AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 3, 1998
REGISTRATION NO. 333-63367
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
WORLD OMNI 1998-A AUTOMOBILE LEASE
SECURITIZATION TRUST
(ISSUER WITH RESPECT TO THE NOTES)
------------------------
WORLD OMNI LEASE SECURITIZATION L.P.
(ORIGINATOR OF THE TRUST DESCRIBED HEREIN AND TRANSFEROR OF THE SUBI CERTIFICATE
TO THE TRUST)
WORLD OMNI LT
(ISSUER WITH RESPECT TO THE SUBI AND THE SUBI CERTIFICATE)
AUTO LEASE FINANCE L.P.
(ORIGINATOR OF WORLD OMNI LT AND TRANSFEROR OF THE SUBI AND THE SUBI CERTIFICATE
TO THE TRANSFEROR DESCRIBED HEREIN)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 7515 63-1120743
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
------------------------
6150 OMNI PARK DRIVE
MOBILE, ALABAMA 36609
(334) 639-7500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF PRINCIPAL EXECUTIVE OFFICES OF WORLD OMNI LEASE SECURITIZATION L.P. AND AUTO
LEASE FINANCE L.P.)
------------------------
A. TUCKER ALLEN
120 NORTHWEST 12TH AVENUE
DEERFIELD BEACH, FLORIDA 33442
(954) 429-2200
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
Copies to:
CHARLES A. SWEET, ESQ. REED D. AUERBACH, ESQ.
WILLIAMS & CONNOLLY STROOCK & STROOCK & LAVAN LLP
725 TWELFTH STREET, N.W. 180 MAIDEN LANE
WASHINGTON, D.C. 20005 NEW YORK, NEW YORK 10038
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /x/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
------------------
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / /
------------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, 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.
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- --------------------------------------------------------------------------------
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State.
SUBJECT TO COMPLETION, DATED NOVEMBER 3, 1998
PROSPECTUS
$1,112,426,000 (APPROXIMATE)
WORLD OMNI 1998-A
AUTOMOBILE LEASE SECURITIZATION TRUST
$294,000,000 (APPROXIMATE)
FLOATING RATE AUTOMOBILE LEASE ASSET BACKED NOTES, CLASS A-1
$301,000,000 (APPROXIMATE)
FLOATING RATE AUTOMOBILE LEASE ASSET BACKED NOTES, CLASS A-2
$280,000,000 (APPROXIMATE)
FLOATING RATE AUTOMOBILE LEASE ASSET BACKED NOTES, CLASS A-3
$237,426,000 (APPROXIMATE)
FLOATING RATE AUTOMOBILE LEASE ASSET BACKED NOTES, CLASS A-4
WORLD OMNI LEASE SECURITIZATION L.P.
(Transferor)
WORLD OMNI FINANCIAL CORP.
(Servicer)
------------------------
The Floating Rate Automobile Lease Asset Backed Notes referred to above (the
"Class A Notes") will be issued by the World Omni 1998-A Automobile Lease
Securitization Trust (the "Trust"), a Delaware business trust created pursuant
to a Securitization Trust Agreement between World Omni Lease Securitization L.P.
(the "Transferor"), PNC Bank, Delaware, as owner trustee (the "Owner Trustee")
and The Bank of New York, as indenture trustee (the "Indenture Trustee"). The
Class A Notes will be issued pursuant to an Indenture between the Trust and the
Indenture Trustee. The Class A Notes will be secured by the property of the
Trust, which will consist of a 100% undivided interest in a Special Unit of
Beneficial Interest (the "SUBI"), which, in turn, will evidence a beneficial
interest in certain specified assets of World Omni LT, an Alabama trust (the
"Origination Trust"), monies on deposit in certain accounts and other assets, as
described more fully under "The Trust and the SUBI". The assets of the
Origination Trust (the "Origination Trust Assets") will consist of retail
closed-end lease contracts assigned to the Origination Trust by dealers in the
World Omni Financial Corp. ("World Omni") network of dealers, the automobiles
and light duty trucks relating thereto and payments made under certain insurance
policies relating to such lease contracts, the related lessees and such leased
vehicles, including the Residual Value Insurance Policy, and certain other
assets, as more fully described under "The Origination Trust--Property of the
Origination Trust". World Omni will service the lease contracts included in the
Origination Trust Assets.
(Cover continued on next page)
------------------------
FOR A DISCUSSION OF MATERIAL RISKS THAT SHOULD BE CONSIDERED IN CONNECTION
WITH AN INVESTMENT IN THE CLASS A NOTES, SEE "RISK FACTORS" ON PAGE 19 HEREIN.
------------------------
THE CLASS A NOTES WILL REPRESENT OBLIGATIONS OF THE TRUST AND WILL NOT REPRESENT
INTERESTS IN OR OBLIGATIONS OF WORLD OMNI LEASE SECURITIZATION L.P., AUTO
LEASE FINANCE L.P., WORLD OMNI LT, WORLD OMNI FINANCIAL CORP., PNC
BANK, DELAWARE OR ANY OF THEIR RESPECTIVE AFFILIATES OTHER THAN THE
TRUST.
------------------------
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.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING DISCOUNTS PROCEEDS TO
PUBLIC(1) AND COMMISSIONS(2) THE TRANSFEROR(1)(3)
<S> <C> <C> <C>
Per Class A-1 Note................................. % % %
Per Class A-2 Note................................. % % %
Per Class A-3 Note................................. % % %
Per Class A-4 Note................................. % % %
Total.............................................. $ $ $
</TABLE>
(1) Plus accrued interest, if any, calculated at the related Note Rate from and
including the date of initial issuance.
(2) The Transferor and World Omni have agreed to indemnify the Underwriters
against certain liabilities under the Securities Act of 1933. See
"Underwriting".
(3) Before deducting expenses payable by the Transferor estimated to be
$ .
------------------------
The Class A Notes are offered by the Underwriters, subject to prior sale,
when, as and if issued to and accepted by the Underwriters, subject to approval
of certain legal matters by counsel for the Underwriters and certain other
conditions. The Underwriters reserve the right to withdraw, cancel or modify
such offer and to reject orders in whole or in part. It is expected that
delivery of the Class A Notes in book-entry form will be made through the
facilities of The Depository Trust Company, Cedel Bank, societe anonyme and the
Euroclear System, on or about , 1998, against payment in immediately
available funds.
------------------------
JOINT BOOK RUNNERS
CREDIT SUISSE FIRST BOSTON MERRILL LYNCH & CO.
CO-MANAGERS
FIRST UNION CAPITAL MARKETS
NATIONSBANC MONTGOMERY SECURITIES LLC
SALOMON SMITH BARNEY
------------------------
THE DATE OF THIS PROSPECTUS IS NOVEMBER , 1998
<PAGE>
(Cover continued from previous page)
The SUBI initially will evidence a beneficial interest in specified
Origination Trust Assets, including certain lease contracts, the automobiles and
light duty trucks relating to such lease contracts, certain monies due under or
payable in respect of such lease contracts and leased vehicles on or after
September 1, 1998, payments made under certain insurance policies relating to
such lease contracts, the related lessees and such leased vehicles, including
the Residual Value Insurance Policy, and certain other Origination Trust Assets
(collectively, the "SUBI Assets"), as more fully described under "The Trust and
the SUBI--The SUBI". From time to time until principal is first distributed to
the Noteholders, as described below, principal collections on or in respect of
the SUBI Assets will be reinvested in additional lease contracts assigned to the
Origination Trust by dealers in the World Omni network of dealers, together with
the automobiles and light duty trucks relating thereto, which at the time of
reinvestment will become SUBI Assets. The SUBI will not evidence a direct
interest in the SUBI Assets, nor will it represent a beneficial interest in all
of the Origination Trust Assets. Payments made on or in respect of the
Origination Trust Assets not represented by the SUBI will not be available to
make payments on the Notes. For further information regarding the Trust, the
SUBI and the Origination Trust, see "The Trust and the SUBI" and "The
Origination Trust".
The Notes will consist of four classes of senior notes (respectively, the
"Class A-1 Notes", the "Class A-2 Notes", the "Class A-3 Notes" and the
"Class A-4 Notes", and collectively, the "Class A Notes") and one class of
subordinated Notes (the "Class B Notes", and together with the Class A Notes,
the "Notes"). The Class A Notes will be the only Notes offered hereby. The
Class B Notes will initially be held by an affiliate of the Transferor.
Information concerning the Class B Notes is provided herein only for a better
understanding of the Class A Notes. The initial principal amount of the Class B
Notes will be approximately $63,137,000, and the Class B Notes will be
subordinated to the Class A Notes to the extent described herein. The Transferor
will own the undivided equity interest in the Trust (the "Transferor Interest").
The Transferor Interest will be subordinated to the Notes as described herein.
For further information regarding the Notes, see "Description of the Notes".
In general, no principal payments will be made on the Class A-2 Notes until
the Class A-1 Notes have been paid in full, no principal payments will be made
on the Class A-3 Notes until the Class A-1 Notes and the Class A-2 Notes have
been paid in full, and no principal payments will be made on the Class A-4 Notes
until the Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes have been
paid in full. Following payment in full of the Class A-3 Notes, principal
payments will be made on the Class A-4 Notes and the Class B Notes, pro rata,
based on the Class A Percentage and Class B Percentage, respectively.
Interest on the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes
and the Class A-4 Notes will accrue at the respective floating interest rates
specified herein and will be distributed to holders of the Class A Notes on the
fifteenth day of each month (or, if such day is not a Business Day, on the next
succeeding Business Day), beginning December 15, 1998 (each, a "Distribution
Date"). Principal will be distributed to holders of the Notes to the extent
described herein on each Distribution Date beginning in January 2000, or, in
certain limited circumstances, earlier, as more fully described herein. The
final maturity date for each Class of Class A Notes will be the December 2004
Distribution Date.
The Class A Notes will have the benefit of an interest rate swap (the
"Class A Interest Rate Swap"). Merrill Lynch Derivative Products AG will be the
counterparty to the Class A Interest Rate Swap. Payments received by the Trust
pursuant to the Class A Interest Rate Swap will be available to pay interest due
on the Class A Notes on each Distribution Date to the extent described herein.
There currently is no secondary market for the Class A Notes and there is
no assurance that one will develop. The Underwriters expect, but will not be
obligated, to make a market in each Class of Class A Notes. There is no
assurance that any such market will develop, or if one does develop, that it
will continue.
As more fully described under "Ratings of the Class A Notes", it is a
condition of issuance that each of Moody's Investors Service, Inc., Standard &
Poor's, a division of The McGraw-Hill Companies, Inc. and Fitch IBCA, Inc. rates
each Class of Class A Notes in its highest rating category.
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF ANY
ii
<PAGE>
CLASS OF NOTES, INCLUDING OVER-ALLOTMENT, STABILIZING TRANSACTIONS, SYNDICATE
SHORT COVERING TRANSACTIONS AND PENALTY BIDS. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING".
AVAILABLE INFORMATION
The Transferor, as originator of the Trust, has filed with the Securities
and Exchange Commission (the "Commission") on behalf of the Trust a Registration
Statement on Form S-1 (together with all amendments and exhibits thereto, the
"Registration Statement"), of which this Prospectus is a part, under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Class A Notes being offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which have
been omitted in accordance with the rules and regulations of the Commission. For
further information, reference is made to the Registration Statement, which is
available for inspection without charge at the public reference facilities of
the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, and the regional offices of the Commission at Suite 1400, Citicorp
Center, 500 West Madison Street, Chicago, Illinois 60661-2511 and Suite 1300,
Seven World Trade Center, New York, New York 10048. Copies of such information
can 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 that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission at http://www.sec.gov. The Servicer, on behalf of the Trust, will
also file or cause to be filed with 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.
iii
<PAGE>
OVERVIEW OF TRANSACTION
________________________________________ World Omni____________
| | | (Servicer) |
| 100% | | | | Dealer
| Ownership | | | 100% | Agreements
| | | 99.9% | Ownership |
WOLS LLC | | LP | Dealers
| | | Interest ALF LLC |
| | 99.9% | | | Contracts
| | LP | | 0.1% GP | and Leased
| 0.1% | Interest | | Interest | Vehicles
| GP | | | |
| Interest | |_______________ ALF LP_________Origination
| | | | UTI Trust
| | | | and |
| | | | SUBI |
| | | | |
| | | | Origination
| | Proceeds | | SUBI Trustee
| | | |
| | | |
| | | |
| | | |
| | | |
|____________|__________________________ WOLS LP
(Transferor)
| |
Proceeds | |
and | | SUBI
Transferor | |
Interest | |
| |
Trust__________________Owner
| | | Trustee
| | |
| Class A | | Class A
| Net Swap | | Net Swap
| Receipts | | Payments
Pledge | | |
| | |
| Class A
| Swap
| Counterparty
|
|
|
Indenture Reserve Fund and
Trustee Insured Residual
|_______________Value Loss
_______|_______ Amounts Paid
| | Under Residual
| | Value Insurance
Class A Class B Policy
Noteholders Noteholders
iv
<PAGE>
SUMMARY
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus. See the Index of
Capitalized Terms at page 99 for the location herein of certain capitalized
terms.
<TABLE>
<S> <C>
Overview.................................. Certain motor vehicle dealers ("Dealers") in the World Omni Financial
Corp. ("World Omni") network of dealers have assigned, and will
assign, closed-end retail automobile and light duty truck leases to
World Omni LT, an Alabama trust (the "Origination Trust"). The
Origination Trust was created in 1993 to avoid the administrative
difficulty and expense associated with retitling leased vehicles in
the securitization of automobile and light duty truck leases. The
Origination Trust has issued to Auto Lease Finance L.P. ("ALF L.P.")
an Undivided Trust Interest (the "UTI") representing the entire
beneficial interest in the unallocated assets of the Origination
Trust. ALF L.P. will instruct the trustee of the Origination Trust to
allocate a separate portfolio of leases and leased vehicles within
the Origination Trust and create a special unit of beneficial
interest (the "SUBI") which will represent the entire beneficial
interest in such portfolio. Upon its creation, such portfolio will no
longer be a part of the Origination Trust Assets represented by the
UTI. ALF L.P. will sell its interest in the SUBI to World Omni Lease
Securitization L.P. (the "Transferor") and the Transferor will in
turn contribute the entire interest in the SUBI to the World Omni
1998-A Automobile Lease Securitization Trust (the "Trust"). In
return, the Trust will issue certain securities, including the
Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and Class A-4 Notes
being offered hereby. The undivided equity interest in the Trust will
be permanently retained by the Transferor. ALF L.P. has caused and
from time to time in the future may cause additional special units of
beneficial interest similar to the SUBI ("Other SUBIs") to be created
out of the UTI and sold to the Transferor or one or more other
entities. The Trust and the Noteholders will have no interest in the
UTI, any Other SUBI or any assets of the Origination Trust evidenced
by the UTI or any Other SUBI.
The Trust................................. The Trust will be created pursuant to a securitization trust
agreement dated as of October 1, 1998 (the "Agreement"), among the
Transferor, PNC Bank, Delaware, as owner trustee (in such capacity
(together with its successors and assigns), the "Owner Trustee") and
The Bank of New York ("BONY"), as indenture trustee (in such
capacity, the "Indenture Trustee"). The property of the Trust will
consist primarily of the SUBI, which will evidence a beneficial
interest in certain specified assets of the Origination Trust
(including Insured Residual Value Loss Amounts paid under the
Residual Value Insurance Policy), Class A Net Swap Receipts and
monies on deposit in the Reserve Fund and in certain other accounts
established as described herein.
The Origination Trust was formed by ALF L.P., as grantor and initial
beneficiary, and VT Inc., as trustee (the "Origination Trustee"). The
sole general partner of ALF L.P. is Auto Lease Finance LLC (as
successor by merger to Auto Lease Finance, Inc.),
</TABLE>
<PAGE>
<TABLE>
<S> <C>
a Delaware single member limited liability company ("ALF LLC") which
is a wholly owned, special purpose subsidiary of World Omni. ALF LLC
may not transfer its general partnership interest in ALF L.P. so long
as any financings involving interests in the Origination Trust
(including the transaction described herein) are outstanding. World
Omni is the sole member of ALF LLC and the sole limited partner of
ALF L.P. VT Inc. is an Alabama corporation and a wholly owned,
special purpose subsidiary of U.S. Bank National Association ("U.S.
Bank") that was organized solely for the purpose of acting as
Origination Trustee. VT Inc. is not affiliated with World Omni or any
affiliate thereof. For further information regarding the Origination
Trustee, see "The Origination Trust--The Origination Trustee".
The Origination Trust Assets consist of retail closed-end lease
contracts assigned to the Origination Trust by Dealers, the
automobiles and light duty trucks relating thereto and all proceeds
thereof and payments made under certain insurance policies relating
to such contracts, the related lessees or such leased vehicles,
including the Residual Value Insurance Policy. The SUBI initially
will evidence a beneficial interest in a specified portion of the
Origination Trust Assets, including: (i) certain lease contracts (the
"Initial Contracts") originated by Dealers located throughout the
United States; (ii) the automobiles and light duty trucks relating
thereto (the "Initial Leased Vehicles"); (iii) certain monies due
under or payable in respect of the Initial Contracts and the Initial
Leased Vehicles on or after September 1, 1998 (the "Initial Cutoff
Date"); (iv) payments made under certain insurance policies
(including Insured Residual Value Loss Amounts paid under the
Residual Value Insurance Policy) relating to the Initial Contracts,
the related lessees and the Initial Leased Vehicles; and (v) certain
related assets and rights (collectively, the "SUBI Assets"). For
further information regarding the SUBI Assets, see "The Trust and the
SUBI--The SUBI".
Prior to the time when principal is first distributed to Noteholders
as described herein, payments made on or in respect of the SUBI
Assets allocable to principal will be reinvested in additional retail
closed-end lease contracts (the "Subsequent Contracts" and, together
with the Initial Contracts, the "Contracts") originated and assigned
to the Origination Trust by Dealers located throughout the United
States and the automobiles and light duty trucks relating thereto
(the "Subsequent Leased Vehicles" and, together with the Initial
Leased Vehicles, the "Leased Vehicles"). At the time of such
reinvestment, the related Subsequent Contracts and Subsequent Leased
Vehicles, together with certain related Origination Trust Assets,
will become SUBI Assets. For further information regarding the
Subsequent Contracts and Subsequent Leased Vehicles, see
"Summary--The Revolving Period; Subsequent Contracts and Subsequent
Leased Vehicles" and "The Trust and the SUBI--The SUBI".
The Dealers comprising the sources for Contracts and Leased Vehicles
are members of World Omni's network of dealers. These Dealers offer
automobiles and light duty trucks for lease pursuant to
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
World Omni-approved terms and documentation. For further information
regarding World Omni's lease business, see "World Omni".
The SUBI will evidence an indirect beneficial interest, rather than a
direct legal interest, in the SUBI Assets. The SUBI will not
represent a beneficial interest in any Origination Trust Assets other
than the SUBI Assets. Payments made on or in respect of Origination
Trust Assets other than the SUBI Assets will not be available to make
payments on the Notes. For further information regarding the SUBI,
see "Summary--Security for the Notes--The SUBI", "The Trust and the
SUBI--The SUBI" and "The Origination Trust".
The Transferor............................ The Transferor is a Delaware limited partnership, the sole general
partner of which is World Omni Lease Securitization LLC (as successor
by merger to World Omni Lease Securitization, Inc.), a Delaware
single member limited liability company ("WOLS LLC"), which is a
wholly owned, special purpose subsidiary of World Omni. WOLS LLC may
not transfer its general partnership interest in the Transferor so
long as any financings involving interests formerly or partially held
by it in the Origination Trust (including the transaction described
herein) are outstanding. World Omni is the sole member of WOLS LLC
and the sole limited partner of the Transferor.
World Omni................................ World Omni is a Florida corporation that is a wholly owned subsidiary
of JM Family Enterprises, Inc., a Delaware corporation ("JMFE"). JMFE
also wholly owns Southeast Toyota Distributors, Inc. ("SET"), which
is the exclusive distributor of Toyota automobiles and light duty
trucks in Florida, Alabama, Georgia, North Carolina and South
Carolina (the "Five State Area"). As more fully described under
"World Omni", World Omni provides consumer lease and installment
contract financing to retail customers of, and floorplan and other
dealer financing to, Dealers that are located throughout the United
States. World Omni is the sole member of both ALF LLC and WOLS LLC.
Pursuant to an amended and restated servicing agreement dated as of
July 1, 1994, as amended, to be supplemented by a servicing
supplement dated as of October 1, 1998 (collectively, the "Servicing
Agreement"), each between World Omni and the Origination Trustee,
World Omni will act as the initial servicer of the Origination Trust
Assets, including the SUBI Assets (in such capacity, the "Servicer").
The Owner Trustee and the Indenture Trustee will be third party
beneficiaries of the Servicing Agreement, as described under
"Additional Document Provisions--The Servicing Agreement--Indenture
Trustee and Owner Trustee as Third-Party Beneficiaries".
Securities Offered........................ The Automobile Lease Asset Backed Notes (the "Notes") will consist of
four classes of senior Notes (the "Class A-1 Notes", the "Class A-2
Notes", the "Class A-3 Notes" and the "Class A-4 Notes",
respectively, and collectively, the "Class A Notes") and one class of
subordinated notes (the "Class B Notes"). Generally, no principal
payments will be made on the Class A-2 Notes until the
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
Class A-1 Notes have been paid in full, no principal payments will be
made on the Class A-3 Notes until the Class A-1 Notes and the
Class A-2 Notes have been paid in full, and no principal payments
will be made on the Class A-4 Notes until the Class A-1 Notes,
Class A-2 Notes and Class A-3 Notes have been paid in full, in each
case as more fully described under "Description of the Notes--
Distributions on the Notes--Application and Distributions of
Principal--Amortization Period". The Class B Notes will be
subordinated to the Class A Notes so that (i) interest payments will
not be made in respect of the Class B Notes until interest in respect
of the Class A Notes has been paid, (ii) principal payments will not
be made in respect of the Class B Notes until the Class A-1,
Class A-2 and Class A-3 Notes have been paid in full and (iii) if
other sources available to make payments of principal and interest on
the Class A-4 Notes are insufficient, amounts that otherwise would be
paid in respect of the Class B Notes generally will be available for
that purpose, as more fully described under "Description of the
Notes--Distributions on the Notes". The undivided equity interest in
the Trust will be permanently retained by the Transferor (the
"Transferor Interest"). The Transferor Interest will be subordinated
to the Notes as described under "Summary--Security for the
Notes--Subordination of the Transferor Interest". Only the Class A
Notes are being offered hereby. The Class A Notes will be issued in
book-entry form in minimum denominations of $1,000 and integral
multiples thereof, as set forth under "Description of the
Notes--Book-Entry Registration" and "--Definitive Notes". The
Class B Notes will be sold in one or more private placements.
Information concerning the Class B Notes is provided herein only for
a better understanding of the Class A Notes.
Each Note will represent the right to receive monthly payments of
interest at the related Note Rate and, to the extent described
herein, monthly payments of principal during the Amortization Period.
These payments will be funded from a portion of the payments received
by the Trust on or in respect of the SUBI (i.e., from a portion of
the payments received on or in respect of the Contracts and the
Leased Vehicles) and, in certain circumstances, from Transferor
Amounts that otherwise would be distributable in respect of the
Transferor Interest, Insured Residual Value Loss Amounts paid under
the Residual Value Insurance Policy, Class A Net Swap Receipts and
monies on deposit in the Reserve Fund.
On the date of initial issuance of the Notes (the "Closing Date"),
the Trust will issue approximately $294,000,000 aggregate principal
amount of Class A-1 Notes (the "Initial Class A-1 Note Balance"),
approximately $301,000,000 aggregate principal amount of Class A-2
Notes (the "Initial Class A-2 Note Balance"), approximately
$280,000,000 aggregate principal amount of Class A-3 Notes (the
"Initial Class A-3 Note Balance"), approximately $237,426,000
aggregate principal amount of Class A-4 Notes (the "Initial
Class A-4 Note Balance" and, together with the Initial Class A-1 Note
Balance, the Initial Class A-2 Note Balance and the Initial
Class A-3 Note Balance, the "Initial Class A Note Balance") and
approximately $63,137,000
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aggregate principal amount of Class B Notes (the "Initial Class B
Note Balance" and, together with the Initial Class A Note Balance,
the "Initial Note Balance"). The aggregate principal amounts of the
Class A-1, Class A-2, Class A-3 and Class A-4 Notes and the Class B
Notes will, except in certain circumstances described under
"Summary--The Revolving Period; Subsequent Contracts and Subsequent
Leased Vehicles", remain fixed at their respective Initial Class Note
Balances during the Revolving Period and, to the extent described
herein, will decline thereafter during the Amortization Period as
principal is paid on the Notes. The "Class Note Balance" of any Class
of Notes on any day will equal the Initial Class Note Balance,
reduced by the sum of all distributions made in respect of principal
(including any reimbursements of Loss Amounts allocable to such Class
and Note Principal Loss Amounts in respect of such Class) on or prior
to such day on the related Class of Notes and those Note Principal
Loss Amounts in respect of such Class, if any, which have not been
reimbursed as described herein. The "Class A Note Balance" will mean
the sum of the Class A-1, Class A-2, Class A-3 and Class A-4 Note
Balances. The "Note Balance" with respect to the Notes will mean the
sum of the Class A Note Balance and the Class B Note Balance.
The amount of the Transferor Interest will initially equal
approximately $27,059,476 (which amount will equal approximately
2.25% of the Aggregate Net Investment Value as of the Initial Cutoff
Date) and on any day will equal the difference between the Aggregate
Net Investment Value, calculated as described under
"Summary--Security for the Notes--The SUBI" and "Summary--The
Contracts", and the Note Balance. As more fully described under
"Description of the Notes--General", the Aggregate Net Investment
Value can change daily.
Registration of the Notes................. Each Class of Class A Notes initially will be represented by one or
more notes registered in the name of Cede & Co. ("Cede"), as the
nominee of The Depository Trust Company ("DTC"). A person acquiring
an interest in the Class A Notes (each, a "Note Owner") will hold his
or her interest through DTC, in the United States, or Cedel Bank,
societe anonyme ("Cedel") or the Euroclear System ("Euroclear"), in
Europe. Transfers within DTC, Cedel or Euroclear, as the case may be,
will be in accordance with the usual rules and operating procedures
of the relevant system. Cross-market transfers between persons
holding directly or indirectly through DTC, on the one hand, and
counterparties holding directly or indirectly through Cedel or
Euroclear, on the other, will be effected in DTC through Citibank,
N.A. or Morgan Guaranty Trust Company of New York, the relevant
depositaries (collectively, the "Depositaries") of Cedel or
Euroclear, respectively, and each a participating member of DTC. No
Note Owner will be able to receive a definitive Note representing
such person's interest, except in the limited circumstances described
under "Description of the Notes--Definitive Notes". Unless and until
definitive Notes are issued, Note Owners will not be recognized as
holders of record of Class A Notes and will be permitted to exercise
the rights of such holders only indirectly through DTC. For further
information regarding book-entry registration of the Class A Notes,
see
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"Description of the Notes--General" and "--Book-Entry Registration".
Interest.................................. On the fifteenth day of each month or, if such day is not a Business
Day, on the next succeeding Business Day, beginning December 15,
1998 (each, a "Distribution Date"), distributions in respect of the
Class A Notes will be made to the holders of record of the
Class A-1, Class A-2, Class A-3 and Class A-4 Notes (respectively,
the "Class A-1 Noteholders", the "Class A-2 Noteholders", the
"Class A-3 Noteholders" and the "Class A-4 Noteholders", and
collectively, the "Class A Noteholders") as of the day immediately
preceding such Distribution Date or, if Definitive Notes are issued,
the last day of the immediately preceding calendar month (each such
date, a "Record Date"). On each Distribution Date, the Indenture
Trustee will distribute interest to the Class A Noteholders, based on
the related Class Note Balance as of the immediately preceding
Distribution Date (after giving effect to reductions in such Class
Note Balance as of such immediately preceding Distribution Date) or,
in the case of the first Distribution Date, on the Initial Class Note
Balance, in the case of (i) the Class A-1 Notes, at an annual
percentage rate equal to One-Month LIBOR plus 0. % (the
"Class A-1 Note Rate"), (ii) the Class A-2 Notes, at an annual
percentage rate equal to One-Month LIBOR plus 0. % (the
"Class A-2 Note Rate"), (iii) the Class A-3 Notes, at an annual
percentage rate equal to One-Month LIBOR plus 0. % (the "Class
A-3 Note Rate") and (iv) the Class A-4 Notes, at an annual percentage
rate equal to One-Month LIBOR plus 0. % (the "Class A-4 Note
Rate"). One-Month LIBOR shall generally equal the London interbank
offered quotations for one-month United States dollar deposits
determined as of the applicable LIBOR Determination Date as described
herein. See "Description of the Notes--Determination of One-Month
LIBOR". All such payments will be calculated on the basis of the
actual number of days from and including the prior Distribution Date
(or in the case of the initial Distribution Date, the Closing Date)
to but excluding the related Distribution Date and a 360-day year.
The final maturity date for each Class of Class A Notes (the "Stated
Maturity Date") will be the December 2004 Distribution Date. A
"Business Day" will be a day other than a Saturday or Sunday or a day
on which banking institutions in New York, New York, Chicago,
Illinois, Wilmington, Delaware, Deerfield Beach, Florida, or Mobile,
Alabama, are authorized or obligated by law, executive order or
government decree to be closed. As described under "Description of
the Notes--Distributions on the Notes--Distributions of Interest",
distributions in respect of interest on the Class B Notes will be
subordinated to distributions in respect of interest on the Class A
Notes under certain circumstances.
Class A Interest Rate Swap................ On the date of issuance of the Notes, the Trust will enter into the
Class A Interest Rate Swap with the Class A Swap Counterparty. The
Class A Interest Rate Swap will have a notional amount (the "Notional
Amount") as of any Deposit Date equal to the Class A Note Balance,
as of the close of business on the preceding Distribution Date after
giving effect to distributions on such
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Distribution Date; provided, however, with respect to the first
Deposit Date, the Notional Amount will be equal to the Initial
Class A Note Balance. Pursuant to the Class A Interest Rate Swap, on
each Deposit Date, payment will be made by the Trust to the Class A
Swap Counterparty (if the following is a positive number) or by the
Class A Swap Counterparty to the Trust (if the following is a
negative number) of an amount equal to (i) one-twelfth of the product
of (A) the Notional Amount and (B) the Swap Rate (or, with respect to
the first Deposit Date, an amount specified in the Agreement) minus
(ii) the product of (A) a fraction, the numerator of which is the
actual number of days from and including the prior Distribution Date
to but excluding the related Distribution Date (or, with respect to
the first Deposit Date, the actual number of days from the date of
issuance of the Notes to but excluding the first Distribution Date)
and the denominator of which is 360, (B) the Notional Amount and
(C) One-Month LIBOR with respect to the related Distribution Date. If
such amount is positive it will be referred to herein as the
"Class A Net Swap Payment", and if such amount is negative, it will
be referred to herein as the "Class A Net Swap Receipt". The "Swap
Rate" is %.
Any Class A Net Swap Receipt in respect of a Deposit Date will be
deposited in the Distribution Account and will be available to make
distributions of interest due on the Class A Notes on the related
Distribution Date. Any Class A Net Swap Payment in respect of a
Deposit Date will be paid out of funds on deposit in the SUBI
Collection Account. See "The Class A Interest Rate Swap".
Class A Swap Counterparty................. Merrill Lynch Derivative Products AG will be the swap counterparty
with respect to the Class A Interest Rate Swap (in such capacity, the
"Class A Swap Counterparty"). See "The Class A Interest Rate
Swap--The Class A Swap Counterparty".
The Revolving Period; Subsequent Contracts
and Subsequent Leased Vehicle........... No principal will be payable on the Notes until the January 2000
Distribution Date or, upon the occurrence of an Early Amortization
Event, until the Distribution Date in the month immediately
succeeding the month in which such Early Amortization Event occurs.
From and including the Closing Date and ending on the day immediately
preceding the commencement of the Amortization Period (i.e., the
earlier of December 1, 1999 or the date of an Early Amortization
Event) (the "Revolving Period"), all Principal Collections and
reimbursements of Loss Amounts will be reinvested in Subsequent
Contracts and Subsequent Leased Vehicles so as to maintain the
Class A-1, Class A-2, Class A-3, Class A-4 and Class B Note Balances
at constant levels during the Revolving Period, except to the extent
there are unreimbursed Note Principal Loss Amounts in respect of any
such Class, in which case the Note Balance of the related Class of
Notes will decrease, although such amounts may be reimbursed as
described under "Description of the Notes--Distributions on the
Notes--Distributions of Interest". The events that might lead to the
termination of the Revolving Period prior to its scheduled
termination date are described under "Description of the Notes--Early
Amortization Events". On any
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calendar day (i) in each month (beginning December 1998) during the
Revolving Period and (ii) if no Early Amortization Event has
occurred, in the month in which the Amortization Date occurs, on one
or more days selected by the Servicer (each, a "Transfer Date"), the
Servicer will direct the Origination Trustee to reinvest Principal
Collections and certain Loss Amounts that otherwise would be
reimbursed to the Noteholders in certain lease contracts and the
related leased vehicles of the Origination Trust that are not
evidenced by the SUBI or any Other SUBI. Upon such reinvestment, the
related Subsequent Contracts and Subsequent Leased Vehicles will
become SUBI Assets. If on the twenty-fifth calendar day of any month
(beginning December 1998) during the Revolving Period the amount of
Principal Collections and such otherwise reimbursable Loss Amounts as
of the last day of the immediately preceding month that have not been
reinvested in Subsequent Contracts and Subsequent Leased Vehicles
exceeds $1,000,000, an Early Amortization Event will occur, the
Revolving Period will terminate as of such day and all unreinvested
Principal Collections and all such reimbursable Loss Amounts will be
distributed as principal to Noteholders on the immediately succeeding
Distribution Date. For further details concerning the application of
Principal Collections and Loss Amounts, see "Summary--Amortization
Period; Principal Payments", "Risk Factors--Risk of Absence of Funds
for Reimbursement of Loss Amounts", "The Trust and the SUBI--The
SUBI" and "Description of the Notes--Distributions on the Notes--
Application and Distributions of Principal--Revolving Period".
The Subsequent Contracts and Subsequent Leased Vehicles will be
selected from the Origination Trust's portfolio of lease contracts
and related vehicles that are not allocated to (or reserved for
allocation to) any Other SUBI, based on the same criteria as are
applicable to the Initial Contracts and the other criteria described
under "The Contracts--Representations, Warranties and Covenants". If
allocations are being made in respect of any one or more previous
Other SUBI(s) at the same time out of the Origination Trust's general
pool of unreserved lease contracts, reinvestment will be made first
in respect of such previous Other SUBI(s). For further information
regarding the Subsequent Contracts and Subsequent Leased Vehicles,
see "The Contracts".
"Principal Collections" will mean, with respect to any Collection
Period, all Collections allocable to the principal component of any
Contract (including any payment in respect of the related Leased
Vehicle, but other than any payment as to which a Loss Amount has
been realized and allocated during any prior Collection Period),
discounted to the extent required below. A "Collection Period" will
be each calendar month. For purposes of determining Principal
Collections, the principal component of all payments made on or in
respect of a Contract (or the related Leased Vehicle) with a Lease
Rate less than 7.75% (each, a "Discounted Contract") will be
discounted to present value at a rate of 7.75%, thereby effectively
reallocating a portion of the payments received in respect of the
principal component of the Contracts to Interest Collections and
providing additional credit enhancement for the benefit of the
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Noteholders. "Collections" with respect to any Collection Period will
include all net collections received on or in respect of the
Contracts and Leased Vehicles during such Collection Period other
than Insured Residual Value Loss Amounts paid under the Residual
Value Insurance Policy, such as Monthly Payments (including amounts
in the SUBI Collection Account that previously constituted Payments
Ahead but which represent Monthly Payments due during such Collection
Period), Prepayments, Advances, Net Matured Leased Vehicle Proceeds,
Net Repossessed Vehicle Proceeds and other Net Liquidation Proceeds
and any Undistributed Transferor Excess Collections in respect of the
immediately preceding Collection Period, but shall not include, and
(as appropriate) shall be net of (i) Payments Ahead with respect to
one or more future Collection Periods, (ii) amounts paid to the
Servicer in respect of outstanding Advances, Matured Leased Vehicle
Expenses, Repossessed Vehicle Expenses, other Liquidation Expenses
and Insurance Expenses, (iii) late payment charges, payments of
insurance premiums, excise taxes or similar items and (iv) Additional
Loss Amounts in respect of such Collection Period. In addition, if
such Collection Period occurs during the Revolving Period, amounts
otherwise payable to the Noteholders on the related Distribution Date
as reimbursement of Loss Amounts allocable to the Notes (as described
under "Description of the Notes--Distributions on the
Notes--Distributions of Interest") will be treated as Principal
Collections and reinvested in Subsequent Contracts and Subsequent
Leased Vehicles as described above. "Interest Collections" with
respect to any Collection Period generally will equal the amount by
which Collections exceed Principal Collections. "Net Repossessed
Vehicle Proceeds" will equal Repossessed Vehicle Proceeds net of
Repossessed Vehicle Expenses, and "Net Liquidation Proceeds" will
equal Liquidation Proceeds net of Liquidation Expenses. "Net Matured
Leased Vehicle Proceeds" will be Matured Leased Vehicle Proceeds
received during a Collection Period net of Matured Leased Vehicle
Expenses incurred during such Collection Period.
Amortization Period; Principal
Payments................................ The "Amortization Period" will commence on the earlier of
December 1, 1999 (the "Amortization Date") or the day on which an
Early Amortization Event occurs, and will end when each Class of
Notes has been paid in full and all Note Principal Loss Amounts and
Class B Note Principal Carryover Shortfalls, if any, have been repaid
in full, together with accrued interest thereon, or when the Trust
otherwise terminates. During the Amortization Period, Principal
Collections and certain reimbursed Loss Amounts will no longer be
reinvested in Subsequent Contracts and Subsequent Leased Vehicles as
described above. Instead, on each Distribution Date beginning with
the Distribution Date in the month following the month in which the
Amortization Period commences and ending on the Distribution Date on
which the Class A-3 Notes have been paid in full, all Principal
Collections for the related Collection Period that are allocable to
the Notes will be distributed as principal payments first to the
Class A-1 Noteholders until the Class A-1 Notes have been paid in
full, second, to the Class A-2 Noteholders until the Class A-2 Notes
have been paid in full, third, to the
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Class A-3 Noteholders until the Class A-3 Notes have been paid in
full and thereafter the Class A Percentage and the Class B
Percentage of any remaining such Principal Collections will be
distributed as principal payments to the Class A-4 Noteholders and to
the holders of record of the Class B Notes (the "Class B
Noteholders" and, together with the Class A Noteholders, the
"Noteholders"), respectively. On each Distribution Date after the
Class A-3 Notes have been paid in full, the Class A Percentage and
the Class B Percentage of Principal Collections for the related
Collection Period allocable to the Notes will be distributed to the
Class A-4 Noteholders and the Class B Noteholders, respectively,
until the related Class of Notes has been paid in full. Certain Loss
Amounts incurred during the Amortization Period will be reimbursed to
the Noteholders as described below. The "Class A Percentage" will
mean the Class A Note Balance immediately after the Class A-3 Notes
have been paid in full, as a percentage of the Note Balance at such
time, and the "Class B Percentage" will mean the Class B Note Balance
immediately after the Class A-3 Notes have been paid in full, as a
percentage of the Note Balance at such time. The Class A Percentage
and the Class B Percentage will not change after they are set.
In no event will the principal distributed in respect of any Class of
Notes exceed its Note Balance. In addition, under certain
circumstances, (i) Class A Noteholders will be entitled to receive
reimbursement of Loss Amounts as a distribution of principal from
sources other than Principal Collections and (ii) principal allocable
to the Class B Notes may instead be distributed in respect of Loss
Amounts allocable to the Class A-4 Notes, Class A-4 Note Principal
Loss Amounts and accrued and unpaid interest thereon, as described
under "Description of the Notes--Distributions on the Notes--
Distributions of Interest", "Description of the Notes--Distributions
on the Notes--Application and Distributions of Principal" and "Risk
Factors--Risk of Absence of Funds for Reimbursement of Loss Amounts".
See "Description of the Notes--Early Amortization Events" for a
description of the events that might lead to the commencement of the
Amortization Period prior to the Amortization Date.
During the Amortization Period, the amount of Principal Collections
allocable to the Notes in respect of a Collection Period (the
"Principal Allocation") generally will mean the Principal Collections
in respect of such Collection Period multiplied by the Investor
Percentage for such Principal Collections. The "Investor Percentage"
for purposes of the Principal Allocation will equal the percentage
equivalent of a fraction (not to exceed 100%), the numerator of which
is the Note Balance and the denominator of which is the Aggregate Net
Investment Value, calculated as described under "Summary--The
Contracts", as of the last day of the last Collection Period
(i) preceding the Amortization Date or (ii) preceding the month, if
any, during which an Early Amortization Event occurs. See
"Description of the Notes--Calculation of Investor Percentage and
Transferor Percentage" for a description of
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calculation of the Investor Percentage relating to Interest
Collections and Loss Amounts.
Allocations based upon the Principal Allocation for Principal
Collections during the Amortization Period may result in
distributions of principal with respect to a Collection Period during
the Amortization Period to Noteholders in amounts that are greater
relative to the declining balance of the Note Balance than would be
the case if no fixed Investor Percentage were used to determine the
percentage of Principal Collections distributed in respect of the
Notes. Additionally, to the extent that on any Distribution Date
during the Amortization Period any portion of the Investor Percentage
of Interest Collections in respect of the related Collection Period
remains after required distributions have been made, such excess
interest will be deposited into the Reserve Fund until the amount on
deposit therein equals the Reserve Fund Cash Requirement. Any
remaining excess interest, up to but not exceeding the product of (i)
one-twelfth of 0.25% and (ii) the Aggregate Net Investment Value as
of the last day of such Collection Period (the "Accelerated Principal
Distribution Amount"), will be distributed as an additional payment
of principal to the Noteholders in the same manner and priority as
principal is distributed in respect of the Notes as described in the
preceding paragraphs. See "Description of the Notes--Distributions on
the Notes--Distributions of Interest" and "Description of the Notes--
The Accounts--The SUBI Collection Account--Withdrawals from the SUBI
Collection Account" for further information regarding the foregoing
matters.
Optional Redemption....................... The Notes will be subject to redemption if the Transferor exercises
its option to purchase all of the assets of the Trust, which option
may be exercised on any Distribution Date if, either before or after
giving effect to any payment of principal required to be made on such
Distribution Date, the Note Balance has been reduced to an amount
less than or equal to 10% of the Initial Note Balance, at a purchase
price determined as described under "Description of the
Notes--Termination of the Trust; Redemption of the Notes".
Security for the Notes.................... The security for the Notes will consist primarily of the following:
A. The SUBI............................. The SUBI will evidence a beneficial interest in the SUBI Assets. The
Origination Trust was created pursuant to a trust agreement (the
"Origination Trust Agreement"), among ALF L.P., as grantor and
initial beneficiary, the Origination Trustee and U.S. Bank, as trust
agent (in such capacity, the "Trust Agent"). The SUBI and the entire
beneficial interest in the SUBI Assets will be evidenced by a
certificate (the "SUBI Certificate") that will be issued by the
Origination Trust pursuant to a supplement to the Origination Trust
Agreement dated as of October 1, 1998 (the "SUBI Supplement" and,
together with the Origination Trust Agreement, the "SUBI Trust
Agreement"). The Indenture Trustee and the Owner Trustee will be
third party beneficiaries of the SUBI Trust Agreement.
The Origination Trust Assets evidenced by the SUBI will primarily
include the Contracts and the Leased Vehicles. The SUBI will not
evidence an interest in any Origination Trust Assets other than the
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SUBI Assets, and payments made on or in respect of all other
Origination Trust Assets will not be available to make payments on
the Notes. For more information regarding the SUBI, see "The Trust
and the SUBI" and "The Origination Trust".
B. The Residual Value Insurance
Policy............................... On the Closing Date, Federal Insurance Company, a wholly owned
subsidiary of The Chubb Corporation ("Federal" or the "RV Insurer"),
will issue an insurance policy (the "Residual Value Insurance
Policy") to the Transferor (with the Origination Trustee, the Owner
Trustee, the Indenture Trustee and ALF L.P. also named as insureds),
which will provide coverage for the Insured Residual Value Loss
Amount for any Collection Period. The aggregate maximum amount
payable under the Residual Value Insurance Policy with respect to any
Leased Vehicle will be the lesser of $60,000 and its insured residual
value, calculated as described under "Security for the Notes--The
Residual Value Insurance Policy". Additionally, the aggregate maximum
amount payable under the Residual Value Insurance Policy will not
exceed the aggregate insured residual values of all Leased Vehicles.
Prior to each Distribution Date, the Servicer will make a claim for
any Insured Residual Value Loss Amount under the Residual Value
Insurance Policy. The proceeds of any such claim will be used to make
the payments described under "Description of the Notes--
Distributions on the Notes--Distributions of Interest". For a fuller
description of these mechanics, see "Security for the Notes--The
Residual Value Insurance Policy".
The "Insured Residual Value Loss Amount" for any Collection Period
will be the lesser of (i) the Investor Percentage of the Residual
Value Loss Amount, and (ii) any shortfall in the amount required to
make all payments (other than deposits into the Reserve Fund)
required to be made on the related Distribution Date that are
described under "Description of the Notes--Distributions on the
Notes--Distributions of Interest", after application of the Investor
Percentage of Interest Collections and Transferor Amounts otherwise
payable in respect of the Transferor Interest, as described below
under "Summary--Security for the Notes--Subordination of the
Transferor Interest".
C. The Reserve Fund..................... The Trust will have the benefit of the Reserve Fund maintained with
the Indenture Trustee for the benefit of the Noteholders and the
Transferor (as holder of the Transferor Interest). The Reserve Fund
is designed to provide additional funds for the benefit of the
Noteholders in the event that on any Distribution Date Interest
Collections allocable to the Notes for the related Collection Period,
plus the Class A Net Swap Receipt, plus Transferor Amounts otherwise
distributable in respect of the Transferor Interest, plus any Insured
Residual Value Loss Amount paid under the Residual Value Insurance
Policy for the related Collection Period, less any Class A Net Swap
Payment are insufficient to pay, among other things, the sum of (i)
accrued interest and any overdue interest (with interest thereon) at
the applicable Note Rate on the Notes on such Distribution Date,
(ii) any Loss Amount for such Collection Period allocable to the
Notes, calculated as described under "Description
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of the Notes--Calculation of Investor Percentage and Transferor
Percentage", and (iii) any unreimbursed Note Principal Loss Amounts,
together with interest thereon at the applicable Note Rate. Monies on
deposit in the Reserve Fund also will be available to Noteholders
should Collections ultimately be insufficient to pay in full any
Class of Notes. For further information regarding the Reserve Fund,
see "Security for the Notes--The Reserve Fund".
The Reserve Fund will be created with an initial deposit by the
Transferor of approximately $12,026,225 (the "Initial Deposit")
(which amount will equal 1.0% of the Aggregate Net Investment Value
as of the Initial Cutoff Date). On each Distribution Date, the funds
in the Reserve Fund will be supplemented by (i) certain Interest
Collections, as more fully described under "Description of the
Notes--Distributions on the Notes--Distributions of Interest",
(ii) income realized on the investment of amounts on deposit in the
Reserve Fund and (iii) in certain circumstances, the deposit of
monies in respect of the related Collection Period remaining in the
Distribution Account after making all payments required to be made
therefrom on such Distribution Date prior to such deposit, including
monies that would otherwise be distributed or applied in respect of
the Transferor Interest, until the amount on deposit in the Reserve
Fund equals the Reserve Fund Cash Requirement then in effect,
calculated as described under "Security for the Notes--The Reserve
Fund--The Reserve Fund Cash Requirement".
The Transferor may be required under certain circumstances to deposit
funds into the Reserve Fund in an amount equal to certain Reserve
Fund supplemental requirements. For a description of the
circumstances under which the Transferor will be required to make
such deposits, see "Security for the Notes--The Reserve Fund". For
further information regarding deposits into the Reserve Fund, see
"Description of the Notes--Distributions on the Notes--Distributions
of Interest".
After giving effect to all payments from the Reserve Fund on a
Distribution Date, monies that are in excess of the Reserve Fund Cash
Requirement generally will be paid to the Transferor, free and clear
of any lien of the Trust.
D. Subordination of the Transferor
Interest............................. The Transferor Interest will initially equal approximately
$27,059,476, and will represent the entire equity interest in the
Trust. However, to provide additional credit enhancement for the
Notes, on each Distribution Date, no payments will be made to the
Transferor in respect of the Transferor Interest until all payments
required to be made on such Distribution Date that are described
under "Description of the Notes--Distributions on the Notes--
Distributions of Interest" have been made and the amount on deposit
in the Reserve Fund equals the Reserve Fund Cash Requirement. For a
description of certain payments made to the Transferor, see
"Description of the Notes--Certain Payments to the Transferor".
The Contracts............................. The Contracts will consist of a pool of retail closed-end lease
contracts originated by Dealers located throughout the United States,
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each of which will have an original term of not more than 60 months.
The Initial Contracts will be randomly selected from the pool
described herein (the "Potential Initial Contracts") in an amount
equal to the Initial Note Balance plus the initial Transferor
Interest. The Initial Contracts in the aggregate will not differ
materially from the pool described herein. Each Contract will be a
finance lease for accounting purposes and will have been written for
a "capitalized cost" (which may exceed the manufacturer's suggested
retail price), plus an implicit rate in each Lease calculated as an
annual percentage rate (the "Lease Rate") on a constant yield basis.
The Contracts will provide for equal monthly payments (the "Monthly
Payments") such that at the end of the related Contract term such
capitalized cost will have been amortized to an amount equal to the
residual value of the related Leased Vehicle established at the time
of origination of such Contract (the "Residual Value"). The amount to
which the capitalized cost of a Contract has been amortized at any
point in time is referred to herein as its "Outstanding Principal
Balance".
The Potential Initial Contracts consist of 74,744 lease contracts. As
of the Initial Cutoff Date, the Lease Rate of the Potential Initial
Contracts ranged from 3.20% to 13.00%, with a weighted average Lease
Rate of 8.65%. The aggregate of the original principal balances of
the Potential Initial Contracts as of their respective dates of
origination was $1,894,114,729. As of the Initial Cutoff Date, the
aggregate Outstanding Principal Balance of the Potential Initial
Contracts was approximately $1,772,260,191, the aggregate Residual
Value of the Initial Leased Vehicles was approximately $1,218,938,715
and the Potential Initial Contracts had a weighted average original
term of 41 months and a weighted average remaining term to scheduled
maturity of 33 months. See "The Contracts" for further information
regarding the Potential Initial Contracts.
The Potential Initial Contracts (including the Initial Contracts)
were, and the Subsequent Contracts will be, identified by the
Servicer from the Origination Trust's portfolio of lease contracts
originated by Dealers located throughout the United States that are
not evidenced by (or reserved for allocation to) any Other SUBI,
based upon the criteria specified in the SUBI Trust Agreement and
described under "The Contracts--Characteristics of the Contracts" and
"--Representations, Warranties and Covenants". The "Aggregate Net
Investment Value" as of any day will equal the sum of (i) the
Discounted Principal Balance of all Contracts other than Charged-off,
Liquidated, Matured and Additional Loss Contracts, (ii) the aggregate
Residual Value of all Leased Vehicles to the extent that the related
Contracts have reached their scheduled maturities (each, a "Matured
Contract") within the three immediately preceding Collection Periods
but which Leased Vehicles as of the last day of the most recent
Collection Period have remained unsold and not otherwise disposed of
by the Servicer for no more than two full Collection Periods (the
"Matured Leased Vehicle Inventory") and (iii) during the Revolving
Period, the amount of Principal Collections and Loss Amounts that
otherwise would be reimbursed to the Noteholders, if any, that have
not been
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reinvested in Subsequent Contracts and Subsequent Leased Vehicles.
The "Discounted Principal Balance" of (i) a Discounted Contract will
equal the present value of all remaining Monthly Payments on such
Contract and the Residual Value of the related Leased Vehicle,
calculated using a discount rate of 7.75%, and (ii) all Contracts
other than Discounted Contracts will equal their Outstanding
Principal Balance. As of the Initial Cutoff Date, the aggregate
Discounted Principal Balance of the Potential Initial Contracts was
approximately $1,763,657,871. The Aggregate Net Investment Value of
the pool of contracts expected to be selected as Initial Contracts
from the pool of Potential Initial Contracts is expected to be
approximately $1,202,622,476.
The Leased Vehicles....................... The Leased Vehicles will be comprised of automobiles and light duty
trucks. As of the times of origination of the Contracts, the related
Leased Vehicles will be either new vehicles, dealer demonstrator
vehicles or manufacturers' program vehicles, as described under "The
Contracts--General". Manufacturers' program vehicles are vehicles
which have been sold directly by manufacturers to rental car
companies and returned to the manufacturer for resale.
The certificates of title to the Initial Leased Vehicles have been,
and the certificates of title to the Subsequent Leased Vehicles will
be, registered at all times in the name of the Origination Trustee
(in its capacity as trustee of the Origination Trust). Such
certificates of title will not reflect the indirect interest of the
Trust in the Leased Vehicles by virtue of its ownership of the SUBI
or any security interest of the Indenture Trustee. Therefore, the
Indenture Trustee will not have a perfected lien in the Leased
Vehicles, although it will have a perfected security interest in the
SUBI Certificate and certain other assets. For further information
regarding the titling of the Leased Vehicles and the interest of the
Indenture Trustee therein, see "The Origination Trust--Contract
Origination; Titling of Leased Vehicles" and "Certain Legal Aspects
of the Contracts and the Leased Vehicles--Back-up Security
Interests".
The Accounts.............................. The Indenture Trustee will maintain the SUBI Collection Account for
the benefit of the Noteholders. Within two Business Days of receipt,
payments made on or in respect of the Contracts or the Leased
Vehicles generally will be deposited by the Servicer into the SUBI
Collection Account. Such payments will include, but will not be
limited to, Monthly Payments made by lessees, Monthly Payments
determined by the Servicer to be due in one or more future Collection
Periods (each, a "Payment Ahead"), Prepayments, proceeds from the
sale or other disposition of Leased Vehicles relating to Matured
Contracts (including payments for excess mileage and excess wear and
use, but excluding Insured Residual Value Loss Amounts paid under the
Residual Value Insurance Policy) ("Matured Leased Vehicle Proceeds"),
proceeds received in connection with the sale or other disposition of
Leased Vehicles that have been repossessed ("Repossessed Vehicle
Proceeds") and other amounts received in connection with the
realization of the amounts due under any Contract (excluding Insured
Residual Value Loss Amounts paid under the Residual
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Value Insurance Policy) (together with Matured Leased Vehicle
Proceeds and Repossessed Vehicle Proceeds, "Liquidation Proceeds").
The Servicer will be entitled to reimbursement for expenses incurred
in connection with the realization of Matured Leased Vehicle Proceeds
("Matured Leased Vehicle Expenses"), Repossessed Vehicle Proceeds
("Repossessed Vehicle Expenses") and other Liquidation Proceeds (such
expenses, together with Matured Leased Vehicle Expenses and
Repossessed Vehicle Expenses, "Liquidation Expenses"), either from
amounts on deposit in the SUBI Collection Account or as a deduction
from Matured Leased Vehicle Proceeds, Repossessed Vehicle Proceeds or
other Liquidation Proceeds, as appropriate, deposited into the SUBI
Collection Account. For further details regarding these deposits and
reimbursements, see "Description of the Notes--The Accounts--The SUBI
Collection Account".
On the Business Day immediately preceding each Distribution Date
(each, a "Deposit Date"), the following amounts will be deposited
into the SUBI Collection Account: (i) Advances by the Servicer and
(ii) Reallocation Payments by World Omni (together with, under
certain circumstances during the Amortization Period, Reallocation
Deposit Amounts) in respect of certain Contracts as to which an
uncured breach of certain representations and warranties or certain
servicing covenants has occurred. Thereafter, Interest Collections
(and, with respect to the Deposit Date in any month following the
month during which the Amortization Period commences, Principal
Collections) on deposit in the SUBI Collection Account in respect of
the related Collection Period will be deposited into the Distribution
Account maintained by the Indenture Trustee for the benefit of the
Noteholders and the Transferor. Any Insured Residual Value Loss
Amount paid under the Residual Value Insurance Policy will be
deposited into the SUBI Collection Account (if it relates to the
Revolving Period) or the Distribution Account (if it relates to the
Amortization Period) within one Business Day of receipt by the
Servicer. Any Required Amount will be withdrawn from the Reserve Fund
and deposited into the Distribution Account on each Distribution
Date. Any Class A Net Swap Receipt will be deposited into the
Distribution Account on the Deposit Date. All payments to Noteholders
will be made from the Distribution Account. Any funds remaining in
the Distribution Account on a Distribution Date in respect of the
related Collection Period following the payment of amounts required
to be paid therefrom generally will be paid to the Transferor. For
further information regarding these deposits and payments, see
"Description of the Notes--The Accounts--The Distribution Account"
and "--The SUBI Collection Account".
Advances.................................. On each Deposit Date the Servicer will be obligated to make, by
deposit into the SUBI Collection Account, an advance equal to the
aggregate Monthly Payments due but not received during the related
Collection Period with respect to Contracts that are 31 days or more
past due as of the end of such Collection Period, and the Servicer
may (but shall not be required to) make such an advance with respect
to Contracts that are one or more days, but less than 31 days, past
due as of the end of such Collection Period (each, an "Advance"). The
Servicer will not be required to make any
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Advance to the extent that it determines that such Advance may not be
ultimately recoverable by the Servicer from Net Liquidation Proceeds
or otherwise. For further information regarding Advances, see
"Additional Document Provisions--The Servicing Agreement--Advances".
Servicing Compensation.................... The Servicer will be entitled to receive a monthly fee with respect
to the SUBI Assets (the "Servicing Fee"), payable on each
Distribution Date, equal to one-twelfth of 1% of the Aggregate Net
Investment Value as of the first day of the related Collection Period
(or, in the case of the first Distribution Date, one-twelfth of 1% of
the Aggregate Net Investment Value as of the Initial Cutoff Date).
The Servicer also will be entitled to additional servicing
compensation in the form of, among other things, late fees and other
administrative fees or similar charges under the Contracts. For
further information regarding Servicer compensation, see "Additional
Document Provisions--The Servicing Agreement--Servicing
Compensation".
Tax Status................................ Cadwalader, Wickersham & Taft, special federal income tax counsel to
the Transferor, is of the opinion that the Class A Notes will be
characterized as indebtedness for federal income tax purposes, as
described under "Material Income Tax Considerations--Federal
Taxation". Each Class A Noteholder, by its acceptance of a Class A
Note, and each Note Owner, by its acquisition of an interest in the
Class A Notes, will agree to treat the Class A Notes as indebtedness
for federal, state and local income tax purposes. Prospective
investors are advised to consult their own tax advisors regarding the
federal income tax consequences of the purchase, ownership and
disposition of the Class A Notes, and the tax consequences arising
under the laws of any state or other taxing jurisdiction. For further
information regarding material federal income tax considerations with
respect to the Class A Notes, see "Material Income Tax
Considerations--Federal Taxation".
ERISA Considerations...................... As more fully described under "ERISA Considerations", an employee
benefit plan subject to the requirements of the fiduciary
responsibility provisions of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), or the provisions of Section 4975
of the Internal Revenue Code of 1986, as amended, contemplating the
purchase of Class A Notes should consult its counsel before making a
purchase, and the fiduciary of such plan and such legal advisors
should consider the matters discussed herein.
Ratings................................... It is a condition of issuance of the Class A Notes that each of
Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's, a
division of The McGraw-Hill Companies, Inc. ("Standard & Poor's") and
Fitch IBCA, Inc. ("Fitch" and, together with Moody's and Standard &
Poor's, the "Rating Agencies") rates each Class of Class A Notes in
its highest rating category. The ratings of the Class A Notes should
be evaluated independently from similar ratings on other types of
securities. A rating is not a recommendation to buy, sell or hold the
related Class A Notes, inasmuch as such rating does not comment as to
market price or suitability for a particular investor. The ratings of
the Class A Notes
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will be based primarily upon the value of the Initial Contracts, the
Residual Value Insurance Policy (see "Security for the Notes--The
Reserve Fund--Other Reserve Fund Requirements" for information
regarding the effect of a downgrade by a Rating Agency of the credit
rating of the RV Insurer), the Reserve Fund, the Class A Interest
Rate Swap, the Class A Swap Counterparty (see "Risk Factors--Risks
Associated with the Class A Swap Counterparty" for information
regarding the effect of (i) a downgrade by a Rating Agency of the
counterparty rating of the Class A Swap Counterparty and (ii) a payment
default by the Class A Swap Counterparty) and the terms of the
Transferor Interest and the Class B Notes. There is no assurance that
any such rating will not be lowered or withdrawn by the assigning
Rating Agency if, in its judgment, future circumstances so warrant.
In the event that a rating with respect to any Class of Class A Notes
is qualified, reduced or withdrawn, no person or entity will be
obligated to provide any additional credit enhancement with respect
to such Class of Class A Notes. Any reduction in the rating assigned
to the Class A Swap Counterparty or the RV Insurer may result in a
reduction in the rating of the Class A Notes. For further
information concerning the ratings assigned to the Class A Notes,
including the limitations of such ratings, see "Ratings of the
Class A Notes".
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RISK FACTORS
RISK OF LIMITED LIQUIDITY; ABSENCE OF SECONDARY MARKET
There is currently no market for the Class A Notes. The Underwriters
expect, but will not be obligated, to make a market in each Class of Class A
Notes. There can be no assurance that a secondary market for the Class A Notes
will develop or, if one does develop, that it will provide the related
Noteholders with liquidity of investment or will continue for the life of the
related Class A Notes.
RISK OF ABSENCE OF FUNDS FOR REIMBURSEMENT OF LOSS AMOUNTS
In the event that Loss Amounts are incurred in respect of the Contracts and
the Leased Vehicles during a Collection Period, if the related Distribution Date
occurs during the Revolving Period, an amount equal to the Investor Percentage
of such Loss Amounts will not be reimbursed to the Noteholders but will be
treated as if such amount constituted Principal Collections received during the
Collection Period in which such Distribution Date occurs. Accordingly, to the
extent that amounts are available for the reimbursement of such Loss Amounts as
described herein, such amount will be available for reinvestment in Subsequent
Contracts and Subsequent Leased Vehicles. If the related Distribution Date
occurs during the Amortization Period and to the extent such amounts are
available, they will be distributed to the Noteholders, in the following order
and priority: first to the Class A-1 Noteholders until the Class A-1 Notes have
been paid in full, second to the Class A-2 Noteholders until the Class A-2 Notes
have been paid in full, third to the Class A-3 Noteholders until the Class A-3
Notes have been paid in full and thereafter the Class A Percentage and the
Class B Percentage of any such remaining reimbursable amounts will then be
distributed to the Class A-4 Noteholders and the Class B Noteholders,
respectively. If the Note Balance of the Class B Notes has been reduced to zero,
such amounts will be allocated to the Class A Noteholders, pro rata, based on
the Class A-1, Class A-2, Class A-3 and Class A-4 Allocation Percentages. Such
distribution of principal will be made from: (i) any remaining portion of the
Investor Percentage of the Interest Collections for the related Collection
Period, (ii) Transferor Amounts otherwise payable to the Transferor in respect
of the Transferor Interest; (iii) Insured Residual Value Loss Amounts paid under
the Residual Value Insurance Policy; (iv) amounts on deposit in the Reserve
Fund; and (v) in the case of the Class A-4 Notes, amounts otherwise payable as
principal to the Class B Noteholders, to the extent available after the
distributions described under clauses (i) through (ix) of "Description of the
Notes--Distributions on the Notes--Distributions of Interest". So long as World
Omni is the Servicer, the Servicing Fee will be subordinated to (among other
things) the reimbursement of Loss Amounts, and amounts that otherwise would be
used to pay the Servicing Fee will be included in any remaining portion of the
Investor Percentage of Interest Collections as described in clause (i) above.
Such remaining portion also may include Undistributed Transferor Excess
Collections in respect of the preceding Collection Period. With respect to any
Distribution Date, the "Class A-1 Allocation Percentage" will mean the
Class A-1 Note Balance as a percentage of the Note Balance, calculated as of the
last day of the related Collection Period. The "Class A-2 Allocation
Percentage", the "Class A-3 Allocation Percentage" and the "Class A-4 Allocation
Percentage" will be calculated in the same manner as the Class A-1 Allocation
Percentage, appropriately modified to relate to the Class A-2, Class A-3 or
Class A-4 Notes, as the case may be. Higher Loss Amounts that occur during the
Amortization Period may therefore accelerate the rate of return of principal on
the Notes. To the extent that Principal Collections and Loss Amounts that
otherwise would be reimbursed to the Noteholders are reinvested in Subsequent
Contracts during the Revolving Period, the aggregate Residual Value of the
Leased Vehicles as a percentage of the Aggregate Net Investment Value will
increase.
Loss Amounts that are not reimbursed will be allocated first to the
Class B Notes until the Note Balance of the Class B Notes has been reduced to
zero and then to the Class A Notes, pro rata, based on the Class A-1, Class A-2,
Class A-3 and Class A-4 Allocation Percentages. Furthermore, to the extent that
Loss Amounts (including Residual Value Loss Amounts) ultimately exceed the
sources available for repayment thereof, investors in the Class A Notes could
incur a loss on their investment. World Omni's agreements with its Dealers
generally do not provide for recourse to the Dealer for unpaid amounts in
respect of a defaulted lease contract. For further information on Dealer
repurchase obligations, see "The Origination Trust--Contract Origination;
Titling of Leased Vehicles".
"Loss Amounts" will include Charged-off Amounts, Residual Value Loss
Amounts and Additional Loss Amounts. The "Residual Value Loss Amount" for any
Collection Period generally will represent the aggregate
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net losses on dispositions of Matured Leased Vehicle Inventory, and will be
equal to the sum of (a) the aggregate of the Residual Values of all those Leased
Vehicles that were included in Matured Leased Vehicle Inventory but that had
remained unsold and not otherwise disposed of by the Servicer for at least two
full Collection Periods as of the last day of such Collection Period, (b) the
excess, if any, of (i) the aggregate of the Residual Values of all Leased
Vehicles previously included in Matured Leased Vehicle Inventory but that were
sold or otherwise disposed of during such Collection Period, over (ii) Net
Matured Leased Vehicle Proceeds for such Collection Period, and (c) any losses
(up to the respective Discounted Principal Balance) on Contracts terminated on
or prior to their Maturity Dates during such Collection Period by agreement
between the Servicer and the lessee in connection with the payment of less than
their respective Outstanding Principal Balances pursuant to World Omni's
pro-active lease termination program, as described under "Maturity, Prepayment
and Yield Considerations".
As more fully described under "Security for the Notes--The Residual Value
Insurance Policy", the Residual Value Insurance Policy will be drawn upon to pay
any Insured Residual Value Loss Amount, as described under "Description of the
Notes--Distributions on the Notes--Distributions of Interest", after application
of the Investor Percentage of Interest Collections, the Class A Net Swap Receipt
and Transferor Amounts otherwise payable in respect of the Transferor Interest.
For a discussion of the recent leased vehicle residual value loss
experience of World Omni, see "World Omni--Delinquency, Repossession and Loss
Data". The amount of Residual Value losses will vary based on a variety of
factors, including the effect of World Omni's pro-active lease termination
program, more fully described under "Maturity, Prepayment and Yield
Considerations", and the supply of, and demand for, vehicles similar to the
Leased Vehicles in the used car market. No assurance can be given as to the
likely levels of Residual Value losses over the life of the Notes.
MATURITY AND PREPAYMENT RISKS
No principal will be paid to any Class A Noteholders until the January 2000
Distribution Date or, upon the occurrence of an Early Amortization Event, until
the Distribution Date in the month immediately succeeding the month in which
such Early Amortization Event occurs. During the Revolving Period, Principal
Collections and reimbursements of Loss Amounts will be reinvested in Subsequent
Contracts and Subsequent Leased Vehicles. Accordingly, the continuation of the
Revolving Period will be dependent, in part, upon the continued origination and
assignment to the Origination Trust of lease contracts and leased vehicles
meeting the eligibility criteria described herein. An unexpectedly high rate of
Principal Collections (including Prepayments) received during the Revolving
Period or a significant decline in the number of qualifying lease contracts
available to be assigned to the Origination Trust could result in the occurrence
of an Early Amortization Event and the commencement of the Amortization Period
prior to the Amortization Date. The retail automobile and light duty truck
leasing business in the United States may be affected by a variety of social,
economic and geographic factors. Economic factors include interest rates,
unemployment levels, the rate of inflation and consumer perceptions of economic
conditions. However, it is not possible to determine or predict whether or to
what extent economic, geographic or social factors will affect retail automobile
and light duty truck leasing in general, or that of World Omni or its Dealers in
particular. As a result, there can be no assurance that the Revolving Period
will not terminate prior to the Amortization Date due to the occurrence of an
Early Amortization Event. Since an Early Amortization Event would result in the
commencement of distributions of principal to Class A-1 Noteholders on the
Distribution Date in the succeeding month, it could shorten the final maturity
of and affect the yield on each Class of Class A Notes. See "Description of the
Notes--Early Amortization Events" for a description of the events that might
lead to the early commencement of the Amortization Period and a description of
the results of an Early Amortization Event.
The rate of payment of principal on the Notes during the Amortization
Period will depend on the rate of payments on or in respect of the Contracts and
the Leased Vehicles (including scheduled payments on and prepayments and
liquidations of the Contracts) and losses with respect thereto, which cannot be
predicted with certainty. In addition, because payments made on or in respect of
the Contracts and the Leased Vehicles will ordinarily be distributed to
Noteholders during the Amortization Period according to the timing of their
receipt, the rate of principal payments on the Notes and the yield to maturity
of the Class A Notes generally will be directly related to the rate at which
payments on or in respect of the Contracts and the Leased Vehicles are made.
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Moreover, if on any Distribution Date relating to the Amortization Period any
Excess Collections exist at a time when the amount on deposit in the Reserve
Fund is at least equal to the Reserve Fund Cash Requirement, the related
Accelerated Principal Distribution Amount will be distributed as principal to
Noteholders as more fully described under "Description of the
Notes--Distributions on the Notes--Distributions of Interest". The rate of
payment of principal of the Class A Notes may also be affected by payment by
World Omni of Reallocation Payments (together with, under certain circumstances
during the Amortization Period, Reallocation Deposit Amounts) in respect of
certain Contracts as to which an uncured breach of certain representations and
warranties or certain servicing covenants has occurred and the exercise by the
Transferor of its right to purchase all of the assets of the Trust at its option
under certain circumstances pursuant to the Agreement, thereby triggering a
redemption of the Notes. A substantial increase in the rate of payments on or in
respect of the Contracts and Leased Vehicles (including prepayments and
liquidations of the Contracts) during the Amortization Period or a high level of
Loss Amounts may shorten the final maturity of and may significantly affect the
yields on each Class of Class A Notes. See "Description of the
Notes--Termination of the Trust; Redemption of the Notes", "The
Contracts--Representations, Warranties and Covenants" and "Additional Document
Provisions--The Servicing Agreement--Collections" for further information
regarding these matters.
Each of the Contracts may be prepaid by the related lessee without penalty
in full or in part at any time upon payment of a $250 processing fee. As more
fully described under "Maturity, Prepayment and Yield Considerations", World
Omni actively encourages lessees under lease contracts with remaining terms of
less than one year to either buy, trade in or refinance the related leased
vehicles prior to the scheduled maturities of such lease contracts. As a part of
this program, during the last several months of a lease contract World Omni may
selectively offer certain incentives to encourage lease terminations, which may
result in residual value losses. As also more fully described under "Maturity,
Prepayment and Yield Considerations", World Omni estimates that over calendar
years 1995, 1996, 1997 and the six months ended June 30, 1998, an average of
approximately 73% of the number of retail automobile and light duty truck lease
contracts in its portfolio (including lease contracts owned by the Origination
Trustee on behalf of the Origination Trust and by certain special purpose
finance subsidiaries of World Omni) with scheduled maturities during this period
terminated prior to maturity. Such early terminations primarily were due either
to voluntary prepayments or to repossession of the leased vehicles due to
default by the lessees under the related lease contracts. No assurance can be
given that the Contracts will experience the same rate of prepayment or default
or any greater or lesser rate than World Omni's historical rate for the retail
automobile and light duty truck lease contracts in its portfolio (including
lease contracts owned by the Origination Trustee on behalf of the Origination
Trust and by certain special purpose finance subsidiaries of World Omni).
For further information regarding these topics and related yield
information, see "Maturity, Prepayment and Yield Considerations".
RISKS ASSOCIATED WITH SEQUENTIAL PAYMENT OF PRINCIPAL ON THE NOTES
In general, no principal payments (including Covered Loss Amounts) will be
made on the Class A-2, Class A-3, Class A-4 or Class B Notes until the
Class A-1 Notes have been paid in full, on the Class A-3, Class A-4 or Class B
Notes until the Class A-1 and Class A-2 Notes have been paid in full, or on the
Class A-4 or Class B Notes until the Class A-1, Class A-2 and Class A-3 Notes
have been paid in full. On each Distribution Date during the Amortization
Period, all Principal Collections (and Covered Loss Amounts) for the related
Collection Period that are allocable to the Notes will be distributed first to
the Class A-1 Noteholders until the Class A-1 Notes have been paid in full,
second to the Class A-2 Noteholders until the Class A-2 Notes have been paid in
full, third to the Class A-3 Noteholders until the Class A-3 Notes have been
paid in full and thereafter the Class A Percentage and the Class B Percentage of
any such remaining Principal Collections (and Covered Loss Amounts) will then be
distributed as principal payments to the Class A-4 Noteholders and the Class B
Noteholders, respectively.
Principal payments in respect of the Class A-4 and Class B Notes will be
based on the fixed Class A Percentage and Class B Percentage, which will be
calculated when the Class A-1, Class A-2 and Class A-3 Notes have been paid in
full. Since Uncovered Loss Amounts will be allocated first to the Class B Notes
until the Note Balance of the Class B Notes has been reduced to zero and then to
the Class A Notes, pro rata, based on the Class A-1, Class A-2, Class A-3 and
Class A-4 Allocation Percentages, Class A-2 Notes may be allocated more
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Loss Amounts than the Class A-1 Notes as a relative percentage of their
respective Initial Note Balances, Class A-3 Notes may be allocated more Loss
Amounts than the Class A-1 or Class A-2 Notes as a relative percentage of their
respective Initial Note Balances, and Class A-4 Notes may be allocated more Loss
Amounts than the Class A-1, Class A-2 or Class A-3 Notes as a relative
percentage of their respective Initial Note Balances, primarily because Loss
Amounts will be allocated on each Distribution Date based on the then-current
Class A-2, Class A-3 and Class A-4 Allocation Percentages, which will increase
as the Note Balance of each Class of Class A Notes senior in priority of payment
decreases during the Amortization Period.
In addition, the Investor Percentage of the net proceeds of any sale or
other disposition of the SUBI, the SUBI Certificate or other property of the
Trust, which may occur under certain circumstances involving an Insolvency Event
with respect to the Transferor (as described under "Description of the
Notes--Early Amortization Events"), to the extent such net proceeds constitute
Principal Collections, will be distributed first, on a pro rata basis, to the
Class A Swap Counterparty based on the termination payment, if any, due and to
the Class A Noteholders based on the respective Class A Note Balances until the
Class A Swap Counterparty and the Class A Notes have been paid in full, and
second, to the Class B Noteholders. See "Additional Document Provisions--The
Indenture--Events of Default".
RISKS ASSOCIATED WITH GEOGRAPHIC, ECONOMIC AND OTHER FACTORS
The Dealers which originated and will originate the Contracts are located
(and, therefore, the lessees generally are and will be located) throughout the
United States, with the largest percentage of Potential Initial Contracts
originated in (and the largest percentage of Subsequent Contracts expected to be
originated in) the Five State Area. Less than 5% of the total number of
Potential Initial Contracts were originated in any State other than a State in
the Five State Area. For a further breakdown of these percentages, see "The
Contracts--Characteristics of the Contracts--Distribution of the Initial
Contracts by State". Due to the geographic concentration of Contracts in the
Five State Area, adverse economic conditions in one of more of the States
therein may have a disproportionate impact on the performance of the SUBI
Assets. Economic factors such as unemployment, interest rates, the rate of
inflation and consumer perceptions of the economy may affect the rate of
prepayment and defaults on the Contracts and the ability to sell or otherwise
dispose of Leased Vehicles relating to Matured Contracts for an amount at least
equal to their respective Residual Values. These economic factors, as well as
other factors such as consumer perceptions of used vehicle values, also may
affect the ability to realize the Residual Values of Leased Vehicles upon sale.
Certain shortfalls in respect of the Residual Values of Leased Vehicles relating
to Matured Contracts will be covered by the Residual Value Insurance Policy, as
and to the extent described under "Security for the Notes--The Residual Value
Insurance Policy".
RISKS ASSOCIATED WITH CONSUMER PROTECTION LAWS
Numerous federal and state consumer protection laws, including the federal
Consumer Leasing Act of 1976 and Regulation M promulgated by the Board of
Governors of the Federal Reserve System, impose requirements on retail lease
contracts such as the Contracts. These laws apply to the Origination Trust as
the assignee and co-lessor of the Contracts and may also apply to the Trust as
owner of the SUBI Certificate which represents a beneficial interest in, among
other things, the Contracts. The failure by the Origination Trust to comply with
such requirements may give rise to liabilities on the part of the Origination
Trust, and claims by such parties may be subject to set-off as a result of such
noncompliance. Many States, including each of the States in the Five State Area,
have adopted Lemon Laws that provide vehicle users certain rights in respect of
substandard vehicles which may apply to one or more of the Leased Vehicles. A
successful claim under a Lemon Law could result in, among other things, the
termination of the related Contract and/or require the refunding of a portion of
payments that previously have been paid. World Omni will make representations
and warranties that each Contract complies with all requirements of law in all
material respects. If any such representation and warranty proves incorrect, has
certain material adverse effects and is not timely cured, World Omni will be
required to make a Reallocation Payment (together with, under certain
circumstances during the Amortization Period, Reallocation Deposit Amounts) into
the SUBI Collection Account and reallocate the related Contract and Leased
Vehicle out of the SUBI, as described under "The Contracts--Representations,
Warrants and Covenants" and "Description of the Notes--Reallocation Payments and
Reallocation Deposit Amounts". For further information regarding consumer
protection laws, see "Certain Legal Aspects of the Contracts and the Leased
Vehicles--Consumer Protection Laws".
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RISKS ASSOCIATED WITH ERISA LIABILITIES
The Origination Trust Assets, including the SUBI Assets, could become
subject to liens in favor of the Pension Benefit Guaranty Corporation (the
"PBGC") to satisfy unpaid ERISA obligations of any member of an "affiliated
group" that includes World Omni, SET, JMFE and their respective affiliates. Such
a PBGC lien would have priority over the interest of Noteholders in any SUBI
Assets that are not subject to a prior perfected security interest in favor of
the Indenture Trustee (i.e., the Leased Vehicles). The ratings of the Class A
Notes may be downgraded in the event of any unfunded ERISA liability of any
member of such affiliated group, as described under "Additional Document
Provisions--The Servicing Agreement--Compliance with ERISA". The ratings of the
Class A Notes address the likelihood of the payment of principal of and interest
on the Class A Notes pursuant to their terms, as described under "Ratings of the
Class A Notes". However, the Transferor believes that the likelihood of any such
liability being asserted against the Origination Trust Assets or, if so
asserted, being successfully pursued, is remote. Such affiliated group maintains
only one plan (which is neither a multi-employer or multiple employer plan) that
would subject it to a lien if the plan were to terminate with assets
insufficient to cover its liabilities. That plan historically has had assets
that significantly exceeded its liabilities. However, no assurance can be given
that these conditions will continue in the future.
RISKS ASSOCIATED WITH VICARIOUS TORT LIABILITY
Although the Origination Trust will own the Leased Vehicles and the Trust
will have an interest therein evidenced by the SUBI, the Leased Vehicles will be
operated by the related lessees and their respective invitees. State laws differ
as to whether anyone suffering injury to person or property involving a leased
vehicle may bring an action against the owner of the vehicle merely by virtue of
that ownership. To the extent that applicable State law permits such an action,
the Origination Trust and the Origination Trust Assets may be subject to
liability to such an injured party. However, the laws of many States, including
each of the States in the Five State Area, either do not permit such suits, or
the lessor's liability is capped at the amount of any liability insurance that
the lessee was required to, but failed to, maintain. For further information in
this regard, see "Certain Legal Aspects of the Contracts and the Leased
Vehicles--Vicarious Tort Liability". Notwithstanding the foregoing, in the event
that vicarious liability on the Origination Trust as owner of a Leased Vehicle
were imposed and the coverage provided by the Contingent and Excess Liability
Insurance Policies were insufficient to cover such a loss with respect to a
Leased Vehicle or, in certain circumstances, a leased vehicle that is an Other
SUBI Asset or a UTI Asset, investors in the Class A Notes could incur a loss on
their investment. See "Security for the Notes--The Contingent and Excess
Liability Insurance Policies" and "Certain Legal Aspects of the Origination
Trust and the SUBI--The SUBI".
All of the Contracts will contain provisions requiring the lessees to
maintain levels of insurance satisfying applicable state law. In addition, in
the event that any such insurance has lapsed or has not been maintained in full
force and effect or the Servicer has failed to maintain the right to receive the
proceeds of such insurance, the Servicing Agreement will require World Omni to
pay all such amounts as would otherwise have been recoverable as Insurance
Proceeds. For further information regarding insurance matters, see "World Omni--
Insurance" and "Additional Document Provisions--The Servicing
Agreement--Insurance on Leased Vehicles".
Under Florida law, the owner of a motor vehicle that is subject to a lease
having an initial term of at least one year is exempt from liability arising out
of an accident in which the leased vehicle is involved if the lessee is required
by the lease to maintain certain specific levels of insurance, and such
insurance is maintained either by the lessee or the lessor, as further described
under "Certain Legal Aspects of the Contracts and the Leased Vehicles--Vicarious
Tort Liability". However, a court applying the law of another jurisdiction might
reach another result. Moreover, actions by third parties might arise against the
owner of a leased vehicle based on legal theories other than negligence, such as
a product defect or improper vehicle preparation prior to the origination of the
related lease contract. Even if the Origination Trust were to be the subject of
an action for damages as a result of its ownership of a Leased Vehicle, however,
it will be the beneficiary of the Contingent and Excess Liability Insurance
Policies with respect thereto, as more fully described under "Security for the
Notes--The Contingent and Excess Liability Insurance Policies". Although the
Origination Trust's insurance coverage exceeds $10 million per claim, with an
allowance for multiple claims in any policy period, in the event that all such
insurance coverage were exhausted and damages were assessed against the
Origination Trust, claims could be imposed against the assets of the Origination
Trust, including the Leased Vehicles. If any such claims are imposed against any
SUBI Assets or, in certain limited circumstances, any
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Other SUBI Assets or UTI Assets, investors in the Class A Notes could incur a
loss on their investment. For further information regarding the potential for
third-party claims against the Origination Trust Assets, see "The Origination
Trust--Allocation of Origination Trust Liabilities", "Certain Legal Aspects of
the Origination Trust and the SUBI--The SUBI", "Certain Legal Aspects of the
Contracts and the Leased Vehicles--Vicarious Tort Liability" and "ERISA
Considerations".
RISKS IN THE EVENT OF AN INSOLVENCY OF WORLD OMNI; SUBSTANTIVE CONSOLIDATION
WITH WORLD OMNI
The Transferor has taken steps in structuring the transactions contemplated
hereby that are intended to ensure that the voluntary or involuntary application
for relief under the United States Bankruptcy Code or similar applicable state
laws ("Insolvency Laws") by World Omni will not result in the consolidation of
the assets and liabilities of ALF LLC, ALF L.P., WOLS LLC, the Transferor, the
Origination Trust or the Trust with those of World Omni. With respect to WOLS
LLC and ALF LLC, these steps include their creation as separate, special purpose
finance subsidiaries of World Omni pursuant to limited liability company
agreements containing certain limitations (including the requirement that each
must have a board of managers, known as a "board of directors", including at all
times at least two "independent directors" and restrictions on the nature of
their respective businesses and on their ability to commence a voluntary case or
proceeding under any Insolvency Law without the affirmative vote of a majority
of their respective directors, including each independent director). With
respect to the Transferor and ALF L.P., these steps include their creation as
separate, special purpose limited partnerships of which WOLS LLC and ALF LLC,
respectively, are the sole general partners, pursuant to limited partnership
agreements containing certain limitations (including restrictions on the nature
of their respective businesses and on their ability to commence a voluntary case
or proceeding under any Insolvency Law without the affirmative vote of all of
the directors of their respective general partners, including each independent
director).
Reallocation Payments made by World Omni in respect of certain Contracts as
to which an uncured breach of certain representations and warranties or certain
servicing covenants has occurred (and, if during the Amortization Period such
payment would cause the Transferor Interest to be less than zero, payment of the
related Reallocation Deposit Amount), payments made by World Omni in respect of
certain insurance policies required to be obtained and maintained by lessees
pursuant to the Contracts, unreimbursed Advances made by World Omni, as
Servicer, pursuant to the Servicing Agreement, and payments made by World Omni
to the Transferor, pursuant to the Support Agreement or otherwise, may be
recoverable by World Omni as debtor-in-possession or by a creditor or a trustee
in bankruptcy of World Omni as a preferential transfer from World Omni if such
payments were made within one year prior to the filing of a bankruptcy case in
respect of World Omni. In addition, the insolvency of World Omni could result in
the replacement of World Omni as Servicer, which could result in a temporary
interruption of payments on the Notes and an Event of Servicing Termination
under the Servicing Agreement.
Additionally, if prior to the Amortization Date a conservator, receiver or
bankruptcy trustee were appointed by the Transferor, or if certain other events
relating to the bankruptcy or insolvency of the Transferor were to occur (each,
an "Insolvency Event") the Amortization Period would commence.
On the Closing Date, Williams & Connolly, counsel to ALF LLC, ALF L.P., the
Transferor, WOLS LLC and World Omni, will render an opinion based on a reasoned
analysis of analogous case law (although there is no precedent based on directly
similar facts) that, subject to certain facts, assumptions and qualifications
specified therein, under present reported decisional authority and statutes
applicable to federal bankruptcy cases, if World Omni were to become a debtor in
a case under the Bankruptcy Code, it would not be a proper exercise by a federal
bankruptcy court of its equitable discretion to disregard the independent forms
so as to substantively consolidate the assets and liabilities of ALF LLC, ALF
L.P., the Transferor, WOLS LLC, the Origination Trust or the Trust with those of
World Omni. In addition, on the Closing Date, counsel to the Transferor will
render an opinion to the effect that (i) the transfer of the SUBI Certificate by
the Transferor to the Trust constitutes a sale of the SUBI Certificate and the
beneficial interest in the SUBI Assets evidenced thereby, subject in each case
to the rights of the Transferor as the holder of the Transferor Interest and the
rights of the Indenture Trustee as pledgee of the SUBI Certificate, or (ii) if
such transfer does not constitute a sale, then the Agreement creates a valid
perfected security interest of the Trust in the Transferor's right, title and
interest in the SUBI Certificate. For further information regarding the risk of
insolvency, see "Certain Legal Aspects of the Origination Trust and the
SUBI--Insolvency Related Matters".
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The Origination Trust has been registered under the business trust
provisions of certain state laws, including those of Alabama and Florida. As
such, the Origination Trust may be subject to the Insolvency Laws, and claims
against the Origination Trust Assets could have priority over the beneficial
interest therein represented by the SUBI. In addition, claims of a third party
against the Origination Trust Assets, including the SUBI Assets, to the extent
such claims are not covered by insurance, would take priority over the holders
of beneficial interests in the Origination Trust, such as the Indenture Trustee,
as more fully described under "Security for the Notes--The Contingent and Excess
Liability Insurance Policies" and "Certain Legal Aspects of the Contracts and
Leased Vehicles--Vicarious Tort Liability".
RISKS ASSOCIATED WITH THE CLASS A SWAP COUNTERPARTY
The Contracts bear interest at a fixed rate while the Class A Notes bear
interest at a floating rate. The Trust will enter into the Class A Interest Rate
Swap with the Class A Swap Counterparty to mitigate the basis risk associated
with an increase in floating rates that results in the weighted average of the
Note Rates on the Class A Notes exceeding the weighted average Lease Rates on
the Contracts. If a Class A Net Swap Receipt is due to the Trust, a default by
the Class A Swap Counterparty may affect the Trust's ability to make interest
payments on the Class A Notes, which could result in a loss to the Class A
Noteholders.
In addition, an Early Amortization Event will occur in the event that
either (a) the Class A Swap Counterparty fails to make a required payment within
five calendar days of the date such payment was due or (b) the Class A Swap
Counterparty or the Trust fails, within 30 calendar days of the date on which
the counterparty ratings of the Class A Swap Counterparty fall below the
required ratings of any of the Ratings Agencies as specified in the Agreement,
to (i) obtain a replacement interest rate swap agreement with terms
substantially the same as the Class A Interest Rate Swap or (ii) establish any
other arrangement satisfactory to the applicable Rating Agency, in any case such
that the Rating Agency will not reduce or withdraw its ratings of any Class of
the Class A Notes. For a discussion of the prepayment risks associated with the
occurrence of an Early Amortization Event, see "--Maturity and Prepayment
Risks".
Following an Indenture Event of Default or an Insolvency Event and the sale
of the SUBI at the direction of the Noteholders, so long as the Class A Swap
Counterparty has not breached any of its obligations, it may be entitled to a
termination payment. Amounts available to make such a payment shall be paid pro
rata (based on the amount of the termination payment due to the Class A Swap
Counterparty, on the one hand and the Class A Note Balance on the other) between
the Class A Swap Counterparty and the Class A Noteholders. See "Additional
Document Provisions--The Indenture--Events of Default". In such event, the Class
A Noteholders may suffer a loss.
In addition, if the Trust defaults in its obligation to pay the Swap Rate
to the Class A Swap Counterparty, the Trust may no longer have the benefit of
the Class A Interest Rate Swap. As a result of a termination of the Class A
Interest Rate Swap, there may not be funds available to pay interest on the
Class A Notes at the applicable Note Rate.
RISKS ASSOCIATED WITH EVENT OF DEFAULT
Investors should be aware that the amount of principal or interest required
to be paid to holders of any Class of the Class A Notes prior to the maturity
date for that Class of Class A Notes generally will be limited to amounts
available in the Distribution Account for payment to Noteholders. Therefore, the
failure to pay principal or interest on a Class of Class A Notes generally will
not result in the occurrence of an Indenture Event of Default until the Stated
Maturity Date for the Class A Notes. See "Additional Document Provisions--The
Indenture". Accordingly, Noteholders may not seek to enforce any remedies for
the failure to pay principal or interest on a Class of Class A Notes until the
Stated Maturity Date for the Class A Notes.
RISKS ASSOCIATED WITH YEAR 2000 COMPLIANCE
Year 2000 compliance refers to the ability of computer systems to respond
to the problems created by the fact that many computer programs have been
written using two digits rather than four digits to define the applicable year.
As a consequence, unless modified, such systems are not able to differentiate
between 2000 and 1900 and may generate erroneous data or cause interruptions in
system processing. While certain aspects of World Omni's businesses could
operate on a manual basis for a period of time, in the event Year 2000
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compliance for its significant information technology ("IT") systems were not
reached, World Omni believes that it would be unable to sustain its current
level of performance and customer service. World Omni is therefore committed to
taking all appropriate actions to achieve Year 2000 compliance for its
significant IT systems before the millennium change date.
World Omni has identified all significant IT applications that will require
remediation, which in some cases will involve the replacement of systems, to
ensure Year 2000 compliance. Before the end of 1998, World Omni will have
initiated formal communications with all significant third party suppliers that
provide operational support and non-IT systems to determine the extent to which
it would be vulnerable in the event that one or more of those third parties fail
to remediate their own Year 2000 issues. While World Omni believes that it does
not have significant exposure to significant suppliers' Year 2000 problems, it
is seeking compliance assurances from such significant suppliers. As of
October 15, 1998, substantially all of World Omni's IT systems have been
remediated. All remaining in-house developed software is scheduled for
completion by November 1998. Except for three systems for which testing is
scheduled to be completed during the second quarter of 1999, all of World Omni's
significant vendor software is scheduled to be compliant by the end of 1998. The
three systems that will be tested during the second quarter of 1999 have been
certified by the vendors to be Year 2000 compliant. The total costs of the Year
2000 project has not had nor is it anticipated to have a material impact on
World Omni's financial position or results of operations or its ability to
perform its obligations and its duties as Servicer.
World Omni does not anticipate that Year 2000 issues with respect to its
computer systems will have a material adverse effect on the Trust or the
Origination Trust, the Origination Trust Assets, the SUBI Assets or the
servicing of such Origination Trust Assets or SUBI Assets. The date on which
World Omni believes it will complete the Year 2000 modifications is based on
management's best estimates, which were derived utilizing numerous assumptions
of future events, including the continued availability of certain resources,
third party modification plans and other factors. However, there can be no
assurances that these estimates will be achieved, and actual results could
differ materially from those anticipated. Specific factors that might cause such
material differences include, but are not limited to, the availability and cost
of personnel trained in this area, the ability to locate and correct all
relevant computer codes and similar uncertainties.
THE TRUST AND THE SUBI
GENERAL
The Trust and the Noteholders will have no interest in the UTI, any Other
SUBI or any assets of the Origination Trust evidenced by the UTI or any Other
SUBI. Payments made on or in respect of the Origination Trust Assets not
represented by the SUBI will not be available to make payments on the Notes. For
further information regarding the Origination Trust, see "The Origination
Trust".
THE TRUST
Pursuant to the Agreement, the Transferor will create the Trust by
transferring and assigning the SUBI, represented by the SUBI Certificate, to the
Trust in exchange for the Notes and a certificate evidencing the Transferor
Interest. (Agreement, Section 2.02). The property of the Trust will primarily
include (i) the SUBI, which evidences the entire beneficial interest in certain
specified Origination Trust Assets (i.e., the SUBI Assets), (ii) Class A Net
Swap Receipts, (iii) such amounts as from time to time may be held in the
Distribution Account and the Reserve Fund, and investments of such amounts and
(iv) the Owner Trustee's and the Trust's rights as a third-party beneficiary to
the Servicing Agreement and the SUBI Trust Agreement. The Trust also will have a
beneficial interest in such amounts as from time to time may be held in the SUBI
Collection Account and investments of such amounts.
If the protection provided to the Class A Noteholders by (i) the Investor
Percentage of certain excess Interest Collections; (ii) Class A Net Swap
Receipts; (iii) amounts otherwise payable to the Transferor in respect of the
Transferor Interest; (iv) so long as World Omni is the Servicer, amounts
otherwise payable in respect of the Servicing Fee; (v) Insured Residual Value
Loss Amounts paid under the Residual Value Insurance Policy; (vi) available
monies on deposit in the Reserve Fund; (vii) the subordination of interest
payments otherwise payable to the Class B Noteholders; and (viii) in the case of
the Class A-4 Notes, the subordination of principal payments otherwise payable
to the Class B Noteholders is insufficient, the Class A Noteholders ultimately
will
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have to look to (a) payments made on or in respect of the Contracts and the
Leased Vehicles (including under certain related insurance policies) and
(b) the proceeds of Dealer repurchase obligations, if any, to make distributions
on or in respect of the SUBI Assets to the Indenture Trustee which in turn will
be distributed to the Noteholders. In such event, certain factors, such as the
fact that the Trust will not have a direct ownership interest in the Contracts
or the Leased Vehicles or a perfected security interest in the Leased Vehicles
(which will be titled in the name of the Origination Trustee, in its capacity as
trustee of the Origination Trust) may limit the amount realized to less than the
amount due from the related lessees. Investors in the Class A Notes may thus be
subject to delays in payment and may incur losses on their investment in the
Class A Notes as a result of defaults or delinquencies by lessees and because of
depreciation in the value of the related Leased Vehicles. See "The Origination
Trust--Allocation of Origination Trust Liabilities", "Security for the
Notes--The Reserve Fund", "Additional Document Provisions--The Servicing
Agreement--Insurance on Leased Vehicles", "Certain Legal Aspects of the
Origination Trust and the SUBI--The SUBI" and "Certain Legal Aspects of the
Contracts and the Leased Vehicles" for a discussion of these matters.
THE SUBI
The SUBI will be issued pursuant to the SUBI Trust Agreement and will
evidence a beneficial interest in certain specified Origination Trust Assets
consisting of (i) the Contracts, the Leased Vehicles and all proceeds or
payments received or due on or after the related Cutoff Date; and (ii) all other
related Origination Trust Assets, including (A) the SUBI Collection Account
(which account, and the funds therein, will be pledged to the Indenture Trustee
for the benefit of the Noteholders), (B) the right to receive payments made to
World Omni, the Origination Trust or the Origination Trustee under any insurance
policy relating to the Contracts, the related lessees or the Leased Vehicles,
including Insured Residual Value Loss Amounts payable under the Residual Value
Insurance Policy, (C) the right to receive the proceeds of any Dealer repurchase
obligations in respect of the Contracts or Leased Vehicles, and (D) all proceeds
of the foregoing (collectively, the "SUBI Assets"). (SUBI Trust Agreement,
Sections 4.02, 11.01 and 11.02).
As described under "Summary--The Revolving Period; Subsequent Contracts and
Subsequent Leased Vehicles" and "Description of the Notes--Distributions on the
Notes--Application and Distributions of Principal", during the Revolving Period,
Principal Collections and reimbursement of Loss Amounts will be reinvested in
Subsequent Contracts and Subsequent Leased Vehicles which will become SUBI
Assets at the time of such reinvestment. The SUBI will not represent a direct
interest in the SUBI Assets, nor will it represent an interest in any
Origination Trust Assets other than the SUBI Assets. Payments made on or in
respect of such other Origination Trust Assets will not be available to make
payments on the Notes or to cover expenses of the Origination Trust allocable to
the SUBI Assets.
Pursuant to the SUBI Trust Agreement, on the Closing Date the Origination
Trustee will issue the SUBI Certificate, which will evidence the SUBI, to the
Transferor. The Transferor will transfer and assign the SUBI Certificate to the
Trust pursuant to the Agreement, and the Trust will pledge the SUBI Certificate
to the Indenture Trustee pursuant to the Indenture.
THE ORIGINATION TRUST
GENERAL
The Origination Trust is an Alabama trust formed pursuant to the
Origination Trust Agreement. The primary business purpose of the Origination
Trust is to take assignments of, and serve as record holder of title to,
substantially all of the fixed rate retail closed-end lease contracts and the
related leased vehicles originated through Dealers in the World Omni network of
dealers since November 1993. Pursuant to the Servicing Agreement, World Omni
will service the lease contracts included in the Origination Trust Assets,
including the Contracts. For further information regarding the Origination Trust
and the servicing of the Origination Trust Assets, see "Additional Document
Provisions--The SUBI Trust Agreement" and "--The Servicing Agreement" and
"Certain Legal Aspects of the Origination Trust and the SUBI--The Origination
Trust".
Except as otherwise described under "Additional Document Provisions--The
SUBI Trust Agreement", pursuant to the Origination Trust Agreement the
Origination Trust has not and will not (i) issue interests therein or securities
thereof other than the SUBI, the SUBI Certificate, Other SUBIs representing
divided interests in
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other portfolios of Origination Trust Assets (the "Other SUBI Assets") and
certificates representing Other SUBIs or portions thereof (the "Other SUBI
Certificates"), the UTI representing a divided interest in the remaining
portfolio of Origination Trust Assets not allocated as SUBI Assets or Other SUBI
Assets (the "UTI Assets") and one or more certificates representing the UTI or
portions thereof (the "UTI Certificates"); (ii) borrow money (except from World
Omni) in connection with funds used to acquire lease contracts and the related
leased vehicles; (iii) make loans; (iv) invest in or underwrite securities,
other than Permitted Investments or as otherwise permitted by the Origination
Trust Agreement or the SUBI Trust Agreement; (v) offer securities in exchange
for property (other than the SUBI Certificate, the Other SUBI Certificates and
the UTI Certificates); or (vi) repurchase or otherwise reacquire its securities
except in connection with financing or refinancing the acquisition of lease
contracts and the related leased vehicles or as otherwise permitted by each such
financing or refinancing. (SUBI Trust Agreement, Section 5.01). The Origination
Trust will not be permitted to acquire lease contracts otherwise than through
dealers in the World Omni network of Dealers, unless such lease contracts are
(in World Omni's reasonable judgment) originated generally in accordance with
World Omni's then-current lease contract underwriting standards. (SUBI Trust
Agreement, Section 2.01).
ALLOCATION OF ORIGINATION TRUST LIABILITIES
The Origination Trust Assets are comprised of several portfolios of assets
other than the SUBI Assets, including six portfolios of Other SUBI Assets and
the remaining portfolio of UTI Assets. ALF L.P. has pledged (and may in the
future pledge) the UTI as security for obligations to third-party lenders, and
has created and sold and may in the future create and sell or pledge Other SUBIs
in connection with other financings. The Origination Trust Agreement will permit
the Origination Trust, in the course of its activities, to incur certain
liabilities relating to its assets other than the SUBI Assets, or relating to
its assets generally, and to which, in certain circumstances, the SUBI Assets
may be subject. Pursuant to the Origination Trust Agreement, as among the
beneficiaries of the Origination Trust and their pledgees, an Origination Trust
liability relating to a particular Origination Trust Asset will be allocated to
and charged against the allocated portfolio of Origination Trust Assets to which
it belongs. Origination Trust liabilities that are incurred with respect to the
Origination Trust Assets generally will be borne pro rata among all portfolios
of Origination Trust Assets. The Origination Trustee, the beneficiaries of the
Origination Trust (including the Trust) and their pledgees (including the
Indenture Trustee) will be bound by this allocation. In particular, the
Origination Trust Agreement will require the holders from time to time of Other
SUBI Certificates and any UTI Certificates to waive any claim that they might
otherwise have with respect to the SUBI Assets and to fully subordinate any
claims to the SUBI Assets in the event that this waiver is not given effect.
Similarly, by virtue of holding Notes or a beneficial interest in the Notes,
Noteholders and Note Owners will be deemed to have waived any claim that they
might otherwise have with respect to Other SUBI Assets and the UTI Assets. For
further information regarding these matters, see "Additional Document
Provisions--The SUBI Trust Agreement--The SUBI, the Other SUBIs and the UTI" and
"Certain Legal Aspects of the Origination Trust and the SUBI--The SUBI".
ALF LLC AND ALF L.P.
ALF LLC, a single member limited liability company, is a wholly owned,
special purpose finance subsidiary of World Omni and was organized under the
laws of Delaware in September 1998 (as successor by merger to Auto Lease
Finance, Inc.), solely for the purpose of acting as the successor general
partner of ALF L.P. (and to engage directly in activities in which ALF L.P. may
engage). ALF L.P. was formed as a limited partnership under the laws of Delaware
in June 1994 solely for the purpose of being grantor and initial beneficiary of
the Origination Trust, holding the UTI and the UTI Certificates, acquiring
interests in the SUBI and the Other SUBIs and engaging in related transactions.
ALF LLC's limited liability company agreement and ALF L.P.'s limited partnership
agreement limit their respective activities to the foregoing purposes and to any
activities incidental to and necessary for such purposes. ALF LLC generally may
not transfer its general partnership interest in ALF L.P. so long as any
financings involving interests in the Origination Trust (including the
transaction described herein) are outstanding. World Omni is the sole member of
ALF LLC and the sole limited partner of ALF L.P. The principal office of ALF
L.P. is located at 6150 Omni Park Drive, Mobile, Alabama and its telephone
number is (334) 639-7500.
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THE ORIGINATION TRUSTEE
The Origination Trustee is a wholly owned, special purpose subsidiary of
U.S. Bank that was organized in 1993 solely for the purpose of acting as
Origination Trustee. U.S. Bank, as Trust Agent, serves as agent for the
Origination Trustee to perform certain functions of the Origination Trustee
pursuant to the Origination Trust Agreement. (Origination Trust Agreement,
Section 5.03). The Origination Trust Agreement provides that in the event that
U.S. Bank no longer can be the Trust Agent, the designee of ALF L.P. (who may
not be ALF L.P. or any affiliate thereof) will have the option to purchase the
stock of the Origination Trustee for a nominal amount. If ALF L.P.'s designee
does not timely exercise this option, then the Origination Trustee will appoint
a new trust agent, and that new trust agent (or its designee) will next have the
option to purchase the stock of the Origination Trustee. If none of these
options is timely exercised, U.S. Bank may sell the stock of the Origination
Trustee to another party. (Origination Trust Agreement, Section 6.10).
PROPERTY OF THE ORIGINATION TRUST
The property of the Origination Trust consists of (i) fixed rate retail
closed-end lease contracts originated throughout the United States and assigned
to the Origination Trust by World Omni or Dealers since November 1993 and all
monies due from lessees thereunder; (ii) the automobiles and light duty trucks
leased pursuant thereto and all proceeds thereof; (iii) all of World Omni's
rights (but not its obligations) with respect to such lease contracts and leased
vehicles, including the right to receive proceeds of Dealer repurchase
obligations, if any; (iv) the rights to proceeds from residual value, physical
damage, credit life, disability and all other insurance policies, if any,
covering the lease contracts, the related lessees or the leased vehicles,
including, but not limited to, the Contingent and Excess Liability Insurance
Policies, the Residual Value Insurance Policy and other residual value insurance
policies that may relate to Other SUBI Assets or the UTI Assets; (v) all
security deposits with respect to such lease contracts to the extent due to the
lessor thereunder; and (vi) all proceeds of the foregoing (collectively, the
"Origination Trust Assets"). From time to time after the date of this
Prospectus, World Omni will cause Dealers to originate additional retail
closed-end lease contracts and to assign such lease contracts to the Origination
Trustee on behalf of the Origination Trust and, as described below, title the
related leased vehicles in the name of the Origination Trustee on behalf of the
Origination Trust. (Origination Trust Agreement, Section 2.01).
CONTRACT ORIGINATION; TITLING OF LEASED VEHICLES
All lease contracts originated by the Origination Trust have been, or will
be, underwritten using the underwriting criteria described under "World
Omni--Lease Contract Underwriting Procedures". In connection with the
origination of each lease contract, the Origination Trustee, on behalf of the
Origination Trust, will be listed as the owner of the related leased vehicle on
the related certificate of title. Liens will not be placed on such certificates
of title, and new certificates of title will not be issued, to reflect the
interest of the Owner Trustee, as holder of the SUBI Certificate, or the
Indenture Trustee, as pledgee of the SUBI Certificate, in the Leased Vehicles.
The certificates of title to the Leased Vehicles will, however, reflect a first
lien recorded in favor of Bank of America Trust Company of Florida, N.A. or AL
Holding Corp. (collectively, the "Administrative Lienholders"). Such lien (the
"Administrative Lien") will exist solely to assure delivery of the certificates
of title to the Leased Vehicles to the Servicer. Neither of the Administrative
Lienholders will have any interest in any of the Leased Vehicles.
Pursuant to agreements between World Omni and the Dealers, each Dealer is
obligated, after origination of lease contracts and assignment thereof to the
Origination Trustee on behalf of the Origination Trust, to repurchase such lease
contracts which do not meet certain representations and warranties made by such
Dealer. These representations and warranties relate primarily to the origination
of the lease contracts and the titling of the related leased vehicles, and do
not typically relate to the creditworthiness of the related lessees or the
collectibility of such lease contracts. The Dealer agreements do not generally
provide for recourse to the Dealer for unpaid amounts in respect of a defaulted
lease contract, other than in connection with the breach of the foregoing
representations and warranties. The rights of World Omni to receive proceeds of
such Dealer repurchase obligations will constitute Origination Trust Assets (and
accordingly will constitute SUBI Assets to the extent they relate to the
Contracts and Leased Vehicles), although the related Dealer agreements will not
constitute Origination Trust Assets.
29
<PAGE>
USE OF PROCEEDS
The net proceeds from the sale of the Class A Notes (i.e., the proceeds of
the public offering of the Class A Notes minus expenses relating thereto) will
be applied by the Transferor to purchase the SUBI Certificate from ALF L.P.
THE TRANSFEROR
The Transferor is a limited partnership formed under the laws of Delaware
in June 1994. The sole general partner of the Transferor, WOLS LLC, is a single
member limited liability company and a wholly owned, special purpose finance
subsidiary of World Omni that was organized under the laws of Delaware in
September 1998 (as successor by merger to World Omni Lease Securitization,
Inc.), solely for the purpose of acting as the successor general partner of the
Transferor (and to engage directly in activities in which the Transferor may
engage). WOLS LLC generally may not transfer its general partnership interest in
the Transferor so long as any financings involving interests formerly or
partially held by it in the Origination Trust (including the transaction
described herein) are outstanding. World Omni is the sole member of WOLS LLC and
the sole limited partner of the Transferor. The principal office of the
Transferor is located at 6150 Omni Park, Mobile, Alabama 36609 and its telephone
number is (334) 639-7500.
The Transferor and WOLS LLC were organized solely for the purpose of
acquiring interests in the SUBI and the Other SUBIs, issuing asset-backed notes
and certificates and engaging in related transactions. The limited partnership
agreement of the Transferor and the limited liability company agreement of WOLS
LLC limit their respective activities to the foregoing purposes and to any
activities incidental to and necessary for such purposes.
A support agreement dated as of October 1, 1995, as amended (the "Support
Agreement"), between the Transferor and World Omni provides that World Omni
will, directly or indirectly, retain 100% ownership of the Transferor and that
under certain circumstances World Omni will make contributions or loans or
provide or arrange for financial assistance to the Transferor in order to ensure
that the Transferor maintains positive partners' capital. The Support Agreement
will provide that World Omni's total obligations thereunder will not exceed
$100 million. The Support Agreement does not constitute a guarantee by World
Omni of the Notes or any other obligations of the Transferor. The Support
Agreement provides that no person other than the Transferor and WOLS LLC may
take any action to enforce the Support Agreement. Although World Omni intends to
comply with all of its obligations under the Support Agreement, because (as
described above) it can only be enforced by the Transferor and WOLS LLC, there
can be no assurance that the Indenture Trustee or the Noteholders would be able
to enforce the Support Agreement directly against World Omni.
WORLD OMNI
GENERAL
The Initial Contracts were, and the Subsequent Contracts will be, assigned
to the Origination Trust by Dealers. World Omni is a Florida corporation and a
wholly owned subsidiary of JM Family Enterprises, Inc. ("JMFE"), a Delaware
corporation. JMFE is primarily engaged, through its subsidiaries, in providing
Toyota dealerships in the Five State Area, as well as other automotive
dealerships throughout the United States, with a full range of distribution and
financial services. WOLS LLC and ALF LLC are wholly owned, special purpose
finance subsidiaries of World Omni.
In addition to the lease contract financing described below, World Omni
provides retail installment contract financing to retail customers of certain
automotive dealers and wholesale floorplan financing and capital and mortgage
loans to dealers and customers of Southeast Toyota Distributors, Inc. ("SET"),
World Omni's sister corporation, as well as to other automotive dealers within
and outside the Five State Area.
SET is the exclusive distributor of Toyota cars and light duty trucks,
parts and accessories in the Five State Area. As such, SET is the sole provider
of Toyotas to Dealers in the Five State Area. SET distributes Toyota vehicles
pursuant to a Distributor Agreement, which first was entered into in 1968 and
has been renewed through October 1999, with Toyota Motor Sales, USA, Inc.
("TMS"), a California corporation that is wholly owned by Toyota Motor
Corporation, the largest automotive company in Japan. In addition, for a fee SET
processes Lexus vehicles in the Five State Area and processes Lexus parts in a
nine state area. SET's consolidated revenues for the years ended December 31,
1997, December 31, 1996 and December 31, 1995 were approximately $4.5 billion,
30
<PAGE>
$4.2 billion and approximately $3.8 billion, respectively. Since March 1996,
substantially all financial services provided by World Omni to, by and through
SET's Toyota Dealers in the Five State Area have been provided under the name
"Southeast Toyota Finance".
World Omni (either directly or through the Origination Trust and certain
special purpose finance subsidiaries of World Omni) owns and leases vehicles
primarily through more than 1,000 Dealers located throughout the United States.
Pursuant to written agreements with World Omni, each Dealer offers automobiles
and light duty trucks for set lease periods pursuant to World Omni approved
terms and a World Omni supplied form of closed-end retail motor vehicle lease
and disclosure statement. Each Dealer is responsible for obtaining certain
credit-related information about a prospective lessee and for forwarding such
information for review and credit evaluation to one of World Omni's central
operations centers, which are located in St. Louis, Missouri (the "St. Louis
Center") and Deerfield Beach, Florida (the "Deerfield Office"), as applicable.
At the St. Louis Center or the Deerfield Office, each application is reviewed,
evaluated and "scored" as described under "World Omni--Lease Contract
Underwriting Procedures". The results of this computer-based evaluation are then
sent to one of World Omni's purchase offices for final review and credit
evaluation. The related purchase office then advises the Dealer if such
applicant is acceptable to World Omni. If a prospective lessee is accepted, the
Dealer will prepare all necessary paperwork to sell the vehicle from its
inventory to World Omni or its designee, and to enter into a lease contract with
its customer and assign the lease contract to World Omni or, at World Omni's
direction, a different assignee. Substantially all retail lease contracts
originated by World Omni Dealers are assigned to, and the related leased
vehicles are titled in the name of, the Origination Trustee on behalf of the
Origination Trust. For further information regarding the underwriting of lease
contracts, see "World Omni--Lease Contract Underwriting Procedures".
World Omni's lease contracts are serviced primarily through the St. Louis
Center and a center located in Mobile, Alabama (the "Mobile Center"), which
handle collection activities, operational accounting, insurance verification and
dealer and customer inquiries for World Omni. In addition, the St. Louis Center
and the Deerfield Office verify that all documents supplied by a Dealer with
respect to a lease contract conform with World Omni's requirements.
World Omni initiated operations in 1982, and as of December 31, 1997,
December 31, 1996 and December 31, 1995, World Omni and its affiliates had
approximately 305,000, 232,000 and 156,900 retail lease contracts outstanding,
respectively. Aggregate net outstanding principal balances of retail lease
contracts at such dates (including retail lease contracts that were sold but are
still being serviced by World Omni), were $6.5 billion, $4.6 billion and
$2.8 billion, respectively. Of these amounts, the related leased vehicles had an
estimated aggregate residual value as of the end of their lease terms of
approximately $4.8 billion, $3.3 billion and $2.0 billion, respectively. For the
years ended December 31, 1997, December 31, 1996 and December 31, 1995, World
Omni's consolidated gross revenues were approximately $359 million, $275 million
and $228 million, respectively.
The principal executive offices of World Omni are located at 120 Northwest
12th Avenue, Deerfield Beach, Florida 33442 and its telephone number is
(954) 429-2200.
CERTAIN ADMINISTRATIVE AND LEGAL PROCEEDINGS
As part of its regular examination process of the consolidated Federal
income tax returns of JMFE and its subsidiaries (which include World Omni) for
certain prior years, the Internal Revenue Service (the "IRS") currently is
reviewing, among other things, certain transactions that were consummated in
prior years that are similar to the transactions described in this Prospectus.
The IRS has proposed treating (a) such transactions as sales rather than
financings for Federal income tax purposes, which would affect World Omni's
depreciation deductions and (b) each of the Origination Trust and securitization
trusts created for such transactions as an association taxable as a corporation
rather than a trust for Federal income tax purposes. In connection with each
transaction, World Omni received an opinion of tax counsel to the effect that
such transactions were properly treated as financings for Federal income tax
purposes and that neither the Origination Trust nor the securitization trusts
created for such transactions would be treated as an association taxable as a
corporation for Federal income tax purposes. While management believes that any
challenge by the IRS, if made, would be unsuccessful, there can be no assurance
of this result. Furthermore, in connection with this examination, the IRS has
proposed changes to a number of other positions that were taken on such tax
returns.
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<PAGE>
Management is vigorously defending its positions and believes that the
ultimate resolution of all of the issues referred to above will not have a
material adverse effect on Noteholders, JMFE's or World Omni's operations and
financial condition or the financial condition of the Origination Trust. If,
however, the IRS were to prevail on certain issues it could have a material
adverse effect on JMFE's or World Omni's operations and financial condition or
the financial condition of the Origination Trust. Nevertheless, management
believes that, even if the IRS were to prevail on all of these issues it would
not result in any material impairment of World Omni's ability to perform its
obligations and its duties as Servicer under the Servicing Agreement. However,
there can be no assurance of this result.
LEASE CONTRACT UNDERWRITING PROCEDURES
World Omni has underwritten retail motor vehicle lease contracts since
February 1983. The Initial Contracts were, and the Subsequent Contracts will be,
underwritten by the Origination Trust, in each case through World Omni's
purchase offices.
The World Omni underwriting standards are intended to evaluate a
prospective lessee's credit standing and repayment ability. Generally, a
prospective lessee is required by the Dealer to complete a credit application on
a form prepared or approved by World Omni. As part of the description of the
applicant's financial condition, the applicant is required to provide current
information enumerating, among other things, employment history, residential
status and annual income. Upon receipt by the applicable office, all application
data is entered into a centralized computer network (owned and maintained by a
division of JMFE) that automatically obtains an independent credit bureau report
and then "scores" the application with the use of a scorecard. The scorecard
enables World Omni to review an application and establish the probability that
the proposed lease contract will be paid in accordance with its terms. The
credit scores rank-order applications according to credit risk, which is the
likelihood that the account will be delinquent or repossessed. The application
also is evaluated against a "cutoff score" established by World Omni as the
minimum acceptable score to purchase a lease contract, which is revised from
time to time as changes occur in economic conditions and World Omni's lease
contract portfolio.
This numerical credit scoring system was developed by Fair, Isaac & Company
("Fair, Isaac"), a lending and leasing consulting firm, specifically for World
Omni based upon an analysis of the historical performance of the retail
automobile and light duty truck lease and installment sale contract portfolios
of World Omni. To determine the appropriate characteristics for credit scoring,
Fair, Isaac reviewed a random sample of 10,000 retail lease contracts and 10,000
retail installment sale contracts from World Omni's portfolio. Fair, Isaac then
compiled a list of various characteristics that cumulatively carried the most
weight in predicting historical performance and assigned point values and
weighting to each of these characteristics. The weighting system is particularly
significant because the weightings are beyond the control of a dealer and cannot
be manipulated. Fair, Isaac determined that the most accurate determinant of the
performance of a lease or installment sale contract was the credit bureau
report. Based on such historical performance, Fair, Isaac prepared two retail
credit and two lease scorecards (which differ according to the geographical
location of the dealer and whether the vehicle is new or used), each of which
assigned at least a 50% weighting to the credit bureau report. The Fair, Isaac
scorecard system was implemented in the fourth quarter of 1990 and was used for
substantially all lease contracts originated from that time until February 1997.
In an effort to increase the predictiveness of the scorecards, World Omni
implemented an updated scorecard system, also developed by Fair, Isaac
specifically for World Omni, in February 1997. The updated scorecard system
includes three retail credit and two lease scorecards (which, for lease
scorecards, differ according to the geographic location of the dealer and, for
retail scorecards, whether the vehicle is new or used and the credit "depth" of
the applicant). The revised scorecards place a greater emphasis upon the credit
bureau report.
Each of these numerical scoring models is intended to provide a means of
analysis to assist in decision making, but the final decision rests with World
Omni's credit specialists. Under World Omni's guidelines, a credit specialist
generally may not override the scorecard analysis of applications above or below
the cutoff score by more than a limited percentage of such applications
(depending on vehicle make and geographic location). Both the number of
overrides granted by each credit specialist and the aggregate number of
overrides granted by all credit specialists are tracked by World Omni daily in
order to insure the statistical validity of the scoring models. Detailed
reporting on all aspects of the numerical scoring model is utilized to track
performance of World Omni's retail automobile and light duty truck lease
contract portfolio and to enable World Omni to fine tune the scoring model
according to statistical indications in order to continually assure the
statistical validity of
32
<PAGE>
the scoring models. In limited circumstances, lessees with established credit
histories with World Omni may be pre-approved for new leases without the use of
a numerical scorecard and, under certain circumstances, lessees having certain
minimum credit bureau scores may be automatically approved.
For the six months ended June 30, 1998 and the years ended December 31,
1997, December 31, 1996 and December 31, 1995, World Omni, either directly or
through the Origination Trust or certain special purpose finance subsidiaries of
World Omni, on average, booked approximately 59%, 63%, 70% and 71%,
respectively, of all credit applications relating to leased vehicles. These
averages generally reflect adjustments in underwriting criteria in connection
with the use of the Fair, Isaac scorecard system. Substantially all of the
Potential Initial Contracts (including the Initial Contracts) were, and
substantially all Subsequent Contracts will be, underwritten using the updated
numerical scorecards. See "The Contracts--Characteristics of the Contracts" for
further information on the identity and characteristics of the Contracts.
After an application has been approved by a World Omni purchase office and
the prospective lessee has agreed to the terms of the related lease contract,
including an assignment of the lease contract from the Dealer to World Omni (or,
at the direction of World Omni, an assignee thereof), World Omni receives from
the Dealer a lease contract package containing, among other things, the standard
form lease contract between the Dealer and the lessee, the customer's
application, applicable insurance information (company, agent and additional
insured(s), with the lessor named as loss payee) and any payments due from the
customer. World Omni determines whether such package complies with its
requirements. The specifics of the lease contract are compared to the
application approved by the purchasing department, and the rate,
truth-in-leasing disclosures and purchase price from the Dealer are verified.
INSURANCE
Each lease contract requires the lessee to maintain automobile bodily
injury and property damage liability insurance that must name the Dealer's
assignee (with respect to the Contracts, the Origination Trustee on behalf of
the Origination Trust) as an additional insured. Each lease contract further
requires the lessee to maintain (all risks) comprehensive and collision
insurance covering damage to the leased vehicle and naming the Dealer's assignee
(with respect to the Contracts, the Origination Trustee on behalf of the
Origination Trust) as loss payee. The insurance coverage is verified
independently by World Omni (through its third-party contracted agents) upon
execution of the lease contract.
COLLECTION, REPOSSESSION AND DISPOSITION PROCEDURES
Collection efforts are made by World Omni as Servicer, which, in some
cases, are enhanced by the use of an automated dialing system. Notwithstanding
the centralization of collection efforts, repossessions continue to be handled
locally, as independent contractors are employed in connection with
repossessions. In general, guidelines for collection of lease contracts and
repossession of leased vehicles include the following:
<TABLE>
<CAPTION>
NUMBER OF DAYS DELINQUENT ACTION
- ------------------------------------------------ ------------------------------------------------
<S> <C>
22-45........................................... Telephone contact with the lessee is initiated
46-89........................................... Telephone and/or field collections continue
60-90........................................... The leased vehicle is normally repossessed
</TABLE>
Occasionally, situations occur in the collection process when a lessee has
become delinquent and is willing but unable to bring the related account current
(i.e., a skipped payment). In this situation, at the discretion of collection
department management, but subject to extensive guidelines, the lease contract
may be extended, provided that the lessee pays an extension fee (each, an
"Extension Fee") equal to the lesser of (i) the product of 1.15% multiplied by
the outstanding principal balance of such lease contract, and (ii) one-half of
the related monthly contract payment. In circumstances deemed appropriate by
collection department management, World Omni may reduce or waive the payment by
the lessee of an Extension Fee. However, the Servicing Agreement will require
that all Extension Fees relating to the Contracts be deposited into the SUBI
Collection Account and that a Contract may not be extended more than five times.
Moreover, no extensions of a Contract may be made for more than five months in
the aggregate or to a date later than the last day of the month immediately
preceding the month in which the Final Scheduled Distribution Date occurs, as
described under "Additional Document Provisions--The Servicing
Agreement--Collections".
<PAGE>
World Omni disposes of off-lease vehicles through several outlets,
including a Toyota "certified" program, in which vehicles are inspected and
given body work, repairs and maintenance as needed, certified as meeting the
33
<PAGE>
program standards, and then may be sold to automobile dealers primarily in World
Omni's dealer network for retail sale. World Omni also disposes of off-lease
vehicles through large regional automobile auctions (which are utilized for
off-lease vehicle sales in addition to liquidation of repossessed vehicles) and
negotiated sales of groups of vehicles to rental companies, fleet lessors and
others.
DELINQUENCY, REPOSSESSION AND LOSS DATA
The following tables set forth certain delinquency, repossession and loss
data with respect to World Omni's retail automobile and light duty truck lease
contract portfolio originated by Dealers located throughout the United States,
including lease contracts assigned to the Origination Trust and lease contracts
originated by World Omni and assigned to special purpose finance subsidiaries of
World Omni, as of and for the years ended December 31, 1993 through
December 31, 1997 and as of and for the six month period ended June 30, 1998.
As shown on these tables, World Omni's delinquency rates trended up in 1995
and 1996, consistent with recent trends in overall consumer credit and, to a
lesser extent, due to some disruption in collection activity caused by the
implementation of a new collection system at the Mobile Center in 1996. During
the six month period ended June 1998, delinquencies declined due to the
generally higher credit quality of World Omni's non-Toyota lease portfolio,
which has increased as a percent of its total lease portfolio, and due to a
general improvement in the credit quality of Toyota leases booked by World Omni
over the past year.
Net Repossession Losses as a percentage of Average Net Receivables
increased in both 1995 and 1996. The increase in 1995 was driven primarily by an
increase in the Average Net Repossession Loss per Liquidated Lease Contract
which was generally due to higher average amounts being financed and higher
residual values. These same factors continued to cause an increase in the
Average Net Repossession Loss per Liquidated Lease Contract during 1996. In
addition, loss severity during 1996 was negatively affected by a general
weakening in the used car market. The higher frequency of repossession in 1996
was due to a general trend of weaker overall consumer credit quality nationally
as well as World Omni adjusting, to a limited extent, its credit policies.
Net Repossession Losses as a percent of Average Net Receivables remained
substantially unchanged during 1997 and the first half of 1998. Average Net
Repossession Loss per Liquidated Lease Contract increased during this period as
a result of increases in residual values financed and a continuation of the soft
market for used vehicles. The Number of Repossessions as a percentage of Average
Lease Contracts Outstanding during 1997 and the first half of 1998 declined due
to the general improvement in the credit quality of World Omni's lease
portfolio, as noted above.
Residual value losses and the number of vehicles returned to and sold by
World Omni has increased steadily since 1994. In 1995, losses and returns
increased as a result of special programs on shorter term leases. Losses in 1996
increased over 1995 as a result of generally higher residual values, higher
losses on shorter term leases (i.e. leases with terms 24 months or shorter) and
an increase in the losses on leases with other maturities. There are no short
term leases included in the Initial Contracts nor will any be included in the
Subsequent Contracts. In addition, during 1996 there was some weakening in the
used car market relative to the prior three years. Generally, the 1996 trends
continued through 1997 and the first half of 1998, resulting in higher vehicle
returns and losses during this period.
For the entire year 1997 and the first half of 1998, the used vehicle
market was relatively weak. If the used vehicle market continues to experience
weakness, World Omni's returns and losses in the future could be negatively
affected. Based upon prior experience, World Omni does not believe that its loss
experience or those recent negative trends will materially adversely affect
Class A Noteholders or World Omni's business. However, no assurances can be
given in this regard.
<PAGE>
The data presented in the following tables are for illustrative purposes
only. Delinquency, repossession and loss experience may be influenced by a
variety of economic, social, geographic and other factors. In addition, the data
presented below may be affected by the growth and relative lack of seasoning of
the portfolio. Accordingly, there is no assurance that World Omni's delinquency,
repossession and loss experience with respect to its retail automobile and light
duty truck lease contracts and the related leased vehicles in the future, or the
experience with respect to the Contracts and the Leased Vehicles, will be
similar to that set forth below.
34
<PAGE>
RETAIL VEHICLE LEASE CONTRACT DELINQUENCY EXPERIENCE
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
AT JUNE 30, ------------------------------------------------------------
1998 1997 1996 1995 1994 1993
----------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Dollar Amount of Lease
Contracts(1)....................... $ 6,952,408 $6,527,588 $4,641,992 $2,798,830 $1,823,823 $1,039,888
Ending Number of Lease Contracts..... 323,593 304,863 231,942 156,471 114,298 71,198
Percentage of Lease Contracts
Delinquent(2)(3)(4)
31-60 Days......................... 1.17% 1.27% 1.42% 1.12% 0.97% 0.88%
61-90 Days......................... 0.20 0.23 0.13 0.08 0.03 0.04
91 Days or More.................... 0.04 0.06 0.03 0.01 0.01 0.00
----------- ---------- ---------- ---------- ---------- ----------
Total........................... 1.41% 1.56% 1.58% 1.21% 1.01% 0.92%
</TABLE>
- ------------------
(1) Based on the sum of all principal amounts outstanding under lease contracts
(inclusive of the residual values of the related leased vehicles).
(2) Excludes lease contracts the related lessees of which are bankrupt or have
commenced bankruptcy proceedings. As of June 30, 1998 approximately 371
lease contracts involving bankrupt lessees were delinquent for at least
61 days.
(3) The period of delinquency is based on the number of days payments are
contractually past due.
(4) As a percentage of the total number of lease contracts at period end.
RETAIL VEHICLE LEASE CONTRACT REPOSSESSION AND LOSS EXPERIENCE
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
AT JUNE 30, ------------------------------------------------------------
1998 1997 1996 1995 1994 1993
----------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Dollar Amount of Lease
Contracts(1)....................... $ 6,952,408 $6,527,588 $4,641,992 $2,798,830 $1,823,823 $1,039,888
Ending Number of Lease Contracts..... 323,593 304,863 231,942 156,471 114,298 71,198
Average Lease Contracts
Outstanding........................ 314,579 268,305 194,492 133,069 93,023 58,605
Repossessions:
Number of Repossessions............ 3,099 5,843 4,297 2,519 1,776 1,287
Number of Repossessions as a
Percentage of:
Lease Contracts Outstanding(4)..... 1.92% 1.92% 1.85% 1.61% 1.55% 1.81%
Average Lease Contracts
Outstanding(4)..................... 1.97% 2.18% 2.21% 1.89% 1.91% 2.20%
Losses:
Average Net Receivables
Outstanding........................ $ 6,753,172 $5,602,946 $3,718,336 $2,243,790 $1,426,382 $ 817,452
Net Repossession Losses(2)........... $ 21,073 $ 35,351 $ 23,196 $ 11,347 $ 6,283 $ 3,811
Average Net Repossession Loss per
Liquidated Lease Contract(1)(3).... $ 6,800 $ 6,050 $ 5,398 $ 4,505 $ 3,538 $ 2,961
Net Repossession Losses as a
Percentage of Average Net
Receivables(4)..................... 0.62% 0.63% 0.62% 0.51% 0.44% 0.47%
</TABLE>
- ------------------
(1) Based on the sum of all principal amounts outstanding under lease contracts
(inclusive of the residual values of the related leased vehicles).
(2) Includes losses on charged-off accounts, but does not include expenses
incurred to dispose of vehicles.
(3) Dollars not in thousands.
(4) The number for June 30, 1998 has been annualized.
35
<PAGE>
RESIDUAL VALUE LOSS EXPERIENCE(1)
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
AT JUNE 30, -----------------------------------------------
1998 1997 1996 1995 1994 1993
----------- ------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Total Number of Leased Vehicles Scheduled to
Terminate....................................... 41,151 78,002 36,413 25,677 14,775 17,218
Number of Leased Vehicles Returned to and Sold by
World Omni...................................... 16,318 22,555 5,018 4,611 779 2,050
Full Termination Ratio(2)......................... 39.7% 28.9% 13.8% 18.0%(3) 5.3% 11.9%
Total Losses/Gains on Vehicles that Reached
Scheduled Term (4).............................. $31,258(5) $27,338(5) $ 3,700 $ 1,893 $ (168) $ 503
Average Loss/Gain(4)(6)........................... $ 1,916 $ 1,212 $ 737 $ 411 $ (216) $ 245
</TABLE>
- ------------------
(1) Because the terms of the retail closed-end lease contracts originated by
World Omni have gradually shifted from five years to three years since 1992,
the residual value loss experience for the periods in the table may not be
fully comparable.
(2) The ratio of line 2 over line 1 expressed as a percentage.
(3) The ratio for the year ended December 31, 1995 includes special program
short-term lease contracts referenced under "Delinquency, Repossession and
Loss Data" above. Excluding those vehicles, the ratio would have been 7.1%.
(4) Figures do not include expenses incurred in disposal of vehicles returned to
World Omni.
(5) Does not include losses related to World Omni's incentive programs of
approximately $5,976,422 and $1,879,447 at June 30, 1998 and December 31,
1997, respectively.
(6) Dollars not in thousands.
36
<PAGE>
THE CONTRACTS
GENERAL
The Potential Initial Contracts consist of a pool of 74,744 closed-end
retail lease contracts, having an aggregate Outstanding Principal Balance as of
the Initial Cutoff Date of $1,772,260,191, selected from the Origination Trust's
portfolio of retail closed-end automobile and light duty truck lease contracts
that are not evidenced by or reserved for allocation to an Other SUBI. During
the Revolving Period, Principal Collections (and reimbursement of Loss Amounts)
will be reinvested in Subsequent Contracts and Subsequent Leased Vehicles, which
at the time of such reinvestment will become SUBI Assets. See "Description of
the Notes--Distributions on the Notes--Application and Distributions of
Principal--Revolving Period". The Initial Contracts were originated by Dealers
located throughout the United States and assigned to the Origination Trust, and
the Subsequent Contracts will be originated by Dealers located in the United
States and assigned to the Origination Trust, in accordance with the
underwriting procedures described under "World Omni--Lease Contract Underwriting
Procedures". The Initial Contracts have been selected based upon the criteria
specified in the SUBI Trust Agreement and described under "The
Contracts--Characteristics of the Contracts--General" and "--Representations,
Warranties and Covenants". The Subsequent Contracts will be selected from the
other lease contracts of the Origination Trust that also meet the foregoing
criteria. Principal Collections (and reimbursements of Loss Amounts) will be
reinvested in eligible leases selected by World Omni in its discretion, except
that (i) certain leases have been, and may in the future be, allocated to (or
reserved for allocation to) Other SUBIs and therefore not be available for
reinvestment of such amounts from the SUBI, and (ii) to the extent that
reinvestment of such amounts from the SUBI and any one or more previous Other
SUBIs are at any time being made out of the Origination Trust's general pool of
available lease contracts that have not been so reserved, such reinvestment will
first be made with respect to such previous Other SUBI(s). World Omni will
represent and warrant that, except as otherwise described in the immediately
preceding sentence, no adverse selection procedures were employed or will be
employed in selecting the Initial Contracts or the Subsequent Contracts for
inclusion in the SUBI Assets and that it is not aware of any bias in the
selection of such Contracts that would cause the delinquencies or losses on such
Contracts to be worse than other retail closed-end automobile and light duty
truck lease contracts held in the Origination Trust's portfolio; however, there
can be no assurance that the delinquencies or losses on the Contracts will not
be worse. Subsequent Contracts may be originated by World Omni using different
underwriting criteria than those which were applied to the Initial Contracts.
For this reason, the characteristics of the Subsequent Contracts may vary from
those of the Initial Contracts.
Each Contract will have been written for an original term of not more than
60 months, for a "capitalized cost" (which may exceed the manufacturer's
suggested retail price), plus an implicit Lease Rate. The Initial Contracts
were, and the Subsequent Contracts will be, written on a constant yield basis
and provide for equal Monthly Payments such that at the end of the lease term
the capitalized cost has been amortized to an amount equal to the Residual Value
of the related Leased Vehicle.
At the times of origination of the related Contracts, the related Leased
Vehicles were, in the case of the Initial Contracts, or will be, in the case of
the Subsequent Contracts, new vehicles, dealer demonstrator vehicles driven
fewer than 6,000 miles or manufacturers' program vehicles. Manufacturers'
program vehicles are vehicles which have been sold directly by manufacturers to
rental car companies and returned to the manufacturer for resale, generally
after a period of eight to twelve months. Such vehicles generally are then
resold to dealers through an automobile auction.
All of the Contracts will be closed-end leases. Under a "closed-end lease",
at the end of its term, if the lessee does not elect to purchase the related
leased vehicle by exercise of the purchase option contained in such lease
contract, the lessee is required to return the leased vehicle to or upon the
order of the lessor, at which time the lessee will then owe only incidental
charges for excess mileage, excessive wear and use and other items as may be due
under such lease. In contrast, under an "open-end lease", the lessee is also
obligated to pay at the end of the lease term any deficit between the fair
market value of the leased vehicle at that time and the residual value
established at the time of origination of such lease.
Each lessee will be permitted to purchase the Leased Vehicle at the end of
the term of the related Contract. The purchase price will be a fixed dollar
amount equal to the Residual Value plus any applicable taxes and all other
incidental charges which may be due under the Contract. In addition, each
Contract will allow the related lessee
37
<PAGE>
voluntarily to terminate such Contract by paying certain miscellaneous charges
and a termination amount more fully described below. In most instances, the
Contracts are not expected to run to their full terms, as more fully described
under "Risk Factors--Maturity and Prepayment Risks" and "Maturity, Prepayment
and Yield Considerations".
Each Contract will provide that the lessor may terminate such Contract and
repossess the Leased Vehicle in the event of a default by the lessee. Events of
default under the Contracts will include, but will not be limited to, failure to
make payment when due, certain events of bankruptcy or insolvency, failure to
maintain the insurance required by the Contract, failure to maintain or repair
the Leased Vehicle as required or to comply with any other term or condition of
the Contract and the making of a material misrepresentation by the lessee in the
lease application.
In the forms of contract used by the Dealers to evidence the Contracts,
upon early termination where the lessee is not in default and does not exercise
its option to purchase the Leased Vehicle, the amount owed by the lessee (the
"Early Termination Charge") will be determined by adding (i) the amount of the
Monthly Payment times the number of Monthly Payments not yet made, plus
(ii) any other amounts unpaid by the lessee, other than excess mileage and
excessive wear and use charges, arising under the Contract and not prohibited by
applicable law, plus (iii) any official fees and taxes related to the
termination of the Contract, plus (iv) the Residual Value, plus (v) a
disposition fee in the amount set forth in the Contract (either $250.00 or
$350.00), minus (vi) the "Realized Value" (as described below) of the Leased
Vehicle, minus (vii) the unearned lease charges calculated in accordance with an
actuarial method. Under the actuarial method of determining the unearned lease
charges under clause (vii) above, the Contracts will provide that the monthly
lease charges (including those for the month in which the early termination
occurs) are earned in advance on the scheduled due dates of the Monthly Payments
and that the Monthly Payments are deemed to have been received on their
scheduled due dates. If, instead, there is an early termination and the lessee
is in default, the amount owed by a lessee in default will be determined by
adding (i) the Early Termination Charge, plus (ii) all collection, repossession,
storage, preparation and sale expenses of the Leased Vehicle, plus
(iii) attorneys' fees and disbursements incurred after default and referral to
an attorney not to exceed 15% of the amount a lessee owes (or such lesser rate
as may be required under applicable law), plus (iv) simple interest at a rate of
15% per year (or such lesser rate as may be required under applicable law) on
all expenses incurred by the lessor and all obligations that a lessee owes after
termination of the Contract, other than earned but unpaid lease charges.
The "Realized Value" of a Leased Vehicle is the price the Servicer receives
at the time of disposition of the Leased Vehicle. World Omni shall sell the
Leased Vehicles at wholesale or otherwise determine its wholesale value in a
commercially reasonable manner. However, each Contract provides that the lessee
has the right to obtain from a qualified independent appraiser acceptable to the
lessor a written appraisal of the wholesale value of the Leased Vehicle that
could be realized at sale. This appraised value then would be used as the
wholesale value for purposes of calculating sums due from the lessee. Although
World Omni cannot predict whether any lessee will challenge the wholesale sale
price determined by World Omni, management of World Omni is unaware of any such
challenge by any lessee under its retail closed end automobile and light duty
truck lease contracts. See "Maturity, Prepayment and Yield Considerations" for
further information related to the relationship between payments on the
Contracts and the effective yield on the Notes.
In the event of early termination of a Contract where the lessee is in
default, the amounts collected with respect to such Contract and the related
Leased Vehicle (after deducting the costs and other sums retained by the
Servicer in connection therewith) may be less than the Outstanding Principal
Balance of such Contract, which shortfall can be due to, among other things, the
use of wholesale appraisal of a Leased Vehicle as described above. In the event
that a Contract reaches the date on which the last Monthly Payment is due, as
such date may have been extended (the "Maturity Date"), but the related Leased
Vehicle cannot be sold or otherwise disposed of for a net amount at least equal
to its Residual Value, there may be an additional shortfall in amounts otherwise
expected to be received in respect of the SUBI. In the event that any of the
foregoing shortfalls are not covered from the Investor Percentage of certain
excess Interest Collections, amounts otherwise payable to the Transferor in
respect of the Transferor Interest, the Servicing Fee otherwise payable to the
Servicer (so long as World Omni is the Servicer), Insured Residual Value Loss
Amounts paid under the Residual Value Insurance Policy, amounts on deposit in
the Reserve Fund, the subordination of interest payments otherwise payable to
the Class B Noteholders and, in the case of the Class A-4 Notes, the
subordination of principal payments otherwise payable to the Class B
Noteholders, in each case to the extent described herein, investors in the
Class A Notes could suffer a loss on their investment.
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<PAGE>
CHARACTERISTICS OF THE CONTRACTS
General
The Initial Contracts will be randomly selected from the pool described
herein in an aggregate outstanding principal balance as of the Cutoff Date equal
to the Initial Note Balance. The Initial Contracts in the aggregate will not
differ materially from the pool described herein. The Potential Initial
Contracts (including the Initial Contracts) were, and the Subsequent Contracts
will be, selected by reference to several criteria, including, as of the related
Cutoff Date, that each Contract (i) is written with respect to a Leased Vehicle
that was at the time of the origination of the related lease contract a new
vehicle, a limited mileage dealer demonstrator vehicle, or a manufacturers'
program vehicle; (ii) was originated in the United States after November 1, 1993
in the case of the Initial Contracts and on or before November 30, 1999 in the
case of the Subsequent Contracts; (iii) has a Maturity Date on or after
October 1, 1999 and no later than July 31, 2003 in the case of the Initial
Contracts and no later than November 30, 2004 in the case of the Subsequent
Contracts; (iv) fully amortizes to an amount equal to the Residual Value of the
related Leased Vehicle based on a fixed Lease Rate calculated on a constant
yield basis and provides for level payments over its term (except for payment of
the Residual Value); (v) was not more than 60 days past due as of the Initial
Cutoff Date or the related Subsequent Cutoff Date, as the case may be; and
(vi) has never been extended for more than five months in the aggregate. (SUBI
Trust Agreement, Section 10.01). Appearing below is some additional information
regarding the characteristics of the Potential Initial Contracts and the
potential Initial Leased Vehicles (the "Potential Initial Leased Vehicles"):
POTENTIAL INITIAL CONTRACTS
<TABLE>
<CAPTION>
AVERAGE MINIMUM MAXIMUM
---------- --------- ----------
<S> <C> <C> <C>
Original Principal Balance................................. $25,341.36 $7,418.92 $93,142.44
Outstanding Principal Balance(1)........................... $23,711.07 $7,424.24 $87,971.62
Residual Value............................................. $16,308.18 $2,958.66 $59,855.40
Lease Rate(1).............................................. 8.65%(2) 3.20 13.00
Seasoning (months)(1)...................................... 8.29(2) 2 26
Remaining Term (months)(1)................................. 32.86(2) 13 58
</TABLE>
- ------------------
(1) As of the Initial Cutoff Date.
(2) Weighted by Outstanding Principal Balance as of the Initial Cutoff Date.
Distribution of the Potential Initial Leased Vehicles by Make
As of the Initial Cutoff Date, the composition of the Potential Initial
Leased Vehicles by make of vehicle was as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF POTENTIAL NUMBER OF POTENTIAL
VEHICLE MAKE INITIAL CONTRACTS INITIAL CONTRACTS
- ----------------------------------------------------- ------------------- -------------------
<S> <C> <C>
Toyotas.............................................. 32,184 43.06%
United States manufacturers.......................... 39,110 52.33
Other Japanese manufacturers......................... 452 0.60
Other foreign manufacturers.......................... 2,998 4.01
------- -------
Total.............................................. 74,744 100.00%
</TABLE>
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<PAGE>
Distribution of the Potential Initial Contracts by Lease Rate
The distribution of the Potential Initial Contracts as of the Initial
Cutoff Date by Lease Rate was as follows:
<TABLE>
<CAPTION>
INITIAL PERCENTAGE OF AGGREGATE
NUMBER OF PERCENTAGE OF CUTOFF DATE INITIAL CUTOFF DATE
POTENTIAL NUMBER OF POTENTIAL OUTSTANDING OUTSTANDING
LEASE RATE RANGE INITIAL CONTRACTS INITIAL CONTRACTS PRINCIPAL BALANCE PRINCIPAL BALANCE
- -------------------- ----------------- ------------------- ----------------- -----------------------
<S> <C> <C> <C> <C>
3.00% to 3.99%.... 59 0.08% $ 1,142,258.43 0.06%
4.00% to 4.99%.... 1,242 1.66 24,217,701.96 1.37
5.00% to 5.99%.... 4,944 6.61 90,405,348.30 5.10
6.00% to 6.99%.... 5,055 6.76 97,959,285.95 5.53
7.00% to 7.99%.... 5,682 7.60 122,075,968.40 6.89
8.00% to 8.99%.... 25,777 34.49 692,520,176.96 39.08
9.00% to 9.99%.... 25,336 33.90 592,913,077.18 33.46
10.00% to 10.99%.... 4,475 5.99 103,029,360.44 5.81
11.00% to 11.99%.... 1,809 2.42 40,999,427.11 2.31
12.00% to 12.99%.... 365 0.49 6,997,585.79 0.39
------- ------- ----------------- -------
Total............. 74,744 100.00% $1,772,260,190.52 100.00%
</TABLE>
Distribution of the Potential Initial Contracts by Maturity
The distribution of the Potential Initial Contracts as of the Initial
Cutoff Date by year of maturity was as follows:
<TABLE>
<CAPTION>
INITIAL PERCENTAGE OF AGGREGATE
NUMBER OF PERCENTAGE OF CUTOFF DATE INITIAL CUTOFF DATE
POTENTIAL NUMBER OF POTENTIAL OUTSTANDING OUTSTANDING
YEAR OF MATURITY INITIAL CONTRACTS INITIAL CONTRACTS PRINCIPAL BALANCE PRINCIPAL BALANCE
- -------------------- ----------------- ------------------- ----------------- -----------------------
<S> <C> <C> <C> <C>
1999................ 106 0.14% $ 2,246,431.78 0.13%
2000................ 18,422 24.65 423,222,581.93 23.88
2001................ 43,242 57.85 1,004,267,992.68 56.67
2002................ 9,772 13.08 254,408,921.28 14.35
2003................ 3,202 4.28 88,114,262.85 4.97
------- ------- ----------------- -------
Total............. 74,744 100.00% $1,772,260,190.52 100.00%
</TABLE>
Distribution of the Potential Initial Contracts by State
The distribution of the Potential Initial Contracts as of the Initial
Cutoff Date by State of origination, broken out for States representing 5% or
more of the number of Potential Initial Contracts, was as follows:
<TABLE>
<CAPTION>
INITIAL PERCENTAGE OF AGGREGATE
NUMBER OF PERCENTAGE OF CUTOFF DATE INITIAL CUTOFF DATE
POTENTIAL NUMBER OF POTENTIAL OUTSTANDING OUTSTANDING
STATE BALANCE INITIAL CONTRACTS INITIAL CONTRACTS PRINCIPAL BALANCE PRINCIPAL BALANCE
- -------------------- ----------------- ------------------- ----------------- -----------------------
<S> <C> <C> <C> <C>
Florida............. 24,020 32.14% $ 528,123,058.45 29.80%
North Carolina...... 10,876 14.55 242,246,242.50 13.67
Georgia............. 8,751 11.71 197,891,535.75 11.17
Alabama............. 5,213 6.97 117,433,482.94 6.63
All other states.... 25,884 34.63 686,565,870.88 38.73
------- ------- ----------------- -------
Total............. 74,744 100.00% $1,772,260,190.52 100.00%
</TABLE>
REPRESENTATIONS, WARRANTIES AND COVENANTS
The Initial Contracts and Initial Leased Vehicles will be described in a
schedule appearing as an exhibit to the SUBI Trust Agreement, which schedule
will be amended from time to time as Subsequent Contracts and Subsequent Leased
Vehicles become SUBI Assets during the Revolving Period (collectively, the
"Schedule of Contracts and Leased Vehicles").
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<PAGE>
The Schedule of Contracts and Leased Vehicles will identify each Contract
by identification number, will identify each Leased Vehicle by its vehicle
identification number and will set forth as to each such Contract, among other
things, its: (i) date of origination; (ii) Maturity Date; (iii) Monthly Payment;
(iv) original Outstanding Principal Balance; (v) Outstanding Principal Balance
and Discounted Principal Balance as of the related Cutoff Date; and
(vi) Residual Value. (Servicing Agreement, Sections 1.01 and 10.01). In the
Servicing Agreement, representations and warranties will be made with respect to
each Contract and Leased Vehicle to the effect described in the text of the
first paragraph under "The Contracts--Characteristics of the Contracts--
General", and certain other representations and warranties will be made,
including, among other things, that each such Contract and, to the extent
applicable, the related Leased Vehicle or lessee: (a) was originated by a Dealer
located in the United States in the ordinary course of its business and in
compliance with World Omni's normal credit and collection policies and
practices; (b) is owned by the Origination Trustee, on behalf of the Origination
Trust, free of all liens, encumbrances or rights of others (other than the
Administrative Lien); (c) was originated in compliance with, and complies with,
all material applicable legal requirements; (d) all material consents, licenses,
approvals or authorizations of, or registrations or declarations with, any
governmental authority required to be obtained, effected or given by the
originator of such Contract and the Origination Trustee in connection with
(i) the origination of such Contract, (ii) the execution, delivery and
performance by such originator of the Contract and (iii) the acquisition by the
Origination Trust of such Contract and Leased Vehicle, have been duly obtained,
effected or given and are in full force and effect as of such date of creation
or acquisition; (e) is the legal, valid and binding obligation of the lessee;
(f) to the knowledge of the Servicer, is not subject to any right of rescission,
setoff, counterclaim or any other defense of the related lessee to pay the
Outstanding Principal Balance due under such Contract and no such right of
rescission, offset, defense or counterclaim has been asserted or threatened;
(g) the related Dealer, the Servicer and the Origination Trustee have each
satisfied all obligations required to be fulfilled on its part with respect
thereto; (h) is payable solely in United States dollars in the United States;
(i) the lessee thereunder is located in the United States and is not (i) ALF LLC
(or its predecessor), ALF L.P., WOLS LLC (or its predecessor), the Transferor or
any of their respective affiliates or (ii) the United States or any state or
local government thereof, or any agency, department or instrumentality of the
United States or any state or local government thereof; (j) requires the lessee
to maintain insurance against loss or damage to the related Leased Vehicle under
an insurance policy that names the Origination Trustee as loss payee, and the
related Leased Vehicle is covered by the Residual Value Insurance Policy;
(k) the related certificate of title therefor is registered in the name of the
Origination Trustee (or a properly completed application for such title has been
submitted to the appropriate titling authority); (l) is a closed-end lease that
(i) requires equal monthly payments to be made within 60 months of the date of
origination of such Contract and (ii) requires such payments to be made by the
lessee thereof within 30 days after the billing date for such payment; (m) is
fully assignable and does not require the consent of the lessee as a condition
to any transfer, sale or assignment of the rights of the originator; (n) has a
Residual Value that does not exceed the lesser of (i) $60,000 and (ii) an amount
reasonably established by the Servicer consistent with its policies and
practices regarding the setting of residual values as applied with respect to
closed-end retail automobile and light duty truck leases; (o) has never been
extended by more than five months in the aggregate or otherwise modified except
in accordance with World Omni's normal credit and collection policies and
practices; (p) the lessee thereunder has not made a claim under the Soldiers'
and Sailors' Civil Relief Act of 1940; (q) is not an Other SUBI Asset; (r) the
lessee thereunder is not bankrupt or currently the subject of a bankruptcy
proceeding; (s) is not more than 60 days past due; (t) is a finance lease for
accounting purposes; and (u) is a "true lease" for applicable state law
purposes. (SUBI Trust Agreement, Section 10.01; Servicing Agreement,
Sections 8.01 and 9.01).
The Servicing Agreement will provide that the reinvestment of Principal
Collections (and Loss Amounts that otherwise would be reimbursed to the
Noteholders) in Subsequent Contracts and Subsequent Leased Vehicles during the
Revolving Period will be subject to the satisfaction of certain conditions
precedent, including, among other things, that, unless the Indenture Trustee
receives confirmation (written or oral) from each Rating Agency to the effect
that the use of a different criteria will not result in the qualification,
reduction or withdrawal of its then-current rating on any Class of Class A Notes
or the Class B Notes, after giving effect to such reinvestment, (i) each
Subsequent Contract will be allocated as a SUBI Asset based upon its Discounted
Principal Balance as of the relevant Cutoff Date; (ii) the weighted average
remaining term of the Contracts (including the Subsequent Contracts) is not
greater than 38 months and (iii) the weighted average Residual Value of the
Leased Vehicles relating to the Contracts (including the Subsequent Contracts),
as a percentage of the
41
<PAGE>
aggregate Outstanding Principal Balance of the Contracts (including the
Subsequent Contracts), in each case as of the related dates of origination, is
not greater than 67%. (Servicing Agreement, Section 8.02).
The Servicing Agreement will provide that upon the discovery by the
Origination Trustee, World Omni, the Owner Trustee, the Indenture Trustee or the
Transferor of a breach of any representation, warranty or covenant referred to
in the second preceding paragraph that materially and adversely affects the
owners of interests in the SUBI or the Noteholders in the related Contract or
Leased Vehicle, which breach is not cured in all material respects within
60 days after World Omni discovers such breach or is given notice thereof, World
Omni will be required to deposit (or cause to be deposited) into the SUBI
Collection Account an amount (the "Reallocation Payment") equal to the
Discounted Principal Balance of such Contract as of the last day of the
Collection Period during which the related cure period ended, plus an amount
equal to any imputed lease charge on such Contract at the related Lease Rate
that was delinquent as of the end of such Collection Period. The foregoing
payment obligation will survive any termination of World Omni as Servicer under
the Servicing Agreement. (Servicing Agreement, Sections 8.03 and 11.01).
MATURITY, PREPAYMENT AND YIELD CONSIDERATIONS
All of the Contracts will be prepayable, in whole or in part, at any time
without penalty. The prepayment experience with respect to the Contracts will
affect the life of the Class A Notes.
In general, the rate of prepayments on the Contracts may be influenced by a
variety of economic, social, geographic and other factors. The Origination Trust
was formed and began to accept assignments of lease contracts in November 1993.
All of the lease contracts assigned to the Origination Trust for allocation as
SUBI Assets since that time have been, and all of the lease contracts to be
assigned to the Origination Trust subsequent to the date of this Prospectus will
be, assigned by Dealers using World Omni's underwriting standards. Under its
pro-active lease termination program, World Omni actively encourages lessees
under lease contracts with remaining terms of less than one year to either buy,
trade in or refinance the related leased vehicles prior to the related scheduled
maturities of such lease contracts. World Omni estimates that over calendar
years 1995, 1996, 1997 and the six months ended June 30, 1998 an average of
approximately 73% of the number of retail automobile and light duty truck lease
contracts in its portfolio (including those owned by the Origination Trustee on
behalf of the Origination Trust and by certain special purpose finance
subsidiaries of World Omni) that were scheduled to mature during such period
were terminated prior to maturity, either because of voluntary prepayments or
repossession of the leased vehicles due to default by the lessees under the
related lease contracts.
As a part of its pro-active lease termination program, World Omni actively
monitors its overall portfolio, and selectively offers incentives to encourage
customer loyalty and to minimize anticipated residual value losses on lease
contracts scheduled to reach maturity in the near term. These incentives
generally occur during the last year of a lease contract (typically, the last
six months), and for the years 1996, 1997 and the six months ended June 30, 1998
the losses relating to these incentives were $223,303, $1,879,447 and
$5,976,422, respectively. World Omni may continue the use of these incentive
programs in the future. All such losses relating to the Contracts will
constitute Residual Value Loss Amounts and, therefore, will be covered by the
Residual Value Insurance Policy.
The distribution of the Potential Initial Contracts by year of maturity is
set forth under "The Contracts--Characteristics of the Contracts--Distribution
of the Potential Initial Contracts by Maturity", and historical levels of lease
contract defaults, leased vehicle repossessions and losses and residual value
losses are discussed under "World Omni--Delinquency, Repossession and Loss
Data". No assurances can be given that the Contracts will experience the same
rate of prepayment or default or any greater or lesser rate than World Omni's
historical rate, or that the Residual Value experience of Leased Vehicles
related to Contracts that have reached their Maturity Dates will differ from
World Omni's historical residual value loss experience, for all of the retail
automobile and light duty truck lease contracts in its portfolio (including
those owned by the Origination Trustee on behalf of the Origination Trust and by
certain special purpose finance subsidiaries of World Omni).
The effective yield on, and average life of, each Class of Class A Notes
will depend upon, among other things, the amount of scheduled and unscheduled
payments on or in respect of the Contracts and the Leased Vehicles and the rate
at which such payments are paid to the Class A Noteholders. In the event of
prepayments of the Contracts (and payment of the Residual Value of the related
Leased Vehicles) or payment of any Accelerated
42
<PAGE>
Principal Distribution Amounts during the Amortization Period, Class A
Noteholders who receive such amounts may not be able to reinvest the related
payments of principal received on the Class A Notes at yields as high as the
related Note Rate. The timing of changes in the rate of prepayments on the
Contracts and payments in respect of the Leased Vehicles may also affect
significantly an investor's actual yield to maturity and the average life of the
related Class of Class A Notes. A substantial increase in the rate of payments
on or in respect of the Contracts and Leased Vehicles (including prepayments and
liquidations of the Contracts) during the Amortization Period may shorten the
final maturity of and may significantly affect the yield on the Class A Notes.
Additionally, although monies on deposit in the Accounts and Principal
Collections (and Loss Amounts that otherwise would be reimbursed to the
Noteholders) that have not been reinvested in Subsequent Contracts and
Subsequent Leased Vehicles during the Revolving Period will be invested in
Permitted Investments, and all gain on other income from such investments will
be available for making the distributions described under "Description of the
Notes--Distributions on the Notes--Distributions of Interest", no assurance can
be made as to the rate of return that will be realized on such Permitted
Investments. Any reinvestment risk resulting from the rate of prepayment of the
Contracts (and payment of the Residual Value of the related Leased Vehicles),
the making of the foregoing investments or payment of any Accelerated Principal
Distribution Amounts and the distribution of any such amounts to Class A
Noteholders will be borne entirely by the Class A Noteholders.
The yield to an investor who purchases Class A Notes in the secondary
market at a price other than par will vary from the anticipated yield if the
rate of prepayment on the Contracts is actually different than the rate
anticipated by such investor at the time such Class A Notes were purchased.
In sum, an investor's expected yield will be affected by the following
factors: (i) the price the investor paid for the Class A Notes, (ii) the rate of
prepayments in respect of the Contracts and Leased Vehicles and (iii) the
investor's assumed reinvestment rate. These factors do not operate
independently, but are interrelated. For example, if the rate of prepayments on
or in respect of the Contracts and Leased Vehicles is slower than anticipated,
the investor's yield will be lower if interest rates are higher than the
investor anticipated and higher if interest rates are lower than the investor
anticipated. Conversely, if the rate of prepayments on or in respect of the
Contracts and Leased Vehicles is faster than anticipated, the investor's yield
will be higher if interest rates are higher than the investor anticipated and
lower if interest rates are lower than the investor anticipated.
In general, during the Amortization Period, no principal payments will be
received by Class A-2 Noteholders until the Class A-1 Notes have been paid in
full, by Class A-3 Noteholders until the Class A-1 and Class A-2 Notes have been
paid in full or by Class A-4 and Class B Noteholders until the Class A-1,
Class A-2 and Class A-3 Notes have been paid in full. In addition, the Class A
Percentage and the Class B Percentage of Principal Collections allocable to the
Notes will be calculated when the Class A-1, Class A-2 and Class A-3 Notes have
been paid in full, and then used to determine the distribution of principal
payments on the Class A-4 Notes and the Class B Notes, as described under "Risk
Factors--Maturity and Prepayment Risks" and "--Risks Associated with Sequential
Payment of Principal on the Notes", which may affect the maturity and yield on
the Class A-4 Notes. An amount equal to the Covered Loss Amount will be
reimbursed first to the Class A-1 Noteholders until the Class A-1 Notes have
been paid in full, second to the Class A-2 Noteholders until the Class A-2 Notes
have been paid in full, third to the Class A-3 Noteholders until the Class A-3
Notes have been paid in full and thereafter the Class A Percentage and the
Class B Percentage of any such remaining reimbursable amounts will then be
distributed to the Class A-4 Noteholders and the Class B Noteholders,
respectively; provided that if the Note Balance of the Class B Notes has been
reduced to zero, Covered Loss Amounts will be reimbursed to the Class A
Noteholders, pro rata, based on the Class A-1, Class A-2, Class A-3 and
Class A-4 Allocation Percentages. Uncovered Loss Amounts will be allocated first
to the Class B Notes until the Note Balance of the Class B Notes has been
reduced to zero and then to the Class A Notes, pro rata, based on the
Class A-1, Class A-2, Class A-3 and Class A-4 Allocation Percentages. In
addition, the Investor Percentage of the net proceeds of any sale or other
disposition of the SUBI, the SUBI Certificate and other property of the Trust,
which may occur under certain circumstances involving an Indenture Event of
Default (as described under "Additional Document Provisions--The
Indenture--Events of Default"), to the extent such net proceeds constitute
Principal Collections, will be distributed first, on a pro rata basis, to the
Class A Swap Counterparty based on the termination payment, if any, due and to
the Class A Noteholders based on the respective Class A Note Balances until the
Class A Swap Counterparty and the Class A Notes have been paid in full, and
second, to the Class B Noteholders.
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The following information is provided solely to illustrate the effect of
prepayments of the Contracts on the Class A-1 Note Balance, the Class A-2 Note
Balance, the Class A-3 Note Balance and the Class A-4 Note Balance and the
weighted average life of each Class of Class A Notes under the assumptions
stated below and is not a prediction of the prepayment rates that might actually
be experienced with respect to the Contracts.
Prepayments on automobile lease contracts may be measured by a prepayment
standard or model. The prepayment model used with respect to the Contracts is
based on a prepayment assumption (the "Prepayment Assumption") expressed in
terms of percentages of ABS. "ABS" refers to a prepayment model which assumes a
constant percentage of the original number of Contracts in a pool prepay each
month. However, as used herein, a 100% Prepayment Assumption assumes that, based
on the assumptions in the next paragraph, the original Outstanding Principal
Balance of a Contract will prepay as follows: (i) 0.30% ABS for the first six
months of the life of the Contract, (ii) 0.50% ABS for the seventh through
twelfth month of the life of the Contract, (iii) 0.65% ABS for the thirteenth
through eighteenth month of the life of the Contract, (iv) 0.85% ABS for the
nineteenth through twenty-fourth month of the life of the Contract, (v) 1.10%
ABS for the twenty-fifth through thirtieth month of the life of the Contract and
(vi) 1.60% ABS following the thirtieth month of the life of the Contract until
the original Outstanding Principal Balance of the Contract has been paid in
full. Neither ABS nor the Prepayment Assumption purports to be a historical
description of prepayment experience or a prediction of the anticipated rate of
prepayment of lease contracts, including the Contracts. There can be no
assurance that the Contracts will prepay at the indicated levels of the
Prepayment Assumption or at any other rate.
The tables below were prepared on the basis of certain assumptions,
including that: (i) all Collections (including Monthly Payments and net sale
proceeds in respect of the Leased Vehicles relating to Matured Contracts) are
timely received, and that no Contracts are ever delinquent; (ii) no Reallocation
Payment or Reallocation Deposit Amount is made in respect of any Contract;
(iii) there are no Loss Amounts; (iv) the Transferor exercises its optional
purchase option of the property of the Trust as described herein; (v) all
distributions of principal (including any Accelerated Principal Distribution
Amount) and interest on the Class A Notes are made on the dates specified
herein; (vi) the Servicing Fee is 1% per annum of the Aggregate Net Investment
Value; (vii) all prepayments are full Prepayments; (viii) the Revolving Period
ends on December 1, 1999; (ix) the Initial Contracts have been selected from the
Potential Initial Contracts, have substantially similar characteristics as the
Potential Initial Contracts, have assumed Lease Rates of 7.75%, have an
Aggregate Net Investment Value of $1,202,622,475.62 and were originated ten
months prior to October 22, 1998; (x) the Closing Date is November 17, 1998;
(xi) all Principal Collections in respect of each Collection Period during the
Revolving Period are reinvested, on a Transfer Date that is the fifteenth day of
the following calendar month, in Subsequent Contracts that have stated terms of
three years, Lease Rates of 7.75% and Residual Values equal to 65% of the
original Outstanding Principal Balances thereof, were originated on October 30,
1998 and that otherwise have terms that are substantially similar to those of
the expected Initial Contracts; and (xii) One-Month LIBOR remains consistent at
5.24% and the Swap Rate is a rate such that there is no Class A Net Swap Payment
or Class A Net Swap Receipt.
No representation is made as to what the actual levels of losses and
delinquencies on the Contracts will be. Since the tables below were prepared on
the basis of the foregoing assumptions, there will be discrepancies between the
characteristics of the Contracts that actually will be allocated as SUBI Assets
in respect of Principal Collections made during the Revolving Period and Loss
Amounts with respect to the Revolving Period that otherwise would be reimbursed
to the Noteholders, and the characteristics of the Contracts assumed in
preparing the tables to be allocated as SUBI Assets in respect of Principal
Collections made during the Revolving Period and Loss Amounts with respect to
the Revolving Period that otherwise would be reimbursed to the Noteholders, as
well as other discrepancies between the foregoing assumptions and the actual
experience in respect of the Contracts. Any such discrepancy may increase or
decrease the percentage of the outstanding Class A-1 Note Balance, the
Class A-2 Note Balance, the Class A-3 Note Balance or the Class A-4 Note
Balance, as the case may be, and the weighted average lives of each Class of
Class A Notes set forth in the tables. In addition, since the Contracts will
have characteristics which differ from those assumed in preparing the tables,
distributions of principal on the Class A Notes may be made earlier or later
than set forth in the tables. Investors are urged to make their investment
decisions on a basis that includes their determination as to anticipated
prepayment rates under a variety of the assumptions discussed herein.
The following tables set forth the percentages of the Initial Note Balance
of each Class of Class A Notes that would be outstanding after each of the dates
shown, based on a rate equal to 0%, 50%, 100%, 150% and 200% of
44
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the Prepayment Assumption. As used in the table, "0% Prepayment Assumption"
assumes no prepayments on a Contract, "50% Prepayment Assumption" assumes that a
Contract will prepay at 50% of the Prepayment Assumption, and so forth.
PERCENTAGE OF INITIAL CLASS A PRINCIPAL BALANCE REMAINING
AND WEIGHTED AVERAGE LIFE OF CLASS A-1 NOTES
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTIONS
------------------------------------
DISTRIBUTION DATE 0% 50% 100% 150% 200%
- ---------------------------------------------------------------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Initial Percentage.......................................................... 100% 100% 100% 100% 100%
May 1999.................................................................... 100 100 100 100 100
November 1999............................................................... 100 100 100 100 100
May 2000.................................................................... 75 65 52 35 12
November 2000............................................................... 0 0 0 0 0
May 2001.................................................................... 0 0 0 0 0
Weighted Average Life (Years)(1)............................................ 1.65 1.57 1.50 1.43 1.37
</TABLE>
- ------------------
(1) The weighted average life of the Class A-1 Notes is determined by
(i) multiplying the amount of each principal payment by the number of years
from the Closing Date to the related Distribution Date, (ii) adding the
results, and (iii) dividing the sum by the Initial Class A-1 Note Balance.
PERCENTAGE OF INITIAL CLASS A PRINCIPAL BALANCE REMAINING
AND WEIGHTED AVERAGE LIFE OF CLASS A-2 NOTES
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTIONS
------------------------------------
DISTRIBUTION DATE 0% 50% 100% 150% 200%
- ---------------------------------------------------------------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Initial Percentage.......................................................... 100% 100% 100% 100% 100%
May 1999.................................................................... 100 100 100 100 100
November 1999............................................................... 100 100 100 100 100
May 2000.................................................................... 100 100 100 100 100
November 2000............................................................... 100 79 50 0 0
May 2001.................................................................... 0 0 0 0 0
Weighted Average Life (Years)(1)............................................ 2.29 2.19 2.02 1.84 1.70
</TABLE>
- ------------------
(1) The weighted average life of the Class A-2 Notes is determined by
(i) multiplying the amount of each principal payment by the number of years
from the Closing Date to the related Distribution Date, (ii) adding the
results, and (iii) dividing the sum by the Initial Class A-2 Note Balance.
PERCENTAGE OF INITIAL CLASS A PRINCIPAL BALANCE REMAINING
AND WEIGHTED AVERAGE LIFE OF CLASS A-3 NOTES
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTIONS
------------------------------------
DISTRIBUTION DATE 0% 50% 100% 150% 200%
- ---------------------------------------------------------------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Initial Percentage.......................................................... 100% 100% 100% 100% 100%
May 1999.................................................................... 100 100 100 100 100
November 1999............................................................... 100 100 100 100 100
May 2000.................................................................... 100 100 100 100 100
November 2000............................................................... 100 100 100 95 0
May 2001.................................................................... 85 66 34 0 0
November 2001............................................................... 0 0 0 0 0
Weighted Average Life (Years)(1)............................................ 2.67 2.61 2.48 2.19 1.77
</TABLE>
(Footnote on next page)
45
<PAGE>
(Footnote from previous page)
- ------------------------
(1) The weighted average life of the Class A-3 Notes is determined by (i)
multiplying the amount of each principal payment by the number of years from
the Closing Date to the related Distribution Date, (ii) adding the results,
and (iii) dividing the sum by the Initial Class A-3 Note Balance.
PERCENTAGE OF INITIAL CLASS A PRINCIPAL BALANCE REMAINING
AND WEIGHTED AVERAGE LIFE OF CLASS A-4 NOTES
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTIONS
------------------------------------
DISTRIBUTION DATE 0% 50% 100% 150% 200%
- ---------------------------------------------------------------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Initial Percentage.......................................................... 100% 100% 100% 100% 100%
May 1999.................................................................... 100 100 100 100 100
November 1999............................................................... 100 100 100 100 100
May 2000.................................................................... 100 100 100 100 100
November 2000............................................................... 100 100 100 100 81
May 2001.................................................................... 100 100 100 67 0
November 2001............................................................... 55 42 0 0 0
May 2002.................................................................... 0 0 0 0 0
Weighted Average Life (Years)(1)............................................ 3.15 3.01 2.93 2.61 2.32
</TABLE>
- ------------------
(1) The weighted average life of the Class A-4 Notes is determined by
(i) multiplying the amount of each principal payment by the number of years
from the Closing Date to the related Distribution Date, (ii) adding the
results, and (iii) dividing the sum by the Initial Class A-4 Note Balance.
CLASS A NOTE FACTORS AND TRADING INFORMATION;
REPORTS TO CLASS A NOTEHOLDERS
The "Class A-1 Note Factor", the "Class A-2 Note Factor", the "Class A-3
Note Factor" and the "Class A-4 Note Factor" will each be a seven-digit decimal
that the Servicer will compute each month indicating the Class A-1, Class A-2,
Class A-3 or Class A-4 Note Balance, as the case may be, as of the close of
business on the Distribution Date in such month as a fraction of the Initial
Note Balance of the related Class of Class A Notes. Each Note Factor will
initially be 1.0000000 and will remain unchanged during the Revolving Period,
except in certain limited circumstances where there are unreimbursed Class A-1,
Class A-2, Class A-3 or Class A-4 Note Principal Loss Amounts. During the
Amortization Period, each Note Factor will decline to reflect reductions in the
related Note Balance resulting from distributions of principal and unreimbursed
Class A-1, Class A-2, Class A-3 or Class A-4 Note Principal Loss Amounts, if
any. The portion of the Class A Note Balance for a given month allocable to a
Class A Noteholder can be determined by multiplying the original denomination of
the holder's Class A Note by the related Note Factor for that month.
Pursuant to the Agreement, The Bank of New York, as Indenture Trustee, will
provide to all registered holders of the Class A Notes (which shall be Cede as
the nominee of DTC unless Definitive Notes are issued under the limited
circumstances described herein) unaudited monthly reports concerning payments
received on or in respect of the Contracts and the Leased Vehicles, the
Aggregate Net Investment Value, the Investor Percentage, the Class A-1,
Class A-2, Class A-3 and Class A-4 Note Factors and various other items of
information. Note Owners may obtain copies of such reports upon a request in
writing to the Indenture Trustee. In addition, Class A Noteholders during each
calendar year will be furnished information for tax reporting purposes not later
than the latest date permitted by law. For further details concerning
information furnished to Noteholders and Note Owners, see "Description of the
Notes--Statements to Noteholders" and "Description of the Notes--Book-Entry
Registration".
46
<PAGE>
DESCRIPTION OF THE NOTES
The Notes will be issued pursuant to the Indenture (the "Indenture"), a
form of which, together with forms of the Agreement, the SUBI Trust Agreement
and the Servicing Agreement, has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part. The following summaries of all
material provisions of the foregoing documents and the summaries of all material
provisions included under "The Trust and the SUBI", "The Origination
Trust--Property of the Origination Trust", "The Contracts--Characteristics of
the Contracts--General", "The Contracts--Characteristics at the
Contracts--Representations, Warranties and Covenants", "Security for the Notes"
and "Additional Document Provisions" do not purport to be complete and are
subject to, and qualified in their entirety by reference to, the provisions of
such documents. Where particular provisions of or terms used in the Indenture,
the Agreement, the SUBI Trust Agreement and the Servicing Agreement are referred
to, the actual provisions (including definitions of terms and Section
references) are incorporated by reference as part of such summaries.
GENERAL
The Class A Notes will be issued in denominations of $1,000 and integral
multiples thereof in book-entry form. (Indenture, Section 2.02). The Class A
Notes will initially be represented by notes registered in the name of Cede, the
nominee of DTC. No Note Owner will be entitled to receive a note representing
such owner's Note, except as set forth below. Unless and until Class A Notes are
issued in fully registered certificated form ("Definitive Notes") under the
limited circumstances described below, all references herein to distributions,
notices, reports and statements to Class A Noteholders will refer to the same
actions made with respect to DTC or Cede, as the case may be, for the benefit of
Note Owners in accordance with DTC procedures. (Indenture, Section 2.10). See
"Description of the Notes--Book-Entry Registration" and "--Definitive Notes".
The outstanding principal amount of each class of Notes (each, a "Class")
at any time will be equal to the initial principal amount of such Class of
Notes, less the sum of (i) all payments made on or prior to such date allocable
to principal, (ii) the amount of Note Principal Loss Amounts allocable to such
Class of Notes, if any, which have not been reimbursed as described herein and
(iii) in the case of the Class B Notes, any unreimbursed Class B Note Principal
Carryover Shortfall. (Agreement, Section 1.01). See "Description of the Notes--
Distributions on the Notes". Each Note will represent the right to receive
payments of interest at the related Note Rate and, to the extent described
herein, payments of principal during the Amortization Period funded from the
Investor Percentage of distributions to the Trust of Interest Collections and
Principal Collections and Accelerated Principal Distribution Amounts allocable
to Notes of the related Class, Transferor Amounts otherwise payable to the
Transferor in respect of the Transferor Interest, the Servicing Fee (so long as
World Omni is the Servicer) and Insured Residual Value Loss Amounts payable
under the Residual Value Insurance Policy, in each case to the extent described
herein. As described under "Description of the Notes--Distributions on the
Notes", the right of the Class B Notes to receive payments of interest and
principal also will be subordinated to the right of the Class A Notes to receive
such payments.
The Transferor will permanently retain the certificate representing the
Transferor Interest (the "Transferor Certificate"), which will represent the
entire equity interest in the Trust including the right to receive the
Transferor Percentage of Interest Collections and Principal Collections
calculated as described under "Description of the Notes--Calculation of Investor
Percentage and Transferor Percentage". The Transferor Certificate will be
subordinated to the Notes to the extent described under "Description of the
Notes--Certain Payments to the Transferor".
During the Revolving Period, the Note Balance will remain constant except
in certain limited circumstances where there are unreimbursed Note Principal
Loss Amounts. During the Amortization Period, the Note Balance will decline as
the Investor Percentage of Principal Collections and Accelerated Principal
Distribution Amounts are distributed to the Noteholders and as Note Principal
Loss Amounts are incurred. The Aggregate Net Investment Value can change daily
as principal is paid on or in respect of the Contracts and the Leased Vehicles,
as Reallocation Payments in respect of certain Contracts as to which an uncured
breach of certain representations and warranties or certain servicing covenants
has occurred are paid by World Omni during the Amortization Period, together
with, under certain circumstances, Reallocation Deposit Amounts, as liquidation
losses and other losses in respect of the Contracts and Leased Vehicles are
incurred and as Leased Vehicles in Matured Leased Vehicle Inventory are sold or
otherwise disposed of.
47
<PAGE>
TRANSFER OF THE SUBI
On the Closing Date, pursuant to the Agreement, the Transferor will deliver
the SUBI Certificate to the Owner Trustee and transfer and assign to the Trust,
without recourse, all of its right, title and interest in and to the SUBI,
represented by the SUBI Certificate. The Owner Trustee will, concurrently with
such delivery, transfer and assignment, deliver the Notes and the Transferor
Certificate on behalf of the Trust to or upon the order of the Transferor.
(Agreement, Sections 2.02 and 4.02).
Pursuant to the Agreement, the Transferor will represent and warrant that
immediately prior to the transfer and assignment of the SUBI Certificate to the
Trust, it had good title to, and was the sole legal and beneficial owner of the
SUBI Certificate, free and clear of liens and claims. (Agreement,
Section 5.01).
REALLOCATION PAYMENTS AND REALLOCATION DEPOSIT AMOUNTS
As more fully described under "The Contracts--Representations, Warranties
and Covenants" and "Additional Document Provisions--The Servicing
Agreement--Collections", under certain circumstances World Omni will be required
to make Reallocation Payments in respect of certain Contracts (and the related
Leased Vehicles) discovered not to be in compliance with World Omni's
representations or warranties or Contracts as to which certain servicing
procedures have not been followed, in either case that materially and adversely
affects such Contract. Upon any such payment during the Amortization Period (but
not during the Revolving Period), the Aggregate Net Investment Value will
decline by an amount equal to the Discounted Principal Balance of such Contract,
thereby reducing the amount of the Transferor Interest by the same amount, and
such Contract and the related Leased Vehicle will no longer constitute SUBI
Assets as they will be reallocated and become UTI Assets. If such deduction
would cause the Transferor Interest to become less than zero, World Omni will be
required to deposit (or cause to be deposited) in the SUBI Collection Account
the amount (the "Reallocation Deposit Amount") by which the Transferor Interest
would be reduced to less than zero. Notwithstanding the foregoing, in the event
a Reallocation Deposit Amount is required to be made, reallocation of the
related Contract (and the related Leased Vehicle) will not be considered to have
occurred unless such deposit is actually made. (Servicing Agreement,
Section 8.03).
CALCULATION OF INVESTOR PERCENTAGE AND TRANSFEROR PERCENTAGE
Pursuant to the Servicing Agreement, the Servicer will allocate between the
Notes and the Transferor Certificate, based on the applicable Investor
Percentage and the Transferor Percentage for the related Collection Period, all
Interest Collections and (during the Amortization Period) Principal Collections
collected or received in respect of the related Collection Period. In addition,
similar allocations will be made by the Servicer at the end of each Collection
Period in respect of (i) an amount equal to the Discounted Principal Balance of
any Contract that became a Charged-off Contract during such Collection Period
(all such amounts in any Collection Period, the "Charged-off Amount"), (ii) the
Residual Value Loss Amount for such Collection Period and (iii) any Additional
Loss Amounts incurred during such Collection Period. A "Charged-off Contract"
will be a Contract (a) with respect to which the related Leased Vehicle has been
repossessed and sold or otherwise disposed of or (b) which has been written off
by the Servicer in accordance with its normal policies for writing off lease
contracts other than with respect to repossessions. (SUBI Trust Agreement,
Section 10.01; Agreement, Sections 1.01 and 3.03; Servicing Agreement,
Section 9.02).
For convenience, this Prospectus refers to the Investor Percentage with
respect to Interest Collections, Principal Collections, Charged-off Amounts,
Residual Value Loss Amounts and Additional Loss Amounts as if the Investor
Percentage were the same percentage at all times in each case. The Investor
Percentage may be a different percentage for each Collection Period, and will
vary primarily as a result of changes in the Aggregate Net Investment Value.
The Investor Percentage in respect of any Collection Period will mean, with
respect to (i) Loss Amounts and Interest Collections, the percentage equivalent
of a fraction (not to exceed 100%) the numerator of which is the Note Balance on
the last day of the immediately preceding Collection Period (or, in the case of
the first Collection Period, the Initial Note Balance) and the denominator of
which is the Aggregate Net Investment Value on the last day of the immediately
preceding Collection Period (or, in the case of the first Collection Period, as
of the Initial Cutoff Date) and (ii) Principal Collections during the
Amortization Period, the percentage equivalent
48
<PAGE>
of a fraction (not to exceed 100%) the numerator of which is the Note Balance
and the denominator of which is the Aggregate Net Investment Value, in each case
as of the last day of the last Collection Period preceding (a) the Amortization
Date or (b) the date on which an Early Amortization Event occurs. The
"Transferor Percentage" will in all cases, be equal to 100% minus the applicable
Investor Percentage. (Agreement, Section 1.01).
As a result of the calculations described above, Interest Collections in
each Collection Period will be allocated to the Noteholders based on the
relationship of the Note Balance to the Aggregate Net Investment Value (which
may change daily and from Collection Period to Collection Period). As described
above, the Investor Percentage applied when allocating Principal Collections may
vary monthly during the Revolving Period, because the Note Balance as a
percentage of the Aggregate Net Investment Value may fluctuate monthly. During
the Amortization Period, however, the Principal Allocation will be determined by
reference to a fixed percentage which will equal the Investor Percentage with
respect to Principal Collections as of the last day of the Revolving Period.
CERTAIN PAYMENTS TO THE TRANSFEROR
On each Distribution Date, the Indenture Trustee will pay to the
Transferor, from amounts on deposit in the Distribution Account in respect of
the related Collection Period, the following amounts (the "Transferor Amounts"):
(i) if such Distribution Date is in respect of the Revolving Period, the
Transferor Percentage of Interest Collections and (ii) if such Distribution Date
occurs in any month following the month in which the Amortization Period
commences, the Transferor Percentage of Interest Collections and, to the extent
that the Transferor Interest is equal to or greater than zero, the Transferor
Percentage of Principal Collections. The foregoing payments will be made net of
the Transferor Percentage of the Servicing Fee, Capped Origination Trust
Administrative Expenses, Capped Trust Administrative Expenses, Capped Contingent
and Excess Liability Premiums and Uncapped Administrative Expenses payable in
respect of the related Collection Period. Any Principal Collections not paid to
the Transferor because the Transferor Interest is less than or equal to zero
("Unallocated Principal Collections") will be retained in the Distribution
Account for payment to Noteholders.
Notwithstanding the foregoing, no Transferor Amounts will be paid to the
Transferor on a Distribution Date unless (i) the amounts described in clauses
(i) through (xvi) of the first paragraph under "Description of the
Notes--Distributions on the Notes--Distributions of Interest" have been paid in
full and (ii) the amount on deposit in the Reserve Fund, after giving effect to
all withdrawals therefrom and other deposits thereto on such Distribution Date,
is at least equal to the Reserve Fund Cash Requirement. (Agreement,
Section 3.03).
DETERMINATION OF ONE-MONTH LIBOR
The Servicer will determine One-Month LIBOR for each Distribution Date on
the second business day prior to the preceding Distribution Date (or, in the
case of the initial Distribution Date, the second business day prior to the date
of issuance of the Notes) (each a "LIBOR Determination Date"). For purposes of
calculating One-Month LIBOR, a business day is any day on which dealings in
deposits in U.S. Dollars are transacted in the London interbank market.
"One-Month LIBOR" means, as of any LIBOR Determination Date, the rate for
deposits in U.S. Dollars for a period of the Designated Maturity (commencing on
the previous Distribution Date) which appears on the Telerate Page 3750 as of
11:00 a.m., London time, on such date. If such rate does not appear on Telerate
Page 3750, the rate for that day will be determined on the basis of the rates at
which deposits in U.S. Dollars are offered by the Reference Banks at
approximately 11:00 a.m., London time, on that day to prime banks in the London
interbank market for a period of the Designated Maturity (commencing on the
previous Distribution Date). The Servicer will request the principal London
office of each of the Reference Banks to provide a quotation of its rate. If at
least two such quotations are provided, the rate for that day will be the
arithmetic mean of the quotations. If fewer than two quotations are provided as
requested, the rate for that day will be the arithmetic mean of the rates quoted
by major banks in New York City, selected by the Servicer, at approximately
11:00 a.m., New York City time, on that day for loans in U.S. Dollars to leading
European banks for a period of the Designated Maturity (commencing on the
previous Distribution Date).
"Designated Maturity" shall mean, for any LIBOR Determination Date, one
month.
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<PAGE>
"Telerate Page 3750" means the display page currently so designated on the
Dow Jones Telerate Service (or such other page as may replace that page on that
service for the purpose of displaying comparable rates or prices).
"Reference Banks" means four major banks in the London interbank market
selected by the Servicer.
DISTRIBUTIONS ON THE NOTES
General
On the second Business Day prior to each Distribution Date (each, a
"Determination Date"), the Servicer will inform the Indenture Trustee of, among
other things, the amount of Interest Collections and Principal Collections, the
Investor Percentage, the Transferor Percentage, the Class A-1, Class A-2,
Class A-3 and Class A-4 Note Factors, the Class A-1, Class A-2, Class A-3,
Class A-4 and Class B Allocation Percentages, the amount of Advances to be made
by the Servicer, the Required Amount, if any, to be withdrawn from the Reserve
Fund and the Servicing Fee and other servicing compensation payable to the
Servicer, in each case with respect to the Collection Period immediately
preceding the Collection Period in which such Determination Date occurs. On or
prior to each Determination Date, the Servicer shall also determine the Reserve
Fund Cash Requirement, the Class A Net Swap Receipt or the Class A Net Swap
Payment, the amounts to be distributed to the Noteholders and to the Transferor
in respect of the Transferor Interest and the Reserve Fund Supplemental
Requirement (if any). (Servicing Agreement, Sections 9.02 and 10.01).
Distributions of Interest
On each Distribution Date, the Indenture Trustee will make the following
payments in the amounts and order of priority described below. The Indenture
Trustee will distribute, from amounts on deposit in the Distribution Account,
the Investor Percentage of Interest Collections collected during or received in
respect of the related Collection Period, together with (i) Transferor Amounts
that would otherwise be payable to the Transferor in respect of the Transferor
Interest on such Distribution Date, plus (ii) to the extent necessary to make
the distributions described below other than in clause (ix), the sum of any
Insured Residual Value Loss Amounts paid under the Residual Value Insurance
Policy in respect of such Collection Period and the amount withdrawn from the
Reserve Fund in respect of the Required Amount, if any, plus (iii) to the extent
needed to make distributions described in clauses (iii), (x) and (xi), to the
Class A-4 Noteholders during the Amortization Period, amounts that would
otherwise be distributable to the Class B Noteholders in respect of the Class B
Percentage of the Investor Percentage of Principal Collections in respect of
such Collection Period:
(i) in the event of an Indenture Event of Default as a result of the
Indenture Trustee having received written instructions from holders of
Notes evidencing Voting Interests of not less than a majority in interest
of the Class A Notes (voting together as a single class) or a majority in
interest of the Class A Notes and Class B Notes (voting together as a
single class) to sell or dispose of the SUBI, to the Indenture Trustee, the
Investor Percentage of Capped Indenture Trustee Administrative Expenses,
and to the Owner Trustee, the Investor Percentage of Capped Owner Trustee
Administrative Expenses;
(ii) first from the Class A Net Swap Receipt and then from the amounts
remaining after the application of clause (i) above, to (A) each Class of
Class A Noteholders, interest at the related Note Rate on the Class A-1,
Class A-2, Class A-3 or Class A-4 Note Balance, as applicable, as of the
immediately preceding Distribution Date (after giving effect to any
reduction in such Note Balance on such immediately preceding Distribution
Date) or, in the case of the first Distribution Date, on the Initial Class
A-1, Class A-2, Class A-3 or Class A-4 Note Balance, as applicable,
calculated on the basis of the actual number of days from and including the
prior Distribution Date (or in the case of the initial Distribution Date,
the Closing Date) to but excluding the related Distribution Date and a
360-day year, together with any unpaid Class A-1, Class A-2, Class A-3 or
Class A-4 Interest Carryover Shortfall, as applicable and (B) the Class A
Swap Counterparty, the Class A Net Swap Payment, if any, with respect to
such Distribution Date, plus any Class A Net Swap Payments previously due
but not paid; provided, however, if the funds available are not sufficient
to make the distributions specified in subclauses (ii)(A) and (ii)(B), such
funds will be allocated pro rata between the
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Class A Noteholders and the Class A Swap Counterparty based on the
respective amounts due in each such subclause;
(iii) to each Class of Class A Noteholders, accrued and unpaid
interest at the related Note Rate, on any unreimbursed Class A-1,
Class A-2, Class A-3 and Class A-4 Note Principal Loss Amount, as
applicable;
(iv) from amounts remaining after the application of clauses (i), (ii)
and (iii) above, to, or for the benefit of, the Class B Noteholders,
interest at a rate per annum not expected to exceed % (the "Class B Note
Rate" and, together with the Class A-1, Class A-2, Class A-3 and Class A-4
Note Rates, the "Note Rates"), on the Class B Note Balance as of the
immediately preceding Distribution Date (after giving effect to any
reduction in the Class B Note Balance on such immediately preceding
Distribution Date) or, in the case of the first Distribution Date, on the
Initial Class B Note Balance, calculated on the basis of a 360-day year
consisting of twelve 30-day months, together with any unpaid Class B
Interest Carryover Shortfall;
(v) to the Servicer, reimbursement of the Investor Percentage of
Capped Contingent and Excess Liability Premiums;
(vi) to the Origination Trustee, the Investor Percentage of Capped
Origination Trust Administrative Expenses;
(vii) in circumstances other than as set forth in clause (i) above, to
the Indenture Trustee, the Investor Percentage of Capped Indenture Trustee
Administrative Expenses, and to the Owner Trustee, the Investor Percentage
of Capped Owner Trustee Administrative Expenses;
(viii) in the event that World Omni is not the Servicer, to such other
Servicer, the Investor Percentage of (a) the Servicing Fee and (b) any
unpaid Servicing Fees payable in respect of compensation to such other
Servicer with respect to one or more prior Collection Periods;
(ix) to the Reserve Fund, until the amount on deposit therein equals
the Reserve Fund Cash Requirement;
(x) to the Class A Noteholders, (a) so long as the Note Balance of the
Class B Notes has not been reduced to zero, an amount equal to the Covered
Loss Amount for the related Distribution Date, sequentially, commencing
with the Class A-1 Noteholders until the Note Balance of each such Class
has been reduced to zero, or (b) if the Note Balance of the Class B Notes
has been reduced to zero, pro rata, based on the Class A-1, Class A-2,
Class A-3 and Class A-4 Allocation Percentages, an amount equal to the sum
of the Covered Loss Amount and the Uncovered Loss Amount for the related
Distribution Date;
(xi) to each Class of Class A Noteholders, the aggregate of the
amounts allocable to such Class pursuant to clause (x) above that were not
previously distributed pursuant to such clause or this clause (each such
amount, a "Class A-1 Note Principal Loss Amount", "Class A-2 Note Principal
Loss Amount", "Class A-3 Note Principal Loss Amount" or "Class A-4 Note
Principal Loss Amount", respectively);
(xii) to the Class B Noteholders, accrued and unpaid interest at the
Class B Note Rate on any unreimbursed Class B Note Principal Loss Amount
and any unreimbursed Class B Note Principal Carryover Shortfall;
(xiii) to the Class B Noteholders, an amount equal to the Uncovered
Loss Amount incurred during the related Collection Period;
(xiv) to the Class B Noteholders, the aggregate of the amounts
allocable pursuant to clause (xiii) above that were not previously
distributed pursuant to such clause or this clause (each such amount, a
"Class B Note Principal Loss Amount"), together with any Class B Note
Principal Carryover Shortfall;
(xv) in the event that World Omni is the Servicer (and it has not
elected to waive the Servicing Fee with respect to the related Collection
Period), to the Servicer, the Investor Percentage of (a) the Servicing Fee
for the related Collection Period and (b) any unpaid Servicing Fee with
respect to one or more prior Collection Periods; and
(xvi) to the Indenture Trustee, the Owner Trustee and the Origination
Trustee, as applicable, the Investor Percentage of all specified expenses
incurred with respect to the Indenture, the Notes, the Trust or
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the Origination Trust in excess of the Capped Administrative Expenses that
have been paid but have not yet been reimbursed (the "Uncapped
Administrative Expenses"). (Agreement, Sections 1.01 and 3.03).
Notwithstanding the foregoing, as more fully described under "Description
of the Notes--Distributions on the Notes--Application and Distributions of
Principal", on any Distribution Date relating to a Collection Period during the
Revolving Period, for purposes of reinvestment, amounts otherwise payable to
Noteholders pursuant to clauses (x), (xi), (xiii) and (xiv) above (whether from
Interest Collections, Transferor Amounts that otherwise would be payable to the
Transferor, Insured Residual Value Loss Amounts paid under the Residual Value
Insurance Policy, or from amounts on deposit in the Reserve Fund) will be
treated as Principal Collections for the Collection Period in which such
Distribution Date occurs. Accordingly, such amounts will be available to be
reinvested in Subsequent Contracts and Subsequent Leased Vehicles during the
Revolving Period. (Agreement, Section 3.03).
The balance, if any, of the Interest Collections and the Class A Net Swap
Receipt allocated to the Notes for the related Collection Period, after giving
effect to the distributions in clauses (i) through (xvi) above, will constitute
"Excess Collections". On each Distribution Date that occurs (i) during the
Revolving Period, Excess Collections will be paid to the Transferor and
(ii) during the Amortization Period, an amount equal to the related Accelerated
Principal Distribution Amount will be paid to Noteholders as a payment of
principal and any remaining Excess Collections will be paid to the Transferor.
On any Distribution Date, the Transferor may (at its option) instruct the
Indenture Trustee not to pay any or all of such remaining Excess Collections to
it, but instead to redeposit such amount ("Undistributed Transferor Excess
Collections") into the SUBI Collection Account for application as Collections in
respect of the Collection Period during which such Distribution Date occurs. The
Transferor will have no further claim to any Undistributed Transferor Excess
Collections so deposited into the SUBI Collection Account, except insofar as
they become Excess Collections that are payable to the Transferor for a
succeeding Collection Period. To the extent that an Accelerated Principal
Distribution Amount is paid to Noteholders on a Distribution Date in any month
following the month during which the Amortization Period commences, such amount
will be distributed first to the Class A-1 Noteholders until the Class A-1 Notes
have been paid in full, second, to the Class A-2 Noteholders until the
Class A-2 Notes have been paid in full, third, to the Class A-3 Noteholders
until the Class A-3 Notes have been paid in full, and thereafter the Class A
Percentage and the Class B Percentage of any remaining amount will be
distributed to the Class A-4 Noteholders and the Class B Noteholders,
respectively. If any Transferor Amounts are required to be applied to make any
of the distributions in clauses (i) through (xvi) above, the Interest
Collections that are part of the Transferor Amounts will be applied before any
Principal Collections that are part of the Transferor Amounts are so applied.
(Agreement, Sections 1.01 and 3.03).
In the event on any Distribution Date there remains any shortfall in
amounts required to be distributed to the Class A-1 Noteholders, Class A-2
Noteholders, Class A-3 Noteholders and Class A-4 Noteholders under clause (ii)
and on any Distribution Date on which the Note Balance of the Class B Notes has
been reduced to zero, there remains any shortfall in amounts required to be
distributed to the Class A-1 Noteholders, Class A-2 Noteholders, Class A-3
Noteholders and Class A-4 Noteholders under clauses (iii), (x) or (xi) above,
then the amount available will be distributed pro rata to such Noteholders based
on the Class A-1 Allocation Percentage, the Class A-2 Allocation Percentage, the
Class A-3 Allocation Percentage and the Class A-4 Allocation Percentage,
respectively. (Agreement, Section 3.03).
If and to the extent that the full amount distributable on a Distribution
Date pursuant to clauses (i) through (xvi) above exceeds the Investor Percentage
of Interest Collections for the related Collection Period (plus in the case of
clause (ii) above, the Class A Net Swap Receipt, for such Distribution Date),
then (i) Transferor Amounts otherwise distributable to the Transferor will be
applied to such shortfall, (ii) if such Transferor Amounts are insufficient to
cover such shortfall, then the proceeds of a claim under the Residual Value
Insurance Policy for any Insured Residual Value Loss Amount will be applied to
such shortfall (other than any shortfall in amounts to be deposited into the
Reserve Fund as set forth in clause (ix) above), and (iii) if available
Transferor Amounts and any claim under the Residual Value Insurance Policy are
insufficient to cover such shortfall, then the Required Amount will be withdrawn
from the Reserve Fund and applied to such shortfall (other than any shortfall in
amounts to be deposited into the Reserve Fund as set forth in
clause (ix) above). (Agreement, Section 3.03).
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"Interest Collections" with respect to any Collection Period will be
calculated as described under "Summary--The Revolving Period; Subsequent
Contracts and Subsequent Leased Vehicles". (SUBI Trust Agreement,
Section 10.01).
"Capped Origination Trust Administrative Expenses" will equal the amounts
sufficient to pay specified administrative costs and expenses of the Origination
Trust that are up to but not exceeding $100,000 in any calendar year. (SUBI
Trust Agreement, Section 10.01). "Capped Indenture Trustee Administrative
Expenses" will equal the amounts sufficient to pay the Indenture Trustee's
compensation and certain other expenses up to but not exceeding $50,000 in any
calendar year (or $100,000 in a calendar year in which an Indenture Event of
Default occurs with respect to which the Indenture Trustee sells or otherwise
disposes of the SUBI). "Capped Owner Trustee Administrative Expenses" will equal
amounts sufficient to pay the Owner Trustee's compensation and certain other
expenses up to but not exceeding $5,000 in any calendar year. (Agreement,
Section 1.01).
"Capped Contingent and Excess Liability Premiums" will equal the amounts
sufficient to pay the premiums then due on the portion of the Contingent and
Excess Liability Insurance Policies, up to but not exceeding $550,000 in any
calendar year.
"Covered Loss Amounts" for any Distribution Date will equal the lesser of
(i) the Investor Percentage of Loss Amounts for such Distribution Date and
(ii) amounts available for distribution described under "Description of the
Notes--Distributions on the Notes--Distributions of Interest" remaining after
application of clauses (i) through (ix) thereunder.
"Uncovered Loss Amounts" for any Distribution Date will equal the excess of
(i) the Investor Percentage of Loss Amounts for such Distribution Date over
(ii) Covered Loss Amounts for such Distribution Date.
A "Note Principal Loss Amount" with respect to any Distribution Date will
equal the sum of any Class A-1, Class A-2, Class A-3, Class A-4 and Class B Note
Principal Loss Amount and will represent a loss of principal in respect of Loss
Amounts allocable to the Notes and will arise when the Investor Percentage of
Interest Collections, Insured Residual Value Loss Amounts paid under the
Residual Value Insurance Policy, the Required Amount, the Transferor Amounts
and, with respect to any Class A-4 Note Principal Loss Amount, amounts otherwise
payable in respect of principal to the Class B Noteholders are not sufficient to
cover such loss. As described under "Description of the Notes--General", any
Note Principal Loss Amounts allocable to a Class of Class A Notes which are not
reimbursed as provided herein will reduce the Note Balance of such Class of
Class A Notes. (Agreement, Section 1.01).
The "Class A-1 Interest Carryover Shortfall" with respect to any
Distribution Date will equal the excess, if any, of (i) the amount of interest
distributable on the Class A-1 Notes for such Distribution Date and any
outstanding Class A-1 Interest Carryover Shortfall from the immediately
preceding Distribution Date plus interest at the Class A-1 Note Rate on such
outstanding Class A-1 Interest Carryover Shortfall from such immediately
preceding Distribution Date through the current Distribution Date, over
(ii) the amount of interest distributed to the Class A-1 Noteholders on such
Distribution Date. The "Class A-2 Interest Carryover Shortfall", the "Class A-3
Interest Carryover Shortfall", the "Class A-4 Interest Carryover Shortfall" and
the "Class B Interest Carryover Shortfall" will be calculated in the same manner
as the Class A-1 Interest Carryover Shortfall, appropriately modified to relate
to the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes and the
Class B Notes, respectively. (Agreement, Section 1.01).
The "Class B Note Principal Carryover Shortfall", with respect to any
Distribution Date relating to the Amortization Period from and after the
Distribution Date on which the Class A-3 Notes are paid in full, will equal the
amount, if any, of the Class B Percentage of the Investor Percentage of
Principal Collections for such Distribution Date that is instead applied to the
distribution of principal to the Class A Noteholders, pursuant to
clauses (iii), (x) and (xi) above. The Class B Percentage of the Investor
Percentage of Principal Collections will be applied for such purposes only to
the extent that the other amounts available therefor are insufficient.
The "Class B Allocation Percentage" with respect to any Distribution Date
will mean the Class B Note Balance as a percentage of the Note Balance,
calculated as of the last day of the related Collection Period.
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The "Voting Interests" of the (i) Class A Notes will be allocated among the
Class A-1, Class A-2, Class A-3 and Class A-4 Noteholders or Note Owners, as the
case may be, in accordance with their respective Class Note Balances, as the
context may require, and (ii) Class B Notes will be allocated among the Class B
Noteholders in accordance with the Class B Note Balance represented thereby.
Notwithstanding the foregoing, in certain circumstances, any Class A Notes or
Class B Notes, as the case may be, held or beneficially owned by ALF LLC, ALF
L.P., the Transferor, WOLS LLC, World Omni or any of their respective affiliates
shall be excluded from such determination. (Agreement, Section 1.01).
The "Required Amount" will equal the lesser of (i) the amount on deposit in
the Reserve Fund on the related Deposit Date after all deposits thereto
(including pursuant to clause (ix) above) and (ii) the amount, if any, by which
(a) the full amount distributable on the related Distribution Date pursuant to
clauses (i) through (viii) and (x) through (xvi) above exceeds (b) the sum of
(1) the Investor Percentage of Interest Collections for the related Collection
Period above (plus in the case of clause (ii) above, the Class A Net Swap
Receipt for the related Distribution Date), (2) any Transferor Amounts applied
to cover such distributable amount on such Distribution Date, and (3) any
Insured Residual Value Loss Amounts paid under the Residual Value Insurance
Policy with respect to the related Collection Period. (Agreement,
Sections 1.01, 3.03 and 3.04). For further details regarding the Reserve Fund,
see "Security for the Notes--The Reserve Fund".
Application and Distributions of Principal
Revolving Period. No principal will be payable to the Class A Noteholders
until the January 2000 Distribution Date or, upon the occurrence of an Early
Amortization Event, until the Distribution Date in the month immediately
succeeding the month in which such Early Amortization Event occurs.
On a Transfer Date related to any Collection Period during the Revolving
Period, the Servicer will identify lease contracts and the related leased
vehicles of the Origination Trust that meet the eligibility criteria described
under "The Contracts" and are not evidenced by the SUBI or any Other SUBI. On
each Transfer Date, the Servicer, acting on behalf of the Origination Trustee,
will allocate as SUBI Assets additional lease contracts and related leased
vehicles so identified having aggregate Discounted Principal Balances as of the
last day of the preceding Collection Period (each, a "Subsequent Cutoff Date"
and, together with the Initial Cutoff Date, the "Cutoff Dates") approximately
equal to, but not greater than, all Principal Collections collected or received
since the Initial Cutoff Date (including Loss Amounts that otherwise would be
reimbursed to the Noteholders which for this purpose are treated as Principal
Collections, as described under "Description of the Notes--Distributions on the
Notes--Distributions of Interest") that have not yet been reinvested in
Subsequent Contracts and Subsequent Leased Vehicles as described herein. Upon
such allocation, the related lease contracts and leased vehicles will become
Subsequent Contracts and Subsequent Leased Vehicles and accordingly will become
SUBI Assets. No partial interest in lease contracts (and the related leased
vehicles) will be so allocated as SUBI Assets. Coincident with such allocation,
the Servicer, acting on behalf of the Indenture Trustee, will transfer from the
SUBI Collection Account an amount of unreinvested Principal Collections equal to
the aggregate Discounted Principal Balances of the related Subsequent Contracts
as of the related Subsequent Cutoff Date to an account maintained by the
Origination Trustee to hold collections with respect to the Origination Trust
Assets that are not SUBI Assets.
Any Principal Collections (and Loss Amounts that otherwise would be
reimbursed to the Noteholders) that are not so reinvested may be reinvested in
additional Subsequent Contracts and Subsequent Leased Vehicles on one or more
subsequent Transfer Dates prior to the end of the Revolving Period. In the event
that on the twenty-fifth day of any month (beginning December 1998) during the
Revolving Period the amount of such Principal Collections and Loss Amounts as of
the last day of the immediately preceding month that have not been reinvested in
Subsequent Contracts and Subsequent Leased Vehicles exceeds $1,000,000, an Early
Amortization Event will occur, the Revolving Period will terminate prior to the
Amortization Date and any unreinvested Principal Collections at the end of the
Revolving Period will be distributed as principal to the Trust and then to
Noteholders on the immediately succeeding Distribution Date. (Servicing
Agreement, Section 8.02; SUBI Trust Agreement, Section 11.02; Agreement,
Section 8.01).
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"Collections" and "Principal Collections" with respect to any Collection
Period will be calculated as described under "Summary--The Revolving Period;
Subsequent Contracts and Subsequent Leased Vehicles". (SUBI Trust Agreement,
Section 10.01).
Amortization Period. On each Distribution Date beginning with the
Distribution Date in the month following the month in which the Amortization
Period commences and ending on the Distribution Date on which the Class A-3
Notes have been paid in full, the Indenture Trustee will distribute an amount
equal to the Investor Percentage of all Principal Collections collected or
received in respect of the related Collection Period allocable to the Notes as
principal first to the Class A-1 Noteholders until the Class A-1 Notes have been
paid in full, second, to the Class A-2 Noteholders until the Class A-2 Notes
have been paid in full, third, to the Class A-3 Noteholders until the Class A-3
Notes have been paid in full, and thereafter the Class A Percentage and the
Class B Percentage of any such remaining Principal Collections will be
distributed as principal to the Class A-4 Noteholders and the Class B
Noteholders, respectively. The Indenture Trustee will also distribute to Class
A-1 Noteholders on the Distribution Date in the month following the month in
which the Amortization Period commences the Class A Percentage of the Investor
Percentage of the sum of (i) any Principal Collections that were not reinvested
in Subsequent Contracts and Subsequent Leased Vehicles as of the end of the
Revolving Period and (ii) any Unallocated Principal Collections on deposit in
the Distribution Account at the time the Amortization Period commences. The
aggregate distributions of principal to the Noteholders of each Class of
Class A Notes will not exceed the Initial Note Balances of such Class of Notes.
(SUBI Trust Agreement, Section 11.02; Indenture, Section 2.06; Agreement,
Section 3.03).
In general, no principal payments (including amounts with respect to
Covered Loss Amounts) will be made on the Class A-2 Notes until the Class A-1
Notes have been paid in full, on the Class A-3 Notes until the Class A-1 and
Class A-2 Notes have been paid in full, or on the Class A-4 or Class B Notes
until the Class A-1, Class A-2 and Class A-3 Notes have been paid in full.
Following the reduction of the Note Balance of the Class B Notes to zero,
principal payments will be distributed on a pro rata basis to the Class A Notes.
Uncovered Loss Amounts will be allocated first to the Class B Notes until the
Note Balance of the Class B Notes has been reduced to zero and then to the
Class A Notes, pro rata, based on the Class A-1, Class A-2, Class A-3 and
Class A-4 Allocation Percentages. Amounts with respect to Uncovered Loss Amounts
will not be allocated or reimbursed to any Noteholder once the related Notes
have been paid in full. In addition, the Investor Percentage of the net proceeds
of any sale or other disposition of the SUBI, the SUBI Certificate or other
property of the Trust, which may occur under certain circumstances involving an
Indenture Event of Default (as described under "Additional Agreement
Provisions--The Indenture--Events of Default"), to the extent such net proceeds
constitute Principal Collections, will be distributed first, on a pro rata
basis, to the Class A Swap Counterparty based on the termination payment, if
any, due and to the Class A Noteholders based on the respective Class A Note
Balances until the Class A Swap Counterparty and the Class A Notes have been
paid in full, and second, to the Class B Noteholders. See "Additional Document
Provisions--The Indenture--Events of Default."
In addition, on any Distribution Date relating to the Amortization Period
from and after the Distribution Date on which the Class A-3 Notes are paid in
full, but only to the extent that other amounts available therefor are
insufficient, amounts that would otherwise be distributable to the Class B
Noteholders in respect of the Class B Percentage of the Investor Percentage of
Principal Collections collected or received in respect of the related Collection
Period will instead be distributed as principal payments to the Class A-4
Noteholders up to an amount equal to the sum of (i) the Class A-4 Allocation
Percentage of the Investor Percentage of Loss Amounts incurred during the
related Collection Period, (ii) any Class A-4 Note Principal Loss Amounts and
(iii) accrued and unpaid interest on any Class A-4 Note Principal Loss Amounts,
as set forth under "Description of the Notes--Distributions on the
Notes--Distributions of Interest".
Principal payments made during the Amortization Period in respect of the
Class A-1 Notes, the Class A-2 Notes or Class A-3 Notes, as applicable, will
consist primarily of the Investor Percentage of all Principal Collections during
the related Collection Period. Principal payments made in respect of the
Class A-4 Notes and the Class B Notes (once the Class A-1 Notes, Class A-2 Notes
and Class A-3 Notes have been paid in full) will be based upon a calculation of
the Class A Percentage and the Class B Percentage of the Investor Percentage of
such Principal Collections.
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THE ACCOUNTS
The Distribution Account
On or prior to the Closing Date, the Servicer will establish a trust
account with and in the name of the Indenture Trustee for the benefit of the
Noteholders and the Transferor, as holder of the Transferor Certificate, from
which all payments with respect to the Notes will be made (the "Distribution
Account"). (Agreement, Section 3.01). Within one Business Day of receipt, the
Servicer will deposit all Insured Residual Value Loss Amounts paid under the
Residual Value Insurance Policy (if they relate to the Amortization Period) into
the Distribution Account (Agreement, Section 3.02). On each Deposit Date, all
Principal Collections and Interest Collections with respect to the related
Collection Period and the Class A Net Swap Receipt will be remitted to the
Distribution Account. Such deposits will be made from, among other sources,
(i) monies on deposit in the SUBI Collection Account or the Reserve Fund and
(ii) the Transferor in the case of exercise of its right to purchase the SUBI
represented by the SUBI Certificate when the Note Balance is less than or equal
to 10% of the Initial Note Balance.
The SUBI Collection Account
On or prior to the Closing Date, the Origination Trustee will establish a
trust account with and in the name of the Indenture Trustee for the benefit of
the Noteholders and the Transferor, as holder of the Transferor Certificate,
into which collections on or in respect of the Contracts and the Leased Vehicles
generally will be deposited (the "SUBI Collection Account" and, together with
the Distribution Account and the Reserve Fund, the "Accounts"). (SUBI Trust
Agreement, Section 12.01).
Deposits into the SUBI Collection Account. Deposits into the SUBI
Collection Account will include, but will not be limited to, the following
payments made in respect of the SUBI Assets: (i) Monthly Payments; (ii) early
payments of the Outstanding Principal Balance of a Contract, including an amount
equal to the Residual Value of the related Leased Vehicle (each, a
"Prepayment"); (iii) Matured Leased Vehicle Proceeds, Repossessed Vehicle
Proceeds and other Liquidation Proceeds, and Insurance Proceeds; (iv) Extension
Fees; (v) Payments Ahead; (vi) Advances made by the Servicer; (vii) Reallocation
Payments by World Omni (together with, under certain circumstances during the
Amortization Period, Reallocation Deposit Amounts) in respect of certain
Contracts as to which an uncured breach of certain representations and
warranties or certain servicing covenants has occurred; (viii) Undistributed
Transferor Excess Collections and (ix) with respect to the Revolving Period,
Insured Residual Value Loss Amounts paid under the Residual Value Insurance
Policy. (Servicing Agreement, Sections 2.02, 8.02, 9.02 and 9.04; SUBI Trust
Agreement, Section 12.01).
"Insurance Proceeds" will include recoveries pursuant to the Contingent and
Excess Liability Insurance Policies and the comprehensive, collision, public
liability and property damage insurance policy required to be obtained and
maintained by the lessee pursuant to each Contract (or payment by the Servicer
under the Servicing Agreement of such amounts under the circumstances described
in "Additional Document Provisions--The Servicing Agreement--Insurance on Leased
Vehicles"), and amounts paid by any insurer under any other insurance policy
relating to the Contracts, the related lessees or the Leased Vehicles, but will
not include Insured Residual Value Loss Amounts paid under the Residual Value
Insurance Policy. (SUBI Trust Agreement, Section 10.01).
Monthly Payments made by the lessees under the Contracts normally will be
paid by mail and deposited into a lock box maintained by the Servicer, and then
deposited in the SUBI Collection Account within two Business Days after receipt.
Within two Business Days after receipt by the Servicer of all other payments on
or in respect of the Contracts or the Leased Vehicles other than Security
Deposits and Insured Residual Value Loss Amounts paid under the Residual Value
Insurance Policy, including without limitation any Monthly Payments delivered
directly to the Servicer or World Omni (in the event that World Omni is no
longer the Servicer), Matured Leased Vehicle Proceeds, Repossessed Vehicle
Proceeds and other Liquidation Proceeds, Insurance Proceeds, Extension Fees,
Payments Ahead and Prepayments (regardless of whether made by lessees or other
persons), such payments shall be remitted to the SUBI Collection Account.
(Servicing Agreement, Sections 2.02 and 9.02).
Notwithstanding the foregoing, the Servicer may remit all payments
collected or received by it on or in respect of the Contracts and the Leased
Vehicles to the SUBI Collection Account on a less frequent basis if (i) it
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obtains a letter of credit, surety bond or insurance policy (collectively, the
"Servicer Letter of Credit") under which demands for payment may be made to
secure timely remittance of monthly collections to the SUBI Collection Account
and (ii) the Indenture Trustee is provided with confirmation (written or oral)
from each Rating Agency to the effect that the use of such alternative
remittance schedule will not result in the qualification, reduction or
withdrawal of its then-current rating of any Class of Notes. (Servicing
Agreement, Section 9.02).
Net Deposits. So long as World Omni is the Servicer, the Servicer will be
permitted to deposit in the Distribution Account only the net amount
distributable to the Indenture Trustee, as pledgee of the SUBI, and the
Transferor on the related Deposit Date. The Servicer, however, will account to
the Indenture Trustee, the Origination Trustee, the Noteholders and the
Transferor as if all of the deposits and distributions described herein were
made individually. (Agreement, Section 3.05; Servicing Agreement, Section 9.02).
This "net deposit" provision will be for the administrative convenience of the
parties involved and will not affect amounts required to be deposited into the
Accounts.
Withdrawals from the SUBI Collection Account. On each Deposit Date, all
Principal Collections and Interest Collections on deposit in the SUBI Collection
Account in respect of the related Collection Period (including that portion of
Payments Ahead representing Monthly Payments due in such Collection Period) will
be deposited into the Distribution Account. During the Revolving Period,
however, Principal Collections will be retained in the SUBI Collection Account
for reinvestment in Subsequent Contracts and Subsequent Leased Vehicles as
described under "Description of the Notes--Distributions on the
Notes--Application and Distributions of Principal--Revolving Period".
(Agreement, Section 3.02; SUBI Trust Agreement, Section 12.01; Servicing
Agreement, Sections 2.02, 8.02 and 9.02).
In the event that on any date the Servicer supplies the Origination Trustee
and the Indenture Trustee with an officer's certificate setting forth the basis
for such withdrawal, the Indenture Trustee shall remit to the Servicer, without
interest and prior to any other distribution from the SUBI Collection Account on
such date, monies from the SUBI Collection Account representing
(i) unreimbursed Matured Leased Vehicle Expenses, Repossessed Vehicle Expenses
and other Liquidation Expenses; (ii) delinquent Monthly Payments with respect to
which the Servicer has made an unreimbursed Advance; and (iii) an amount equal
to any unreimbursed Advances that the Servicer has concluded are Nonrecoverable
Advances. (Servicing Agreement, Section 9.02). For further information regarding
Nonrecoverable Advances, see "Additional Document Provisions--The Servicing
Agreement--Advances".
Maintenance of the Accounts
The Accounts will be maintained with the Indenture Trustee so long as
either (i) the short-term unsecured debt obligations of the Indenture Trustee
are rated at least P-1 by Moody's and A-1 by Standard & Poor's (and, if such
obligations are rated by Fitch, at least F-1 by Fitch) (the "Required Deposit
Ratings") or (ii) the Indenture Trustee is a depository institution or trust
company having a long-term unsecured debt rating from Moody's of at least Baa3
and corporate trust powers and the related Account is maintained in a segregated
trust account in the corporate trust department of the Indenture Trustee. If the
Indenture Trustee at any time does not qualify under either of these criteria,
the Servicer shall, with the assistance of the Indenture Trustee, cause the
related Account to be moved to a depository institution organized under the laws
of the United States or any state thereof whose short-term unsecured debt
obligations are rated at least equal to the Required Deposit Ratings or moved to
a segregated trust account located in a corporate trust department of a
depository institution or trust company as described above. (Agreement,
Sections 3.01 and 3.04; SUBI Trust Agreement, Sections 12.01 and 12.03;
Servicing Agreement, Section 9.02).
Permitted Investments
Upon receipt of directions from the Servicer, the Indenture Trustee shall
invest funds on deposit in the Accounts in one or more Permitted Investments
maturing (i) no later than the Business Day immediately preceding the Deposit
Date immediately succeeding the date of such investment, in the case of amounts
on deposit in the SUBI Collection Account or the Reserve Fund or (ii) on the
Business Day immediately preceding the Distribution Date immediately succeeding
the date of such investment in the case of amounts on deposit in the
Distribution Account. Notwithstanding the foregoing, (a) investments on which
the entity at which the related
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Account is located is the obligor may mature on the related Deposit Date or
Distribution Date, as the case may be, and (b) investments during the Revolving
Period of Principal Collections on deposit in the SUBI Collection Account may
mature on such dates as in the Servicer's discretion will maintain sufficient
cash to acquire Subsequent Contracts and Subsequent Leased Vehicles on the
related Transfer Dates.
All income or other gain from the foregoing investments generally shall be
retained in the related Account with such gain in respect of funds in the SUBI
Collection Account and the Distribution Account generally being treated as
Interest Collections received in respect of the related Collection Period. Any
loss resulting from such investments shall be charged to the related Account.
(SUBI Trust Agreement, Section 12.01; Agreement, Sections 3.01 and 3.04;
Servicing Agreement, Section 9.02). "Permitted Investments" will be specified in
the SUBI Trust Agreement and will be limited to investments that meet the
criteria of Moody's and Standard & Poor's (and, if such investments are rated by
Fitch, of Fitch) from time to time as being consistent with its then-current
rating of each Class of Notes. (Agreement, Section 1.01).
EARLY AMORTIZATION EVENTS
As described above, the Revolving Period will continue until the close of
business on the last day of November 1999 and the Amortization Period will begin
on December 1, 1999 and continue to the earlier of the payment in full of the
Notes and the termination of the Trust, unless an Early Amortization Event
occurs prior to any of such dates, thereby commencing the Amortization Period.
An "Early Amortization Event" will mean any of the following events:
(i) failure by the Servicer (a) to make any payment or deposit
required with respect to the SUBI, the SUBI or the Notes under the
Agreement, the SUBI Trust Agreement or the Servicing Agreement, within five
Business Days after the date the payment or deposit is required to be made,
or (b) to deliver a Servicer's Certificate within ten Business Days after
any Determination Date;
(ii) failure by the Transferor or the Servicer duly to observe or
perform in any material respect any other of its covenants or agreements in
the Agreement (other than those described in clause (i) above), the SUBI
Trust Agreement or the Servicing Agreement, which failure materially and
adversely affects the rights of holders of the SUBI or Noteholders and
which continues unremedied for 60 days after the giving of written notice
of such failure (a) to the Transferor or the Servicer, as the case may be,
by the Indenture Trustee or the Origination Trustee or (b) to the
Transferor or the Servicer, as the case may be, and to the Indenture
Trustee by holders of Notes evidencing not less than 25% of the Voting
Interests of the Class A Notes and the Class B Notes, voting together as a
single class;
(iii) failure to cure the inaccuracy of certain representations,
warranties and certificates of the Transferor or the Servicer in the
Agreement, the SUBI Trust Agreement or the Servicing Agreement, which
failure materially and adversely affects the rights of holders of the SUBI
or Noteholders and which continues uncured for 60 days after notice is
given as described in clause (ii) above; provided that an Early
Amortization Event pursuant to this subparagraph (iii) will not be deemed
to occur if a related Reallocation Payment is due in connection with such
breach and has been paid by the Servicer in accordance with the Indenture,
the Agreement, the backup security agreement (the "Backup Security
Agreement"), the SUBI Trust Agreement or the Servicing Agreement;
(iv) the occurrence of certain Insolvency Events relating to the
Transferor;
(v) creation of any lien or encumbrance not otherwise permitted by the
Indenture, the Agreement, the Backup Security Agreement, the SUBI Trust
Agreement or the Servicing Agreement on the SUBI Assets, which lien or
encumbrance is not released or bonded over within 60 days of its creation;
(vi) the Transferor, the Trust or the Origination Trust becomes
subject to registration as an "investment company" for purposes of the
Investment Company Act of 1940, as amended;
(vii) if on the twenty-fifth day of any month (beginning December,
1998) the amount of Principal Collections and Loss Amounts that otherwise
would be available to be reimbursed to the Noteholders as of the last day
of the immediately preceding month that have not been reinvested in
Subsequent Contracts and Subsequent Leased Vehicles exceeds $1,000,000;
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(viii) an Event of Servicing Termination or an Event of Default under
the Indenture (an "Indenture Event of Default") occurs;
(ix) if on any Distribution Date the aggregate amount withdrawn from
the Reserve Fund and deposited into the Distribution Account on or prior to
such Distribution Date (without giving effect to any deposits into the
Reserve Fund) exceeds approximately $3,006,556 (i.e., 0.25% multiplied by
the Aggregate Net Investment Value as of the Initial Cutoff Date);
(x) any Leased Vehicle is no longer covered by the Residual Value
Insurance Policy or one or more policies with substantially similar
coverage and provisions issued by an insurer acceptable to each Rating
Agency, or an alternative mechanism to support Residual Values of Leased
Vehicles implemented in accordance with the procedures required for
amendment of the Agreement (as described in "Additional Document
Provisions--Additional Agreement Provisions--Amendment");
(xi) the failure of the Class A Swap Counterparty to make a required
payment within five calendar days of the date such payment was due; or
(xii) the failure of the Trust or the Class A Swap Counterparty,
within 30 calendar days of the date on which the counterpary ratings
of the Class A Swap Counterparty fall below the required ratings of any of
the Ratings Agencies as specified in the Agreement, to (i) obtain a
replacement interest rate swap agreement with terms substantially the same
as the Class A Interest Rate Swap or (ii) establish any other arrangement
satisfactory to the applicable Rating Agency, in any case such that the
Rating Agency will not reduce or withdraw its ratings of any Class of the
Class A Notes.
The Amortization Period will commence on the day as of which an Early
Amortization Event is deemed to have occurred. (Agreement, Section 8.01). In
such event, distributions of principal to the Noteholders will begin on the
Distribution Date in the month following the month in which the Early
Amortization Event occurs. If, because of the occurrence of an Early
Amortization Event, the Amortization Period begins earlier than the Amortization
Date, Class A-1 Noteholders will begin receiving distributions of principal
earlier than they would otherwise have under the Agreement, and Class A-2,
Class A-3 and Class A-4 Noteholders may begin receiving distributions of
principal earlier than they would otherwise have under the Agreement, which may
shorten the final maturity of the related Class of Class A Notes.
STATEMENTS TO NOTEHOLDERS
On each Distribution Date, the Indenture Trustee will include with each
distribution to each Noteholder as of the close of business on the related
Record Date (which, in the case of the Class A Notes, shall be Cede as the
nominee of DTC unless Definitive Notes are issued under the limited
circumstances described herein) a statement, setting forth with respect to such
Distribution Date or the related Collection Period, among other things, the
following:
(i) the Investor Percentages for Interest Collections and Principal
Collections for such Collection Period;
(ii) the amount being distributed to Noteholders (the "Note
Distribution Amount");
(iii) the amount of the Note Distribution Amount allocable to interest
and to principal on each Class of Notes;
(iv) the amount of the Note Distribution Amount allocable to any
Class A-1 Interest Carryover Shortfall, any Class A-2 Interest Carryover
Shortfall, any Class A-3 Interest Carryover Shortfall, any Class A-4
Interest Carryover Shortfall and any Class B Interest Carryover Shortfall;
(v) the amount, if any, of any unpaid Class A-1 Interest Carryover
Shortfall, unpaid Class A-2 Interest Carryover Shortfall, unpaid Class A-3
Interest Carryover Shortfall, unpaid Class A-4 Interest Carryover Shortfall
and unpaid Class B Interest Carryover Shortfall, after giving effect to
distribution of the Note Distribution Amount;
(vi) the Note Balance, the Class A-1 Note Balance, the Class A-2 Note
Balance, the Class A-3 Note Balance, the Class A-4 Note Balance, the
Class B Note Balance, the Class A-1 Note Factor, the Class A-2
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Note Factor, the Class A-3 Note Factor, the Class A-4 Note Factor, the
Class A-1 Allocation Percentage, the Class A-2 Allocation Percentage, the
Class A-3 Allocation Percentage, the Class A-4 Allocation Percentage and
the Class B Allocation Percentage as of such Distribution Date, in each
case after giving effect to distribution of the Note Distribution Amount;
(vii) the aggregate amount, if any, of the reimbursement of Covered
Loss Amounts and Uncovered Loss Amounts included in distribution of the
Note Distribution Amount and the amount thereof allocated to each Class of
Noteholders;
(viii) the amount of the Note Distribution Amount allocable to
reimbursement of previous Class A-1 Note Principal Loss Amounts, Class A-2
Note Principal Loss Amounts, Class A-3 Note Principal Loss Amounts,
Class A-4 Note Principal Loss Amounts and Class B Note Principal Loss
Amounts, in each case together with the amount of accrued interest thereon
included in such distribution;
(ix) the amount, if any, of the aggregate unreimbursed Class A-1 Note
Principal Loss Amounts, Class A-2 Note Principal Loss Amounts, Class A-3
Note Principal Loss Amounts, Class A-4 Note Principal Loss Amounts and
Class B Note Principal Loss Amounts, after giving effect to distribution of
the Note Distribution Amount;
(x) the amount of any unreimbursed Class B Note Principal Carryover
Shortfall;
(xi) the Investor Percentage of the Servicing Fee;
(xii) the amount of any Required Amount included in the Note
Distribution Amount, the balance on deposit in the Reserve Fund on such
Distribution Date, after giving effect to withdrawals therefrom and
deposits thereto on such Distribution Date, the change in such balance from
the immediately preceding Distribution Date, the Reserve Fund Cash
Requirement and any Reserve Fund supplemental requirement;
(xiii) the Transferor Amount, if any, included in the Note
Distribution Amount;
(xiv) the Aggregate Net Investment Value as of the end of such
Collection Period;
(xv) the aggregate amount of Payments Ahead on deposit in the SUBI
Collection Account and the change in such amount from the immediately
preceding Distribution Date;
(xvi) the amounts of Advances made in respect of such Collection
Period and the amount of unreimbursed Advances on such Distribution Date;
(xvii) certain information used in determining compliance with the
Charge-off Test Rate and the Delinquency Test;
(xviii) the Insured Residual Value Loss Amount, if any, for such
Distribution Date; and
(xix) the Class A Net Swap Receipt or the Class A Net Swap Payment,
for such Distribution Date.
Each amount set forth pursuant to clauses (ii) through (v) and
(vii) through (x) above will be expressed in the aggregate and as a dollar
amount per $1,000 of original principal balance of a Class A Note or Class B
Note, as applicable. Copies of such statements may be obtained by Noteholders or
Note Owners by a request in writing addressed to the Indenture Trustee. In
addition, within the prescribed period of time for tax reporting purposes after
the end of each calendar year during the term of the Agreement, the Indenture
Trustee will mail to each person who at any time during such calendar year shall
have been a Class A or Class B Noteholder or a Note Owner, a statement
containing the sum of the amounts described in clauses (ii) through (vi) and
(viii) through (xi) above for the purpose of preparing such person's federal
income tax return. (Agreement, Section 3.06).
TERMINATION OF THE TRUST; REDEMPTION OF THE NOTES
The respective obligations and responsibilities of the Transferor and the
Indenture Trustee created by the Agreement will terminate upon the earliest to
occur of (i) the disposition of the SUBI, or its expiration or termination by
virtue of the maturity, sale or other liquidation, as the case may be, of the
last outstanding Contract and Leased Vehicle evidenced by the SUBI, and the
distribution of all proceeds thereof, together with all amounts on deposit in
the Accounts and the Reserve Fund, in the manner prescribed in the Agreement,
(ii) the
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day following the Distribution Date on which the Notes have been paid in full
and after which there is no unreimbursed Note Principal Loss Amount or Class B
Note Principal Carryover Shortfall (together with accrued interest thereon) and
(iii) the purchase of the corpus of the Trust and the resulting redemption of
the Notes as described below. In order to avoid excessive administrative
expenses, the Transferor will be permitted at its option to purchase all of the
assets of the Trust on any Distribution Date if, either before or after giving
effect to any payment of principal required to be made on such Distribution
Date, the Note Balance is less than or equal to 10% of the Initial Note Balance.
The purchase price will be equal to the greater of (i) the sum of the Class A
Note Balance and the Class B Note Balance, in each case plus accrued and unpaid
interest thereon at the related Note Rate, plus certain other accrued and unpaid
amounts, if any, due to the Noteholders or the Servicer, and (ii) the Aggregate
Net Investment Value as of the last day of the preceding Collection Period. If
the Transferor purchases the assets of the Trust, the Indenture Trustee will
furnish a redemption notice to each Noteholder not more than 30 days and not
less than 15 days prior to the applicable Redemption Date. Failure to give
notice of redemption, or any defect in the notice, to any Noteholder of any Note
selected for redemption will not impair or affect the validity of the redemption
of any Note. The Notes will, on the Redemption Date, become due and payable and
no interest will accrue on the Notes for any period after such Redemption Date.
(Agreement, Sections 7.01 and 7.02; Indenture, Section 2.06).
The final distribution to any Noteholder will be made only upon surrender
and cancellation of such Noteholder's Note at an office or agency of the
Indenture Trustee specified in the notice of termination. Any funds remaining
that are payable in such final distribution to a Noteholder, after the Indenture
Trustee has taken certain measures to locate such Noteholder and such measures
have failed, will be distributed to the Transferor. (Indenture, Section 2.06).
BOOK-ENTRY REGISTRATION
Note Owners may hold through DTC (in the United States), or Cedel or
Euroclear (in Europe), which in turn hold through DTC, if they are participants
in such systems, or indirectly through organizations that are participants in
such systems ("Participants").
Cede, as nominee for DTC, will hold the Class A Notes. Cedel and Euroclear
will hold omnibus positions on behalf of their Participants through customers'
securities accounts in the Depositaries which in turn will hold such positions
in customers' securities accounts in the Depositaries' names on the books of
DTC. Unless and until Definitive Notes are issued, it is anticipated that the
only Class A Noteholder will be Cede, as the nominee of DTC. Note Owners will
only be permitted to exercise their rights indirectly through DTC.
Transfers between Participants in DTC ("DTC Participants") will occur in
accordance with DTC rules. Transfers between Participants in Cedel ("Cedel
Participants") and Participants in Euroclear ("Euroclear Participants") will
occur in accordance with their respective 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 Cedel or Euroclear by its Depositary.
However, each such cross-market transaction will require delivery of
instructions to Cedel or Euroclear by the counterparty in such system in
accordance with its rules and procedures and within its established deadlines
(European time). Cedel or Euroclear 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 related Depositaries.
Because of time-zone differences, credits of securities received in Cedel
or Euroclear as a result of a transaction with a DTC Participant will be made
during subsequent securities settlement processing and dated the business day
following the DTC settlement date. Such credits or any transactions in such
securities settled during such processing will be reported to the relevant Cedel
Participants or Euroclear Participants on such business day. Cash received in
Cedel or Euroclear as a result of sales of Class A Notes by or through a Cedel
Participant or Euroclear Participant to a DTC Participant will be received with
value on the DTC settlement date but will be available in the relevant Cedel or
Euroclear cash account only as of the business day following settlement in DTC.
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DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the UCC in effect in the State of New York and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that DTC Participants deposit with DTC. DTC also facilitates
the clearance and settlement of securities transactions among DTC Participants
through electronic computerized book-entry changes in accounts of DTC
Participants, thereby eliminating the need for physical movement of securities
certificates. DTC Participants include securities brokers and dealers (including
the Underwriters), banks, trust companies, clearing corporations and certain
other organizations. Indirect access to the DTC system also is available to
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a DTC Participant, either directly or indirectly
(the "Indirect DTC Participants"). The rules applicable to DTC and DTC
Participants are on file with the Commission.
Note Owners that are not DTC Participants or Indirect DTC Participants but
that desire to purchase, sell or otherwise transfer ownership of, or an interest
in, Class A Notes under the DTC System may do so only through DTC Participants
or Indirect DTC Participants. DTC Participants will receive a credit for the
Class A Notes in DTC's records. The ownership interest of each Note Owner in
turn will be recorded on the DTC Participants' and Indirect DTC Participants'
respective records. Note Owners will not receive written confirmation from DTC
of their purchase, but Note Owners are expected to receive written confirmations
providing details of the transaction, as well as periodic statements of their
holdings, from the DTC Participant or Indirect DTC Participant through which the
Note Owner entered into the transaction. Transfers of ownership interests in the
Class A Notes will be accomplished by entries made on the books of DTC
Participants acting on behalf of Note Owners.
To facilitate subsequent transfers, all Class A Notes deposited by DTC
Participants with DTC will be registered in the name of Cede, as nominee of DTC.
The deposit of Class A Notes with DTC and their registration in the name of Cede
will effect no change in beneficial ownership. DTC will have no knowledge of the
actual Note Owners and its records will reflect only the identity of the DTC
Participants to whose accounts such Class A Notes are credited, which may or may
not be the Note Owners. DTC Participants and Indirect DTC Participants will
remain responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to DTC Participants,
by DTC Participants to Indirect DTC Participants and by DTC Participants and
Indirect DTC Participants to Note Owners will be governed by arrangements among
them, subject to any statutory or regulatory requirements as may be in effect
from time to time.
Principal and interest payments with respect to the Class A Notes will be
made to DTC. DTC's practice is to credit DTC Participants' accounts on each
Distribution Date in accordance with their respective holdings shown on DTC's
records unless DTC has reason to believe that it will not receive payment on
such Distribution Date. Payments by DTC Participants and Indirect DTC
Participants to Note Owners will be governed by standing instructions and
customary practices, as in the case with securities held for the accounts of
customers in bearer form or registered in "street name", and will be the
responsibility of such DTC Participant and Indirect DTC Participant and not of
DTC, the Indenture Trustee, the Owner Trustee, the Origination Trustee, the
Servicer or the Transferor, subject to any statutory or regulatory requirements
as may be in effect from time to time. Payment of principal of and interest on
the Class A Notes to DTC will be the responsibility of the Indenture Trustee,
disbursement of such payments to DTC Participants will be the responsibility of
DTC and disbursement of such payments to Note Owners will be the responsibility
of DTC Participants and Indirect DTC Participants. As a result, under the
book-entry format, Note Owners may experience some delay in their receipt of
payments.
Because DTC can only act on behalf of DTC Participants, who in turn act on
behalf of Indirect DTC Participants and certain banks, the ability of a Note
Owner to pledge Class A Notes to persons or entities that do not participate in
the DTC system, or otherwise take actions with respect to such Class A Notes,
may be limited due to the lack of a physical Note for such Class A Notes.
Neither DTC nor Cede will consent or vote with respect to the Class A
Notes. Under its usual procedures, DTC mails an "Omnibus Proxy" to the Indenture
Trustee as soon as possible after any applicable record date for such a consent
or vote. The Omnibus Proxy assigns Cede's consenting or voting rights to those
DTC Participants
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to whose accounts the Class A Notes are credited on that record date (identified
in a listing attached to the Omnibus Proxy). None of the Transferor, the
Servicer, the Origination Trustee, the Owner Trustee nor the Indenture Trustee
will have any liability for any aspect of the records relating to or payments
made on account of beneficial ownership interests of the Class A Notes held by
Cede, as nominee of DTC, or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
Cedel is incorporated under the laws of Luxembourg as a professional
depository. Cedel holds securities for 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 34 currencies, including United States dollars. Cedel
provides to 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 depositary, Cedel is subject to regulation
by the Luxembourg Monetary Institute. Cedel Participants are recognized
financial institutions around the world, including underwriters, securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations. Indirect access to Cedel is also available to others, such
as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Cedel Participant, either directly or indirectly.
Euroclear was created in 1968 to hold securities for 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 any of 34 currencies, including United States dollars. The Euroclear System
includes various other services, including securities lending and borrowing, and
interfaces with domestic markets in more than 25 countries generally similar to
the arrangements for cross-market transfers with DTC described above. Euroclear
is operated by the Brussels, Belgium office of Morgan Guaranty Trust Company of
New York (the "Euroclear Operator"), under contract with Euroclear Clearance
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 Board establishes policy for the
Euroclear System. Euroclear Participants include banks (including central
banks), securities brokers and dealers and other professional financial
intermediaries. 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 Euroclear, withdrawals of securities and
cash from Euroclear and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear Participants, and has no record of or relationship with persons
holding through Euroclear Participants.
Distributions with respect to Class A 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 and withholding in accordance with relevant United States tax laws and
regulations. For further information in this regard, see "Material Income Tax
Considerations--Federal Taxation--Federal Income Tax Consequences to Foreign
Investors" herein and "Global Clearance, Settlement and Tax Documentation
Procedures--Certain U.S. Federal Income Tax Documentation Requirements" in
Annex I hereto. Cedel or the Euroclear Operator, as the case may be, will take
any other action permitted to be taken by a Class A Noteholder on behalf of a
Cedel
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Participant or Euroclear Participant only in accordance with its relevant rules
and procedures and subject to the related 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 Class A 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.
DEFINITIVE NOTES
Definitive Notes will be issued to Note Owners rather than to DTC only if
(i) DTC is no longer willing or able to discharge its responsibilities with
respect to the Class A Notes, and neither the Indenture Trustee nor the
Transferor is able to locate a qualified successor, (ii) the Transferor, at its
option, elects to terminate the book-entry system through DTC or (iii) after an
Indenture Event of Default, Note Owners representing in the aggregate more than
50% of the Voting Interests of the Class A Notes (voting together as a single
class) advise the Indenture Trustee through DTC or its successor in writing that
the continuation of a book-entry system through DTC or its successor is no
longer in the best interest of Note Owners.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Indenture Trustee will be required to notify all Note
Owners, through Participants, of the availability through DTC of Definitive
Notes. Upon surrender by DTC of the certificates representing the related
Class A Notes and the receipt of instructions for re-registration, the Indenture
Trustee will issue Definitive Notes to Note Owners, who thereupon will become
Noteholders for all purposes of the Agreement. (Indenture, Section 2.12).
Payments on the related Class A Notes will thereafter be made by the
Indenture Trustee directly to holders of such Class A Notes in accordance with
the procedures set forth herein and to be set forth in the Indenture. Interest
payments and any principal payments on the Definitive Notes on each Distribution
Date will be made to holders in whose names the Definitive Notes were registered
at the close of business on the Record Date with respect to such Distribution
Date. Payments will be made by check mailed to the address of such holders as
they appear on the Note Register or, under the circumstances to be provided by
the Agreement, by wire transfer to a bank or depository institution located in
the United States and having appropriate facilities therefor. (Indenture,
Section 2.06). The final payment on any Class A Notes (whether Definitive Notes
or global certificates registered in the name of Cede representing the Class A
Notes), however, will be made only upon presentation and surrender of such
Definitive Notes or global certificates at the office or agency specified in the
notice of final distribution to Class A Noteholders. (Indenture, Section 2.06).
Definitive Notes will be transferable and exchangeable at the offices of
the Indenture Trustee or the Note Registrar to be set forth in the Agreement. No
service charge will be imposed for any registration of transfer or exchange, but
the Indenture Trustee may require payment of a sum sufficient to cover any tax
or other governmental charge imposed in connection therewith. (Indenture,
Section 2.04).
THE INDENTURE TRUSTEE
The Bank of New York will be the Indenture Trustee under the Indenture. The
Corporate Trust Office of the Indenture Trustee is located at 101 Barclay
Street, Floor 12 East, New York, New York 10286. The Bank of New York is not
affiliated with World Omni, although it does act as a service provider to World
Omni.
The Indenture Trustee may resign at any time, in which event the Trust will
be obligated to appoint a successor Indenture Trustee. Noteholders representing
in the aggregate more than 50% of the Voting Interests of the outstanding Notes
(voting together as a single class) may remove the Indenture Trustee by
delivering notice thereof to the Indenture Trustee and the Trust. The Trust may
also remove the Indenture Trustee if the Indenture Trustee ceases to be eligible
to continue as such under the Indenture, becomes legally unable to act or
becomes insolvent. In such circumstances, the Trust will be obligated to appoint
a successor Indenture Trustee. Any resignation or removal of the Indenture
Trustee and appointment of a successor Indenture Trustee will not become
effective until acceptance of the appointment by such successor Indenture
Trustee. (Indenture, Section 6.10).
The Indenture Trustee must be a corporation organized under the laws of a
state of the United States, the District of Columbia or the Commonwealth of
Puerto Rico, authorized to exercise corporate trust powers under
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those laws, and subject to supervision or examination by or state laws, with a
combined capital and surplus of at least $50,000,000 and a long-term deposit
rating no lower than Baa3 by Moody's, or must be otherwise acceptable to each
Rating Agency. As co-trustee or separate trustee need not meet these eligibility
requirements. (Indenture, Sections 6.08 and 6.14 ).
Noteholders representing in the aggregate more than 50% of the Voting
Interests of the outstanding Notes (voting together as a single class) generally
will have the power to direct any proceeding for any remedy available to the
Indenture Trustee under the Agreement, and the exercise of any trust or power
conferred on the Indenture Trustee by the Agreement (including actions by the
Indenture Trustee in its capacity as a party to, or a third-party beneficiary
of, the SUBI Trust Agreement or the Servicing Agreement). However, the Indenture
Trustee will not be required to follow such a direction if, after being advised
by counsel, it concludes that the action is unlawful, or if it in good faith
determines that the proceedings directed would be illegal, would subject it to
personal liability or would be unduly prejudicial to the rights of other
Noteholders. (Indenture, Section 5.14).
A Noteholder may institute proceedings under the Indenture, but only if
such holder previously has given to the Indenture Trustee written notice of
default and unless the Noteholders representing in the aggregate not less than
25% of the Voting Interests of the outstanding Notes (voting together as a
single class) have made written request upon the Indenture Trustee to institute
such proceeding in its own name as Indenture Trustee and have offered to the
Indenture Trustee reasonable indemnity and the Trustee for 60 days has neglected
or refused to institute any such proceeding. (Indenture, Section 5.09). The
Indenture Trustee will be under no obligation to exercise any of the rights or
powers vested in it by the Agreement or to make any investigation of matters
arising thereunder or to institute, conduct or defend any litigation thereunder
or in relation thereto at the request, order or direction of any of the
Noteholders, unless such holders have offered to the Indenture Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby. (Indenture, Section 6.03). Noteholders
will have no express right to institute a proceeding directly under the SUBI
Trust Agreement or the Servicing Agreement.
List of Noteholders
Upon a written request of the Servicer, the Indenture Trustee, as Note
Registrar, will provide to the Servicer within 15 days after receipt of such
request a list of the names and addresses of all Noteholders. In addition, three
or more Noteholders or Noteholders representing in the aggregate not less than
25% of the Voting Interests of any Class of outstanding Notes, upon compliance
by such Noteholders with certain provisions of the Agreement, may request that
the Indenture Trustee, as Note Registrar, afford such Noteholders access during
business hours to the current list of Noteholders for purposes of communicating
with other Noteholders with respect to their rights under the Indenture.
(Indenture, Section 7.02). For further information regarding communications with
Noteholders, see "Description of the Notes--Book-Entry Registration" and
"--Definitive Notes".
The Indenture will not provide for the holding of any annual or other
meetings of Noteholders.
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SECURITY FOR THE NOTES
GENERAL
The Notes will be secured by all of the property of the Trust, which will
primarily consist of the SUBI as evidenced by the SUBI Certificate, as more
fully described under "The Trust and the SUBI--The SUBI". The property of the
Trust will also include such amounts as from time to time are held in the
Reserve Fund and the Distribution Account. As described under "Certain Legal
Aspects of the Origination Trust and the SUBI--The SUBI" and "Certain Legal
Aspects of the Contracts and the Leased Vehicles--Back-up Security Interests",
the Indenture Trustee also will have a security interest in the Contracts and
Contract Rights susceptible of perfection by the filing of a financing statement
under the Uniform Commercial Code (the "UCC"). The Indenture Trustee will also
have a security interest in the SUBI Collection Account, the Distribution
Account and the Reserve Fund, the Contingent and Excess Liability Insurance
Policies and the Residual Value Insurance Policy described below and will be a
third-party beneficiary of the SUBI Trust Agreement and the Servicing Agreement.
In no event will the Owner Trustee or the Indenture Trustee be deemed to have a
perfected security interest in the Leased Vehicles.
THE RESERVE FUND
On or prior to the Closing Date, the Owner Trustee will establish a trust
account with and in the name of the Indenture Trustee for the benefit of the
Noteholders and the Transferor, as holder of the Transferor Certificate (the
"Reserve Fund"). The monies on deposit in the Reserve Fund will, as described
below, be applied on each Distribution Date to pay certain shortfalls in respect
of amounts collected with respect to the related Collection Period to be paid
from the Distribution Account and certain other shortfalls in respect of the
Residual Values of the Leased Vehicles, should, among other things, Transferor
Amounts and Insured Residual Value Loss Amounts paid under the Residual Value
Insurance Policy with respect to such Collection Period not be sufficient to
cover such shortfalls. In addition, to the extent not otherwise required to make
any of the payments described under "Description of the Notes--Distributions on
the Notes--Distributions of Interest", monies on deposit in the Reserve Fund
will be available to make payments to the Noteholders should Collections
ultimately be insufficient to reduce the Class A-1 Note Balance, the Class A-2
Note Balance, the Class A-3 Note Balance, the Class A-4 Note Balance or the
Class B Note Balance to zero. (Agreement, Sections 3.03 and 3.04).
The Reserve Fund Cash Requirement. The Reserve Fund will be created on or
prior to the Closing Date with the deposit by the Transferor of the Initial
Deposit. On each Distribution Date, the funds in the Reserve Fund will be
supplemented by (i) certain Interest Collections, (ii) all income realized on
the investment of amounts on deposit in the Reserve Fund in Permitted
Investments, net of losses resulting from such investments, and (iii) the
deposit of monies in respect of the related Collection Period remaining in the
Distribution Account after making all payments required to be made therefrom on
such Distribution Date prior to such deposit, including monies that otherwise
would be distributed to the Transferor as Transferor Amounts, until the amount
on deposit therein equals the Reserve Fund Cash Requirement then in effect.
Except as otherwise described below, the "Reserve Fund Cash Requirement" with
respect to any Distribution Date will equal the lesser of (i) approximately
$12,026,225 (i.e., 1.0% of the Aggregate Net Investment Value as of the Initial
Cutoff Date) and (ii) the Note Balance as of the related Distribution Date
(after giving effect to reductions in the Note Balance on such Distribution
Date).
So long as all of the Reserve Fund Tests (as described under "Security for
the Notes--The Reserve Fund--Reserve Fund Tests") are satisfied and there is no
RV Insurer Trigger Event or Downgrade Trigger Event, the Reserve Fund Cash
Requirement is expected to be approximately $12,026,225 for each Date relating
to the Revolving Period. (Agreement, Sections 3.03 and 3.04).
Other Reserve Fund Requirements. On each Deposit Date on which withdrawals
are to be made from the Reserve Fund in order (a) to deposit into the
Distribution Account an amount equal to the Required Amount, or (b) to make any
other payments to Noteholders or otherwise from the Reserve Fund, as described
under "Description of the Notes--Distributions on the Notes--Distributions of
Interest", to the extent that the amount on deposit in the Reserve Fund is
insufficient to make such deposits or payments (a "Reserve Fund Deficiency"),
the Transferor shall be required to deposit into the Reserve Fund an additional
cash amount which is limited to the lesser of (i) such Reserve Fund Deficiency,
and (ii) approximately $6,013,112 (i.e., 0.5% of the
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Aggregate Net Investment Value as of the Initial Cutoff Date), less all amounts
previously deposited by or on behalf of the Transferor into the Reserve Fund to
satisfy a Reserve Fund Deficiency (the "Reserve Fund Supplemental Requirement").
In the event (i) a conservator, receiver or bankruptcy trustee is appointed
by the RV Insurer, or if certain other events relating to the bankruptcy or
insolvency of the RV Insurer occur, or (ii) the Residual Value Insurance Policy
has been declared void or unenforceable by a court of competent jurisdiction in
a final judgment as to which the time for noting an appeal has expired and all
appeals have been decided, if one or more policies with substantially similar
aggregate coverage and provisions have not been issued by an insurer acceptable
to each Rating Agency nor has an alternative mechanism been implemented to
support the Residual Values of the Leased Vehicles in accordance with the
procedures required for amendment of the Agreement (as described in "Additional
Document Provisions--Additional Agreement Provisions--Amendment") (each such
event, an "RV Insurer Trigger Event"), then, within 60 days of notice thereof,
the Transferor shall be required to deposit into the Reserve Fund an additional
cash amount equal to the difference between (x) the greater of the Initial
Deposit and the amount then on deposit in the Reserve Fund, and
(y) approximately $42,091,787 (i.e., 3.5% of the Aggregate Net Investment Value
as of the Initial Cutoff Date) (the "RV Insurer Reserve Fund Supplemental
Requirement"). From such time until one or more policies are issued with
substantially similar aggregate coverage and provisions issued by an insurer
acceptable to each Rating Agency, or an alternative mechanism is implemented to
support the Residual Values of the Leased Vehicles as described above, the
Reserve Fund Cash Requirement shall be approximately $42,091,787 (i.e., 3.5% of
the Aggregate Net Investment Value as of the Initial Cutoff Date).
In the event that the RV Insurer's claims paying ability is downgraded to
"Aa3" or lower by Moody's, or below "AAA" by Standard & Poor's (or, if such
ability is rated by Fitch, below "AAA" by Fitch) (a "Downgrade Trigger Event"),
then within 60 days thereof, the Transferor shall either (i) cause one or more
policies to be issued with substantially similar aggregate coverage and
provisions by an insurer acceptable to each Rating Agency, or cause an
alternative mechanism to be implemented to support the Residual Values of the
Leased Vehicles in accordance with the procedures required for amendment of the
Agreement (as described in "Additional Document Provisions--Additional Agreement
Provisions--Amendment"), or (ii) deposit into the Reserve Fund any amount that
the Rating Agencies may require in order to maintain their then-current ratings
on each Class of Notes (the "Downgrade Reserve Fund Supplemental Requirement").
For so long as the Transferor elects to comply with the requirements of clause
(ii) rather than clause (i), the Reserve Fund Cash Requirement shall be such
amount as the Rating Agencies may require in order to maintain their
then-current ratings on each Class of Notes and the Rating Agencies may impose
additional conditions to the maintenance of their then-current ratings on each
Class of Notes, including the addition of further triggers for the application
of the Alternate Reserve Fund Formula described below (which tests generally
would be expected to relate to the Residual Values of the Leased Vehicles). If
the Transferor cannot comply with either clause (i) or clause (ii), or
determines in good faith that such compliance would not be commercially
reasonable, then all Excess Collections in respect of any Distribution Date,
after giving effect to all payments required to be made therefrom on such
Distribution Date, will be deposited into the Reserve Fund, rather than being
paid to the Transferor, regardless of the Reserve Fund Cash Requirement, and the
then-current ratings on each Class of Notes may be downgraded. On the
Distribution Date following the date on which the Transferor complies with
clause (i) or clause (ii), monies on deposit in the Reserve Fund in excess of
the Reserve Fund Cash Requirement shall be distributed to the Transferor (or to
the Noteholders to the extent allocable to the Accelerated Principal
Distribution Amount). (Agreement, Sections 1.01 and 3.04).
Payment of the Reserve Fund Supplemental Requirement, the RV Insurer
Reserve Fund Supplemental Requirement and the Downgrade Reserve Fund
Supplemental Requirement will be obligations of the Transferor with respect to
the Reserve Fund. In the event that there is a Reserve Fund Deficiency, an RV
Insurer Trigger Event or a Downgrade Trigger Event, the Reserve Fund
Supplemental Requirement, the RV Insurer Reserve Fund Supplemental Requirement
or the Downgrade Reserve Fund Supplemental Requirement, as the case may be, will
supplement the cash available in the Reserve Fund to the limited extent
described above. There can be no assurance that the Transferor will have
sufficient cash to fund all or a part of any Reserve Fund Deficiency or to meet
its obligation to pay any Reserve Fund Supplemental Requirement, RV Insurer
Reserve Fund Supplemental Requirement or Downgrade Reserve Fund Supplemental
Requirement. However, pursuant to the Support
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Agreement, World Omni has agreed under certain circumstances to provide or
arrange for financial assistance in order to ensure that the Transferor
maintains positive partners' capital. The Support Agreement will not constitute
a guarantee by World Omni of any obligations of the Transferor, including
payment of any Reserve Fund Supplemental Requirement, RV Insurer Reserve Fund
Supplemental Requirement or Downgrade Reserve Fund Supplemental Requirement. See
"The Transferor" for further information in this regard.
Reserve Fund Tests. Notwithstanding the foregoing calculations of the
Reserve Fund Cash Requirement and the supplemental requirements discussed above,
in the event that the Charge-off Rate Test or the Delinquency Test
(collectively, the "Reserve Fund Tests") is not satisfied as of any
Determination Date and no RV Insurer Trigger Event or Downgrade Trigger Event
has occurred and is continuing, the Reserve Fund Cash Requirement for the
related Distribution Date will be an amount calculated pursuant to a formula
(the "Alternate Reserve Fund Formula") that will be equal to the lesser of
(i) two times the Reserve Fund Cash Requirement and (ii) the Note Balance as of
such Distribution Date (after giving effect to any reduction in the Note Balance
on such Distribution Date). The Alternate Reserve Fund Formula will be utilized
to determine the Reserve Fund Cash Requirement on all future Distribution Dates
until the Distribution Date as of which the related Reserve Fund Test is
satisfied and all other Reserve Fund Tests are satisfied. Notwithstanding the
foregoing, as described under "Additional Document Provisions--The Servicing
Agreement--Compliance with ERISA", in the event that the ERISA Compliance Test
is not satisfied on any Determination Date, all Excess Collections (as described
under "Description of the Notes--Distributions on the Notes--Distribution of
Interest") in respect of each Distribution Date thereafter will be deposited in
the Reserve Fund until the Distribution Date following the Determination Date on
which the ERISA Compliance Test has been satisfied. (Agreement, Section 1.01).
The "Charge-off Rate Test" will not be satisfied if, with respect to any
Determination Date the average of the Charge-off Rates for the three immediately
preceding calendar months (or the month of November 1998 in the case of the
December 1998 Determination Date, or the months of November and December 1998 in
the case of the January 1999 Determination Date) is greater than 2.75%. The
"Delinquency Test" will not be satisfied if, with respect to any Determination
Date the average of the Delinquency Rates for the three immediately preceding
calendar months (or the month of November 1998 in the case of the December 1998
Determination Date, or the months of November and December 1998 in the case of
the January 1999 Determination Date) is greater than 1.75%. The "Charge-off
Rate" with respect to any calendar month will be the Discounted Principal
Balance of all Contracts that became Charged-off Contracts during such month,
less all Net Repossessed Vehicle Proceeds and other Net Liquidation Proceeds
collected during such month with respect to Charged-off Contracts, all divided
by the average of the Aggregate Net Investment Value as of the last day of such
month and the preceding month. Such result will then be multiplied by twelve to
produce an annualized rate. The "Delinquency Rate" for any calendar month will
be the number of Current Contracts that are 61 days or more delinquent, whether
or not the related Leased Vehicles have been repossessed (or repossession
proceedings in respect thereof have been initiated), but which have not yet been
sold or otherwise disposed of, divided by the aggregate number of Current
Contracts, in each case as of the last day of such month. (Agreement,
Section 1.01).
"Current Contracts" will be all Contracts other than Charged-off,
Liquidated, Matured and Additional Loss Contracts. A "Liquidated Contract" will
be a Contract that has been the subject of a Prepayment in full or otherwise has
been paid in full. An "Additional Loss Contract" will be a Contract that has
been sold or otherwise disposed of by the Servicer, acting on behalf of the
Origination Trust, to pay an Additional Loss Amount. (Agreement, Section 1.01).
The Transferor may, from time to time after the date of this Prospectus,
request each Rating Agency to approve (a) a formula for determining the Reserve
Fund Cash Requirement, the Reserve Fund Supplemental Requirement, the RV Insurer
Reserve Fund Supplemental Requirement and/or the Downgrade Reserve Fund
Supplemental Requirement that is different from the one described above
(including using different Reserve Fund Tests or different cures for failures
thereof) that would result in a decrease in the amount of the Reserve Fund Cash
Requirement, the Reserve Fund Supplemental Requirement, the RV Insurer Reserve
Fund Supplemental Requirement and/or the Downgrade Reserve Fund Supplemental
Requirement or (b) a change in the manner by which the Reserve Fund is funded,
which change could include borrowings by the Transferor to fund all or a portion
of the Initial Deposit (which borrowings would be payable from assets or cash
flow otherwise payable to the Transferor) or to meet the Reserve Fund Cash
Requirement, the Reserve Fund Supplemental Requirement, the RV Insurer Reserve
Fund Supplemental Requirement and/or the Downgrade
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Reserve Fund Supplemental Requirement. If each Rating Agency confirms (in
writing or orally) to the Indenture Trustee to the effect that the use of any
such new formula or change will not result in a qualification, reduction or
withdrawal of its then-current rating of any Class of Notes, and the
Transferor's counsel delivers an opinion as and to the extent required, as
described under "Additional Document Provisions--Additional Agreement
Provisions--Amendment", then such new formula or change will be implemented and,
to the extent necessary, the Agreement will be amended, without the consent of
any Noteholder or Note Owner. (Agreement, Section 9.01).
Withdrawals from the Reserve Fund. On each Deposit Date the Indenture
Trustee shall withdraw from the Reserve Fund, to the extent available, and
deposit in the Distribution Account an amount equal to the Required Amount.
Amounts on deposit in the Reserve Fund will also be available to make certain
other payments to Noteholders and the Transferor as described under "Security
for the Notes--The Reserve Fund". Monies on deposit in the Reserve Fund on a
Distribution Date in excess of the Reserve Fund Cash Requirement will be
released to the Transferor. Any such amounts received by the Transferor shall be
free of any claim of the Trust, the Indenture Trustee or the Noteholders and
shall not be available to the Indenture Trustee or the Trust for the purpose of
making deposits to the Reserve Fund or making payments to the Noteholders, nor
shall the Transferor be required to refund any amount properly received by it.
(Agreement, Sections 3.03 and 3.04).
THE RESIDUAL VALUE INSURANCE POLICY
On or prior to the Closing Date the RV Insurer will issue the Residual
Value Insurance Policy to the Transferor (with the Origination Trustee, the
Indenture Trustee, the Owner Trustee and ALF L.P. also named as insureds), which
will provide coverage for the Insured Residual Value Loss Amount for any
Collection Period, and will cover only the Leased Vehicles and not any UTI Asset
or Other SUBI Asset. Insured Residual Value Loss Amounts payable under the
Residual Value Insurance Policy will only arise in connection with the
disposition of Leased Vehicles relating to Matured Contracts and in connection
with losses on Contracts terminated on or prior to their Maturity Dates by
agreement between the Servicer and the lessee in connection with the payment of
less than their respective Outstanding Principal Balances pursuant to World
Omni's pro-active termination program, as described under "Maturity, Prepayment
and Yield Considerations". The Residual Value Insurance Policy may not be
cancelled by the RV Insurer. The Residual Value Insurance Policy will not have
any deductibles or provide for co-insurance, but the aggregate maximum amount
payable under the Residual Value Insurance Policy with respect to any Leased
Vehicle will be the lesser of $60,000 and its insured residual value.
Additionally, the aggregate maximum amount payable under the Residual Value
Insurance Policy will not exceed the aggregate insured residual values of all
Leased Vehicles. For these purposes, the residual value of a Leased Vehicle
generally will be determined by reference to World Omni's residual value lease
policies communicated to its Dealers, as amended or supplemented from time to
time (which amount generally will be equal to its Residual Value), as adjusted
for extensions of the related Contract.
On the tenth day of each calendar month or if such day is not a Business
Day, the next succeeding Business Day, the Servicer will determine whether, on
the upcoming Distribution Date, there will be any Insured Residual Value Loss
Amount for the related Collection Period. If so, the Servicer will make a claim
for the Insured Residual Value Loss Amount under the Residual Value Insurance
Policy. Pursuant to the Residual Value Insurance Policy, so long as all
conditions precedent to liability set forth therein are satisfied and no
exclusions apply, the RV Insurer will pay any such claim within five days.
Within one Business Day after receipt, the Servicer will deposit the proceeds of
any such claim into the SUBI Collection Account, if the payment relates to the
Revolving Period, so that the proceeds will be available for reinvestment in
Subsequent Contracts and Subsequent Leased Vehicles, and into the Distribution
Account, if the payment relates to the Amortization Period, so that the proceeds
will be available to make the payments described under "Description of the
Notes--Distributions on the Notes--Distributions of Interest" by the relevant
Distribution Date.
Federal is incorporated under the laws of the State of Indiana and is one
of the Chubb Group of Insurance Companies. Federal is a wholly owned subsidiary
of The Chubb Corporation, a publicly owned holding company incorporated under
the laws of the State of New Jersey. The Residual Value Insurance Policy is an
obligation of Federal and not of The Chubb Corporation or any other affiliate of
Federal. Federal is located at Federal Insurance Company, 15 Mountain View Road,
Warren, New Jersey 07059 and the telephone number is (908) 903-2000.
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At December 31, 1997, Federal had total assets of approximately $10.8
billion, total liabilities of approximately $8.3 billion and surplus to
policyholders of approximately $2.5 billion, in each case as reported on a
statutory accounting basis in conformity with accounting practices prescribed or
permitted by the Indiana Insurance Department (which varies from generally
accepted accounting principles in certain respects). As of the date of the
Prospectus, Federal's financial strength ratings were "Aaa" by Moody's and "AAA"
by Standard & Poor's.
Federal files annual statements with the insurance department of the State
of Indiana and other states in which it is licensed to write insurance. Copies
of the annual statement of Federal for the year-ended December 31, 1997 are
available upon request from the Indenture Trustee. Audited financial statements
of Federal prepared in accordance with Indiana insurance regulations for the
three years ended December 31, 1997 are included in this Prospectus.
The Servicing Agreement will require that World Omni pay the premiums due
on the Residual Value Insurance Policy and will provide that as long as any
Notes are outstanding, no insured party may terminate or cause the termination
of any Residual Value Insurance Policy unless one or more policies are issued
with substantially similar aggregate coverage and provisions issued by an
insurer acceptable to each Rating Agency, or an alternative mechanism is
implemented to support the Residual Values of the Leased Vehicles in accordance
with the procedures required for amendment of the Agreement (as described in
"Additional Document Provisions--Additional Agreement Provisions--Amendment").
The foregoing obligations of World Omni will survive any termination of World
Omni as Servicer under the Servicing Agreement (Servicing Agreement,
Section 9.10). World Omni will be obligated to reimburse Federal for a specified
percentage of claims paid under the Residual Value Insurance Policy, although
the failure to make such reimbursement will not affect Federal's obligation to
pay claims under the Residual Value Insurance Policy.
THE CONTINGENT AND EXCESS LIABILITY INSURANCE POLICIES
In addition to the physical damage and liability insurance coverage
required to be obtained and maintained by the lessees pursuant to the Contracts,
and as additional protection in the event that any lessee fails to maintain all
such required insurance, World Omni maintains contingent liability insurance
with Lexington Insurance Company which provides coverage of up to $2.0 million
per occurrence (with no annual or aggregate cap on the number of claims
thereunder) for bodily injury and property damage suffered by third persons
caused by any vehicle owned by any insured. World Omni also maintains
substantial amounts of excess insurance coverage for which the Origination
Trustee is an additional named insured (together with the aforementioned
contingent liability insurance policy, the "Contingent and Excess Liability
Insurance Policies"). These insurance policies collectively provide insurance
coverage in excess of $10 million per accident, and permit multiple claims in
any policy period. To the extent that such coverage were exhausted and damages
were assessed against the Origination Trust, claims could be imposed against the
assets of the Origination Trust. In such event, investors in the Class A Notes
could incur a loss on their investment. However, the Origination Trustee will be
an additional named insured under the Contingent and Excess Liability Insurance
Policies and payments made thereunder will constitute SUBI Assets. To the extent
that payments under the Contingent and Excess Liability Insurance Policies are
made to third party claimants, they will reduce the Additional Loss Amounts that
otherwise would be required to be paid out of the SUBI Assets. See "Risk
Factors--Risks Associated with Vicarious Tort Liability", "Certain Legal Aspects
of the Origination Trust and the SUBI--The SUBI" and "Certain Legal Aspects of
the Contracts and the Leased Vehicles--Vicarious Tort Liability" for a
discussion of related risks.
With respect to damage to the Leased Vehicles, each lessee is required by
the related Contract to maintain comprehensive and collision insurance. As more
fully described under "Additional Document Provisions--The Servicing
Agreement--Insurance on Leased Vehicles", World Omni, under certain limited
circumstances where the lessee does not maintain required insurance, will be
required to make payments in respect of damaged Leased Vehicles. In the event
that all of the foregoing insurance coverage were exhausted and no third-party
reimbursement for such damage to a Leased Vehicle were available, investors in
the Class A Notes could incur a loss on their investment.
The Servicing Agreement will provide that so long as any Notes are
outstanding, neither the Origination Trustee nor World Omni may terminate or
cause the termination of any Contingent and Excess Liability Insurance Policy
unless, among other things, a replacement insurance policy providing at least
the same amount
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of coverage and which does not provide for any annual or aggregate cap on
payments thereunder is obtained and each Rating Agency has delivered a letter to
the Indenture Trustee to the effect that the obtaining of any such replacement
insurance will not cause its then-current rating of any Class of Notes to be
qualified, reduced or withdrawn. The foregoing obligations of World Omni will
survive any termination of World Omni as Servicer under the Servicing Agreement.
(Servicing Agreement, Section 9.10).
THE CLASS A INTEREST RATE SWAP
GENERAL
On the date of issuance of the Notes, the Trust will enter into the
Class A Interest Rate Swap with the Class A Swap Counterparty. The Class A
Interest Rate Swap will have a Notional Amount as of any Deposit Date equal to
the Class A Note Balance, as of the close of business on the preceding
Distribution Date after giving effect to distributions on such Distribution
Date; provided, however, with respect to the first Deposit Date, the applicable
Notional Amount will be equal to the Initial Class A Note Balance.
Pursuant to the Class A Interest Rate Swap, on each Deposit Date, payment
will be made by the Trust to the Class A Swap Counterparty (if the following is
a positive number) or by the Class A Swap Counterparty, to the Trust (if the
following is a negative number) of an amount equal to (i) one-twelfth of the
product of (A) the Notional Amount and (B) the Swap Rate (or, with respect to
the first Deposit Date, an amount specified in the Agreement) minus (ii) the
product of (A) a fraction, the numerator of which is the actual number of days
from and including the prior Distribution Date to but excluding the related
Distribution Date (or, with respect to the first Deposit Date, the actual number
of days from the date of issuance of the Notes to but excluding the first
Distribution Date) and the denominator of which is 360, (B) the Notional Amount
and (C) One-Month LIBOR with respect to the related Distribution Date. If such
amount is positive with respect to the Class A Interest Rate Swap, it will be
referred to herein as the "Class A Net Swap Payment", and if such amount is
negative, it will be referred to herein as the "Class A Net Swap Receipt". Any
Class A Net Swap Receipt in respect of a Deposit Date will be deposited in the
Distribution Account and will be available to make distributions of interest due
on the related Notes on the related Distribution Date. Any Class A Net Swap
Payment in respect of a Deposit Date will be paid out of certain funds on
deposit in the SUBI Collection Account, including illegality and certain tax
events.
The Class A Interest Rate Swap will terminate on the earlier of (a) the
Stated Maturity Date, (b) the Distribution Date on which the Note Balance of
each Class A Note is reduced to zero and (c) the date designated by either the
Indenture Trustee or the Class A Swap Counterparty as an early termination date
with respect to the Class A Interest Rate Swap following a payment default by
the Class A Swap Counterparty or the Trust, respectively, or certain other
customary early termination events.
In the event the Counterparty rating of the Class A Swap Counterparty is
withdrawn or reduced below AA- by Standard & Poor's or its Counterparty rating
is withdrawn or reduced below Aa3 by Moody's (or, if its counterparty rating
is rated by Fitch, at least AA- by Fitch), the Class A Swap Counterparty and the
Trust will, within 30 calendar days after such rating withdrawal or reduction,
use reasonable efforts to (i) obtain a replacement interest rate swap agreement
with terms substantially the same as the Class A Interest Rate Swap or
(ii) establish any other arrangement satisfactory to the Rating Agencies, such
that the ratings of the Class A Notes by the applicable Rating Agency will not
be withdrawn or reduced. In the event that following such 30 calendar days, no
such replacement interest rate swap agreement is obtained or any other such
satisfactory arrangement established within such period, an Early Amortization
Event will occur.
In addition, in the event the Class A Swap Counterparty fails to make any
payment required under the Class A Interest Rate Swap within five calendar days
of the date such payment was due, an Early Amortization Event will occur. See
"Description of the Notes--Early Amortization Events".
THE CLASS A SWAP COUNTERPARTY
Merrill Lynch Derivative Products AG is a Swiss share company with its
principal place of business located at Stauffacherstrasse 5, CH 8004, Zurich,
Switzerland. It is a subsidiary of Merrill Lynch & Co., Inc. a Delaware
corporation with its principal place of business located at World Financial
Center, North Tower, 250 Vesey Street, New York, New York 10281. As of the date
of the Prospectus, the Class A Swap
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Counterparty's counterparty ratings were "Aaa" by Moody's and "AAA" by each of
Standard & Poor's and Fitch.
ADDITIONAL DOCUMENT PROVISIONS
AMENDMENT OF TRANSACTION DOCUMENTS
The Indenture, the Agreement, the SUBI Supplement, the Servicing Agreement
and the other agreements and instruments relating to the transactions discussed
herein (collectively, the "Transaction Documents") may be amended by the
respective parties thereto, without the consent of the Noteholders, to cure any
ambiguity, to correct or supplement any provision therein which may be
inconsistent with any other provision therein, to add any other provisions with
respect to matters or questions arising under the Indenture which are not
inconsistent with provisions of the Indenture or to add or amend any provision
therein in connection with permitting transfers of the Class B Notes; provided
that any such action will not, in the good faith judgment of the parties,
materially and adversely affect the interests of any Noteholder, and the
Indenture Trustee shall have been furnished with an opinion of counsel to the
effect that such amendment will not adversely and materially affect the legal
interest of any Noteholder. (Indenture, Section 9.02; Agreement, Section 9.01).
See "Security for the Notes--The Reserve Fund--The Reserve Fund Cash
Requirement".
The Transaction Documents may also be amended from time to time by the
respective parties thereto, (including with respect to changing the formula for
determining the Reserve Fund Cash Requirement, the Reserve Fund Supplemental
Requirement, the RV Insurer Reserve Fund Supplement Requirement and/or the
Downgrade Reserve Fund Supplemental Requirement, changing the remittance
schedule for collection deposits in the Distribution Account, changing the
definition of "Permitted Investments", or replacing the Residual Value Insurance
Policy with an alternative mechanism) if (a) the Indenture Trustee has been
furnished with confirmation (written or oral) from each Rating Agency to the
effect that such amendment would not cause its then-current rating on any Class
of Notes to be qualified, reduced or withdrawn or (b) the Indenture Trustee has
received the consent of the holders of Notes evidencing more than 50% of the
Voting Interests of the Class A Notes and the Class B Notes (voting together as
a single class) for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of the Indenture or of modifying in
any manner the rights of each Class of Noteholders; provided, however, that:
(i) any amendment eliminating the Reserve Fund or the Residual Value Insurance
Policy, reducing the Reserve Fund Cash Requirement to less than the lesser of
(A) $12,026,225 and (B) the Note Balance as of the related Distribution Date
(after giving effect to reductions in the Note Balance on such Distribution
Date), or eliminating or reducing the RV Insurer Reserve Fund Supplement
Requirement shall also require an opinion of the Transferor's counsel to the
effect that, after such amendment, for federal income tax purposes the Trust
will not be treated as an association taxable as a corporation, and the Class A
Notes will, and the Class B Notes should, properly be characterized as
indebtedness that is secured by the assets of the Trust; and (ii) (A) no such
amendment shall increase or reduce in any manner the amount of, or accelerate or
delay the timing of, collections of payments on the SUBI or the SUBI Certificate
or distributions that shall be required to be made on any Class of Notes or the
applicable Note Rate and (B) no amendment of any type shall reduce the
percentage of the aggregate Voting Interests of the Notes of any Class required
to consent to any such amendment, in each case without the consent of all
Noteholders and Note Owners. (Indenture, Section 9.02; Agreement,
Section 9.01).
THE INDENTURE
Events of Default
"Indenture Events of Default" will be any of the following events: (a) the
Trust defaults in the payment of any interest or principal on any Note for a
period of five Business Days after any such payment is due; (b) the Trust
defaults in the observance or performance in any material respect of any other
covenant or agreement made in the Indenture, or any representation or warranty
of the Trust made in the Indenture was incorrect in any material respect as of
the time made, which default materially and adversely affects the rights of the
Noteholders and which continues uncured for a period of 60 days after written
notice shall have been given to the Trust by the Indenture Trustee or to the
Trust and the Indenture Trustee by the Holders of at least 25% of the aggregate
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outstanding principal amount of the Notes; or (c) certain insolvency events with
respect to the Trust. Investors should be aware that the amount of principal or
interest required to be paid to holders of any Class of the Notes prior to the
maturity date for that Class of Notes generally will be limited to amounts
available in the Distribution Account for payment to Noteholders. Therefore, the
failure to pay principal or interest on a Class of Notes generally will not
result in the occurrence of an Indenture Event of Default until the Stated
Maturity Date for such Class of Notes. (Indenture, Section 5.01).
If an Indenture Event of Default occurs and is continuing, then the
Indenture Trustee or Noteholders representing in the aggregate not less than 25%
of the Voting Interests of the outstanding Notes (voting together as a single
class) may declare all the Notes to be immediately due and payable, by a notice
in writing to the Trust (and to the Indenture Trustee if given by Noteholders),
and upon any such declaration the Notes will become immediately due and payable,
except that upon an insolvency event with respect to the Trust, the Notes will
become immediately due and payable automatically without the giving of any
notice.
At any time after such a declaration of acceleration of maturity has been
made and before a judgment or decree for payment of the money due has been
obtained by the Indenture Trustee, Noteholders representing in the aggregate
more than 50% of the Voting Interests of the outstanding Notes (voting together
as a single class) by written notice to the Trust and the Indenture Trustee, may
rescind and annul such declaration and its consequences under certain
circumstances. (Indenture, Section 5.02).
After acceleration of the Notes, the Indenture Trustee may institute a
proceeding to collect amounts due or foreclose on Trust property, exercise
remedies as a secured party, sell the SUBI (in accordance with the procedures
described below) or elect to have the Trust maintain possession of the SUBI and
continue to apply collections as if there had been no declaration of
acceleration. (Indenture, Section 5.04 and 5.05).
The Indenture Trustee will be under no obligation to exercise any of the
rights or powers under the Indenture at the request or direction of any of the
holders of the Notes, if such Noteholders shall not have offered to the
Indenture Trustee reasonable security or indemnity against the costs, expenses
and liabilities which might be incurred by it in complying with such request or
direction. Subject to the provisions for indemnification and certain limitations
contained in the related Indenture, Noteholders representing in the aggregate
more than 50% of the Voting Interests of the outstanding Notes (voting together
as a single class) will have the right to direct the time, method and place of
conducting any proceeding or any remedy available to the Indenture Trustee, and
Noteholders representing in the aggregate more than 50% of the Voting Interests
of the outstanding Notes (voting together as a single class) 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
the Indenture that cannot be modified without the waiver or consent of all the
holders of the outstanding Notes. (Indenture, Section 5.14 and 5.15).
No holder of a Note will have the right to institute any proceeding with
respect to the Indenture, unless (i) such holder previously has given to the
Indenture Trustee written notice of a continuing Indenture Event of Default,
(ii) Noteholders representing in the aggregate not less than 25% of the Voting
Interests of the outstanding Notes (voting together as a single class) have made
written request to the Indenture Trustee to institute such proceeding in its own
name as Indenture Trustee, (iii) such holder or holders have offered the
Indenture Trustee reasonable indemnity, (iv) the Indenture Trustee has for
60 days failed to institute such proceeding, and (v) no direction inconsistent
with such written request has been given to the Indenture Trustee during such
60-day period by more than 50% of the Voting Interests of the outstanding Notes
(voting together as a single class). (Indenture, Section 5.09).
If an Indenture Event of Default occurs, the Indenture Trustee may, and,
upon receipt of written instructions from Noteholders representing in the
aggregate Voting Interests of not less than a majority of interest of the
outstanding Class A Notes (voting together as a single class) or more than 50%
of the Voting Interests of the outstanding Notes (voting together as a single
class), shall (subject to its election to maintain possession of the SUBI as
described above), publish a notice stating that the Indenture Trustee intends to
sell or dispose of the SUBI and the SUBI Certificate and the other property of
the Trust in a commercially reasonable manner. Following such publication,
unless otherwise prohibited by applicable law, the Indenture Trustee will sell
or otherwise dispose of the SUBI, the SUBI Certificate and such other property
in a commercially reasonable manner and on commercially reasonable terms;
provided that such sale shall not be made without the consent of
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all the Noteholders if proceeds realized as a result of such sale would not be
sufficient to discharge in full the amounts then due and unpaid upon the Notes
for principal and interest. The net sale or disposition proceeds of the SUBI,
the SUBI Certificate and such other property will be distributed to the
Noteholders in the priority provided for herein, and the principal portion of
the Investor Percentage of such proceeds will be distributed first, on a pro
rata basis, to the Class A-1, Class A-2, Class A-3 and Class A-4 Noteholders
based on their respective Class Note Balances until the Class A-1, Class A-2,
Class A-3 and Class A-4 Notes have been paid in full, and second, to the Class B
Noteholders. If such proceeds, together with all amounts on deposit in the
Accounts, the Reserve Fund, amounts otherwise payable to the Transferor in
respect of the Transferor Interest, Insured Residual Value Loss Amounts paid
under the Residual Value Insurance Policy, the Servicing Fee (if World Omni is
the Servicer) and, in the case of the Class A-4 Notes, certain amounts otherwise
distributable in respect of the Class B Notes, are insufficient to pay the Note
Balance of a Class of Class A Notes, any unreimbursed Note Principal Loss Amount
in respect of such Class of Class A Notes and any accrued and unpaid interest
thereon in full, the related Class A Noteholders will suffer a corresponding
loss. (Indenture, Section 5.08 and 5.17).
Following an Indenture Event of Default and the sale of the SUBI at the
direction of the Noteholders, so long as the Class A Swap Counterparty has not
breached any of its obligations, it may be entitled to a termination payment.
Such payment shall be pro rata with amounts to be paid to the Class A
Noteholders.
Annual Compliance Statement
The Trust will be required to file annually with the Indenture Trustee a
written statement as to the fulfillment of its obligations under the Indenture.
(Indenture, Section 3.09).
Indenture Trustee's Annual Report
The Indenture Trustee will be required to mail each year to all Noteholders
a brief report relating to its eligibility and qualification to continue as
Indenture Trustee, any amounts advanced by it under the Indenture, the amount,
interest rate and maturity date of certain indebtedness owing by the Trust to
the Indenture Trustee in its individual capacity, the property and funds
physically held by the Indenture Trustee as such and any action taken by it that
materially affects the Notes and that has not been previously reported.
(Indenture, Section 7.03).
Satisfaction and Discharge of Indenture
The Indenture will be discharged with respect to the collateral securing
the Notes upon the delivery to the Indenture Trustee for cancellation of all
Notes or, with certain limitations, upon deposit with Indenture Trustee of funds
sufficient for the payment in full of all such Notes. (Indenture,
Section 4.01).
No Petition
The Indenture Trustee (or any co-trustee or separate trustee appointed
pursuant to the Indenture) will agree not to institute, or join in, any
bankruptcy or similar proceeding against the Trust until one year and one day
after the payment of the Notes in full. (Indenture, Section 6.17).
ADDITIONAL AGREEMENT PROVISIONS
Certain provisions of the Agreement are described under "Description of the
Notes". The following summarizes certain additional provisions of the Agreement.
No Petition
Each of the Indenture Trustee and the Owner Trustee will agree not to
institute, or join in, any bankruptcy or similar proceeding against the
Transferor, WOLS LLC, ALF L.P., ALF LLC, the Origination Trust or the
Origination Trustee until one year and one day after the later of (i) payment of
the Notes in full and (ii) final payment of all other financings involving
interests in the Origination Trust (including the transaction described herein
and all other transactions involving the UTI and each Other SUBI). (Agreement,
Section 6.16).
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The Owner Trustee
PNC Bank, Delaware will be the Owner Trustee under the Agreement. The
Corporate Trust Office of the Owner Trustee is currently located at 222 Delaware
Avenue, 17th Floor, Wilmington, DE 19801. PNC Bank, Delaware is not affiliated
with World Omni, although it does act as a service provider to World Omni.
The Owner Trustee may resign at any time, in which event the Transferor
will be obligated to appoint a successor Owner Trustee. The Transferor may also
remove the Owner Trustee if the Owner Trustee ceases to be eligible to continue
as such under the Agreement, becomes legally unable to act or becomes insolvent.
In such circumstances, the Transferor will be obligated to appoint a successor
Owner Trustee. Any resignation or removal of the Owner Trustee and appointment
of a successor Owner Trustee will not become effective until acceptance of the
appointment by such successor Owner Trustee. (Agreement, Section 6.10). The
Owner Trustee has indicated that an agreement has been signed whereby Chase
Manhattan Bank Delaware will acquire the corporate trust business of PNC Bank,
Delaware. The Owner Trustee has indicated that the consummation of this
transaction is subject to the satisfaction of a number of conditions precedent,
but the Owner Trustee presently anticipates that the transaction will close
during the fourth quarter of 1998. Any corporation into which PNC Bank, Delaware
may be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which PNC Bank, Delaware may be a party, or
any corporation to which PNC Bank, Delaware may transfer all or substantially
all of its corporate trust business shall automatically succeed to the rights of
the Owner Trustee under the Agreement, provided that such successor Owner
Trustee satisfies the eligibility requirements (as is the case with Chase
Manhattan Bank Delaware) described in the Agreement. (Agreement, Section 6.06).
THE SUBI TRUST AGREEMENT
The SUBI, the Other SUBIs and the UTI
ALF L.P. is the grantor and (as holder of the UTI) a beneficiary of the
Origination Trust. In its capacity as grantor, ALF L.P. will from time to time
assign, transfer, grant and convey (or cause to be assigned, transferred,
granted and conveyed) to the Origination Trustee in trust the Origination Trust
Assets. (SUBI Trust Agreement, Section 2.01). ALF L.P. will hold the UTI, which
represents a beneficial interest in all Origination Trust Assets other than the
SUBI Assets and the Other SUBI Assets. (SUBI Trust Agreement, Section 4.01). ALF
L.P. has pledged (and may in the future pledge) the UTI as security for
obligations to third-party lenders, and has created and sold (and may in the
future create and sell or pledge) Other SUBIs in connection with financings
similar to the transaction described herein. Each holder or pledgee of the UTI
and any Other SUBI will be required to expressly disclaim any interest in the
Origination Trust Assets other than the UTI Assets or the Other SUBI Assets,
respectively, and to fully subordinate any claims to such other Origination
Trust Assets in the event that this disclaimer is not given effect. Except under
the limited circumstances described under "Certain Legal Aspects of the
Origination Trust and The SUBI--The SUBI" and as follows the SUBI Assets will
not be available to make payments in respect of, or pay expenses relating to,
the UTI or any Other SUBIs, and the Other SUBI Assets evidenced by any Other
SUBIs will not be available to make payments on, or pay expenses relating to,
the SUBI, the UTI or any other SUBI.
Each Other SUBI will be created pursuant to a supplement to the Origination
Trust Agreement (each, an "Other SUBI Supplement") which will amend the
Origination Trust Agreement only with respect to the Other SUBI to which it
relates. The SUBI Supplement will amend the Origination Trust Agreement only as
it relates to the SUBI and no Other SUBI Supplement will amend the Origination
Trust Agreement as it relates to the SUBI. (SUBI Trust Agreement,
Section 4.02).
All Origination Trust Assets, including the SUBI Assets, will be owned by
the Origination Trustee on behalf of the beneficiaries of the Origination Trust.
The SUBI Assets will be segregated from the rest of the Origination Trust Assets
on the books and records of the Origination Trustee and the Servicer and the
holders of other beneficial interests in the Origination Trust (including the
UTI and any Other SUBIs) will have no rights to the SUBI Assets. Liabilities of
the Origination Trust shall be allocated to the SUBI Assets, the UTI Assets or
Other SUBI Assets, respectively, if incurred with respect thereto, or will be
allocated pro rata among all Origination Trust Assets if incurred with respect
to the Trust Assets generally. (SUBI Trust Agreement, Section 7.01; Servicing
Agreement, Section 2.02).
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"Additional Loss Amounts" will be incurred in the event of any uninsured
liability to third parties (i.e., litigation risk) on the part of the
Origination Trust as ultimately is borne by the SUBI Assets, whether such
liability is incurred (i) with respect to the SUBI Assets and is therefore
allocated to the SUBI Assets pursuant to the SUBI Trust Agreement, (ii) with
respect to the Origination Trust Assets generally and therefore a pro rata
portion of such liability is allocated to the SUBI Assets pursuant to the SUBI
Trust Agreement or (iii) with respect to UTI Assets or Other SUBI Assets if such
UTI Assets or Other SUBI Assets are insufficient to pay such liability. See
"Certain Legal Aspects of the Origination Trust and The SUBI--The SUBI" for a
discussion of related risks. For purposes of making calculations with respect to
distributions on the Notes, "Additional Loss Amounts" will include both losses
incurred with respect to the foregoing uninsured liabilities and monies reserved
within the SUBI Collection Account against future losses in respect of such
liabilities by the Servicer on behalf of the Trustee. (SUBI Trust Agreement,
Sections 7.01 and 10.01).
Special Obligations of ALF L.P. as Beneficiary and Grantor
ALF L.P., as grantor, will be liable for all debts and obligations arising
with respect to the Origination Trust Assets or the operation of the Origination
Trust; provided, however, that its liability with respect to any pledge of the
UTI and any assignee or pledgee of a SUBI or SUBI Certificate or Other SUBI or
Other SUBI Certificate shall be as set forth in the financing documents relating
thereto. ALF LLC, as the general partner of ALF L.P., the grantor, is required
at all times to maintain a minimum net worth of $10 million. To the extent that
ALF L.P. shall have paid or suffered any liability or expense with respect to
the Origination Trust Assets or the operation of the Origination Trust, ALF L.P.
shall be indemnified, defended and held harmless out of the assets of the
Origination Trust against any such liability or expense (including reasonable
attorneys' fees and expenses). (SUBI Trust Agreement, Sections 4.03 and 11.10).
Origination Trustee Duties and Powers; Fees and Expenses
Pursuant to the SUBI Trust Agreement, the Origination Trustee will be
required to, among other things, (i) apply for and maintain (or cause to be
applied for and maintained) all licenses, permits and authorizations necessary
and appropriate to accept assignments of the Contracts and the Leased Vehicles
and to carry out its duties as Origination Trustee, including motor vehicle
dealer licenses, and (ii) file (or cause to be filed) applications for
certificates of title as are necessary and appropriate so as to cause the
Origination Trustee to be recorded as the holder of legal title of record to the
Leased Vehicles. (SUBI Trust Agreement, Section 5.01). In carrying out the
foregoing duties, the Origination Trustee will be required to exercise the same
degree of care and skill as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs. (SUBI Trust
Agreement, Section 5.02).
The Origination Trustee may be replaced by ALF L.P. only if it ceases to be
qualified in accordance with the terms of the SUBI Trust Agreement and shall be
removed if certain representations and warranties made by the Origination
Trustee therein prove to have been materially incorrect when made, or in certain
events of bankruptcy or insolvency. (SUBI Trust Agreement, Section 6.03). The
Indenture Trustee, as pledgee of the SUBI Certificate, on behalf of the
Noteholders may, or at the direction of Noteholders representing in the
aggregate more than 50% of the Voting Interests of the outstanding Notes (voting
together as a single class) will, exercise its powers under the SUBI Trust
Agreement to cause the Origination Trustee to remove or replace the Trust Agent
for a material breach of its obligations. (SUBI Trust Agreement, Sections 5.03
and 10.02).
The Origination Trustee will make no representations as to the validity or
sufficiency of the SUBI, the SUBI Certificate (other than the execution and
authentication of the SUBI Certificate), or of any Contract, Leased Vehicle or
related document, will not be responsible for performing any of the duties of
ALF L.P. or the Servicer and will not be accountable for the use or application
by any owners of beneficial interests in the Origination Trust Assets of any
funds paid in respect of the Origination Trust Assets, or the investment of any
of such monies before such monies are deposited into the accounts relating to
the SUBI, the Other SUBIs and the UTI. The Origination Trustee will not
independently verify the Contracts or the Leased Vehicles. (SUBI Trust
Agreement, Section 5.04). The duties of the Origination Trustee will generally
be limited to the acceptance of assignments of lease contracts, the titling of
the related leased vehicles in the name of the Origination Trustee, the creation
of the SUBI, the Other SUBIs and the UTI, the maintenance of the SUBI Collection
Account and accounts relating to the Other SUBIs and the UTI and the receipt of
the various certificates, reports or other instruments required to
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be furnished to the Origination Trustee under the SUBI Trust Agreement, in which
case it will only be required to examine them to determine whether they conform
to the requirements of the SUBI Trust Agreement. (SUBI Trust Agreement,
Section 5.01).
The Origination Trustee will be under no obligation to exercise any of the
rights or powers vested in it by the SUBI Trust Agreement or to make any
investigation of matters arising thereunder or to institute, conduct or defend
any litigation thereunder or in relation thereto at the request, order or
direction of ALF L.P., the Servicer or by the holders of a majority in interest
in the SUBI, unless such party or parties have offered to the Origination
Trustee reasonable security or indemnity against the costs, expenses and
liabilities that may be incurred therein or thereby. The reasonable expenses of
every such exercise of rights or powers or examination shall be paid by the
party or parties requesting such exercise or examination or, if paid by the
Origination Trustee, shall be a reimbursable expense of the Origination Trustee.
(SUBI Trust Agreement, Sections 5.03 and 6.08).
The Origination Trustee may enter from time to time into one or more agency
agreements (each, an "Agency Agreement") with such person or persons, including
without limitation any affiliate of the Origination Trustee (each, a "Trust
Agent"), as are by experience and expertise qualified to act in a trustee
capacity and otherwise acceptable to ALF LLC. The Origination Trustee has
engaged U.S. Bank as the Trust Agent. Pursuant to the Agency Agreement (which
currently is a part of the SUBI Trust Agreement), the Trust Agent shall perform
each and every obligation of the Origination Trustee under the SUBI Trust
Agreement. (SUBI Trust Agreement, Section 5.03).
The Origination Trustee shall be paid out of Origination Trust Assets
reasonable compensation and reimbursement of all reasonable expenses (including
reasonable attorneys' fees). (SUBI Trust Agreement, Section 6.08). However, with
regard to the SUBI Assets, this requirement is subject to the provisions
regarding Capped Origination Trust Administrative Expenses described under
"Description of the Notes--Distributions on the Notes--Distributions of
Interest".
Indemnity of Origination Trustee and Trust Agents
The Origination Trustee and each Trust Agent will be indemnified and held
harmless out of and to the extent of the Origination Trust Assets with respect
to any loss, liability or expense, including reasonable attorneys' fees and
expenses (collectively "Claims"), arising out of or incurred in connection with
(i) any of the Origination Trust Assets (including without limitation any Claims
relating to lease contracts or leased vehicles of the Origination Trust, any
personal injury or property damage claims arising with respect to any such
leased vehicle or any claim with respect to any tax arising with respect to any
Origination Trust Asset) or (ii) the Origination Trustee's or the Trust Agent's
acceptance or performance of the trusts and duties contained in the Agreement or
any Agency Agreement. Notwithstanding the foregoing, neither the Origination
Trustee nor any Trust Agent will be indemnified or held harmless out of the
Origination Trust Assets as to any Claim (i) for which World Omni shall be
liable pursuant to the Servicing Agreement, (ii) incurred by reason of the
Origination Trustee's or such Trust Agent's willful misfeasance, bad faith or
negligence or (iii) incurred by reason of the Origination Trustee's or Trust
Agent's breach of its respective representations and warranties pursuant to the
SUBI Trust Agreement or the Servicing Agreement. Such indemnities may result in
Additional Loss Amounts to the extent payable in respect of the SUBI Assets or
allocated to the SUBI. (SUBI Trust Agreement, Section 5.05).
Termination
The Origination Trust and the respective obligations and responsibilities
of ALF L.P. and the Origination Trustee shall terminate upon the last to occur
of (i) the payment to ALF L.P. and each permitted purchaser, assignee and
pledgee of any of ALF L.P.'s interests in the Origination Trust (including the
Indenture Trustee, with respect to the SUBI) of all amounts and obligations
required to be paid to them, and the expiration or termination of all financings
secured by the Origination Trust Assets by their respective terms and (ii) the
maturity or liquidation and the disposition of all Origination Trust Assets and
the disposition to or upon the order of ALF L.P. or any permitted purchaser,
assignee or pledgee of all net proceeds thereof. (SUBI Trust Agreement,
Section 8.01).
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No Petition
The Origination Trustee and the Trust Agent will agree not to institute, or
join in, any bankruptcy or similar proceeding against the Transferor, WOLS LLC,
ALF L.P. or ALF LLC until one year and one day after final payment of all
financings involving interests in the Origination Trust. (SUBI Trust Agreement,
Section 6.09). Each pledgee or assignee of any UTI or other SUBI must give a
similar non-petition covenant. (SUBI Trust Agreement, Sections 4.01 and 4.02).
Owner Trustee and Indenture Trustee as Third-Party Beneficiaries
As the holder of the SUBI, the Trust, and as the pledgee of the SUBI, the
Indenture Trustee, will be third-party beneficiaries of the SUBI Trust
Agreement. Therefore, the Owner Trustee on behalf of the Trust or the Indenture
Trustee may, and, upon the direction of Noteholders representing in the
aggregate more than 50% of the Voting Interests of the outstanding Notes (voting
together as a single class), the Indenture Trustee will, exercise any right
conferred by the SUBI Trust Agreement upon a holder or pledgee of any interest
in the SUBI. (SUBI Trust Agreement, Section 10.02).
THE SERVICING AGREEMENT
General
Pursuant to the Servicing Agreement, the Servicer will perform on behalf of
the Origination Trustee all of the obligations of the lessor under the
Contracts, including, but not limited to, collecting and posting payments,
responding to inquiries of the lessees, investigating delinquencies, sending
payment statements and reporting tax information to the lessees, paying costs of
disposition of Leased Vehicles related to Charged-off Contracts, Matured
Contracts and Additional Loss Contracts and policing the Contracts, commencing
legal proceedings to enforce a Contract on behalf of the Origination Trust,
administering the Contracts, including accounting for collections and furnishing
monthly and annual statements to the Origination Trustee with respect to
distributions and generating federal income tax information. The Origination
Trustee will furnish the Servicer with all powers of attorney and other
documents necessary or appropriate to enable the Servicer to carry out such
servicing and administrative duties under the Servicing Agreement. The Indenture
Trustee and the Owner Trustee will be third-party beneficiaries of the Servicing
Agreement. (Servicing Agreement, Sections 2.01 and 12.12).
Custody of Contract Documents and Certificates of Title
To assure uniform quality in servicing the Contracts and World Omni's own
portfolio of automobile and light duty truck lease contracts and to reduce
administrative costs, the Origination Trustee will appoint World Omni, as
Servicer, to be its agent, bailee and custodian of the Contracts, the
certificates of title relating to the Leased Vehicles and insurance policies and
other documents relating to the Contracts, the related lessees and the Leased
Vehicles. Such documents will not be physically segregated from other automobile
and light duty truck lease contracts, certificates of title and insurance
policies and other documents relating to such lease contracts and leased
vehicles of World Omni, or those which World Omni services for others, including
those leased vehicles constituting Origination Trust Assets that are not
evidenced by the SUBI. The accounting records and computer systems of World Omni
will reflect the interests of the holders of interest in the SUBI in the Initial
Contracts, the Subsequent Contracts, the Initial Leased Vehicles, the Subsequent
Leased Vehicles and all related Contract Rights, and UCC financing statements
reflecting certain interests in the Contracts and the Contract Rights will be
filed, as more fully described under "Certain Legal Aspects of the Contracts and
Leased Vehicles--Back-up Security Interests". The Servicer will be responsible
for filing all periodic sales and use tax or property (real or personal) tax
reports, periodic renewals of licenses and permits, periodic renewals of
qualification to act as a trust and a business trust and other periodic
governmental filings, registration or approvals arising with respect to or
required of the Origination Trustee or the Origination Trust. (Servicing
Agreement, Sections 2.01 and 2.07).
Collections
The Servicer will service, administer and collect all amounts due on or in
respect of the Contracts. The Servicer will make reasonable efforts to collect
all such amounts and, in a manner consistent with the Servicing Agreement, will
be obligated to service the Contracts generally in accordance with customary and
usual
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procedures of institutions which service closed-end automobile and light duty
truck lease contracts and, to the extent more exacting, the procedures used by
the Servicer in respect of lease contracts serviced by it for its own account.
(Servicing Agreement, Sections 2.01 and 2.02).
Consistent with its usual procedures, the Servicer may, in its discretion,
extend the Maturity Date of any Contract by up to five months in the aggregate,
provided that no Contract may be extended more than five times and that the new
Maturity Date of any Contract so extended must not be later than the last day of
the month immediately preceding the month in which the Class B Stated Maturity
Date occurs. The amount of any Extension Fee received by the Servicer in
connection with the extension of a Contract will be deposited into the SUBI
Collection Account. In the event that the Servicer extends a Contract in
contravention of the foregoing, the Servicing Agreement will require the
Servicer to deposit into the SUBI Collection Account an amount equal to the
Reallocation Payment in respect of such Contract on the Deposit Date relating to
the Collection Period in which such extension was granted, at which time such
Contracts and the related Leased Vehicles will no longer constitute SUBI Assets
as they will be reallocated as UTI Assets. (Servicing Agreement, Sections 2.02
and 9.02). See "World Omni--Collection, Repossession and Disposition Procedures"
for further details regarding collection procedures.
As more fully described under "Description of the Notes--The Accounts--The
SUBI Collection Account", unless the Servicer obtains a Servicer Letter of
Credit, the Servicer will deposit or cause to be deposited all payments received
on or in respect of the Contracts and the Leased Vehicles (other than Security
Deposits) into the SUBI Collection Account within two Business Days after
receipt.
Notification of Liens and Claims
The Servicer will be required to notify the Transferor (in the event that
World Omni is not acting as the Servicer), the Indenture Trustee and the
Origination Trustee as soon as practicable of all liens or claims of whatever
kind made by a third party that would materially adversely affect the interests
of, among others, the Transferor, the Origination Trust or any SUBI Asset (with
respect to, among other things, any Contract or Leased Vehicle). Following its
learning of any such lien or claim with respect to any Leased Vehicle, the
Servicer will take whatever actions it deems reasonably necessary to cause such
lien or claim to be removed. (Servicing Agreement, Sections 2.08 and 9.09). See
"Certain Legal Aspects of the Origination Trust and the SUBI--The SUBI" and
"Certain Legal Aspects of the Contracts and the Leased Vehicles--Back-up
Security Interests" for a discussion of the risk of liens on certain SUBI Assets
and other Origination Trust Assets.
Advances
On each Deposit Date, the Servicer will be obligated to make, by deposit
into the SUBI Collection Account, an advance in an amount equal to the aggregate
Monthly Payments due but not received during the related Collection Period with
respect to Contracts that are 31 days or more past due as of the end of the
related Collection Period, and the Servicer may (but shall not be required to)
make such an advance with respect to Contracts that are one or more days, but
less than 31 days, past due as of the end of the related Collection Period
(collectively, an "Advance"). (Servicing Agreement, Section 9.04).
Notwithstanding the foregoing, the Servicer will not be required to make an
Advance to the extent that such Advance would constitute a Nonrecoverable
Advance. (Servicing Agreement, Section 9.04). A "Nonrecoverable Advance" will be
any Advance that, in the reasonable judgment of the Servicer, may not be
ultimately recoverable by the Servicer from Net Liquidation Proceeds or
otherwise. (Servicing Agreement, Section 6.01). In making Advances, the Servicer
will assist in maintaining a regular flow of scheduled principal and interest
payments on the Contracts, rather than to guarantee or insure against losses.
Accordingly, all Advances shall be reimbursable to the Servicer, without
interest, if and when a payment relating to a Contract with respect to which an
Advance has previously been made is subsequently received. In addition, the
Servicer will be reimbursed for all Nonrecoverable Advances from collections on
or in respect of the Contracts and Leased Vehicles in general. (Servicing
Agreement, Section 9.02).
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Security Deposits
The Origination Trustee's rights related to the Contracts will include all
rights under the Contracts to the security deposits paid by the lessees at the
time of origination of the Contracts (the "Security Deposits"). As part of its
general servicing obligations, the Servicer will retain possession of each
Security Deposit remitted by the lessees as an agent for the Origination Trust
and will apply the proceeds of such Security Deposits in accordance with the
terms of the Contracts, its customary and usual servicing procedures and
applicable law. However, in the event that any Contract becomes a Charged-off
Contract or the related Leased Vehicle is repossessed, the related Security
Deposit will, to the extent provided by applicable law and such Contract,
constitute Liquidation Proceeds. (Servicing Agreement, Section 2.04). The
Origination Trustee may not have an interest in the Security Deposits that is
enforceable against third parties until such time as they are deposited into the
SUBI Collection Account. The Servicer will not be required to segregate Security
Deposits from its own funds, and any income earned from any investment thereof
by the Servicer shall be for the account of the Servicer as additional servicing
compensation.
Insurance on Leased Vehicles
Each lessee is required to maintain in full force and effect during the
term of a Contract a comprehensive and collision physical damage insurance
policy covering the actual cash value of the related Leased Vehicle and naming
the Origination Trustee, on behalf of the Origination Trust, as loss payee. Each
lessee also is required to maintain bodily injury and property damage liability
insurance in amounts equal to the greater of the amount prescribed by applicable
state law or industry standards as set forth in the Contract and naming the
Origination Trustee, on behalf of the Origination Trust, as an additional
insured. (Servicing Agreement, Section 2.11). Since lessees may choose their own
insurers to provide the required coverage, the specific terms and conditions of
their policies vary. If a lessee fails to obtain or maintain the required
insurance, the related Contract will be in default. It is the practice of World
Omni not to obtain insurance on behalf of and at the expense of the related
lessee but rather to repossess the related Leased Vehicle. In the event that a
required insurance policy has lapsed, has not been maintained in full force and
effect or the Servicer has failed to maintain the right to receive the proceeds
thereof for damage to or destruction of the related Leased Vehicle, the
Servicing Agreement will require World Omni to pay promptly into the SUBI
Collection Account all such amounts as would otherwise have been recoverable as
Insurance Proceeds. This obligation will survive any termination of World Omni
as Servicer under the Servicing Agreement. (Servicing Agreement, Section 2.11).
World Omni does not require lessees to carry credit disability, credit life
or credit health insurance or other similar insurance coverage which provides
for payments to be made on the Contracts on behalf of such lessees in the event
of disability or death. To the extent that such insurance coverage is obtained
on behalf of a lessee, payments received in respect of such coverage may be
applied to payments on the related Contract to the extent that the lessee's
beneficiary chooses to do so.
Realization Upon Charged-off Contracts
The Servicer will use commercially reasonable efforts to repossess and
liquidate the Leased Vehicle relating to a Contract that comes into and
continues in default and for which no satisfactory arrangements can be made for
collection of delinquent payments. Such liquidation may be through repossession
of such Leased Vehicle and disposition at a public or private sale, or the
Servicer may take any other action permitted by applicable law. The Servicer may
enforce all rights under any such Contract, sell the Leased Vehicle in
accordance with the Contract and commence and prosecute any proceedings in
connection with the Contract. In connection with any such repossession, the
Servicer will follow such practices and procedures as it deems necessary or
advisable and as are normal and usual for responsible holders of closed-end
automobile and light duty truck lease contracts and, to the extent more
exacting, the practices and procedures used by the Servicer in respect of any
such lease contracts serviced by it for its own account, and in any event in
compliance with all applicable laws. The Servicer will be required to repair the
Leased Vehicle if it reasonably determines that such repairs will increase the
related Net Repossessed Vehicle Proceeds. The Servicer will be responsible for
all costs and expenses incurred in connection with the sale or other disposition
of Leased Vehicles related to Charged-off Contracts and other Contracts as to
which a lessee has defaulted and the related Leased Vehicles, but will be
entitled to reimbursement to the extent that such costs constitute Repossessed
Vehicle Expenses or other Liquidation Expenses or expenses recoverable
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under an applicable insurance policy. Proceeds from the sale or other
disposition of repossessed Leased Vehicles will constitute Repossessed Vehicle
Proceeds and will be deposited into the SUBI Collection Account. The Servicer
will be entitled to reimbursement of all related Repossessed Vehicle Expenses
from amounts on deposit in the SUBI Collection Account upon presentation to the
Indenture Trustee of an officer's certificate of the Servicer and Principal
Collections in respect of a Collection Period will include all Net Repossessed
Vehicle Proceeds collected during such Collection Period. (Servicing Agreement,
Sections 2.06 and 9.02).
Matured Leased Vehicle Inventory
Upon the scheduled maturity of a Contract, the related lessee has the
option to acquire the related Leased Vehicle for an amount equal to its Residual
Value plus any applicable taxes and all other incidental charges which may be
due under such Contract. If the lessee chooses not to exercise this option but
instead returns the Leased Vehicle to the Servicer, such Leased Vehicle will be
placed in Matured Leased Vehicle Inventory, and the Servicer, acting on behalf
of the Origination Trust, will sell or otherwise dispose of the Leased Vehicle
in a manner similar to that for other off-lease Leased Vehicles. (Servicing
Agreement, Section 2.06).
Principal Collections in respect of a Collection Period will include all
Net Matured Leased Vehicle Proceeds collected during such Collection Period. All
related Matured Leased Vehicle Proceeds will be deposited into the SUBI
Collection Account. Related Matured Leased Vehicle Expenses may be released from
amounts on deposit in the SUBI Collection Account upon presentation of an
officer's certificate by the Servicer. (SUBI Trust Agreement, Section 10.01;
Servicing Agreement, Section 9.02).
Records, Servicer Determinations and Reports
The Servicer will retain or cause to be retained all data (including,
without limitation, computerized records, operating software and related
documentation) relating directly to or maintained in connection with the
servicing of the Contracts. Upon the occurrence and continuance of an Event of
Servicing Termination and termination of the Servicer's obligations under the
Servicing Agreement, the Servicer will use commercially reasonable efforts to
effect the orderly and efficient transfer of the servicing of the Contracts to a
successor servicer. (Servicing Agreement, Sections 2.03 and 9.03). The Servicer
will perform certain monitoring and reporting functions on behalf of the
Transferor, the Indenture Trustee, the Owner Trustee, the Origination Trustee
and the Noteholders, including the preparation and delivery to the Indenture
Trustee, the Origination Trustee and each Rating Agency of a monthly
certificate, on or before each Determination Date, setting forth all information
necessary to make all distributions required in respect of the related
Collection Period (the "Servicer's Certificate"), and the preparation and
delivery of monthly statements setting forth information described under
"Description of the Notes--Statements to Noteholders", and an annual officer's
certificate specifying the occurrence and status of any Event of Servicing
Termination. (Servicing Agreement, Sections 3.03, 10.01 and 10.03).
Evidence as to Compliance
The Servicing Agreement will provide that a firm of nationally recognized
independent accountants will furnish to the Indenture Trustee on or before April
30 of each year, beginning April 30, 1999, a statement as to compliance by the
Servicer during the preceding twelve months ended December 31 (or since the
Closing Date in the case of the first such statement) with certain standards
relating to the servicing of the Contracts, the Servicer's accounting records
and computer files with respect thereto and certain other matters. (Servicing
Agreement, Sections 3.02 and 10.02).
The Servicing Agreement will also provide for delivery to the Indenture
Trustee, on or before April 30 of such year, beginning April 30, 1999, of a
certificate signed by an officer of the Servicer stating that the Servicer has
fulfilled its obligations under the Agreement throughout the preceding twelve
months ended December 31 (or since the Closing Date in the case of the first
such certificate) or, if there has been a default in the fulfillment of any such
obligation, describing each such default. (Servicing Agreement, Sections 3.03
and 10.03).
Copies of such statements and certificates may be obtained by Note Owners
or Class A Noteholders by a request in writing addressed to the Indenture
Trustee at its Corporate Trust Office. (Agreement, Section 3.06).
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Compliance with ERISA
On or before each Determination Date, the Servicer shall provide the
Indenture Trustee and each Rating Agency with an officer's certificate stating
that none of SET, JMFE, World Omni nor any of their respective affiliates for
purposes of ERISA (i) maintains an ERISA plan which, as of its last valuation
date, had unfunded current liability, (ii) anticipates that the value of the
assets of any ERISA plan it maintains would not be sufficient to cover any
current liability or (iii) is contemplating benefit improvements with respect to
any plans then maintained or the establishment of any new ERISA plans, either of
which would cause it to maintain an ERISA plan with unfunded current liability
(the "ERISA Compliance Test"). In the event that the Servicer does not timely
make the foregoing certifications, or any such certification is incorrect, all
Excess Collections in respect of any Distribution Date, after giving effect to
all payments required to be made therefrom on such Distribution Date, will be
deposited into the Reserve Fund, regardless of the Reserve Fund Cash
Requirement. On the Distribution Date following the date on which the ERISA
Compliance Test is satisfied, monies on deposit in the Reserve Fund in excess of
the Reserve Fund Cash Requirement shall be distributed to the Transferor (or to
the Noteholders to the extent allocable to the Accelerated Principal
Distribution Amount). See "Security for the Notes--The Reserve Fund--The Reserve
Fund Cash Requirement" for a more complete description of the Reserve Fund Cash
Requirement. (Servicing Agreement, Section 10.03; Agreement, Sections 1.01, 3.03
and 3.04).
Servicing Compensation
The Servicer will be entitled to compensation for the performance of its
servicing obligations under the Servicing Agreement. The Servicer will be
entitled to receive on each Distribution Date the Servicing Fee in respect of
the related Collection Period equal to one-twelfth of the product of 1.00% and
the Aggregate Net Investment Value as of the first day of the month preceding
the month in which such Distribution Date occurs (or, in the case of the first
Distribution Date, as of the Initial Cutoff Date). The Servicing Fee will be
calculated and paid based upon a 360-day year consisting of twelve 30-day
months. So long as World Omni is the Servicer, it may, by notice to the
Indenture Trustee and the Origination Trustee, on or before a Determination
Date, elect to waive the Servicing Fee with respect to the related Collection
Period, so long as World Omni believes that sufficient collections will be
available from Interest Collections on one or more future Distribution Dates to
pay such waived Servicing Fee, without interest. In such event, the Servicing
Fee for such Collection Period shall be deemed to equal zero for all purposes of
the Agreement and the Servicing Agreement.
The Servicer will also be entitled to additional servicing compensation in
the form of late fees and other administrative fees or similar charges paid with
respect to the Contracts, and earnings from the investment of Security Deposits
as described above under "Additional Document Provisions--The Servicing
Agreement--Security Deposits". The Servicer will not be entitled to retain any
Extension Fee paid in connection with an extended Contract, as such amounts will
be required to be deposited into the SUBI Collection Account. The Servicer will
pay all expenses incurred by it in connection with its servicing activities
under the Servicing Agreement, including the payment of Uncapped Administrative
Expenses, and will not be entitled to reimbursement of such expenses except to
the extent any such expenses constitute Liquidation Expenses in respect of a
Contract or Leased Vehicle or reasonable issuance expenses under an applicable
insurance policy, or to the extent that Uncapped Administrative Expenses are
reimbursed out of Interest Collections. (Servicing Agreement, Sections 2.05 and
9.06).
The Servicing Fee will compensate the Servicer for performing the functions
of a third party servicer of the Contracts as an agent for the Origination
Trustee under the Servicing Agreement, including collecting and posting
payments, responding to inquiries of lessees on the Contracts, investigating
delinquencies, sending payment statements and reporting tax information to
lessees, paying costs of sale or other disposition of Leased Vehicles relating
to defaulted Contracts and Leased Vehicles included in Matured Leased Vehicle
Inventory, policing the SUBI Assets, administering the Contracts, including
making Advances, accounting for collections, furnishing monthly and annual
statements to the Indenture Trustee with respect to distributions and generating
federal income tax information. (Servicing Agreement, Section 2.05).
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Servicer Resignation and Termination
The Servicer may not resign from its obligations and duties under the
Servicing Agreement unless it determines that its duties thereunder are no
longer permissible by reason of a change in applicable law or regulations. No
such resignation will become effective until a successor servicer has assumed
the Servicer's obligations under the Servicing Agreement. The Servicer may not
assign the Servicing Agreement or any of its rights, powers, duties or
obligations thereunder except as otherwise provided therein or except in
connection with a consolidation, merger, conveyance, transfer or lease made in
compliance with the Servicing Agreement. (Servicing Agreement, Sections 2.10 and
9.11).
The rights and obligations of the Servicer under the Servicing Agreement
may be terminated following the occurrence and continuance of an Event of
Servicing Termination, as described under "Additional Document Provisions--The
Servicing Agreement--Rights Upon Event of Servicing Termination". (Servicing
Agreement, Sections 4.01 and 11.01).
Indemnification by the Servicer
The Servicer will indemnify the Origination Trustee and its agents for any
and all liabilities, losses, damages and expenses that may be incurred by them
as a result of any act or omission by the Servicer in connection with the
performance of its duties under the Servicing Agreement. (Servicing Agreement,
Section 9.08).
Events of Servicing Termination
"Events of Servicing Termination" under the Servicing Agreement with
respect to the SUBI Assets will consist of, among other things: (i) any failure
by the Servicer to deliver to the Indenture Trustee for distribution to
Noteholders any required payment, which failure continues unremedied for five
Business Days after discovery of such failure by an officer of the Servicer or
receipt by the Servicer of notice thereof from the Indenture Trustee, the
Origination Trustee or holders of Notes evidencing not less than 25% of the
Voting Interests of the Class A Notes and the Class B Notes, voting together as
a single class; (ii) any failure by the Servicer duly to observe or perform in
any material respect any other of its covenants or agreements in the Servicing
Agreement which failure materially and adversely affects the rights of holders
of interests in the SUBI or the Noteholders and which continues unremedied for
60 days after written notice of such failure is given as described in clause
(i) above; (iii) failure by the Servicer to deliver to the Origination Trustee
or the Indenture Trustee any report required to be delivered to the Origination
Trustee or the Indenture Trustee pursuant to the Servicing Agreement within ten
Business Days after the date such report is due; (iv) any representation,
warranty or statement of the Servicer made in the Servicing Agreement or any
other document relating to the Origination Trust to which the Servicer is a
party or by which it is bound or any certificate, report or other writing
delivered pursuant to the Servicing Agreement shall prove to be incorrect in any
material respect as of the time when the same shall be made which continues
unremedied for 30 days after written notice of such failure is given as
described in clause (i) above; (v) failure by the Servicer to maintain or pay
when due the premium in respect of any Contingent and Excess Liability Insurance
Policy or the Residual Value Insurance Policy; (vi) any failure by the
Transferor to timely deposit into the Reserve Fund an amount equal to the RV
Insurer Reserve Fund Supplemental Requirement after an RV Insurer Trigger Event;
and (vii) the occurrence of certain Insolvency Events relating to the Servicer.
Notwithstanding the foregoing, a delay in or failure of performance referred to
under clause (i) for a period of ten Business Days, under clause (ii) for a
period of 90 days, under clause (iii) for a period of 20 Business Days or under
clause (iv) for a period of 60 days, shall not constitute an Event of Servicing
Termination if such failure or delay was caused by act of God or other similar
occurrence. Upon the occurrence of any such event, the Servicer shall not be
relieved from using all commercially reasonable efforts to perform its
obligations in a timely manner in accordance with the terms of the Servicing
Agreement and the Servicer shall provide to the Indenture Trustee, the
Origination Trustee, the Transferor and the Noteholders prompt notice of such
failure or delay by it, together with a description of its efforts to so perform
its obligations. (Servicing Agreement, Sections 4.01 and 11.01).
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Rights Upon Event of Servicing Termination
As long as an Event of Servicing Termination remains unremedied, the
Origination Trustee, upon the direction of the Indenture Trustee or Noteholders
representing in the aggregate more than 50% of the Voting Interests of the
outstanding Notes (voting together as a single class) may terminate all of the
rights and obligations of the Servicer under the Servicing Agreement with
respect to the SUBI Assets. In the event of such a termination affecting the
SUBI Assets, the Trust Agent generally will succeed to the rights, powers,
responsibilities, duties and liabilities of the Servicer under the Servicing
Agreement with respect to the SUBI Assets (excluding certain specific
obligations listed in the Servicing Agreement) or provide for a new Servicer to
be approved by each Rating Agency. The Trust Agent or other new Servicer, will
receive substantially the same servicing compensation to which the Servicer
otherwise would have been entitled. If, however, a bankruptcy trustee or similar
official has been appointed for the Servicer, and no Event of Servicing
Termination other than such appointment has occurred, such trustee or official
may have the power to prevent the Origination Trustee, the Indenture Trustee or
such Noteholders from effecting a transfer of servicing. Notwithstanding the
termination of the Servicer's rights and powers in such event, the Servicer will
remain obligated to perform certain specific obligations listed in the Servicing
Agreement and to reimburse the Trust Agent for any losses incurred in performing
certain such obligations, and will be entitled to payment of certain amounts
payable to it for services rendered prior to such termination. (Servicing
Agreement, Sections 4.01 and 11.01).
Noteholders representing in the aggregate more than 50% of the Voting
Interests of the outstanding Notes (voting together as a single class), with the
consent of the Origination Trustee and the Indenture Trustee (which consents
shall not be unreasonably withheld), may waive any default by the Servicer in
the performance of its obligations under the Servicing Agreement and its
consequences with respect to the SUBI Assets, other than a default in making any
required deposits to or payments from an Account in accordance with the
Servicing Agreement or in respect of a covenant or provision of the Servicing
Agreement that cannot be modified or amended without the consent of each
Noteholder (in which event the related waiver will require the approval of
holders of all of the Notes). No such waiver will impair the rights of the
Noteholders with respect to subsequent defaults. (Servicing Agreement,
Section 4.01).
No Petition
The Servicer will agree not to institute, or join in, any bankruptcy or
similar proceeding against the Transferor, WOLS LLC, ALF L.P., ALF LLC, the
Origination Trustee or the Origination Trust until one year and one day after
final payment of all financings involving interests in the Origination Trust.
(Servicing Agreement, Section 5.14).
Termination
The Servicing Agreement shall terminate upon the earlier to occur of
(i) the termination of the Origination Trust, (ii) the discharge of the Servicer
in accordance with its terms or (iii) the termination of the Agreement.
(Servicing Agreement, Section 5.01).
Indenture Trustee and Owner Trustee as Third-Party Beneficiaries
As the holder of the SUBI, the Owner Trustee, and as the pledgee of the
SUBI, the Indenture Trustee, will be third-party beneficiaries of the Servicing
Agreement. (Servicing Agreement, Section 12.12).
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CERTAIN LEGAL ASPECTS OF THE ORIGINATION TRUST AND THE SUBI
THE ORIGINATION TRUST
The Origination Trust may be deemed to be a business trust under Alabama
law. In an Alabama business trust, the trust property is managed for the profit
of the beneficiaries, as opposed to a common "asset preservation" trust, in
which the trustee is charged with the mere maintenance of trust property. The
principal requirement for the formation of a business trust in Alabama is the
filing of the trust instrument with the appropriate state authority. The
Origination Trust Agreement has been, and the SUBI Trust Agreement will be, so
filed. The Origination Trust also has been qualified as a business trust
authorized to transact business in certain other states where it is required to
be qualified.
Because the Origination Trust has been registered as a business trust for
Alabama and other state law purposes, like a corporation, it may be eligible to
be a debtor in its own right under the United States Bankruptcy Code, as further
described under "Risk Factors--Risks in the Event of an Insolvency of World
Omni; Substantive Consolidation with World Omni".
QUALIFICATION OF VT INC. AS FIDUCIARY
State laws, including the laws in the Five State Area, differ as to whether
a corporate trustee that leases vehicles in that state, such as VT Inc., must
qualify as a fiduciary. The consequences of the failure to be qualified as a
fiduciary in a State where such qualification is required differ by State, and
could include penalties against VT Inc. and its directors and officers ranging
from fines to the inability of VT Inc. to maintain action in the courts of that
State.
World Omni believes that VT Inc. does not exercise sufficient discretion in
the performance of its duties under the SUBI Trust Agreement or take such other
discretionary actions that it should be considered to be exercising fiduciary
powers within the meaning of any applicable State law. However, no assurance can
be given that World Omni will prevail in this view. Because no State in which
(i) this issue is uncertain, (ii) VT Inc. has not taken the actions necessary to
qualify as a fiduciary and (iii) the consequences of such failure would be
material represents a significant percentage of the value of the SUBI Assets,
World Omni believes that the failure to be qualified as a fiduciary in any State
where such qualification may ultimately be required will not materially and
adversely affect the Noteholders. However, no assurance can be given in this
regard. World Omni, as Servicer, has agreed to indemnify VT Inc., as Origination
Trustee for, among other things, any and all liabilities, losses, damages and
expenses that may be incurred by the Origination Trustee as a result of any act
or omission by the Servicer in connection with its undertakings to identify from
time to time the periodic governmental filings, registrations and approvals
arising with respect to or required of the Origination Trustee or the
Origination Trust.
THE SUBI
The SUBI will be issued pursuant to the SUBI Trust Agreement and will
evidence a beneficial interest in the SUBI Assets. The SUBI will not represent a
direct interest in the SUBI Assets, nor will it represent an interest in any
Origination Trust Assets other than the SUBI Assets. Under the allocation of
Origination Trust liabilities described under "Additional Document
Provisions--The SUBI Trust Agreement--The SUBI, the Other SUBIs and the UTI",
payments made on or in respect of such other Origination Trust Assets will not
be available to make payments on the Notes or to cover expenses of the
Origination Trust allocable to the SUBI Assets. Any liability to third parties
arising from or in respect of a Contract or Leased Vehicle will be borne by the
holders of interests in the SUBI (including the Trust). If any such liability
arises from a contract or leased vehicle that is an Other SUBI Asset or a UTI
Asset, the Origination Trust Assets (including the SUBI Assets) will not be
subject to such liability unless such Other SUBI Assets or UTI Assets are
insufficient to pay the liability. In such event, because there will be no other
assets from which to satisfy any such liability, to the extent that it is owed
to entities other than the Origination Trustee and the beneficiaries of the
Origination Trust, the other Origination Trust Assets, including the SUBI
Assets, will be available to satisfy such liabilities. Under such circumstances,
investors in the Class A Notes could incur a loss on their investment.
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Similarly, to the extent that a third-party claim that otherwise would be
allocable to an Other SUBI or UTI is satisfied out of the SUBI Assets rather
than Other SUBI Assets or UTI Assets, and the claim exceeds the value of the
portfolio to which it should be allocated, the Origination Trustee will not be
able to reallocate the remaining Origination Trust Assets so that each portfolio
will bear the expense of the claim as nearly as possible if the claim has been
properly allocated. In such circumstances, investors in the Class A Notes could
incur a loss on their investment.
Because the Trust and the Indenture Trustee will not own directly or have a
direct security interest in the Leased Vehicles and certain other SUBI Assets,
and since their respective interests therein generally will be an indirect
beneficial ownership interest and a security interest in such indirect
beneficial ownership interest, perfected liens of third-party creditors of the
Origination Trust in one or more of such SUBI Assets will take priority over the
interests of the Trust and the Indenture Trustee in such SUBI Assets. Therefore,
a general creditor of the Origination Trust may obtain a lien on one or more
such SUBI Assets regardless of whether its claim would be allocated to such SUBI
Assets under the terms of the Origination Trust Agreement. Potentially material
examples of such liens could include tax liens arising against the Transferor or
the Trust, liens arising under various federal and state criminal statutes,
certain liens in favor of the Pension Benefit Guaranty Corporation (the "PBGC"),
judgment liens arising from successful claims under federal and state consumer
protection laws and Lemon Laws with respect to leases and leased vehicles
included in the Origination Trust Assets and judgment liens arising from
successful claims against the Origination Trust arising from the operation of
the leased vehicles constituting Origination Trust Assets. See "Risk
Factors--Risks Associated with Consumer Protection Laws", "--Risks Associated
with ERISA Liabilities" and "--Risks Associated with Vicarious Tort Liability"
and "Certain Legal Aspects of the Contracts and the Leased Vehicles--Vicarious
Tort Liability" and "--Consumer Protection Laws" for a further discussion of
these risks.
The Origination Trust Agreement provides that, to the extent that such a
third-party claim is satisfied out of one or more SUBI Assets rather than Other
SUBI Assets or UTI Assets, as the case may be, the Origination Trustee will
reallocate the remaining Origination Trust Assets (i.e., the Other SUBI Assets
and the UTI Assets) so that each portfolio will bear the expense of the claim as
nearly as possible as if the claim had been allocated as provided in the
Origination Trust Agreement as set forth under "Additional Document
Provisions--The SUBI Trust Agreement--The SUBI, the Other SUBIs and the UTI".
INSOLVENCY RELATED MATTERS
As described under "The Origination Trust--Allocation of SUBI Assets" and
"Certain Legal Aspects of the Origination Trust and the SUBI--The SUBI", each
holder or pledgee of the UTI and any Other SUBI will be required to expressly
disclaim any interest in the SUBI Assets, and to fully subordinate any claims to
the SUBI Assets in the event that this disclaimer is not given effect. Although
no assurance can be given, in the unlikely event of a bankruptcy of ALF L.P.,
the Transferor believes that the SUBI Assets would not be treated as part of ALF
L.P.'s bankruptcy estate and that, even if they were so treated, the
subordination by holders and pledgees of the UTI and Other SUBIs should be
enforceable. In addition, as described under "Risk Factors--Risks in the Event
of an Insolvency of World Omni; Substantive Consolidation with World Omni", the
Transferor has taken steps in structuring the transactions contemplated hereby
that are intended to make it unlikely that the voluntary or involuntary
application for relief by World Omni under any Insolvency Laws will result in
consolidation of the assets and liabilities of ALF LLC, ALF L.P., WOLS LLC, the
Transferor, the Origination Trust or the Trust with those of World Omni. If,
however, (i) a court concluded that the assets and liabilities of ALF LLC, ALF
L.P., the Transferor, WOLS LLC, the Origination Trust or the Trust should be
consolidated with those of World Omni in the event of the application of
applicable Insolvency Laws to World Omni, (ii) a filing were made under any
Insolvency Law by or against ALF LLC, ALF L.P., the Transferor, WOLS LLC, the
Origination Trust or the Trust or (iii) an attempt were made to litigate any of
the foregoing issues, delays in payments on the Notes and possible reductions in
the amount of such payments could occur.
LEGAL PROCEEDINGS
None of ALF LLC, ALF L.P., the Transferor or WOLS LLC is a party to any
legal proceeding. World Omni is a party to, and is vigorously defending,
numerous legal proceedings, all of which it believes constitute ordinary routine
litigation incidental to the business and activities conducted by World Omni.
The Origination Trustee, on
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behalf of the Origination Trust, has been named as a defendant in various cases
which it believes constitute ordinary routine litigation incidental to the
business and activities conducted by the Origination Trustee as an assignee of
lease contracts and leased vehicles. For a description of a pending IRS review,
see "World Omni--Certain Administrative and Legal Proceedings" and "Material
Federal Income Tax Considerations--Possible Alternative Treatment of the
Class A Notes."
CERTAIN LEGAL ASPECTS OF THE
CONTRACTS AND THE LEASED VEHICLES
BACK-UP SECURITY INTERESTS
Absent prior perfection of a security interest by the Trust or the
Indenture Trustee in the SUBI Assets, the holder of a perfected lien in one or
more SUBI Assets would have priority over the respective interests of the
Indenture Trustee and Trust in such SUBI Assets. Therefore, certain actions have
been taken to ensure that the Indenture Trustee will be deemed to have a
perfected security interest in the SUBI Certificate (and the SUBI evidenced
thereby) and in the Contracts and the rights thereunder susceptible of
perfection by the filing of a financing statement under the Uniform Commercial
Code (the "UCC") in effect in the States of Alabama, Illinois and Florida. In
particular, on or prior to the Closing Date, UCC-1 financing statements will be
filed in the States of Alabama, Florida and Illinois to effect this perfection.
By virtue of its possession of the SUBI Certificate, the Indenture Trustee also
will be deemed to have a perfected security interest therein (and in the SUBI
evidenced thereby). However, no action will be taken to perfect any lien that
the Indenture Trustee may be deemed to have in the Leased Vehicles. Therefore,
to the extent that a valid lien is imposed by a third party against a Leased
Vehicle, the interest of the lienholder will be superior to the unperfected
beneficial interest of the Indenture Trustee in such Leased Vehicle. Although
the Servicing Agreement will require the Servicer to contest all such liens and
cause the removal of any liens that may be imposed, if any such liens are
imposed against the Leased Vehicles, investors in the Class A Notes could incur
a loss on their investment. For further information relating to potential liens
on the SUBI Assets, see "Additional Document Provisions--The Servicing
Agreement--Notification of Liens and Claims" and "Certain Legal Aspects of the
Origination Trust and the SUBI--The SUBI".
The Indenture Trustee's back-up security interest in the Contracts could be
subordinate to the interest of certain other parties who take possession of the
Contracts before the filing described above has been completed. Specifically,
the Indenture Trustee's security interest in a Contract could be subordinate to
the rights of a purchaser of such Contract who takes possession thereof without
knowledge or actual notice of the Indenture Trustee's security interest. The
Contracts will not be stamped to reflect the foregoing back-up security
arrangements.
As noted under "Certain Legal Aspects of the Origination Trust and the
SUBI--The SUBI", various liens could be imposed upon all or part of the SUBI
Assets that, by operation of law, would take priority over the Indenture
Trustee's interest therein. Such liens could include tax liens arising against
the Transferor or the Trust, mechanic's, repairmen's, garagemen's and motor
vehicle accident liens and certain liens for personal property taxes, in each
case arising with respect to a particular Leased Vehicle, liens arising under
various state and federal criminal statutes and certain liens, more fully
described under "Risk Factors--Risks Associated with ERISA Liabilities", in
favor of the PBGC. Additionally, any perfected security interest of the
Indenture Trustee in all or part of the property of the Trust could also be
subordinate to claims of any trustee in bankruptcy or debtor-in-possession in
the event of a bankruptcy of the Transferor prior to any perfection of the
transfer of the assets transferred by the Transferor to the Trust pursuant to
the Agreement, as more fully described under "Risk Factors--Risks in the Event
of an Insolvency of World Omni; Substantive Consolidation with World Omni".
VICARIOUS TORT LIABILITY
Although the Origination Trust will own the leased vehicles, they will be
operated by the lessees and their respective invitees. State laws, including the
laws in the Five State Area, differ as to whether anyone suffering injury to
person or property involving a leased vehicle may bring an action against the
owner of the vehicle merely by virtue of that ownership.
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In Alabama and Georgia, a victim of such an accident has no such cause of
action against the owner of a leased vehicle arising from the negligent
operation of such leased vehicle unless the owner has negligently entrusted or
negligently continues to entrust the vehicle to an inappropriate lessee.
In Florida, under Section 324.021(9)(b), Florida Statutes, the owner of a
motor vehicle that is subject to a lease having an initial term of at least one
year is exempt from liability arising out of an accident in which the leased
vehicle is involved if the lessee is required under the lease to maintain
certain specified levels of insurance and such insurance is in effect. In 1991,
in a case involving finance leases, the Florida Supreme Court ruled that this
statute is constitutional and that a Florida owner/lessor that complies with the
statute will not be deemed the owner of the leased vehicle for purposes of
financial responsibility for liability or tort claims arising out of the
negligent operation of the leased vehicle or the negligent acts of the operator.
In 1992, the Florida Supreme Court held that this statute is applicable to true
leases as well as finance leases. In March 1996, the Florida Supreme Court
strictly interpreted the requirements of Section 324.021(9)(b), ruling that the
existence of a lessor's blanket contingent liability insurance policy did not
satisfy the statutory requirement that the lessee have insurance in effect at
the time of the accident and denying the lessor the liability exemption provided
in the statute. However, effective with respect to actions brought on or after
June 1, 1996, the statute was amended to provide that a lessor's blanket
contingent liability insurance policy with certain required policy limits will
be deemed to satisfy the statute's requirements for the liability exemption. The
Origination Trust's insurance coverage meets these requirements.
In North Carolina, a lessor of a motor vehicle generally is not responsible
to injured parties for a lessee's negligent use of the leased vehicle when all
control has been relinquished to the lessee, unless the lessor knew or in the
exercise of reasonable care should have known that the leased vehicle was
defective or unsafe at the time of delivery to the lessee and the defect or
unsafe condition caused injury, or if the lessor negligently entrusted the
vehicle to an incompetent lessee.
As more fully described under "Risk Factors--Risks Associated with
Vicarious Tort Liability", following an accident involving a Leased Vehicle,
under certain circumstances the Origination Trust may be the subject of an
action for damages as a result of its ownership of such Leased Vehicle. To the
extent that applicable state law permits such an action, the Origination Trust
and the Origination Trust Assets may be subject to liability. However, the laws
of many States, including each of the States in the Five State Area, either do
not permit such suits, or the lessor's liability is capped at the amount of any
liability insurance that the lessee was required to, but failed to, maintain.
Although the Origination Trust's insurance coverage is substantial, in the event
that all applicable insurance coverage were exhausted and damages were assessed
against the Origination Trust, claims could be imposed against the assets of the
Origination Trust, including the Leased Vehicles. However, such claims would not
take priority over any SUBI Assets to the extent that the Indenture Trustee has
a prior perfected security interest therein (such as with respect to the
Contracts) as further described under "Certain Legal Aspects of the Contracts
and the Leased Vehicles--Back-up Security Interests". If any such claims were
imposed against the assets of the Origination Trust, investors in the Class A
Notes could incur a loss on their investment.
REPOSSESSION OF LEASED VEHICLES
In the event that a default by a lessee has not been cured within a certain
period of time after notice, the Servicer will ordinarily retake possession of
the related leased vehicle. Some jurisdictions require that the lessee be
notified of the default and be given a time period within which to cure the
default prior to repossession. Generally, this right to cure may be exercised on
a limited number of occasions in any one-year period. In these jurisdictions, if
the lessee objects or raises a defense to repossession, an order must be
obtained from the appropriate state court, and the vehicle must then be
repossessed in accordance with that order. Other jurisdictions permit
repossession without notice (although in Florida, Georgia and North Carolina a
course of conduct in which the lessor has accepted late payments has been held
to create a right of the lessee to receive prior notice), but only if the
repossession can be accomplished peacefully. If a breach of the peace cannot be
avoided, judicial action is required.
In Georgia, a leased vehicle may be repossessed without notice, but only if
the repossession can be accomplished without a breach of the peace. If a breach
of the peace cannot be avoided, the lessor must seek a writ of possession in a
state court action or pursue other judicial action to repossess such leased
vehicle.
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After the Servicer has repossessed a Leased Vehicle, it may provide the
lessee with a period of time within which to cure the default under the related
Contract. If by the end of such period the default has not been cured, the
Servicer will attempt to sell the Leased Vehicle. The Net Repossessed Vehicle
Proceeds therefrom may be less than the remaining amounts due under the Contract
at the time of default by the lessee.
DEFICIENCY JUDGMENTS
The proceeds of sale of a leased vehicle generally will be applied first to
the expenses of resale and repossession and then to the satisfaction of the
amounts due under the related lease contract. While some states impose
prohibitions or limitations on deficiency judgments if the net proceeds from
resale of a leased vehicle do not cover the full amounts due under the related
lease contract, a deficiency judgment can be sought in those states (including
each of the States in the Five State Area) that do not prohibit directly or
limit such judgments. However, in some states (including Florida), a lessee may
be allowed an offsetting recovery for any amount not recovered at resale because
the terms of the resale were not commercially reasonable. In any event, a
deficiency judgment would be a personal judgment against the lessee for the
shortfall, and a defaulting lessee would be expected to have little capital or
sources of income available following repossession. Therefore, in many cases, it
may not be useful to seek a deficiency judgment. Even if a deficiency judgment
is obtained, it may be settled at a significant discount.
In Georgia, amounts recoverable by the lessor of a leased vehicle from a
lessee upon default or early termination are not considered to be "deficiency
judgments", but damages for breach or early termination of the related lease
contract. In the case of liquidated damages provided for in the Contracts, the
only limitation or prohibition on such damages is that they are reasonable in
light of the anticipated harm caused by the default. Georgia law does not
require that any excess proceeds from disposition of a leased vehicle be paid to
a lessee. Under the Georgia Motor Vehicle Warranty Rights Act, however, where a
lessor or lessee has exercised its rights against the manufacturer and obtained
a replacement vehicle and the lessor realizes a gain from disposition of the
replacement vehicle, the lessor must refund to the lessee the lesser of any
offset for use paid by the lessee to the manufacturer or the gain realized by
the lessor.
CONSUMER PROTECTION LAWS
Numerous federal and state consumer protection laws impose requirements
upon lessors and servicers involved in consumer leasing. The federal Consumer
Leasing Act of 1976 and Regulation M, issued by the Board of Governors of the
Federal Reserve System, for example, require that a number of disclosures be
made at the time a vehicle is leased, including the amount of any down payment,
a description of the lessee's liability at the end of the lease term, the amount
of any periodic payments, the circumstances under which the lessee may terminate
the lease prior to the end of the lease term, the capitalized cost of the
vehicle and a warning regarding possible charges for early termination. The
various consumer protection laws would apply to the Origination Trustee as a
"co-lessor" of the Contracts and may also apply to the Trust as holder of a
beneficial interest in the Contracts. The failure to comply with such consumer
protection laws may give rise to liabilities on the part of the Servicer, the
Origination Trust and the Origination Trustee, including liabilities for
statutory damages and attorneys' fees. In addition, claims by the Servicer, the
Origination Trust and the Origination Trustee may be subject to set-off as a
result of such noncompliance.
Courts have applied general equitable principles in litigation relating to
repossession and deficiency balances. These equitable principles may have the
effect of relieving a lessee from some or all of the legal consequences of a
default.
In several cases, consumers have asserted that the self-help remedies of
lessors violate the due process protection provided under the Fourteenth
Amendment to the Constitution of the United States. Courts have generally found
that repossession and resale by a lessor do not involve sufficient state action
to afford constitutional protection to consumers.
Many states, including each State in the Five State Area, have adopted laws
(each, a "Lemon Law") providing redress to consumers who purchase or lease a
vehicle that remains out of conformance with its manufacturer's warranty after a
specified number of attempts to correct a problem or after a specific time
period. Should any Leased Vehicle become subject to a Lemon Law, a lessee could
compel the Origination Trust to
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terminate the related Contract and refund all or a portion of payments that
previously have been paid. Although the Origination Trust may be able to assert
a claim against the manufacturer of any such defective Leased Vehicle, there can
be no assurance any such claim would be successful.
Historically, less than one-half of one percent of all automobiles and
light duty trucks leased by World Omni (including lease contracts owned by the
Origination Trustee on behalf of the Origination Trust or by certain special
purpose subsidiaries of World Omni) have become the subject of an action under
any of the Lemon Laws of any jurisdiction. As noted below, World Omni will
represent and warrant to the Owner Trustee and the Indenture Trustee as of the
Initial Cutoff Date and as of each Subsequent Cutoff Date that none of the
Initial Leased Vehicles or the related Subsequent Leased Vehicles, as the case
may be, is out of compliance with any law, including a Lemon Law. Nevertheless,
there can be no assurance that one or more Leased Vehicles will not become
subject to return (and the related Contract terminated) in the future under a
Lemon Law.
Representations and warranties will be made in the Servicing Agreement that
each Contract complies with all requirements of law in all material respects. If
any such representation and warranty proves to be incorrect with respect to any
Contract, and is not timely cured, World Omni will be required under the
Servicing Agreement to deposit an amount equal to the Reallocation Payment
(together with, in certain circumstances during the Amortization Period, an
amount equal to the Reallocation Deposit Amount) in respect of such Contract
into the SUBI Collection Account unless the breach is cured. See "Additional
Document Provisions--The SUBI Trust Agreement--The SUBI, the Other SUBIs and the
UTI" and "The Contracts--Representations, Warranties and Covenants" for further
information regarding the foregoing representations and warranties.
OTHER LIMITATIONS
In addition to laws limiting or prohibiting deficiency judgments, numerous
other statutory provisions, including applicable Insolvency Laws, may interfere
with or affect the ability of a lessor to enforce its rights under an automobile
or light duty truck lease contract. For example, if a lessee commences
bankruptcy proceedings, the lessor's receipt of rental payments due under the
lease contract is likely to be delayed. In addition, a lessee who commences
bankruptcy proceedings might be able to assign the lease contract to another
party even though the lease prohibits assignment.
MATERIAL INCOME TAX CONSIDERATIONS
FEDERAL TAXATION
General
Set forth below is a discussion representing the opinion of Cadwalader,
Wickersham & Taft, special federal income tax counsel to the Trust, as to
material federal income tax consequences to holders of the Class A Notes who are
original owners and who hold the Class A Notes as capital assets under the
Internal Revenue Code of 1986, as amended (the "Code"). This discussion does not
purport to be complete or to deal with all aspects of federal income taxation or
any aspects of state or local taxation that may be relevant to Class A
Noteholders or Note Owners in light of their particular circumstances, nor to
certain types of Class A Noteholders or Note Owners subject to special treatment
under the federal income tax laws (for example, banks and life insurance
companies). This discussion is based upon present provisions of the Code, the
regulations promulgated thereunder and judicial and ruling authorities, all of
which are subject to change, which change may be retroactive. The parties do not
intend to seek a ruling from the IRS on any of the issues discussed below.
Moreover, there can be no assurance that if such a ruling were sought, the IRS
would rule favorably. Taxpayers and preparers of tax returns (including those
filed by any partnership or other issuer) should be aware that under applicable
Treasury Regulations a provider of advice on specific issues of law is not
considered an income tax return preparer unless the advice is (i) given with
respect to events that have occurred at the time the advice is rendered and is
not given with respect to the consequences of contemplated actions and (ii) is
directly relevant to the determination of an entry on a tax return. Accordingly,
taxpayers should consult their respective tax advisors and tax return preparers
regarding the preparation of any item on a tax return, even where the
anticipated tax treatment has been discussed herein. Prospective investors
should consult their own tax advisors with regard to
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the federal income tax consequences of the purchase, ownership or disposition of
the Class A Notes, as well as the tax consequences arising under the laws of any
state, foreign country or other taxing jurisdiction.
Characterization of the Class A Notes as Indebtedness
The Transferor, the Owner Trustee, each Noteholder, and each Note Owner (by
acquiring a beneficial interest in a Class A Note) will express in the Agreement
and in the Indenture their intent that, for federal, state and local income and
franchise tax purposes, the Class A Notes will be indebtedness, secured by the
assets of the Trust. The Transferor and the Owner Trustee, by entering into the
Agreement and the Indenture, and each Noteholder and each Note Owner, by
acquiring a beneficial interest in a Class A Note, will agree to treat the
Class A Notes as indebtedness for federal, state and local income and franchise
tax purposes.
In general, the characterization of a transaction for federal income tax
purposes is based upon economic substance, and the substance of the transaction
in which the Class A Notes are issued is consistent with the treatment of the
Class A Notes as debt for federal income tax purposes. The determination of
whether the economic substance of a property transfer is a sale or a loan
secured by the transferred property depends upon numerous factors designed to
determine whether the transferor has relinquished (and the transferee has
obtained) substantial incidents of ownership in the property. The primary
factors examined are whether the transferee has the opportunity to gain if the
property increases in value, and has the risk of loss if the property decreases
in value. Based upon its analysis of such factors, Cadwalader, Wickersham & Taft
is of the opinion that, for federal income tax purposes the characterization of
the Class A Notes should be governed by the substance of the transaction and
accordingly, (i) the Trust will not be treated as an association taxable as a
corporation and (ii) the Class A Notes will properly be characterized as
indebtedness that is secured by the Trust assets.
Taxation of Interest and Discount Income
Assuming that the Note Owners are owners of debt obligations for federal
income tax purposes, interest generally will be taxable as ordinary income for
federal income tax purposes when received by the Note Owners utilizing the cash
method of accounting and when accrued by Note Owners utilizing the accrual
method of accounting. Interest received on the Class A Notes may also constitute
"investment income" for purposes of certain limitations of the Code concerning
the deductibility of investment interest expense.
Original Issue Discount. Under regulations issued with respect to the
original issue discount ("OID") provisions of the Code, the Class A Notes will
be deemed to have been issued with OID in an amount equal to the excess of the
"stated redemption price at maturity" of the Class A-1, Class A-2, Class A-3 or
Class A-4 Notes, as the case may be (generally equal to their principal amount
as of the date of original issuance plus all interest other than "qualified
stated interest" payable prior to or at maturity), over their original issue
price (in this case, the initial offering price at which a substantial amount of
the related Class of Class A Notes is sold to the public). The issue price of a
Class A Note is the first price at which a substantial amount of Class A Notes
are sold to the public (excluding bond houses, brokers, underwriters or
wholesalers). If less than a substantial amount of a particular Class of
Class A Notes is sold for cash on or prior to the Closing Date, the issue price
of such Class will be treated as the fair market value of such Class on the
Closing Date. The Trust will treat the issue price of a Class A Note as
including the amount paid by a Class A Noteholder for accrued interest that
relates to a period prior to the issue date of the Class A Note; a Class A
Noteholder may, however, elect to treat such accrued interest as a separate
asset received on the first Distribution Date. The stated redemption price at
maturity of a Class A Note includes the original principal amount of the
Class A Note, but generally will not include distributions of interest if such
distributions constitute "qualified stated interest". Qualified stated interest
generally means interest payable at a single fixed rate or qualified variable
rate provided that such interest payments are unconditionally payable at
intervals of one year or less during the entire term of the Class A-1,
Class A-2, Class A-3 or Class A-4 Notes, as the case may be. Under the OID
provisions of the Code, interest will only be treated as qualified stated
interest if it is "unconditionally payable". Interest will be treated as
"unconditionally payable" only if Noteholders have reasonable remedies to compel
payment of interest deficiencies (e.g., default and acceleration rights).
Because Class A Noteholders will not be entitled to penalty payments of interest
on interest deficiencies, and Class A Noteholders will have no default and
acceleration rights in the event of interest shortfalls, interest paid on the
Class A Notes may not be treated by the IRS as qualified stated interest, and,
in such event, would be treated as OID. A Class A Noteholder must include OID
income over
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the term of the related Class A Note under a constant yield method. In general,
OID must be included in income in advance of the receipt of cash representing
that income, regardless of the Noteholder's method of accounting.
A holder of a Class A Note must include such OID in gross income as
ordinary interest income as it accrues under a method taking into account an
economic accrual of the discount. In general, OID must be included in income in
advance of the receipt of the cash representing that income. The amount of OID
on a Class A Note will be considered to be zero if it is less than a de minimis
amount determined under the Code.
Under the de minimis rule, OID on a Class A Note will be considered to be
zero if such OID is less than 0.25% of the stated redemption price at maturity
of the Class A Note multiplied by the weighted average maturity of the Class A
Note. Noteholders generally must report de minimis OID pro rata as principal
payments are received, and such income will be capital gain if the Class A Note
is held as a capital asset. However, accrual method holders may elect to accrue
all de minimis OID as well as market discount under a constant interest method.
The holder of a Class A Note issued with OID must include in gross income,
for all days during its taxable year on which it holds such Class A Note, the
sum of the "daily portions" of such original issue discount. The amount of OID
includible in income by a Noteholder will be computed by allocating to each day
during a taxable year a pro rata portion of the original issue discount that
accrued during the relevant accrual period, assuming no change in the initial
Note Rate. Adjustments would be made for each accrual period to the extent the
current Note Rate was greater or less than the initial Note Rate.
If a Noteholder purchases a Class A Note issued with OID at an "acquisition
premium" (i.e., at a price in excess of the adjusted issue price of the Class A
Note, but less than or equal to the "stated redemption price at maturity"), the
amount includible by such Noteholder in income in each taxable year as OID will
be reduced by that portion of the premium properly allocable to such year.
Although the matter is not entirely clear, the Transferor currently intends
to report all stated interest on the Class A Notes as qualified stated interest
and not as OID.
Market Discount. Note Owners should be aware that the resale of a Class A
Note may be affected by the market discount rules of the Code. These rules
generally provide that, subject to a de minimis exception, if a holder acquires
a Class A Note at a market discount (i.e., at a price below its "adjusted issue
price") and thereafter recognizes gain upon a disposition of the Class A Note,
the lesser of such gain or the portion of the market discount that accrued while
the Class A Note was held by such holder will be treated as ordinary interest
income realized at the time of the disposition. A Class A Noteholder may elect
to include market discount currently in gross income in taxable years to which
it is attributable, computed using either a ratable accrual or a yield to
maturity method. A Class A Noteholder who does not make such election may be
required to defer a portion of the deduction for interest on indebtedness
incurred to purchase or carry the Class A Note.
Premium. A Note Owner who purchases a Class A Note for more than its
stated redemption price at maturity will be subject to the premium amortization
rules of the Code, provided that the Class A Note was held as a capital asset.
Under those rules, the Note Owner may elect to amortize such premium on a
constant yield method. Amortizable premium reduces interest income on the
related Class A Note. If the Note Owner does not make such an election, the
premium paid for the Class A Note generally will be included in the tax basis of
the Class A Note in determining the gain or loss on its disposition or upon
receipt of a principal payment.
Each Note Owner should consult his own tax advisor regarding the impact of
the original issue discount, market discount, and premium amortization rules.
Sales of Class A Notes
In general, a Note Owner will recognize gain or loss upon the sale,
exchange, redemption or other taxable disposition of a Class A Note measured by
the difference between (i) the amount of cash and the fair market value of any
property received (other than amounts attributable to, and taxable as, accrued
stated interest) and (ii) the Note Owner's tax basis in the Class A Note (as
increased by any OID or market discount previously included in income by the
holder and decreased by any deductions previously allowed for amortizable bond
premium and by any payments, other than qualified stated interest payments,
received with respect to such
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Class A Note). Subject to the market discount rules discussed above and to the
more than one-year holding period requirement for long-term capital gain
treatment, any such gain or loss generally will be long-term capital gain or
loss, provided that the Class A Note was held as a capital asset. The federal
income tax rates applicable to capital gains for taxpayers other than
individuals, estates and trusts are currently the same as those applicable to
ordinary income; however, the maximum ordinary income rate for individuals,
estates and trusts is generally 39.6%, whereas the maximum long-term capital
gains rate for such taxpayers is 20% for capital assets held for more than one
year. Moreover, capital losses generally may be used only to offset capital
gains.
Federal Income Tax Consequences to Foreign Investors
The following information describes the United States federal income tax
treatment of investors that are not United States persons ("Foreign Investors")
if the Class A Notes are treated as debt. The term "Foreign Investor" means any
person other than (i) a citizen or resident of the United States, (ii) a
corporation, partnership or other entity organized in or under the laws of the
United States or any state or political subdivision thereof (other than a
partnership that is not treated as a United States person under any applicable
Treasury regulations), (iii) an estate whose income is subject to United States
federal income tax, regardless of its source or (iv) a trust whose
administration is subject to the primary supervision of a United States court
and which has one or more United States persons who have authority to control
all substantial decisions of the trust. Notwithstanding the preceding sentence,
to the extent provided in 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 so treated also shall be considered U.S. Persons.
The Code and Treasury regulations generally subject interest paid to a
Foreign Investor to a withholding tax at a rate of 30% (unless such rate were
changed by an applicable treaty). The withholding tax, however, is eliminated
with respect to certain "portfolio debt investments" issued to Foreign
Investors. Portfolio debt investments include debt instruments issued in
registered form for which the United States payor receives a statement that the
beneficial owner of the instrument is a Foreign Investor. The Class A Notes will
be issued in registered form; therefore, if the information required by the Code
is furnished (as described below) and no other exceptions to the withholding tax
exemption are applicable, no withholding tax will apply to the Class A Notes.
For the Class A Notes to constitute portfolio debt investments exempt from
United States withholding tax, the withholding agent must receive from the Note
Owner an executed IRS Form W-8 signed under penalty of perjury by the Note Owner
stating that the Note Owner is a Foreign Investor and providing such Note
Owner's name and address. The statement must be received by the withholding
agent in the calendar year in which the interest payment is made, or in either
of the two preceding calendar years.
A Note Owner that is a nonresident alien or foreign corporation will not be
subject to United States federal income tax on gain realized on the sale,
exchange or redemption of such Class A Note, provided that (i) such gain is not
effectively connected with a trade or business carried on by the Note Owner in
the United States, (ii) in the case of a Note Owner that is an individual, such
Note Owner is not present in the United States for 183 days or more during the
taxable year in which such sale, exchange or redemption occurs and (iii) in the
case of gain representing accrued interest, the conditions described in the
immediately preceding paragraph are satisfied.
Backup Withholding
A Note Owner may be subject to a backup withholding at the rate of 31% with
respect to interest paid on the Class A Notes if the Note Owner, upon issuance,
fails to supply the Trustee or his broker with such Note Owner's taxpayer
identification number, fails to report interest, dividends or other "reportable
payments" (as defined in the Code) properly, or under certain circumstances,
fails to provide the Trustee or his broker with a certified statement, under
penalty of perjury, that such Note Owner is not subject to backup withholding.
Information returns will be sent annually to the IRS and to each Note Owner
setting forth the amount of interest paid on the Class A Notes and the amount of
tax withheld thereon.
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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, 1999, subject to certain transition rules. Prospective investors
are urged to consult their own tax advisors regarding the New Regulations.
POSSIBLE ALTERNATIVE TREATMENT OF THE CLASS A NOTES
Although, as described above, it is the opinion of Cadwalader, Wickersham &
Taft that the Class A Notes will properly be characterized as debt for federal
income tax purposes, such opinion will not be binding on the IRS and thus no
assurance can be given that such a characterization shall prevail. If the IRS
were to contend successfully that the Class A Notes did not represent debt for
federal income tax purposes, certain adverse tax consequences to the Class A
Noteholders could result. For example, income to certain tax-exempt entities
(including pension funds) generally would be "unrelated business taxable
income", and income to foreign holders generally would be subject to U.S.
withholding tax and reporting requirements. As described under "World
Omni--Certain Administrative and Legal Proceedings", as part of its regular
examination process of the consolidated Federal income tax returns of JMFE and
its subsidiaries (which include World Omni) for certain prior years, the IRS
currently is reviewing, among other things, certain transactions that were
consummated in prior years that are similar to the transactions described in
this Prospectus. The IRS has proposed treating (a) such transactions as sales
rather than financings for Federal income tax purposes, which would affect World
Omni's depreciation deductions and (b) each of the Origination Trust and
securitization trusts created for such transactions as an association taxable as
a corporation rather than a trust for Federal income tax purposes. In connection
with each transaction, World Omni received an opinion of tax counsel to the
effect that such transactions were properly treated as financings for Federal
income tax purposes and that neither the Origination Trust nor the
securitization trusts created for such transactions would be treated as an
association taxable as a corporation for Federal income tax purposes. While
management believes that any challenge by the IRS, if made, would be
unsuccessful, there can be no assurance of this result. Prospective investors
are advised to consult with their own tax advisors regarding the federal income
tax consequences of the purchase, ownership and disposition of the Class A
Notes.
FLORIDA INCOME TAXATION
The Florida Administrative Code includes a rule (the "Loan Rule"),
promulgated under the Florida Income Tax Code, which provides that a financial
organization earning or receiving interest from loans secured by tangible
property located in Florida will be deemed to be conducting business or earning
or receiving income in Florida, and will be subject to Florida corporate income
tax irrespective of the place of receipt of such interest. A "financial
organization" is defined to include any bank, trust company, savings bank,
industrial bank, land bank, safe deposit company, private banker, savings and
loan association, credit union, cooperative bank, small loan company, sales
finance company or investment company. If the Loan Rule were to apply to an
investment in the Class A Notes, then a financial organization investing in the
Class A Notes would be subject to Florida corporate income tax on a portion of
its income at a maximum rate of 5.5%, and would be required to file an income
tax return in Florida, even if it has no other Florida contacts. English,
McCaughan & O'Bryan, P.A., special Florida counsel to the Transferor, is of the
opinion that if the matter were properly presented to a court having
jurisdiction, and assuming interpretation of relevant law on a basis consistent
with existing authority, such court would hold that the Loan Rule would not
apply to an investment in the Class A Notes or the receipt of interest thereon
by a financial organization with no other Florida contacts. Consequently,
prospective investors are urged to consult their own tax advisers as to the
applicability of Florida taxation to their investments in the Notes and to their
ability to offset any such Florida tax against any other state tax liabilities
that such investors might have.
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ERISA CONSIDERATIONS
Subject to the following discussion, the Class A Notes may be acquired by
pension, profit-sharing or other employee benefit plans, as well as an
individual retirement accounts and Keogh plan (each a "Benefit Plan").
Section 406 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and Section 4975 of the Code prohibit 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 or the
fiduciaries of the Benefit Plan. In addition, Title I of ERISA also requires
fiduciaries of a Benefit Plan subject to ERISA to make investments that are
prudent, diversified and in accordance with the governing plan documents.
Certain transactions involving the Trust might be deemed to constitute
prohibited transactions under ERISA and the Code with respect to a Benefit Plan
that purchased Class A Notes if assets of the Trust were deemed to be assets of
the Benefit Plan. Under a regulation issued by the United States Department of
Labor (the "Regulation"), the assets of the Trust would be treated as plan
assets of a Benefit Plan for the purposes of ERISA and the Code only if the
Benefit Plan acquired an "equity interest" in the Trust and none of the
exceptions to plan assets contained in the Regulation was applicable. An equity
interest is defined under the Regulation as an interest other than an instrument
which is treated as indebtedness under applicable local law and which has no
substantial equity features. Although there is little guidance on the subject,
the Transferor believes that, at the time of their issuance, the Class A Notes
should be treated as indebtedness of the Trust without substantial equity
features for purposes of the Regulation. This determination is based in part
upon the traditional debt features of the Class A Notes, including the
reasonable expectation of purchasers of Class A Notes that the Class A Notes
will be repaid when due, as well as the absence of conversion rights, warrants
and other typical equity features. The debt treatment of the Class A Notes for
ERISA purposes could change if the Trust incurred losses.
However, without regard to whether the Class A Notes are treated as an
equity interest for purposes of the Regulation, the acquisition or holding of
Class A Notes by or on behalf of a Benefit Plan could be considered to give rise
to a prohibited transaction if the Trust, the Indenture Trustee, the Owner
Trustee, the Origination Trustee, the Transferor or World Omni is or becomes a
party in interest or a disqualified person with respect to such Benefit Plan.
Certain exemptions from the prohibited transaction rules could be applicable to
the purchase and holding of Class A Notes by a Benefit Plan depending on the
type and circumstances of the plan fiduciary making the decision to acquire such
Class A Notes. Included among these exemptions are: Prohibited Transaction Class
Exemption ("PTCE") 96-23, regarding transactions effected by "in-house asset
managers"; PTCE 95-60, regarding investments by insurance company general
accounts; PTCE 91-38, regarding investments by bank collective investment funds;
PTCE 90-1, regarding investments by insurance company pooled separate accounts;
and PTCE 84-14, regarding transactions effected by "qualified professional asset
managers". By acquiring a Note, each purchaser will be deemed to represent that
either (i) it is not acquiring the Class A Notes with the assets of a Benefit
Plan; or (ii) the acquisition and holding of the Class A Notes will not give
rise to a nonexempt prohibited transaction under Section 406(a) of ERISA or
Section 4975 of the Code.
Due to the complexities of these rules and the penalties imposed upon
persons involved in prohibited transactions, it is important that the fiduciary
of a Benefit Plan considering the purchase of Class A Notes consult with its
counsel regarding whether the assets of the Trust would be considered plan
assets, and the applicability of the prohibited transaction provisions of ERISA
and the Code to such investment. Moreover, each Benefit Plan fiduciary should
determine whether, under the general fiduciary standards of investment prudence
and diversification, an investment in the Class A Notes is appropriate for the
Benefit Plan, taking into account the overall investment policy of the Benefit
Plan and the composition of the Benefit Plan's investment portfolio.
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UNDERWRITING
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated , 1998 (the "Underwriting Agreement"), the
Underwriters named below (the "Underwriters"), for whom Merrill Lynch, Pierce,
Fenner & Smith Incorporated is acting as representative (the "Representative"),
have severally but not jointly agreed to purchase from the Transferor the
following respective principal amounts of Class A-1 Notes, Class A-2 Notes,
Class A-3 Notes and Class A-4 Notes:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT PRINCIPAL AMOUNT PRINCIPAL AMOUNT PRINCIPAL AMOUNT
UNDERWRITER OF CLASS A-1 NOTES OF CLASS A-2 NOTES OF CLASS A-3 NOTES OF CLASS A-4 NOTES
- -------------------------------------- ------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Credit Suisse First Boston
Corporation.........................
Merrill Lynch, Pierce, Fenner & Smith
Incorporated..............
First Union Capital Markets,
a division of Wheat First
Securities, Inc.....................
NationsBanc Montgomery
Securities LLC......................
Salomon Smith Barney Inc..............
------------ ------------ ------------ ------------
Total............................ $294,000,000 $301,000,000 $280,000,000 $237,426,000
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent that the Underwriters
will be obligated to purchase all the Class A Notes if any are purchased. The
Underwriting Agreement provides that, in the event of a default by an
Underwriter, in certain circumstances the purchase commitments of the
non-defaulting Underwriter may be increased or the Underwriting Agreement may be
terminated. The Underwriters have agreed to reimburse the Transferor for certain
of its expenses incurred in connection with the offering of the Class A Notes.
The Transferor has been advised by the Representative that the Underwriters
propose to offer the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes
and the Class A-4 Notes to the public initially at the public offering prices
set forth on the cover page of this Prospectus and to certain dealers at such
prices less a concession of %, %, % and % of the principal amount per
Class A-1 Note, Class A-2 Note, Class A-3 Note and Class A-4 Note, respectively,
and the Underwriters and such dealers may allow a discount of %, %, % and
% of such principal amount per Class A-1 Note, Class A-2 Note, Class A-3 Note
and Class A-4 Note, respectively, on sales to certain other dealers. After the
initial public offering, the public offering price and concessions and discounts
to dealers may be changed by the Underwriters.
The Transferor and World Omni have jointly and severally agreed to
indemnify the Underwriters against certain liabilities, including civil
liabilities under the Securities Act, or contribute to payments which the
Underwriters may be required to make in respect thereof.
It is expected that delivery of the Class A Notes will be made against
payment therefor on or about the date specified in the last paragraph of the
cover page of this Prospectus, which is the business day following the date
hereof. Under Rule 15c6-1 of the Commission under the Exchange Act, trades in
the secondary market generally are required to settle in three business days,
unless the parties to any such trade expressly agree otherwise. Accordingly,
purchasers who wish to trade Class A Notes on the date hereof will be required,
by virtue of the fact that the Class A Notes initially will settle business
days after the date hereof, to specify an alternate settlement cycle at the time
of any such trade to prevent a failed settlement. Purchasers of Class A Notes
who wish to trade Class A Notes on the date hereof should consult their own
advisor.
Upon receipt of a request by an investor who has received an electronic
Prospectus from an Underwriter or a request by such investor's representative
within the period during which there is an obligation to deliver a Prospectus,
the Transferor or the Underwriters will promptly deliver, or cause to be
delivered, without charge, a paper copy of the Prospectus.
The Underwriters may engage in over-allotment, stabilizing transactions,
syndicate covering transactions and penalty bids in accordance with Regulation M
under the Exchange Act. Over-allotment involves syndicate sales in excess of the
offering size, which creates a syndicate short position. Stabilizing
transactions permit bids to purchase the underlying security so long as the
stabilizing bids do not exceed a specified maximum. Syndicate
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<PAGE>
covering transactions involve purchases of the Class A Notes in the open market
after the distribution has been completed in order to cover syndicate short
positions. Penalty bids permit the Underwriters to reclaim a selling concession
from a syndicate member when the Class A Notes originally sold by such syndicate
member are purchased in a syndicate covering transactions and penalty bids may
cause the prices of the Class A Notes to be higher than they would otherwise be
in the absence of such transactions. These transactions, if commenced, may be
discontinued at any time.
Neither the Transferor 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 Class A Notes. In addition,
neither the Transferor nor any Underwriter makes any representation that the
Underwriters will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the Class A Notes in Canada is being made only on a
private placement basis exempt from the requirement that the Transferor prepare
and file a prospectus with the securities regulatory authorities in each
province where trades of the Class A Notes are effected. Accordingly, any resale
of the Class A Notes in Canada must be made in accordance with applicable
securities laws which will vary depending on the relevant jurisdiction, and
which may require resales to be made in accordance with available statutory
exemptions or pursuant to a discretionary exemption granted by the applicable
Canadian securities regulatory authority. Purchasers are advised to seek legal
advice prior to any resale of the Class A Notes.
REPRESENTATIONS OF PURCHASERS
Each purchaser of Class A Notes in Canada who receives a purchase
confirmation will be deemed to represent to the Transferor and the dealer from
whom such purchase confirmation is received that (i) such purchaser is entitled
under applicable provincial securities laws to purchase such Class A Notes
without the benefit of a prospectus qualified under such securities laws,
(ii) where required by law, that such purchaser is purchasing as principal and
not as agent, and (iii) such purchaser has reviewed the text above under "Notice
to Canadian Residents--Resale Restrictions".
RIGHTS OF ACTION AND ENFORCEMENT
The securities being offered are those of foreign issuers and Ontario
purchasers will not receive the contractual right of action prescribed by
Section 32 of the Regulation under the Securities Act (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available, including
common law rights of action for damages or rescission or rights of action under
the civil liabilities provisions of the U.S. federal securities laws.
All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be possible
for Ontario purchasers to effect service of process within Canada upon the
issuer or such persons. All or a substantial portion of the assets of the issuer
and such persons may be located outside of Canada and, as a result, it may not
be possible to satisfy a judgment against the issuer or such persons in Canada
or to enforce a judgment obtained in Canadian courts against such issuer or
persons outside of Canada. Following a recent decision of the U.S. Supreme
Court, it is possible that Ontario purchasers will not be able to rely upon the
remedies set out in Section 12(2) of the Securities Act if the securities are
being offered under a U.S. private placement memorandum.
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of Class A Notes to whom the Securities Act (British Columbia)
applies is advised that such purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any
Class A Notes acquired by such purchaser pursuant to this offering. Such report
must be in the form attached to British Columbia Securities Commission Blanket
Order BOR #95/17, a copy of which may be obtained from the Transferor. Only one
such report must be filed in respect of Class A Notes acquired on the same date
and under the same prospectus exemption.
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RATINGS OF THE CLASS A NOTES
It is a condition of issuance that each of Moody's, Standard & Poor's and
Fitch rates each Class of Class A Notes in its highest rating category. The
ratings of the Class A Notes will be based primarily upon the value of the
Initial Contracts, the Residual Value Insurance Policy (see "Security for the
Notes--The Reserve Fund--Other Reserve Fund Requirements" for information
regarding the effect of a downgrade by a Rating Agency of the credit rating of
the RV Insurer), the Reserve Fund, the Class A Interest Rate Swap, the Class A
Swap Counterparty (see "Risk Factors--Risks Associated with the Class A Swap
Counterparty" for information regarding the effect of (i) a downgrade by a
Rating Agency of the credit rating of the Class A Swap Counterparty and (ii) a
payment default by the Class A Swap Counterparty) and the terms of the
Transferor Interest and the Class B Notes. There is no assurance that any such
rating will not be lowered or withdrawn by the assigning Rating Agency if, in
its judgment, future circumstances so warrant. In the event that a rating with
respect to any Class of Class A Notes is qualified, reduced or withdrawn, no
person or entity will be obligated to provide any additional credit enhancement
with respect to such Class of Class A Notes. Any reduction in the rating
assigned to the Class A Swap Counterparty or the RV Insurer may result in a
reduction in the rating of the Class A Notes.
The ratings of the Class A Notes should be evaluated independently from
similar ratings on other types of securities. A rating is not a recommendation
to buy, sell or hold the related Class A Notes, inasmuch as such rating does not
comment as to market price or suitability for a particular investor. The ratings
of each Class of Class A Notes addresses the likelihood of the payment of
principal of and interest on such Notes pursuant to their terms.
There can be no assurance as to whether any rating agency other than
Moody's, Standard & Poor's and Fitch will rate the Class A Notes, or, if one
does, what rating will be assigned by such other rating agency. A rating on any
Class of Class A Notes by another rating agency, if assigned at all, may be
lower than the ratings assigned to such Class A Notes by each of Moody's,
Standard & Poor's and Fitch.
LEGAL MATTERS
Certain legal matters with respect to the Class A Notes will be passed upon
for the Transferor by Williams & Connolly, Washington, D.C. Certain other legal
matters will be passed upon for the Transferor with respect to New York and
Illinois law, by McDermott, Will & Emery, New York, New York and Chicago,
Illinois, with respect to Alabama law, by Hand Arendall, L.L.C., Birmingham,
Alabama, and with respect to Florida law, by English, McCaughan & O'Bryan, P.A.,
Fort Lauderdale, Florida. Cadwalader, Wickersham & Taft, New York, New York will
act as special federal income tax counsel to the Transferor. Stroock & Stroock &
Lavan LLP, New York, New York will act as counsel for the Underwriters.
EXPERTS
The statutory-basis balance sheets of Federal Insurance Company at
December 31, 1997 and 1996, and the related statutory-basis statements of
income, surplus to policyholders, and cash flows for each of the three years in
the period ended December 31, 1997, appearing in this Registration Statement and
related Prospectus have been audited by Ernst & Young LLP, independent auditors,
as set forth in their report thereon (which report expresses an adverse opinion
under generally accepted accounting principles and an unqualified opinion under
accounting practices prescribed or permitted by the Indiana Insurance
Department) appearing elsewhere herein, and are included in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
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INDEX OF CAPITALIZED TERMS
Set forth below is a list of the capitalized terms used in this Prospectus
and the pages on which the definitions of such terms may be found.
ABS.................................................................... 44
Accelerated Principal Distribution Amount.............................. 11
Accounts............................................................... 56
Additional Loss Amounts................................................ 76
Additional Loss Contract............................................... 68
Administrative Lien.................................................... 29
Administrative Lienholders............................................. 29
Advance................................................................ 16
Agency Agreement....................................................... 77
Aggregate Net Investment Value......................................... 14
Agreement.............................................................. 1
ALF LLC................................................................ 2
ALF L.P................................................................ 1
Alternate Reserve Fund Formula......................................... 68
Amortization Date...................................................... 9
Amortization Period.................................................... 9
Backup Security Agreement.............................................. 58
Benefit Plan........................................................... 94
BONY................................................................... 1
Business Day........................................................... 6
Capped Contingent and Excess Liability Premiums........................ 53
Capped Indenture Trustee Administrative Expenses....................... 53
Capped Origination Trust Administrative Expenses....................... 53
Capped Owner Trustee Administrative Expenses........................... 53
Cede................................................................... 5
Cedel.................................................................. 5
Cedel Participants..................................................... 61
Charged-off Amount..................................................... 48
Charged-off Contract................................................... 48
Charge-off Rate........................................................ 68
Charge-off Rate Test................................................... 68
Claims................................................................. 77
Class.................................................................. 47
Class A Interest Rate Swap............................................. ii
Class A Net Swap Payment............................................... 7
Class A Net Swap Receipt............................................... 7
Class A Note Balance................................................... 5
Class A Noteholders.................................................... 6
Class A Notes.......................................................... Cover
Class A Percentage..................................................... 10
Class A Swap Counterparty.............................................. 7
Class A-1 Allocation Percentage........................................ 19
Class A-1 Interest Carryover Shortfall................................. 53
Class A-1 Note Factor.................................................. 46
Class A-1 Note Principal Loss Amount................................... 51
Class A-1 Note Rate.................................................... 6
Class A-1 Noteholders.................................................. 6
Class A-1 Notes........................................................ ii
Class A-2 Allocation Percentage........................................ 19
Class A-2 Interest Carryover Shortfall................................. 53
99
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Class A-2 Note Factor.................................................. 46
Class A-2 Note Principal Loss Amount................................... 51
Class A-2 Note Rate.................................................... 6
Class A-2 Noteholders.................................................. 6
Class A-2 Notes........................................................ ii
Class A-3 Allocation Percentage........................................ 19
Class A-3 Interest Carryover Shortfall................................. 53
Class A-3 Note Factor.................................................. 46
Class A-3 Note Principal Loss Amount................................... 51
Class A-3 Note Rate.................................................... 6
Class A-3 Noteholders.................................................. 6
Class A-3 Notes........................................................ ii
Class A-4 Allocation Percentage........................................ 19
Class A-4 Interest Carryover Shortfall................................. 53
Class A-4 Note Factor.................................................. 46
Class A-4 Note Principal Loss Amount................................... 51
Class A-4 Note Rate.................................................... 6
Class A-4 Noteholders.................................................. 6
Class A-4 Notes........................................................ ii
Class B Allocation Percentage.......................................... 53
Class B Interest Carryover Shortfall................................... 53
Class B Note Principal Carryover Shortfall............................. 53
Class B Note Principal Loss Amount..................................... 51
Class B Note Rate...................................................... 51
Class B Noteholders.................................................... 10
Class B Notes.......................................................... ii
Class B Percentage..................................................... 10
Class Note Balance..................................................... 5
Closing Date........................................................... 4
Code................................................................... 90
Collection Period...................................................... 8
Collections............................................................ 9
Commission............................................................. iii
Contingent and Excess Liability Insurance Policies..................... 70
Contracts.............................................................. 2
Cooperative............................................................ 63
Covered Loss Amounts................................................... 53
Current Contracts...................................................... 68
Cutoff Dates........................................................... 54
Dealers................................................................ 1
Deerfield Office....................................................... 31
Definitive Notes....................................................... 47
Delinquency Rate....................................................... 68
Delinquency Test....................................................... 68
Deposit Date........................................................... 16
Depositaries........................................................... 5
Designated Maturity.................................................... 49
Determination Date..................................................... 50
Discounted Contract.................................................... 8
Discounted Principal Balance........................................... 15
Distribution Account................................................... 56
Distribution Date...................................................... ii
Downgrade Reserve Fund Supplemental Requirement........................ 63
Downgrade Trigger Event................................................ 67
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DTC.................................................................... 5
DTC Participants....................................................... 61
Early Amortization Event............................................... 58
Early Termination Charge............................................... 37
ERISA.................................................................. 17
ERISA Compliance Test.................................................. 82
Euroclear.............................................................. 5
Euroclear Operator..................................................... 63
Euroclear Participants................................................. 61
Events of Servicing Termination........................................ 83
Excess Collections..................................................... 52
Exchange Act........................................................... iii
Extension Fee.......................................................... 32
Fair, Isaac............................................................ 32
Federal................................................................ 12
Fitch.................................................................. 17
Five State Area........................................................ 3
Foreign Investors...................................................... 93
Indenture.............................................................. 47
Indenture Event of Default............................................. 59
Indenture Events of Default............................................ 72
Indenture Trustee...................................................... Cover
Indirect DTC Participants.............................................. 62
Initial Class A Note Balance........................................... 5
Initial Class A-1 Note Balance......................................... 4
Initial Class A-2 Note Balance......................................... 4
Initial Class A-3 Note Balance......................................... 4
Initial Class A-4 Note Balance......................................... 4
Initial Class B Note Balance........................................... 4
Initial Contracts...................................................... 2
Initial Cutoff Date.................................................... 2
Initial Deposit........................................................ 13
Initial Leased Vehicles................................................ 2
Initial Note Balance................................................... 5
Insolvency Event....................................................... 24
Insolvency Laws........................................................ 24
Insurance Proceeds..................................................... 56
Insured Residual Value Loss Amount..................................... 12
Interest Collections................................................... 9
Investor Percentage.................................................... 10
IRS.................................................................... 31
IT..................................................................... 26
JMFE................................................................... 3
Lease Rate............................................................. 14
Leased Vehicles........................................................ 2
Lemon Law.............................................................. 89
LIBOR Determination Date............................................... 49
Liquidated Contract.................................................... 67
Liquidation Expenses................................................... 16
Liquidation Proceeds................................................... 16
Loan Rule.............................................................. 94
Loss Amounts........................................................... 19
Matured Contract....................................................... 14
Matured Leased Vehicle Expenses........................................ 16
101
<PAGE>
Matured Leased Vehicle Inventory....................................... 14
Matured Leased Vehicle Proceeds........................................ 15
Maturity Date.......................................................... 38
Mobile Center.......................................................... 31
Monthly Payments....................................................... 14
Moody's................................................................ 17
Net Liquidation Proceeds............................................... 9
Net Matured Leased Vehicle Proceeds.................................... 9
Net Repossessed Vehicle Proceeds....................................... 9
New Regulations........................................................ 93
Nonrecoverable Advance................................................. 79
Note Balance........................................................... 5
Note Distribution Amount............................................... 59
Note Owner............................................................. 5
Note Principal Loss Amount............................................. 53
Note Rates............................................................. 51
Noteholders............................................................ 10
Notes.................................................................. ii
Notional Amount........................................................ 6
OID.................................................................... 91
One-Month LIBOR........................................................ 6
Origination Trust...................................................... Cover
Origination Trust Agreement............................................ 11
Origination Trust Assets............................................... Cover
Origination Trustee.................................................... 1
Other SUBI Assets...................................................... 28
Other SUBI Certificates................................................ 28
Other SUBI Supplement.................................................. 75
Other SUBIs............................................................ 1
Outstanding Principal Balance.......................................... 14
Owner Trustee.......................................................... Cover
Participants........................................................... 61
Payment Ahead.......................................................... 15
PBGC................................................................... 23
Permitted Investments.................................................. 58
Potential Initial Contracts............................................ 14
Potential Initial Leased Vehicles...................................... 39
Prepayment............................................................. 56
Prepayment Assumption.................................................. 44
Principal Allocation................................................... 10
Principal Collections.................................................. 8
PTCE................................................................... 95
Rating Agencies........................................................ 17
Realized Value......................................................... 38
Reallocation Deposit Amount............................................ 48
Reallocation Payment................................................... 42
Record Date............................................................ 6
Reference Banks........................................................ 50
Registration Statement................................................. iii
Regulation............................................................. 95
Repossessed Vehicle Expenses........................................... 16
Repossessed Vehicle Proceeds........................................... 15
Representative......................................................... 96
Required Amount........................................................ 54
102
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Required Deposit Ratings............................................... 57
Reserve Fund........................................................... 66
Reserve Fund Cash Requirement.......................................... 66
Reserve Fund Deficiency................................................ 66
Reserve Fund Supplemental Requirement.................................. 67
Reserve Fund Tests..................................................... 68
Residual Value......................................................... 14
Residual Value Insurance Policy........................................ 12
Residual Value Loss Amount............................................. 19
Revolving Period....................................................... 7
RV Insurer............................................................. 12
RV Insurer Reserve Fund Supplemental Requirement....................... 67
RV Insurer Trigger Event............................................... 67
Schedule of Contacts and Leased Vehicles............................... 40
Securities Act......................................................... iii
Security Deposits...................................................... 80
Servicer............................................................... 3
Servicer Letter of Credit.............................................. 57
Servicer's Certificate................................................. 81
Servicing Agreement.................................................... 3
Servicing Fee.......................................................... 17
SET.................................................................... 3
Southeast Toyota Finance............................................... 31
St. Louis Center....................................................... 31
Standard & Poor's...................................................... 17
Stated Maturity Date................................................... 6
SUBI................................................................... Cover
SUBI Assets............................................................ ii
SUBI Certificate....................................................... 11
SUBI Collection Account................................................ 56
SUBI Supplement........................................................ 11
SUBI Trust Agreement................................................... 11
Subsequent Contracts................................................... 2
Subsequent Cutoff Date................................................. 54
Subsequent Leased Vehicles............................................. 2
Support Agreement...................................................... 30
Swap Rate.............................................................. 7
Telerate Page 3750..................................................... 50
Terms and Conditions................................................... 63
TMS.................................................................... 30
Transaction Documents.................................................. 72
Transfer Date.......................................................... 8
Transferor............................................................. Cover
Transferor Amounts..................................................... 49
Transferor Certificate................................................. 47
Transferor Interest.................................................... ii
Transferor Percentage.................................................. 49
Trust.................................................................. Cover
Trust Agent............................................................ 11
UCC.................................................................... 66
Unallocated Principal Collections...................................... 49
Uncapped Administrative Expenses....................................... 52
Uncovered Loss Amounts................................................. 53
Underwriters........................................................... 96
103
<PAGE>
Underwriting Agreement................................................. 96
Undistributed Transferor Excess Collections............................ 52
U.S. Bank.............................................................. 2
U.S. Person............................................................ 107
UTI.................................................................... 1
UTI Assets............................................................. 28
UTI Certificates....................................................... 28
Voting Interests....................................................... 53
WOLS LLC............................................................... 3
World Omni............................................................. Cover
104
<PAGE>
ANNEX 1
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Class A Notes
(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 as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing organizations
or their participants.
Initial Settlement
All Global Securities will be held in book-entry form by DTC in the name of
Cede, as nominee of DTC. Investors' interests in the Global Securities will be
represented through financial institutions acting on their behalf as direct and
indirect Participants in DTC. As a result, Cedel and Euroclear will hold
positions on behalf of their participants through their respective 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 U.S. corporate debt obligations. Investor
securities custody accounts will be credited with their holdings against payment
in same-day funds on the settlement date.
Investors electing to hold their Global Securities through Cedel or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Global Securities will be credited to the
securities custody accounts on the settlement date against payment in the
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 U.S. corporate
debt obligations 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
will instruct the respective Depositary, as the case may be, to receive the
Global Securities against payment. Payment will include interest accrued on the
Global Securities from and including the last coupon payment date to and
excluding the settlement date, on the basis of actual days elapsed and a 360 day
year. Payment will then be made by the respective Depositary to the DTC
Participant's account against delivery of the Global Securities. After
settlement has been completed, the Global
105
<PAGE>
Securities will be credited to the respective clearing system and by the
clearing system, in accordance with its usual procedures, to the Cedel
Participant's or Euroclear Participant's account. The 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 the 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 the
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 the 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 on the basis of actual days elapsed and a
360 day year. The payment will then be reflected in the account of the Cedel
Participant or Euroclear Participant the following day, and receipt of the cash
proceeds in the Cedel Participant's or Euroclear Participant's account would be
back-valued to the value date (which would be the preceding day, when settlement
occurred in New York). Should the Cedel Participant or Euroclear Participant
have a line of credit with its respective clearing system and elect to be in
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 value 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
106
<PAGE>
(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 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 for non-U.S. Persons (Form W-8). Beneficial owners of
Global Securities that are non-U.S. Persons can obtain a complete exemption
from the withholding tax by filing a signed Form W-8 (Certificate of
Foreign Status). If the information shown on Form W-8 or the Tax
Certificate changes, a new Form W-8 or Tax Certificate, as the case may be,
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
Global Securities residing in a country that has a tax treaty with the
United States can obtain an exemption or reduced tax rate (depending on the
treaty terms) by filing Form 1001 (Ownership, Exemption or Reduced Rate
Certificate). If the treaty provides 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 Note Owner or his agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a
complete exemption from the withholding tax by filing Form W-9 (Payer's
Request for Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The beneficial owner of
a Global Security or, in the case of a Form 1001 or a Form 4224 filer, his
agent, files by submitting the appropriate form to the person through whom
it holds (the clearing agency, in the case of persons holding directly on
the books of the clearing agency). Form W-8 and form 1001 are effective for
three calendar years and Form 4224 is effective for one calendar year.
The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation, partnership or other entity organized in or under
the laws of the United States or any state or political subdivision thereof
(other than a partnership that is not treated as a United States person under
any applicable Treasury regulations), (iii) an estate whose income is subject to
United States federal income tax, regardless of its source or (iv) a trust whose
administration is subject to the primary supervision of a United States court
and which has one or more United States persons who have authority to control
all substantial decisions of the trust. Notwithstanding the preceding sentence,
to the extent provided in 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 so treated also shall be considered U.S. Persons.
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.
107
<PAGE>
INDEX TO FINANCIAL STATEMENTS
OF FEDERAL INSURANCE COMPANY
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Auditors............................................................................. F-1
Financial Statements
Balance Sheets (Statutory Basis) as of December 31, 1997 and 1996........................................ F-2
Statements of Income (Statutory Basis) for Years Ended December 31, 1997, 1996 and 1995.................. F-3
Statements of Surplus to Policyholders (Statutory Basis) for Years Ended December 31, 1997, 1996 and
1995.................................................................................................. F-4
Statements of Cash Flows (Statutory Basis) for Years Ended December 31, 1997, 1996 and 1995 ............. F-5
Notes to Financial Statements............................................................................ F-6
</TABLE>
108
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Federal Insurance Company
We have audited the accompanying statutory-basis balance sheets of Federal
Insurance Company (Company) as of December 31, 1997 and 1996, and the related
statutory-basis statements of income, surplus to policyholders, and cash flows
for each of the three years in the period ended December 31, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As described in Note 1, these financial statements have been prepared in
conformity with accounting practices prescribed or permitted by the Indiana
Insurance Department, the jurisdiction of domicile of the Company, which
practices differ from generally accepted accounting principles. The variances
from such practices and generally accepted accounting principles are also
described in Note 1. The effects on the financial statements of these variances
are not reasonably determinable but are presumed to be material.
In our opinion, because of the effects of the matter described in the preceding
paragraph, the financial statements referred to above do not present fairly, in
conformity with generally accepted accounting principles, the financial position
of Federal Insurance Company at December 31, 1997 and 1996 or the results of its
operations or its cash flows for each of the three years in the period ended
December 31, 1997.
However, in our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Federal Insurance
Company at December 31, 1997 and 1996 and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1997, in
conformity with accounting practices prescribed or permitted by the Indiana
Insurance Department.
ERNST & YOUNG LLP
New York, New York
February 20, 1998
F-1
<PAGE>
FEDERAL INSURANCE COMPANY
BALANCE SHEETS--STATUTORY BASIS
DECEMBER 31, 1997 AND 1996
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1997 1996
----------- ----------
<S> <C> <C>
ADMITTED ASSETS
Invested Assets:
Short Term Investments, at Amortized Cost.......................................... $ 714,065 $ 682,368
Tax Exempt Bonds, at Amortized Cost................................................ 5,221,481 3,969,560
Taxable Bonds, at Amortized Cost................................................... 1,922,965 1,419,181
Equity Securities, at Market....................................................... 465,563 208,469
Investments in Consolidated Subsidiaries........................................... 1,042,295 1,226,495
Investments in Unconsolidated Subsidiaries......................................... 220,182 478,651
Receivable for Securities.......................................................... 29,838 25,038
Other Invested Assets.............................................................. 237,340 209,976
----------- ----------
Total Invested Assets (Note 2).................................................. 9,853,729 8,219,738
Cash................................................................................. 5,310 5,538
Premiums Receivable.................................................................. 625,601 590,599
Interest and Dividends Due and Accrued............................................... 126,395 112,004
Reinsurance Recoverable on Paid Losses............................................... 49,763 49,222
Equities and Deposits in Pools and Associations...................................... 66,276 73,213
Amounts Due from Associated Companies................................................ 51,388 --
Other Assets......................................................................... 174,057 179,287
----------- ----------
10,952,519 9,229,601
Deduct: Non-Admitted Assets.......................................................... 127,261 109,840
----------- ----------
Total Admitted Assets........................................................... $10,825,258 $9,119,761
----------- ----------
----------- ----------
LIABILITIES AND SURPLUS TO POLICYHOLDERS
Outstanding Losses and Loss Expenses (Notes 7 and 8)................................. $ 6,065,735 $4,893,548
Unearned Premiums.................................................................... 1,683,472 1,252,261
Working Funds Due to Manager......................................................... 136,598 136,747
Amounts Due to Associated Companies.................................................. -- 51,293
Federal and Foreign Income Tax (Note 4).............................................. -- 6,899
Provision for Reinsurance............................................................ 45,454 33,093
Accrued Expenses and Other Liabilities............................................... 338,883 282,435
----------- ----------
Total Liabilities............................................................... 8,270,142 6,656,276
----------- ----------
Commitments and Contingent Liabilities (Notes 6 and 8)
Common Capital Stock................................................................. 13,987 13,987
Paid-In Surplus...................................................................... 378,890 472,986
Unassigned Funds..................................................................... 1,972,505 1,649,830
Unrealized Appreciation of Investments............................................... 189,734 326,682
----------- ----------
Total Surplus to Policyholders (Note 9)......................................... 2,555,116 2,463,485
----------- ----------
Total Liabilities and Surplus to Policyholders.................................. $10,825,258 $9,119,761
----------- ----------
----------- ----------
Common Capital Stock:
Shares Authorized............................................................. 3,499,971 3,499,971
Shares Issued and Outstanding................................................. 3,496,678 3,496,678
Par Value Per Share........................................................... $ 4 $ 4
</TABLE>
See accompanying notes.
F-2
<PAGE>
FEDERAL INSURANCE COMPANY
STATEMENTS OF INCOME--STATUTORY BASIS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Net Premiums Written.................................................... $3,676,579 $2,582,131 $2,247,891
Increase in Unearned Premiums Net
of Accrued Retrospective Premiums..................................... 428,188 137,785 59,804
---------- ---------- ----------
Premiums Earned (Note 7)........................................... 3,248,391 2,444,346 2,188,087
---------- ---------- ----------
Losses and Loss Expenses (Note 7)....................................... 2,139,189 1,697,816 1,498,753
Underwriting Expenses................................................... 1,120,121 790,017 694,096
Dividends to Policyholders.............................................. 23,089 14,581 11,983
---------- ---------- ----------
3,282,399 2,502,414 2,204,832
---------- ---------- ----------
Underwriting Loss.................................................. (34,008) (58,068) (16,745)
---------- ---------- ----------
Investment Income Before Expenses....................................... 977,002 559,686 488,374
Realized Capital Gains.................................................. 53,132 34,693 54,207
Investment Expenses..................................................... 7,540 5,325 4,772
---------- ---------- ----------
Investment Income.................................................. 1,022,594 589,054 537,809
---------- ---------- ----------
Other Income (Loss) (including gain or loss on
foreign exchange)..................................................... 1,786 (9,617) (6,973)
---------- ---------- ----------
Income Before Federal and Foreign Income Tax............................ 990,372 521,369 514,091
Federal and Foreign Income Tax (Note 4)................................. 164,440 83,186 81,143
---------- ---------- ----------
Net Income.............................................................. $ 825,932 $ 438,183 $ 432,948
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
See accompanying notes.
F-3
<PAGE>
FEDERAL INSURANCE COMPANY
STATEMENTS OF SURPLUS TO POLICYHOLDERS--STATUTORY BASIS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Common Stock
Balance, Beginning and End of Year.................................... $ 13,987 $ 13,987 $ 13,987
---------- ---------- ----------
Paid-In Surplus
Balance, Beginning of Year............................................ 472,986 472,986 472,986
Distribution of Bellemead Development
Corporation to Parent.............................................. (94,096) -- --
---------- ---------- ----------
Balance, End of Year.................................................. 378,890 472,986 472,986
---------- ---------- ----------
Unassigned Funds
Balance, Beginning of Year............................................ 1,649,830 1,347,361 1,030,157
Net Income............................................................ 825,932 438,183 432,948
Dividends Declared to Parent.......................................... (280,000) (250,000) (240,000)
Decrease (Increase) in Provision for Reinsurance...................... (12,361) 9,505 7,142
Decrease (Increase) in Non-Admitted Assets............................ (17,421) 71 23,583
Increase (Decrease) in Unassigned Funds of
Consolidated Subsidiaries.......................................... (193,261) 89,809 104,309
Other, Net............................................................ (214) 14,901 (10,778)
---------- ---------- ----------
Balance, End of Year.................................................. 1,972,505 1,649,830 1,347,361
---------- ---------- ----------
Unrealized Appreciation of Investments
Balance, Beginning of Year............................................ 326,682 433,116 359,800
Distribution of Bellemead Development
Corporation to Parent.............................................. (175,664) -- --
Change During the Year................................................ 38,716 (106,434) 73,316
---------- ---------- ----------
Balance, End of Year.................................................. 189,734 326,682 433,116
---------- ---------- ----------
Total Surplus to Policyholders..................................... $2,555,116 $2,463,485 $2,267,450
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
See accompanying notes.
F-4
<PAGE>
FEDERAL INSURANCE COMPANY
STATEMENTS OF CASH FLOWS--STATUTORY BASIS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Cash From Operations
Premiums Collected Net of Reinsurance................................... $3,644,597 $2,527,854 $2,208,727
Losses and Loss Expenses Paid (net of salvage and subrogation).......... 967,543 1,717,314 1,174,235
Underwriting Expenses Paid.............................................. 1,079,486 787,594 675,171
Other Underwriting Income (Expenses).................................... (97,527) 163,458 50,852
---------- ---------- ----------
Cash from Underwriting............................................. 1,500,041 186,404 410,173
Investment Income (net of investment expense)........................... 959,457 542,767 467,142
Other Income (Expenses)................................................. 2,275 11,223 (18,511)
Dividends to Policyholders Paid......................................... (8,862) (10,912) (10,105)
Federal Income Taxes Paid............................................... (181,083) (72,964) (99,528)
---------- ---------- ----------
Net Cash from Operations........................................... 2,271,828 656,518 749,171
---------- ---------- ----------
Cash From Investments
Proceeds from Investments Sold or Matured:
Bonds................................................................. 1,826,979 2,378,073 2,425,520
Equity Securities..................................................... 77,626 155,359 47,286
Other Invested Assets................................................. 72,019 33,972 53,119
Miscellaneous Proceeds................................................ 2,894 15,801 19,386
---------- ---------- ----------
Total Investment Proceeds.......................................... 1,979,518 2,583,205 2,545,311
---------- ---------- ----------
Cost of Investments Acquired: (Long Term Only)
Bonds................................................................. 3,591,204 2,806,024 3,026,615
Equity Securities..................................................... 304,742 196,520 82,286
Other Invested Assets................................................. 55,568 47,323 10,669
Miscellaneous Applications............................................ 314 389 3,765
---------- ---------- ----------
Total Investments Acquired......................................... 3,951,828 3,050,256 3,123,335
---------- ---------- ----------
Net Cash from Investments.......................................... (1,972,310) (467,051) (578,024)
---------- ---------- ----------
Cash From Financing and Miscellaneous Sources
Other Cash Provided..................................................... 14,458 639 12,834
---------- ---------- ----------
Cash Applied:
Dividends to Stockholders Paid........................................ 280,000 250,000 240,000
Other Applications.................................................... 2,507 11,963 23,319
---------- ---------- ----------
Total Cash Applied................................................. 282,507 261,963 263,319
---------- ---------- ----------
Net Cash from Financing and Miscellaneous Sources.................. (268,049) (261,324) (250,485)
---------- ---------- ----------
Net Change in Cash and Short Term Investments........................... 31,469 (71,857) (79,338)
Cash and Short Term Investments:
Beginning of Year..................................................... 687,906 759,763 839,101
---------- ---------- ----------
End of Year........................................................... $ 719,375 $ 687,906 $ 759,763
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
See accompanying notes.
F-5
<PAGE>
FEDERAL INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Federal Insurance Company (Company) is a wholly-owned property and
casualty insurance subsidiary of The Chubb Corporation (Chubb). The Company is
domiciled in the State of Indiana and underwrites most forms of property and
casualty insurance, principally in the United States. The geographic
distribution of business in the United States is broad with a particularly
strong market presence in the Northeast.
The Company is a member of an affiliated group of U.S. based property and
casualty insurance companies, including several wholly-owned subsidiaries. For
purposes of this report, the affiliated group of companies, including Federal
Insurance Company, is collectively referred to as the Companies.
The financial statements reflect estimates and judgments made by management
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
Certain amounts in the prior year financial statements have been
reclassified to conform with the 1997 presentation.
These financial statements have been prepared in conformity with accounting
practices prescribed or permitted by the Indiana Insurance Department. Such
accounting practices vary in certain respects from generally accepted accounting
principles (GAAP), including:
(i) investments in bonds are reported at amortized cost and are not
classified as held-to-maturity or available for sale; under GAAP, those
bonds classified as available for sale are carried at market value,
(ii) the costs of acquiring new business are charged to operations as
incurred rather than being deferred and amortized over the period in which
the related premiums are earned,
(iii) certain assets designated "non-admitted" are excluded,
(iv) outstanding losses and loss expenses are reported net of amounts
recoverable from reinsurers; unearned premiums are reported net of the
unearned portion of premiums ceded,
(v) a provision is made for statutory liabilities with respect to
unearned premiums and losses reinsured with non-admitted reinsurers and for
certain overdue amounts from admitted reinsurers to the extent funds are
not held,
(vi) no provision is made for deferred federal income tax, and
(vii) investments in wholly-owned U.S. and foreign property and
casualty insurance subsidiaries, various other subsidiaries which are not
material and, in 1996 and 1995, a wholly-owned non-property and casualty
insurance subsidiary (see Note 1(f)) are included at statutory net asset
value and are not consolidated; dividends declared by such subsidiaries are
included in investment income. Net income of the U.S. property and casualty
insurance subsidiaries is included as a change in unassigned funds. Net
income of the other subsidiaries is included as a change in unrealized
appreciation of investments.
The effects of the foregoing variances from GAAP on the statutory basis
financial statements have not been determined, but are presumed to be material.
(b) Invested assets are carried at values prescribed by the National
Association of Insurance Commissioners (NAIC). Short term investments, which
have an original maturity of one year or less, are carried at amortized cost.
Bonds are generally carried at amortized cost. Premiums and discounts arising
from the purchase of mortgage-backed securities are amortized using the interest
method over the estimated remaining term of the securities, adjusted for
anticipated prepayments. Equity securities are carried at market value.
Investments in unconsolidated subsidiaries and other invested assets are
accounted for on the equity basis.
F-6
<PAGE>
FEDERAL INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Realized gains and losses on the sale of investments are determined on the
basis of the cost of the specific investments sold and are credited or charged
to income. Unrealized appreciation or depreciation of equity securities,
unconsolidated subsidiaries and other invested assets are excluded from income
and credited or charged directly to surplus to policyholders.
(c) Premiums are earned on a monthly pro rata basis over the terms of the
policies. Unearned premiums represent the portion of premiums written applicable
to the unexpired terms of policies in force.
(d) Liabilities for outstanding losses and loss expenses include the
accumulation of individual case estimates for claims reported as well as
estimates of unreported claims and claim settlement expenses, less estimates of
anticipated salvage and subrogation recoveries. Estimates are based upon past
claim experience modified for current trends as well as prevailing economic,
legal and social conditions. Such estimates are continually reviewed and
updated. Any resulting adjustments are reflected in current operating results.
(e) The methods and assumptions used to estimate the fair value of
financial instruments are as follows:
(i) The carrying value of short term investments approximates fair
value due to the short maturities of these investments.
(ii) Fair values of bonds with active markets are based on quoted
market prices. For bonds that trade in less active markets, fair values are
obtained from independent pricing services. Fair values of bonds are
principally a function of current interest rates. Care should be used in
evaluating the significance of these estimated market values which can
fluctuate based on such factors as interest rates, inflation, monetary
policy and general economic conditions.
(iii) Fair values of equity securities are based on quoted market
prices.
(f) In 1997, the Company distributed its investment in Bellemead
Development Corporation to Chubb; in connection with the distribution, paid-in
surplus was reduced by $94,096,000 representing the cost of the investment, and
unrealized appreciation of investments was reduced by $175,664,000 representing
the increase in the statutory net asset value of Bellemead Development
Corporation from the date of acquisition through the date of transfer. This
non-cash transaction has been excluded from the statement of cash flows.
2. INVESTED ASSETS
(a) The cost of equity securities, investments in unconsolidated
subsidiaries and other invested assets at December 31, 1997 and 1996 were as
follows (in thousands):
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Equity Securities......................................................................... $410,001 $183,461
Unconsolidated Subsidiaries............................................................... 173,362 256,557
Other Invested Assets..................................................................... 191,791 171,857
</TABLE>
(b) The components of unrealized appreciation of investments at
December 31, 1997 and 1996 were as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Gross Unrealized Appreciation............................................................. $256,947 $378,349
Gross Unrealized Depreciation............................................................. 67,213 51,667
-------- --------
$189,734 $326,682
-------- --------
-------- --------
</TABLE>
F-7
<PAGE>
FEDERAL INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
2. INVESTED ASSETS--(CONTINUED)
(c) The amortized cost and estimated market value of bonds were as follows
(in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, 1997
----------------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Tax Exempt Bonds............................................. $5,221,481 $326,053 $ 148 $5,547,386
Taxable Foreign Bonds........................................ 150,320 5,524 1,864 153,980
Mortgage-Backed Securities................................... 896,007 22,843 1,510 917,340
Taxable U.S. Government Bonds................................ 286,812 4,470 97 291,185
Taxable Corporate Bonds...................................... 589,826 21,129 1,998 608,957
---------- -------- ------ ----------
Total Bonds................................................ $7,144,446 $380,019 $5,617 $7,518,848
---------- -------- ------ ----------
---------- -------- ------ ----------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1996
----------------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Tax Exempt Bonds............................................. $3,969,560 $203,905 $ 1,860 $4,171,605
Taxable Foreign Bonds........................................ 114,334 3,921 332 117,923
Mortgage-Backed Securities................................... 711,638 10,415 4,886 717,167
Taxable U.S. Government Bonds................................ 380,154 982 3,479 377,657
Taxable Corporate Bonds...................................... 213,055 5,238 977 217,316
---------- -------- -------- ----------
Total Bonds................................................ $5,388,741 $224,461 $ 11,534 $5,601,668
---------- -------- -------- ----------
---------- -------- -------- ----------
</TABLE>
(d) The amortized cost and estimated market value of bonds at December 31,
1997 by contractual maturity were as follows (in thousands):
<TABLE>
<CAPTION>
ESTIMATED
AMORTIZED MARKET
COST VALUE
---------- ----------
<S> <C> <C>
Due in One Year or Less..................................................... $ 123,395 $ 124,380
Due after One Year through Five Years....................................... 962,548 988,779
Due after Five Years through Ten Years...................................... 2,277,937 2,409,492
Due after Ten Years......................................................... 2,884,559 3,078,857
Mortgage-Backed Securities.................................................. 896,007 917,340
---------- ----------
Total Bonds............................................................... $7,144,446 $7,518,848
---------- ----------
---------- ----------
</TABLE>
Actual maturities could differ from contractual maturities because
borrowers may have the right to call or prepay obligations.
3. RELATED PARTY TRANSACTIONS
During 1997, 1996 and 1995, Chubb & Son Inc. (C&S), a subsidiary of Chubb,
had agreements with the Companies pursuant to which the Companies participated
in the U.S. insurance business written through C&S. C&S arranged for the
exchange of reinsurance between the Companies (See Note 7).
The terms of the agreements included that C&S be reimbursed for all
expenses incurred on behalf of the Companies. Such expenses are included
primarily in underwriting expenses.
On December 31, 1997, the agreements with C&S were terminated. Effective
January 1, 1998, new agreements were entered into substituting Federal, through
its Chubb & Son division, in place of C&S.
F-8
<PAGE>
FEDERAL INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
3. RELATED PARTY TRANSACTIONS--(CONTINUED)
Investment income includes dividends from subsidiaries of $507,370,000,
$177,225,000 and $122,000,000 in 1997, 1996 and 1995, respectively.
4. FEDERAL AND FOREIGN INCOME TAX
The Company is a member of an affiliated group which files a consolidated
federal income tax return. Intercompany tax transactions and allocations are
governed by an intercompany tax allocation agreement between Chubb and the
Companies. Under the written agreement, which is in accordance with
Section 1552(a)(1) of the Internal Revenue Code, each of the Companies with
taxable income is allocated a current tax provision based on the ratio of its
taxable income to the total taxable income of those Companies having taxable
income.
The provision for federal and foreign income tax gives effect to
differences between income for statutory reporting purposes and taxable income.
The principal differences are (i) interest income on tax exempt bonds and
(ii) the accelerated recognition of taxable income through the discounting of
outstanding losses and loss expenses and the reduction of unearned premium
reserves for tax purposes.
5. EMPLOYEE BENEFITS
The employees of C&S are afforded benefits under retirement and other
postretirement benefit programs. The Company contributes its proportionate share
towards the cost of these programs.
The Company participates in a non-contributory, defined benefit pension and
retirement plan covering employees of C&S. The benefits are generally based on
an employee's years of service and average compensation during the last five
years of employment.
Vested benefits are fully funded. The employers' policy is to make annual
contributions that meet the minimum funding requirements of the Employee
Retirement Income Security Act of 1974. Each participating affiliate is charged
for its allocable share of such contributions.
No pension expense was allocated to the Company in 1997. Pension costs
allocated to the Company in 1996 and 1995 were $4,077,000 and $7,886,000,
respectively.
As of January 1, 1997, the most recent actuarial valuation date, the plan's
total accumulated benefit obligation was $281,561,798, based on an assumed
interest rate of 7.75%, including vested benefits of $262,361,598; the fair
value of plan assets was $410,535,285.
C&S provides certain other postretirement benefits, principally health care
and life insurance, to retired employees and their beneficiaries and covered
dependents. Substantially all employees may become eligible for these benefits
upon retirement if they meet minimum age and years of service requirements.
These benefits are not funded in advance. Benefits are paid as covered
expenses are incurred. Health care coverage is contributory. Retiree
contributions vary based upon a retiree's age, type of coverage and years of
service. Life insurance coverage is non-contributory.
The Company accrues the expected cost of providing postretirement benefits
to retirees and other fully eligible or vested plan participants and their
beneficiaries and covered dependents. The Companies elected to amortize the
transition obligation, which represents their unfunded and unrecognized
accumulated postretirement benefit obligation as of January 1, 1993, over
20 years. The unamortized transition obligation of C&S was $32,086,000 and
$34,225,000 at December 31, 1997 and 1996, respectively. Net postretirement
benefit costs include the expected cost of such benefits for newly vested
employees, interest cost, gains and losses arising from differences in actuarial
assumptions and actual experience and amortization of the transition obligation.
Net postretirement benefit costs allocated to the Company for the years ended
December 31, 1997, 1996 and 1995 and the postretirement benefit liability at
December 31, 1997 and 1996 were not significant.
F-9
<PAGE>
FEDERAL INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
5. EMPLOYEE BENEFITS--(CONTINUED)
The estimated amount of the postretirement benefit obligation of C&S for
active nonvested employees as of December 31, 1997 and 1996 was $53,950,000 and
$53,349,000, respectively.
The weighted average discount rate used in determining the actuarial
present value of the accumulated postretirement benefit obligation at
December 31, 1997 and 1996 was 7.5% and 7.75%, respectively. At December 31,
1997, the weighted average health care cost trend rate used to measure the
accumulated postretirement cost for medical benefits was 11.3% for 1998 and was
assumed to decrease gradually to 6.0% for the year 2005 and remain at that level
thereafter.
6. LEASES
The Companies occupy office facilities under lease agreements which expire
at various dates through 2019; such leases are generally renewed or replaced by
other leases. In addition, the Companies lease data processing, office and
transportation equipment. Leases are the obligation of the Company. The Company
contributes its proportionate share of the rental cost under such leases.
Most leases contain renewal options for increments ranging from three to
five years; certain lease agreements provide for rent increases based on
price-level factors. All leases are operating leases.
At December 31, 1997, future minimum rental payments required under
non-cancellable operating leases were as follows (in thousands):
Years ending December 31:
1998.................................................... $ 55,769
1999.................................................... 58,245
2000.................................................... 58,872
2001.................................................... 51,583
2002.................................................... 45,211
After 2002.............................................. 315,731
--------
$585,411
--------
--------
7. REINSURANCE
The Company participates in pooling arrangements with affiliated insurers
whereby these companies assume and cede reinsurance with each other. These
arrangements vary as a function of the line of business and location of the
risk. A substantial amount of the reinsurance of the Company is effected under
these pooling arrangements. Effective January 1, 1997, the Company's pro rata
participation in the pooled property and casualty business increased.
In the ordinary course of business, the Company assumes and cedes
reinsurance with other insurance companies and is a member of various pools and
associations. These arrangements provide greater diversification of business and
minimize the maximum net loss potential arising from large risks. A large
portion of the reinsurance is effected under contracts known as treaties and in
some instances by negotiation on individual risks. Certain of these arrangements
consist of excess of loss and catastrophe contracts which protect against losses
over stipulated amounts arising from any one occurrence or event. Ceded
reinsurance contracts do not relieve the Company of its obligation to the
policyholders.
F-10
<PAGE>
FEDERAL INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
7. REINSURANCE--(CONTINUED)
The effect of reinsurance on premiums earned for the years ended
December 31, 1997, 1996 and 1995 was as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Direct..................................................... $ 2,932,452 $ 2,868,065 $ 2,846,006
Assumed.................................................... 1,436,560 1,158,882 1,078,779
Ceded...................................................... (1,120,621) (1,582,601) (1,736,698)
----------- ----------- -----------
Net........................................................ $ 3,248,391 $ 2,444,346 $ 2,188,087
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
For many years, a portion of the U. S. insurance business written by the
Company was reinsured on a quota share basis with a subsidiary of Royal & Sun
Alliance Insurance Group plc. Effective January 1, 1997, the reinsurance
agreement with Royal & Sun Alliance was terminated. The ceded reinsurance
premiums earned of the Company included $266,796,000 and $366,066,000 in 1996
and 1995, respectively, from such reinsurance.
Reinsurance recoveries which have been deducted from losses and loss
expenses were $711,805,000, $1,048,760,000 and $1,118,230,000 in 1997, 1996 and
1995, respectively.
8. OUTSTANDING LOSSES AND LOSS EXPENSES
The process of establishing loss reserves is an imprecise science and
reflects significant judgmental factors. In many liability cases, significant
periods of time, ranging up to several years or more, may elapse between the
occurrence of an insured loss, the reporting of the loss and the settlement of
the loss.
Judicial decisions and legislative actions continue to broaden liability
and policy definitions and to increase the severity of claim payments. As a
result of this and other societal and economic developments, the uncertainties
inherent in estimating ultimate claim costs on the basis of past experience have
increased significantly, further complicating the already complex loss reserving
process.
The uncertainties relating to asbestos and toxic waste claims on insurance
policies written many years ago are exacerbated by judicial and legislative
interpretations of coverage that in some cases have tended to erode the clear
and express intent of such policies and in other cases have expanded theories of
liability. The industry is engaged in extensive litigation over these coverage
and liability issues and is thus confronted with a continuing uncertainty in its
efforts to quantify these exposures.
In 1993, Pacific Indemnity Company (Pacific Indemnity), a wholly-owned
property and casualty insurance subsidiary of the Company, entered into a global
settlement agreement with Continental Casualty Company (a subsidiary of CNA
Financial Corporation), Fibreboard Corporation, and attorneys representing
claimants against Fibreboard for all future asbestos-related bodily injury
claims against Fibreboard. This agreement is subject to final appellate court
approval. The settlement relates to an insurance policy issued to Fibreboard
Corporation by Pacific Indemnity. The Pacific Indemnity policy was 100%
reinsured by the Company. Pursuant to the global settlement agreement, a
$1,525,000,000 trust fund will be established to pay future claims, which are
claims that were not filed in court before August 27, 1993. The Company, as
reinsurer of the Pacific Indemnity policy, will contribute $538,172,000 to the
trust fund and Continental Casualty will contribute the remaining amount. In
December 1993, upon execution of the global settlement agreement, the Company
and Continental Casualty paid their respective shares into an escrow account.
The Company's share is included in its short term investments. Upon final court
approval of the settlement, the amount in the escrow account, including interest
earned thereon, will be transferred to the trust fund. All of the parties have
agreed to use their best efforts to seek final court approval of the global
settlement agreement.
Pacific Indemnity and Continental Casualty reached a separate agreement for
the handling of all asbestos-related bodily injury claims pending on August 26,
1993 against Fibreboard. As reinsurer of Pacific Indemnity, the Company's
obligation under this agreement with respect to such pending claims is
approximately
F-11
<PAGE>
FEDERAL INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
8. OUTSTANDING LOSSES AND LOSS EXPENSES--(CONTINUED)
$635,000,000, all of which has been paid. The agreement further provides that
the total responsibility of Pacific Indemnity and Continental Casualty with
respect to pending and future asbestos-related bodily injury claims against
Fibreboard will be shared on an approximate 35% and 65% basis, respectively.
Pacific Indemnity, Continental Casualty and Fibreboard entered into a
trilateral agreement to settle all present and future asbestos-related bodily
injury claims resulting from insurance policies that were, or may have been,
issued to Fibreboard by the two insurers. The trilateral agreement will be
triggered if the global settlement agreement is ultimately disapproved. The
Company's obligation, as reinsurer of Pacific Indemnity, under the trilateral
agreement is therefore similar to, and not duplicative of, that under those
agreements described above.
The trilateral agreement reaffirms portions of an agreement reached in
March 1992 between Pacific Indemnity and Fibreboard. Among other matters, that
1992 agreement eliminates any Pacific Indemnity liability to Fibreboard for
asbestos-related property damage claims.
In July 1995, the United States District Court of the Eastern District of
Texas approved the global settlement agreement and the trilateral agreement. The
judgments approving these agreements were appealed to the United States Court of
Appeals for the Fifth Circuit. In July 1996, the Fifth Circuit Court affirmed
the 1995 judgments of the District Court. The objectors to the global agreement
appealed to the United States Supreme Court. In June 1997, the United States
Supreme Court set aside the ruling by the Fifth Circuit Court that had approved
the global agreement and ordered the Fifth Circuit Court to reconsider its
approval in light of a June 1997 ruling by the Supreme Court rejecting an
unrelated settlement that included several former asbestos manufacturers.
In January 1998, the Fifth Circuit Court again affirmed the global
settlement agreement, ruling that it was legally distinct from the other
settlement. It is expected that objectors to the settlement will petition the
Supreme Court to review the decision. The Supreme Court would then have to
decide whether to take the appeal.
The trilateral agreement, however, was never appealed to the United States
Supreme Court and is now final. As a result, management continues to believe
that the uncertainty of the Company's exposure, as reinsurer of Pacific
Indemnity, with respect to asbestos-related bodily injury claims against
Fibreboard has been eliminated.
Since 1993, a California Court of Appeal has agreed, in response to a
request by Pacific Indemnity, Continental Casualty and Fibreboard, to delay its
decisions regarding asbestos-related insurance coverage issues that are
currently before it and involve the three parties exclusively, while the
approval of the global settlement is pending in court. Continental Casualty and
Pacific Indemnity have dismissed disputes against each other which involved
Fibreboard and were in litigation.
The Company has additional potential asbestos exposure, primarily on
insureds for which excess liability coverages were written. Such exposure has
increased due to the erosion of much of the underlying limits. The number of
claims against such insureds and the value of such claims have increased in
recent years due in part to the non-viability of other defendants.
The remaining asbestos exposures are mostly peripheral defendants,
including a mix of manufacturers and distributors of certain products that
contain asbestos as well as premises owners. Generally, these insureds are named
defendants on a regional rather than a nationwide basis. Notices of new asbestos
claims and new exposures on existing claims continue to be received as more
peripheral parties are drawn into litigation to replace the now defunct mines
and bankrupt manufacturers.
Legal guidelines regarding coverage for asbestos claims have begun to
articulate more consistent standards regarding the extent of the insurers'
coverage obligation and the method of allocation of costs among insurers.
However, the universe of potential claims is still unknown. Therefore,
uncertainty remains as to the Company's ultimate liability for asbestos-related
claims.
Hazardous waste sites are another significant potential exposure. Under the
federal "Superfund" law and similar state statutes, when potentially responsible
parties (PRPs) fail to handle the clean-up, regulators have the
F-12
<PAGE>
FEDERAL INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
8. OUTSTANDING LOSSES AND LOSS EXPENSES--(CONTINUED)
work done and then attempt to establish legal liability against the PRPs. The
PRPs disposed of toxic materials at a waste dump site or transported the
materials to the site. Insurance policies issued to PRPs were not intended to
cover the clean-up costs of pollution and, in many cases, did not intend to
cover the pollution itself. As the costs of environmental clean-up have become
substantial, PRPs and others have increasingly filed claims with their insurance
carriers. Litigation against insurers extends to issues of liability, coverage
and other policy provisions. There is great uncertainty involved in estimating
the Company's liabilities related to these claims. First, the underlying
liabilities of the claimants are extremely difficult to estimate. At any given
clean-up site, the allocation of remediation costs among governmental
authorities and the PRPs varies greatly. Second, different courts have addressed
liability and coverage issues regarding pollution claims and have reached
inconsistent conclusions in their interpretation of several issues. These
significant uncertainties are not likely to be resolved in the near future.
Uncertainties also remain as to the Superfund law itself. Superfund's
taxing authority expired on December 31, 1995. It is currently not possible to
predict the direction that any reforms may take, when they may occur or the
effect that any changes may have on the insurance industry.
Reserves for asbestos and toxic waste claims cannot be estimated with
traditional loss reserving techniques. Case reserves and expense reserves for
costs of related litigation have been established where sufficient information
has been developed to indicate the involvement of a specific insurance policy.
In addition, incurred but not reported reserves have been established to cover
additional exposures on both known and unasserted claims. These reserves are
continually reviewed and updated.
A reconciliation of the beginning and ending liability for outstanding
losses and loss expenses, net of reinsurance recoverable, and a reconciliation
of the net liability to the corresponding liability on a gross basis is as
follows (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Gross liability, beginning of year...................................... $8,020,224 $7,896,430 $7,483,942
Reinsurance recoverable, beginning of year.............................. 3,126,676 2,992,274 2,908,174
---------- ---------- ----------
Net liability, beginning of year........................................ 4,893,548 4,904,156 4,575,768
---------- ---------- ----------
Net incurred claims and claim expenses related to:
Current year.......................................................... 2,167,893 1,678,276 1,450,452
Prior years........................................................... (28,704) 19,540 48,301
---------- ---------- ----------
2,139,189 1,697,816 1,498,753
---------- ---------- ----------
Net payments for claims and claim expenses related to:
Current year.......................................................... 640,581 489,074 375,139
Prior years........................................................... 326,421 1,219,350 795,226
---------- ---------- ----------
967,002 1,708,424 1,170,365
---------- ---------- ----------
Net liability, end of year.............................................. 6,065,735 4,893,548 4,904,156
Reinsurance recoverable, end of year.................................... 2,578,451 3,126,676 2,992,274
---------- ---------- ----------
Gross liability, end of year.......................................... $8,644,186 $8,020,224 $7,896,430
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
F-13
<PAGE>
FEDERAL INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
8. OUTSTANDING LOSSES AND LOSS EXPENSES--(CONTINUED)
A reconciliation of the beginning and ending gross and net liability for
outstanding losses and loss expenses related to asbestos and toxic waste claims
for 1997, 1996 and 1995 is as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Gross of reinsurance:
Liability, beginning of year............................................ $1,086,500 $1,437,764 $1,348,131
Incurred losses and loss adjustment expenses............................ 159,562 219,231 263,919
Calendar year payments for losses and loss adjustment expenses.......... 73,311 570,495 174,286
---------- ---------- ----------
Liability, end of year.................................................. $1,172,751 $1,086,500 $1,437,764
---------- ---------- ----------
---------- ---------- ----------
Net of reinsurance:
Liability, beginning of year............................................ $ 908,189 $1,289,883 $1,225,501
Incurred losses and loss adjustment expenses............................ 127,837 153,614 204,727
Calendar year payments for losses and loss adjustment expenses.......... (367) 535,308 140,345
---------- ---------- ----------
Liability, end of year.................................................. $1,036,393 $ 908,189 $1,289,883
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
In 1997, 1996 and 1995, increases in outstanding losses and loss expenses
relating to asbestos and toxic waste claims were substantially offset by
favorable claim severity trends for certain liability classes.
Management believes that the aggregate outstanding loss and loss expense
reserves of the Company at December 31, 1997 were adequate to cover claims for
losses which had occurred, including both those known and those yet to be
reported. In establishing such reserves, management considers facts currently
known and the present state of the law and coverage litigation. However, given
the expansion of coverage and liability by the courts and the legislatures in
the past and the possibilities of similar interpretations in the future,
particularly as they relate to asbestos and toxic waste claims, as well as the
uncertainty in determining what scientific standards will be deemed acceptable
for measuring hazardous waste site clean-up, additional increases in loss
reserves may emerge which would adversely affect results in future periods. The
amount cannot reasonably be estimated at the present time.
9. DIVIDEND RESTRICTIONS
Indiana Insurance laws restrict the Company as to the amount of shareholder
dividends it may pay without prior approval. The restrictions are generally
based on net investment income and on statutory surplus. Dividends in excess of
such thresholds are considered "extraordinary" and require prior approval.
F-14
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE TRANSFEROR OR ANY UNDERWRITER. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF
THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF THE TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE TRANSFEROR SINCE SUCH DATE.
------------------------
TABLE OF CONTENTS
PAGE
----
Available Information.......................... iii
Overview of Transaction........................ iv
Summary........................................ 1
Risk Factors................................... 19
The Trust and the SUBI......................... 26
The Origination Trust.......................... 27
Use of Proceeds................................ 30
The Transferor................................. 30
World Omni..................................... 30
The Contracts.................................. 37
Maturity, Prepayment and Yield
Considerations............................... 42
Class A Note Factors and Trading Information;
Reports to Class A Noteholders............... 46
Description of the Notes....................... 47
Security for the Notes......................... 66
The Class A Interest Rate Swap................. 71
Additional Document Provisions................. 72
Certain Legal Aspects of the Origination Trust
and the SUBI................................. 85
Certain Legal Aspects of the Contracts and the
Leased Vehicles.............................. 87
Material Income Tax Considerations............. 90
ERISA Considerations........................... 95
Underwriting................................... 96
Notice to Canadian Residents................... 97
Ratings of the Class A Notes................... 98
Legal Matters.................................. 98
Experts........................................ 98
Index of Capitalized Terms..................... 99
Global Clearance, Settlement and Tax
Documentation Procedures Terms............... 105
Index to Financial Statements of Federal
Insurance Company............................ 108
------------------------
UNTIL , 1998, ALL DEALERS THAT EFFECT TRANSACTIONS IN THE CLASS A
NOTES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS. UPON RECEIPT OF A REQUEST BY AN INVESTOR WHO HAS
RECEIVED AN ELECTRONIC PROSPECTUS OR A REQUEST BY SUCH INVESTOR'S REPRESENTATIVE
WITHIN THE PERIOD DURING WHICH THERE IS A PROSPECTUS DELIVERY OBLIGATION, THE
TRANSFEROR OR THE UNDERWRITERS WILL PROMPTLY DELIVER, OR CAUSE TO BE DELIVERED,
WITHOUT CHARGE, A PAPER COPY OF THE PROSPECTUS.
WORLD OMNI
1998-A AUTOMOBILE LEASE
SECURITIZATION TRUST
$1,112,426,000 (APPROXIMATE)
$294,000,000 (APPROXIMATE)
FLOATING RATE AUTOMOBILE LEASE
ASSET BACKED NOTES,
CLASS A-1
$301,000,000 (APPROXIMATE)
FLOATING RATE AUTOMOBILE LEASE
ASSET BACKED NOTES,
CLASS A-2
$280,000,000 (APPROXIMATE)
FLOATING RATE AUTOMOBILE LEASE
ASSET BACKED NOTES,
CLASS A-3
$237,426,000 (APPROXIMATE)
FLOATING RATE AUTOMOBILE LEASE
ASSET BACKED NOTES,
CLASS A-4
WORLD OMNI LEASE
SECURITIZATION L.P.
(TRANSFEROR)
WORLD OMNI FINANCIAL CORP.
(SERVICER)
---------------------------
PROSPECTUS
---------------------------
JOINT BOOK RUNNERS
CREDIT SUISSE FIRST BOSTON
MERRILL LYNCH & CO.
CO-MANAGERS
FIRST UNION CAPITAL MARKETS
NATIONSBANC MONTGOMERY SECURITIES LLC
SALOMON SMITH BARNEY
November , 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND PAYMENT.
Expenses in connection with the offering of the Class A Notes being
registered herein are estimated as follows:
SEC registration fee........................................ $ (1)
Legal fees and expenses..................................... 250,000
Accounting fees and expenses................................ 60,000
Blue sky fees and expenses.................................. 25,000
Rating agency fees.......................................... 250,000
Trustee fees and expenses................................... 25,000
Printing.................................................... 100,000
Miscellaneous............................................... 10,700
----------
Total..................................................... $ (1)*
----------
----------
- ------------------
(1) To be filed by amendment.
* Does not include premium for Residual Value Insurance Policy, which will be
paid by the Servicer.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 17-108 of the Delaware Revised Uniform Limited Partnership Act
provides that, subject to such standards and restrictions, if any, as are set
forth in its partnership agreement, a limited partnership may, and shall have
the power to, indemnify and hold harmless any partner or other person from and
against any and all claims and demands whatsoever.
Pursuant to Section 4.08 of the Agreement of Limited Partnership of World
Omni Lease Securitization L.P. (the "Transferor"), the Transferor will, to the
fullest extent permitted by law, indemnify World Omni Lease Securitization LLC,
the general partner of the Transferor, and its managers, officers, members,
agents, affiliates and employees acting within the scope of their authority
against their losses and expenses sustained by reason of their acts on behalf of
the Transferor or in furtherance of the interests of the Transferor, if the acts
were not fraudulent or in bad faith and did not constitute willful or wanton
misconduct or gross negligence.
Pursuant to Section 4.08 of the Agreement of Limited Partnership of Auto
Lease Finance L.P. ("ALF L.P."), ALF L.P. will, to the fullest extent permitted
by law, indemnify Auto Lease Finance LLC, the general partner of ALF L.P., and
its managers, officers, members, agents, affiliates and employees acting within
the scope of their authority against their losses and expenses sustained by
reason of their acts on behalf of ALF L.P. or in furtherance of the interests of
ALF L.P., if the acts were not fraudulent or in bad faith and did not constitute
willful or wanton misconduct or gross negligence.
Reference is also made to Section 7 of the Underwriting Agreement (see
Exhibit 1.1), which provides for indemnification by the Transferor under certain
circumstances.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Not applicable.
II-1
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
1.1 -- Form of Underwriting Agreement***
3.1 -- Certificate of Formation of World Omni Lease Securitization LLC*
3.2 -- Limited Liability Company Agreement of World Omni Lease Securitization LLC, dated as of
September 18, 1998*
3.3 -- Amended and Restated Agreement of Limited Partnership of World Omni Lease Securitization L.P. between
World Omni Lease Securitization, Inc. and World Omni Financial Corp., dated as of July 1, 1994
(incorporated by reference from Exhibit 3.3 to the Registration Statement on Form S-1, File
No. 33-85036 (the "1994-B Registration Statement")
3.4 -- Assignment of General Partnership Interest and Amendment to Amended and Restated Limited Partnership
Agreement of World Omni Lease Securitization, L.P. among World Omni Lease Securitization, Inc., World
Omni Lease Securitization LLC and World Omni Financial Corp., dated as of September 23, 1998*
3.5 -- Certificate of Formation of Auto Lease Finance LLC*
3.6 -- Limited Liability Company Agreement of Auto Lease Finance LLC, dated as of September 23, 1998*
3.7 -- Amended and Restated Agreement of Limited Partnership of Auto Lease Finance L.P. between Auto Lease
Finance Inc. and World Omni Financial Corp., dated as of July 1, 1994 (incorporated by reference from
Exhibit 10.7 to the 1994-B Registration Statement)
3.8 -- Assignment of General Partnership Interest and Amendment to Amended and Restated Limited Partnership
Agreement of Auto Lease Finance L.P. among Auto Lease Finance Inc., Auto Lease Finance LLC and World
Omni Financial Corp., dated as of September 23, 1998*
3.9 -- Form of Securitization Trust Agreement among World Omni Lease Securitization L.P., PNC Bank,
Delaware, as Owner Trustee and The Bank of New York, as Indenture Trustee (including form of
Transferor Certificate)*
4.1 -- Form of Indenture between World Omni 1998-A Automobile Lease Securitization Trust and The Bank of New
York, as Indenture Trustee (including forms of Class A Notes)*
5.1 -- Opinion of McDermott, Will & Emery with respect to legality*
8.1 -- Opinion of Cadwalader, Wickersham & Taft with respect to federal income tax matters*
8.2 -- Opinion of English, McCaughan & O'Bryan, P.A. with respect to certain Florida tax matters*
10.1 -- Second Amended and Restated Trust Agreement among Auto Lease Finance L.P., VT Inc. and U.S. Bank
National Association (as successor to Bank of America Illinois), dated as of July 1, 1994
(incorporated by reference from Exhibit 10.1 to the 1994-B Registration Statement)
10.2 -- Amendment No. 1 to Second Amended and Restated Trust Agreement among Auto Lease Finance L.P., VT Inc.
and U.S. Bank National Association (as successor to Bank of America Illinois), dated as of
November 1, 1994 (incorporated by reference from Exhibit 10.8 to the 1994-B Registration Statement)
10.3 -- Amendment No. 2 to the Second Amended and Restated Trust Agreement among Auto Lease Finance L.P., VT
Inc. and U.S. Bank National Association (as successor to Bank of America Illinois), dated as of
September 23, 1998*
10.4 -- Form of Supplement 1998-A to Trust Agreement among Auto Lease Finance L.P., VT Inc. and U.S. Bank
National Association (as successor to Bank of America Illinois) (including form of SUBI Certificate)*
10.5 -- Second Amended and Restated Servicing Agreement between VT Inc. and World Omni Financial Corp., dated
as of July 1, 1994 (incorporated by reference from Exhibit 10.3 to the 1994-B Registration Statement)
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
10.6 -- Amendment No. 1 to Second Amended and Restated Servicing Agreement between VT Inc. and World Omni
Financial Corp., dated as of September 23, 1998*
10.7 -- Form of Supplement 1998-A to Servicing Agreement between VT Inc. and World Omni Financial Corp.*
10.8 -- Second Amended and Restated Assignment Agreement among World Omni Financial Corp., Auto Lease Finance
L.P. and VT Inc., dated as of July 1, 1994 (incorporated by reference from Exhibit 10.9 to
Registration Statement on Form S-1, File No. 33-95404)
10.9 -- Amendment No. 1 to Second Amended and Restated Assignment Agreement among World Omni Financial Corp.,
Auto Lease Finance L.P. and VT Inc., dated as of October 1, 1995 (incorporated by reference from
Exhibit 10.10 to Registration Statement on Form S-1, File No. 333-00794 (the "1996-A Registration
Statement"))
10.10 -- Support Agreement between World Omni Financial Corp. and World Omni Lease Securitization L.P., dated
as of October 1, 1995 (incorporated by reference from Exhibit 10.11 to the 1996-A Registration
Statement)
10.11 -- Amendment No. 1 to Support Agreement between World Omni Financial Corp. and World Omni Lease
Securitization L.P., dated as of May 1, 1996 (incorporated by reference from Exhibit 10.12 to
Registration Statement on Form S-1, File No. 333-11449)
10.12 -- Amendment No. 2 to Support Agreement, dated as of October 1, 1996 between World Omni Financial Corp.,
and World Omni Lease Securitization L.P., dated as of October 1, 1996 (incorporated by reference from
Exhibit 10.10 to Registration Statement on Form S-1, File No. 333-21917 (the "1997-A Registration
Statement"))
10.13 -- Amendment No. 3 to Support Agreement between World Omni Financial Corp. and World Omni Lease
Securitization L.P., dated as of April 1, 1997 (incorporated by reference from Exhibit 10.11 to the
1997-A Registration Statement)
10.14 -- Amendment No. 4 to Support Agreement between World Omni Financial Corp. and World Omni Lease
Securitization L.P., dated as of October 1, 1997*
10.15 -- Amendment No. 5 to Support Agreement between World Omni Financial Corp. and World Omni Lease
Securitization L.P., dated as of September 23, 1998*
10.16 -- Form of Amendment No. 6 to Support Agreement between World Omni Financial Corp. and World Omni Lease
Securitization L.P.*
10.17 -- Form of Residual Value Insurance Policy***
10.18 -- Form of Class A Interest Rate Swap***
23.1 -- Consent of McDermott, Will & Emery (included as part of Exhibit 5.1)*
23.2 -- Consent of Cadwalader, Wickersham & Taft (included as a part of Exhibit 8.1)*
23.3 -- Consent of English, McCaughan & O'Bryan, P.A. (included as part of Exhibit 8.2)*
23.4 -- Consent of Williams & Connolly*
23.5 -- Consent of Hand Arendall, L.L.C.*
23.6 -- Consent of Ernst & Young LLP*
24.1 -- Power of Attorney (included on page II-5 of Registration Statement)**
25.1 -- Form T-1 of The Bank of New York*
</TABLE>
- ------------------
* Filed herewith.
** Previously filed.
*** To be filed by amendment.
(b) Financial Statement Schedules:
Not applicable.
II-3
<PAGE>
ITEM 17. UNDERTAKINGS.
The undersigned registrants hereby undertake as follows:
(a) 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 (the "Act");
(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 a 20%
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.
(b) That, for the purpose of determining any liability under the Act,
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.
(c) 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.
(d) To provide to the Underwriters at the closing date specified in
the Underwriting Agreement certificates in such denominations and
registered in such names as required by the Underwriters to provide prompt
delivery to each purchaser.
(e) Insofar as indemnification for liabilities arising under the Act
may be permitted to directors, officers and controlling persons of any
registrant pursuant to the foregoing provisions, or otherwise, each
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 payment by a
registrant of expenses incurred or paid by a director, officer or
controlling person of such 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, each
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.
(f) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by each registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Act will be deemed to be part of this registration
statement as of the time it was declared effective.
(g) For purposes of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus will be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time will be deemed to
be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, EACH REGISTRANT
HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT ON FORM S-1
TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF DEERFIELD BEACH AND STATE OF FLORIDA, ON THE 2ND DAY OF NOVEMBER, 1998.
WORLD OMNI LEASE SECURITIZATION L.P.,
on behalf of itself and as originator
of the World
Omni 1998-A Automobile Lease
Securitization Trust
By: WORLD OMNI LEASE SECURITIZATION
LLC
as General Partner
By: /s/ A. TUCKER ALLEN
--------------------------------
A. Tucker Allen
Vice President and Corporate
Treasurer
AUTO LEASE FINANCE L.P., on behalf of
itself and as originator of World Omni
LT
By: AUTO LEASE FINANCE LLC
as General Partner
By: /s/ A. TUCKER ALLEN
--------------------------------
A. Tucker Allen
Vice President and Corporate
Treasurer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT ON FORM S-1 HAS BEEN SIGNED
BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------- ------------------------------------------------ ------------------
<S> <C> <C>
/s/ A. TUCKER ALLEN Director and Vice President and Corporate November 2, 1998
- ------------------------------------ Treasurer of the General Partner of each of
A. Tucker Allen World Omni Lease Securitization L.P. and Auto
Lease Finance L.P. (Principal Financial and
Accounting Officer)
* Director of the General Partner of each of World November 2, 1998
- ------------------------------------ Omni Lease Securitization L.P. and Auto Lease
Colin W. Brown Finance L.P.
* Director of the General Partner of each of World November 2, 1998
- ------------------------------------ Omni Lease Securitization L.P. and Auto Lease
Jeffrey B. Shapiro Finance L.P
* Director of the General Partner of each of World November 2, 1998
- ------------------------------------ Omni Lease Securitization L.P. and Auto Lease
Christopher C. Wheeler Finance L.P.
*By: /s/ A. TUCKER ALLEN
A. Tucker Allen
Attorney in Fact
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
1.1 -- Form of Underwriting Agreement***
3.1 -- Certificate of Formation of World Omni Lease Securitization LLC*
3.2 -- Limited Liability Company Agreement of World Omni Lease Securitization LLC, dated as of
September 18, 1998*
3.3 -- Amended and Restated Agreement of Limited Partnership of World Omni Lease Securitization L.P.
between World Omni Lease Securitization, Inc. and World Omni Financial Corp., dated as of July 1,
1994 (incorporated by reference from Exhibit 3.3 to the Registration Statement on Form S-1, File
No. 33-85036 (the "1994-B Registration Statement")
3.4 -- Assignment of General Partnership Interest and Amendment to Amended and Restated Limited
Partnership Agreement of World Omni Lease Securitization, L.P. among World Omni Lease
Securitization, Inc., World Omni Lease Securitization LLC and World Omni Financial Corp., dated as
of September 23, 1998*
3.5 -- Certificate of Formation of Auto Lease Finance LLC*
3.6 -- Limited Liability Company Agreement of Auto Lease Finance LLC, dated as of September 23, 1998*
3.7 -- Amended and Restated Agreement of Limited Partnership of Auto Lease Finance L.P. between Auto
Lease Finance Inc. and World Omni Financial Corp., dated as of July 1, 1994 (incorporated by
reference from Exhibit 10.7 to the 1994-B Registration Statement)
3.8 -- Assignment of General Partnership Interest and Amendment to Amended and Restated Limited
Partnership Agreement of Auto Lease Finance L.P. among Auto Lease Finance Inc., Auto Lease Finance
LLC and World Omni Financial Corp., dated as of September 23, 1998*
3.9 -- Form of Securitization Trust Agreement among World Omni Lease Securitization L.P., PNC Bank,
Delaware, as Owner Trustee and The Bank of New York, as Indenture Trustee (including form of
Transferor Certificate)*
4.1 -- Form of Indenture between World Omni 1998-A Automobile Lease Securitization Trust and The Bank of
New York, as Indenture Trustee (including forms of Class A Notes)*
5.1 -- Opinion of McDermott, Will & Emery with respect to legality*
8.1 -- Opinion of Cadwalader, Wickersham & Taft with respect to federal income tax matters*
8.2 -- Opinion of English, McCaughan & O'Bryan, P.A. with respect to certain Florida tax matters*
10.1 -- Second Amended and Restated Trust Agreement among Auto Lease Finance L.P., VT Inc. and U.S. Bank
National Association (as successor to Bank of America Illinois), dated as of July 1, 1994
(incorporated by reference from Exhibit 10.1 to the 1994-B Registration Statement)
10.2 -- Amendment No. 1 to Second Amended and Restated Trust Agreement among Auto Lease Finance L.P., VT
Inc. and U.S. Bank National Association (as successor to Bank of America Illinois), dated as of
November 1, 1994 (incorporated by reference from Exhibit 10.8 to the 1994-B Registration
Statement)
10.3 -- Amendment No. 2 to the Second Amended and Restated Trust Agreement among Auto Lease Finance L.P.,
VT Inc. and U.S. Bank National Association (as successor to Bank of America Illinois), dated as of
September 23, 1998*
10.4 -- Form of Supplement 1998-A to Trust Agreement among Auto Lease Finance L.P., VT Inc. and U.S. Bank
National Association (as successor to Bank of America Illinois) (including form of SUBI
Certificate)*
10.5 -- Second Amended and Restated Servicing Agreement between VT Inc. and World Omni Financial Corp.,
dated as of July 1, 1994 (incorporated by reference from Exhibit 10.3 to the 1994-B Registration
Statement)
10.6 -- Amendment No. 1 to Second Amended and Restated Servicing Agreement between VT Inc. and World Omni
Financial Corp., dated as of September 23, 1998*
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
10.7 -- Form of Supplement 1998-A to Servicing Agreement between VT Inc. and World Omni Financial Corp.*
10.8 -- Second Amended and Restated Assignment Agreement among World Omni Financial Corp., Auto Lease
Finance L.P. and VT Inc., dated as of July 1, 1994 (incorporated by reference from Exhibit 10.9 to
Registration Statement on Form S-1, File No. 33-95404)
10.9 -- Amendment No. 1 to Second Amended and Restated Assignment Agreement among World Omni Financial
Corp., Auto Lease Finance L.P. and VT Inc., dated as of October 1, 1995 (incorporated by reference
from Exhibit 10.10 to Registration Statement on Form S-1, File No. 333-00794 (the "1996-A
Registration Statement"))
10.10 -- Support Agreement between World Omni Financial Corp. and World Omni Lease Securitization L.P.,
dated as of October 1, 1995 (incorporated by reference from Exhibit 10.11 to the 1996-A
Registration Statement)
10.11 -- Amendment No. 1 to Support Agreement between World Omni Financial Corp. and World Omni Lease
Securitization L.P., dated as of May 1, 1996 (incorporated by reference from Exhibit 10.12 to
Registration Statement on Form S-1, File No. 333-11449)
10.12 -- Amendment No. 2 to Support Agreement, dated as of October 1, 1996 between World Omni Financial
Corp., and World Omni Lease Securitization L.P., dated as of October 1, 1996 (incorporated by
reference from Exhibit 10.10 to Registration Statement on Form S-1, File No. 333-21917 (the
"1997-A Registration Statement"))
10.13 -- Amendment No. 3 to Support Agreement between World Omni Financial Corp. and World Omni Lease
Securitization L.P., dated as of April 1, 1997 (incorporated by reference from Exhibit 10.11 to
the 1997-A Registration Statement)
10.14 -- Amendment No. 4 to Support Agreement between World Omni Financial Corp. and World Omni Lease
Securitization L.P., dated as of October 1, 1997*
10.15 -- Amendment No. 5 to Support Agreement between World Omni Financial Corp. and World Omni Lease
Securitization L.P., dated as of September 23, 1998*
10.16 -- Form of Amendment No. 6 to Support Agreement between World Omni Financial Corp. and World Omni
Lease Securitization L.P.*
10.17 -- Form of Residual Value Insurance Policy***
10.18 -- Form of Class A Interest Rate Swap***
23.1 -- Consent of McDermott, Will & Emery (included as part of Exhibit 5.1)*
23.2 -- Consent of Cadwalader, Wickersham & Taft (included as a part of Exhibit 8.1)*
23.3 -- Consent of English, McCaughan & O'Bryan, P.A. (included as part of Exhibit 8.2)*
23.4 -- Consent of Williams & Connolly*
23.5 -- Consent of Hand Arendall, L.L.C.*
23.6 -- Consent of Ernst & Young LLP*
24.1 -- Power of Attorney (included on page II-5 of Registration Statement)**
25.1 -- Form T-1 of The Bank of New York*
</TABLE>
- ------------------
* Filed herewith.
** Previously filed.
*** To be filed by amendment.
Exhibit 3.1
CERTIFICATE OF FORMATION
OF
WORLD OMNI LEASE SECURITIZATION LLC
This Certificate of Formation of World Omni Lease
Securitization LLC (the "Company"), dated as of September 18, 1998, has been
duly executed and is being filed by Daniel J. Munley, as an authorized person,
to form a limited liability company under the Delaware Limited Liability Company
Act (6 Del.C. ss.18-101, et seq.).
FIRST. The name of the limited liability company formed hereby
is World Omni Lease Securitization LLC.
SECOND. The address of the registered office of the Company in
the State of Delaware is c/o The Corporation Trust Company, Corporation Trust
Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801.
THIRD. The name and address of the registered agent for
service of process on the Company in the State of Delaware are The Corporation
Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, New
Castle County, Delaware 19801.
IN WITNESS WHEREOF, the undersigned authorized person has
executed this Certificate of Formation as of the date first above written.
/s/ Daniel J. Munley
-------------------------
Daniel J. Munley
Authorized Person
Exhibit 3.2
LIMITED LIABILITY COMPANY AGREEMENT
OF
WORLD OMNI LEASE SECURITIZATION LLC
A Delaware Limited Liability Company
THIS LIMITED LIABILITY COMPANY AGREEMENT (this "Agreement") is executed
as of the 18th day of September, 1998 by the undersigned, the sole member, to
form a limited liability company under the laws of the State of Delaware for the
purposes and upon the terms and conditions hereinafter set forth. The Company
(as defined below) joins in the execution of this Agreement so as to be bound by
this Agreement.
World Omni Financial Corp., as the sole member (the "Member"), by
execution of this Agreement, hereby forms a limited liability company pursuant
to and in accordance with the Delaware Limited Liability Company Act (6 Del.C.
ss.18-101, et seq.), as amended from time to time (the "Act"), and hereby
desires that this Agreement be, and hereby is, the sole governing document of
the Company, superseding all prior agreements and hereby agrees as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Whenever used in this Agreement the following
terms shall have the meanings respectively assigned to them in this Article I
unless otherwise expressly provided herein or unless the context otherwise
requires:
Act: "Act" shall mean the Delaware Limited Liability Company Act, 6
Del. C.ss.ss. 18-101 et seq., as amended from time to time.
Affiliate: "Affiliate" of another Person shall mean any Person directly
or indirectly controlling, controlled by, or under common control with, such
other person.
<PAGE>
Agreed Value "Agreed Value" shall mean the fair market value of
Contributed Property or services rendered as agreed to by the contributing
Member and the Company, using such reasonable method of valuation as they may
adopt.
Agreement: "Agreement" shall mean this Amended and Restated Limited
Liability Company Agreement of the Company as the same may be amended or
restated from time to time in accordance with its terms.
Assignee: "Assignee" shall mean a Person who has acquired a share of
the Company's profits and losses and such rights to receive distributions from
the Company as are assigned to that Person, but who is not a Substitute Member.
Bankrupt Member: "Bankrupt Member" shall mean any member (a) that (i)
makes an assignment for the benefit of creditors; (ii) files a voluntary
petition in bankruptcy; (iii) is adjudged a bankrupt or insolvent, or has
entered against such Member an order for relief, in any bankruptcy or insolvency
proceedings; (iv) files a petition or answer seeking for the Member any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any statute, law or regulation; (v) files an answer or
other pleading admitting or failing to contest the material allegations of a
petition filed against the Member in any proceeding of the type described in
subclauses (i) through (iv) of this clause (a); or (vi) seeks, consents to, or
acquiesces in the appointment of a trustee, receiver or liquidator of the Member
or of all or any substantial part of the Member's properties; or (b) against
which, a proceeding seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any statute, law
or regulation has been commenced and one hundred twenty (120) days have expired
without dismissal thereof or with respect to which, without the Member's consent
or acquiescence, a trustee, receiver or liquidator of the Member or of all or
any substantial part of the Member's properties has been appointed and ninety
(90) days have expired without the appointment having been vacated or stayed, or
ninety (90) days have expired after the date of expiration of a stay, if the
appointment has not previously been vacated. The foregoing is intended to and
shall supersede and replace the events of bankruptcy described in Sections
18-304(a) and (b) of the Act.
Capital Contribution: "Capital Contribution" shall mean the amount in
cash contributed and the Agreed Value of other property contributed by each
Member (or its predecessors in interest) to the capital of the Company for such
Member's Membership Interest.
Cash Flow: "Cash Flow" for any period shall mean operating cash flow,
which shall be defined according to generally accepted accounting principles,
before deduction for depreciation, cost recovery or other noncash expenses of
the Company during that period.
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Certificates: "Certificates" has the meaning set forth in Section
3.1(a).
Code: "Code" shall mean the Internal Revenue Code of 1986, as amended.
Company: "Company" shall mean World Omni Lease Securitization LLC, the
Delaware limited liability company formed pursuant to the Act and this
Agreement.
Director: "Director" has the meaning set forth in Section 7.2.
Dispose, Disposing or Disposition: "Dispose," "Disposing" or
"Disposition" shall mean a sale, assignment, transfer, exchange, mortgage,
pledge, grant of a security interest, or other disposition or encumbrance
(including, without limitation, by operation of law), or any act thereof.
Independent Director "Independent Director" shall mean a Director of
the Company who shall at no time be (i) a director, officer, employee or former
employee of any Affiliate, (ii) a natural person related to any director,
officer, employee or former employee of any Affiliate, (iii) a holder (directly
or indirectly) of any voting securities of any Affiliate, or (iv) a natural
person related to a holder (directly or indirectly) of any voting securities of
any Affiliate. For purposes of this definition only, "Affiliate" shall mean any
entity other than the Company or any similarly organized special purpose finance
subsidiary of an Affiliate (i) which owns beneficially, directly or indirectly,
more than 10% of the aggregate Membership Interests of the Company, (ii) which
is in control of the Company, as currently defined under ss. 230.405 of the
Rules and Regulations of the Securities and Exchange Commission, 17 C.F.R. ss.
230.405, (iii) of which 10% or more of the aggregate Membership Interests is
owned beneficially, directly or indirectly, by any entity described in clause
(i) or (ii) above, or (iv) which is controlled by an entity described in clause
(i) or (ii) above, as currently defined under ss. 230.405 of the rules and
Regulations of the Securities and Exchange Commission, 17 C.F.R. ss. 230.405.
IRS: "IRS" shall mean the Internal Revenue Service.
Managing Member: "Managing Member" shall mean the Member and any
successor Managing Member appointed pursuant to this Agreement, each in its
capacity as a managing member of the Company.
Member: "Member" shall mean World Omni Financial Corp. in its capacity
as a managing member of the Company.
Membership Interest: "Membership Interest" shall mean the limited
liability company interest of the Member in the Company, including, without
limitation, rights in the
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capital of the Company, rights to receive distributions (liquidating or
otherwise) and allocations of profits and losses. The Member's Membership
Interest shall be expressed as a percentage which shall equal the ratio that the
value of the Capital Contributions made by such Member bears to the Capital
Contributions of all members. The Member's initial Membership interest shall be
one hundred percent (100%).
Origination Trust: "Origination Trust" has the meaning set forth in
Section 3.1 (a).
Origination Trust Agreement: "Origination Trust Agreement" has the
meaning set forth in Section 3.1(a).
Origination Trust Interest: "Origination Trust Interest" has the
meaning set forth in Section 3.1(a).
Partnership: "Partnership" has the meaning set forth in Section 3.1(a).
Person: "Person" shall have the meaning given that term in Section
18-102(12) of the Act.
Securitization Trust: "Securitization Trust" has the meaning set forth
in Section 3.1(a).
Securitized Financing: "Securitized Financing" has the meaning set
forth in the Origination Trust Agreement.
SUBIs: "SUBIs" has the meaning set forth in Section 3.1(b).
Substitute Member: "Substitute Member" shall mean any Person to whom
the Membership Interest in the Company has been transferred and who was not the
Member immediately prior to such transfer and who has been admitted to the
Company as the Member pursuant to and in accordance with the provisions of
Article IV of this Agreement.
UTIs: "UTIs" has the meaning set forth in Section 3.1(b).
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ARTICLE II
ORGANIZATION
Section 2.1 Formation. The Member hereby executes this Agreement for
the purpose of setting forth the rights and obligations of the Member.
Section 2.2 Name. The name of the limited liability company formed
hereby is World Omni Lease Securitization LLC.
Section 2.3 Certificate of Formation; Foreign Qualification. Daniel J.
Munley, as an authorized person, within the meaning of the Act, shall execute,
deliver and file, or cause the execution, delivery and filing of, the
Certificate of Formation of the Company which is to be filed as of the date
hereof in the office of the Secretary of State of the State of Delaware, in
accordance with the Act. Immediately following such filing, the Managing Member
is hereby designated as an authorized person, with the meaning of the Act, to
execute, deliver and file, or to cause the execution, delivery and filing of,
all certificates (and any amendments and/or restatements thereof) required or
permitted by the Act to be filed in the office of the Secretary of State of the
State of Delaware. Prior to the Company's conducting business in any
jurisdiction other than the State of Delaware, the Managing Member of the
Company shall cause the Company to comply, to the extent procedures are
available and those matters are reasonably within the control of the Managing
Member, with all requirements necessary to qualify the Company as a foreign
limited liability company in that jurisdiction. At the request of the Managing
Member of the Company, each Member shall execute, acknowledge, swear to, and
deliver all certificates and other instruments conforming with this Agreement
that are necessary or appropriate to qualify, continue and terminate the
qualification of the Company as a foreign limited liability company in all such
jurisdictions in which the Company may conduct business.
Section 2.4 No State Law Partnership; Liability to Third Parties;
Federal Taxation. The Member intends that the Company not be a partnership
(including, without limitation, a limited partnership) or joint venture, and
that no Member be a partner or joint venturer of any other Member, for any
purpose including federal and state tax purposes, and that this Agreement not be
construed to suggest otherwise. The Member, on behalf of the Company, will elect
for the Company to be a nonentity for federal tax purposes. Except as otherwise
specifically provided in the Act, no Member shall be liable for the debts,
obligations or liabilities of the Company or any other Member, including under a
judgment, decree or order of a court.
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ARTICLE III
PURPOSES AND POWERS, PRINCIPAL OFFICE, REGISTERED
AGENT, PERIOD OF DURATION AND MEMBER LIST
Section 3.1 Purposes and Powers. The Company has been formed solely for
the purpose of engaging in only the following activities:
(a) To (i) act as a general partner (and from time to time a
limited partner) of one or more limited partnerships (each, a "Partnership"), a
limited partner of which will be the Member, including without limitation World
Omni Lease Securitization L.P. ("WOLS LP"), which Partnerships may engage in any
of the activities in which the Company is permitted to engage, and (ii) act as
settlor or grantor of one or more additional trusts (each a "Securitization
Trust") formed pursuant to a trust agreement or other agreement for the purpose
of acquiring interests in World Omni LT, an Alabama trust (the "Origination
Trust") originally formed under a Trust Agreement dated as of November 1, 1993,
as amended and restated pursuant to an Amended and Restated Trust Agreement
dated as of June 1, 1994 and a Second Amended and Restated Trust Agreement dated
as of July 1, 1994, as amended and supplemented to date (as the same may be
further amended or supplemented from time to time, the "Origination Trust
Agreement") now among Auto Lease Finance L.P., a Delaware limited partnership,
VT Inc., an Alabama corporation, and U.S. Bank National Association (f/k/a First
Bank National Association and successor to Bank of America Illinois, an Illinois
banking corporation f/k/a Continental Bank, successor to Continental Bank
National Association), which Origination Trust originally was formed to issue
beneficial interests ("Origination Trust Interests") representing interests in
various retail closed-end lease contracts of motor vehicles, those related
leased vehicles, and other related rights and assets, as may be transferred
directly or indirectly to the Origination Trust, and which Securitization Trust
may issue certificates ("Certificates") of beneficial interest in the assets of
such Securitization Trust;
(b) To acquire, own, hold, sell, transfer, convey, dispose of,
pledge, assign, borrow money against, finance, refinance or otherwise deal with,
publicly or privately and whether with unrelated third parties or with
affiliated entities, Origination Trust Interests, including without limitation
any undivided trust interests ("UTIs") or special units of beneficial interest
("SUBIs") created with respect to the Origination Trust, and Certificates;
(c) To loan or otherwise invest funds received as a result of
the Company's interest in any Origination Trust Interests or Certificates and
any other income, as determined by the Company's Board of Directors from time to
time;
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(d) To borrow money other than pursuant to subsection (b)
above, but only to the extent that any such borrowing is permitted by the terms
of the transactions contemplated by subsections (a) and (b); and
(e) To engage in any lawful act or activity and to exercise
any powers permitted to limited liability companies organized under the Act that
are incidental to and necessary or convenient for the accomplishment of the
foregoing purposes.
The Company is not otherwise authorized to engage in any
activity except the foregoing.
Section 3.2 Principal Office. The initial principal office of the
Company is located at 6150 Omni Park Drive, Mobile, AL 36609. The principal
office of the Company may be relocated from time to time by determination of the
Managing Member.
Section 3.3 Registered Agent. The registered agent for service of
process on the Company in the State of Delaware shall be The Corporation Trust
Company, Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle
County, Delaware 19801.
Section 3.4 Period of Duration. The term of the Company shall continue
in perpetuity, unless the Company is earlier dissolved pursuant to law or the
provisions of this Agreement.
Section 3.5 Merger. Notwithstanding anything to the contrary in this
Agreement and without the vote, consent or approval of any Person, the Company
is hereby authorized to merge with World Omni Lease Securitization, Inc., a
Delaware corporation, with the Company being the surviving entity (the
"Merger").
ARTICLE IV
MEMBERSHIP AND DISPOSITIONS OF INTERESTS
Section 4.1 Members. The name and the mailing address of the Member are
as follows:
Name Address
---- -------
World Omni Financial Corp. 120 NW 12th Avenue
Deerfield Beach, FL 33442
Attn: Corporate Treasurer
Section 4.2 Elimination of Preemptive Rights. No Member shall be
entitled as such, as a matter of right, to subscribe for or purchase interests
in the Company of any class, now or hereafter authorized.
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Section 4.3 Resignation. Except as otherwise provided in this
Agreement, a Member does not have the right or power to resign from the Company
as a Member.
Section 4.4 Restriction on the Disposition of the Membership Interest.
(a) Subject to compliance with all applicable provisions of
this Section 4.4, any Member may Dispose of all or any part of its Membership
Interest. The Person to whom such Disposition is made shall be an Assignee of
such interest but shall not be a Substitute Member unless admitted as a
Substitute Member in accordance with Section 4.4(b).
(b) The Person to whom a Disposition is made as described in
Section 4.4(a) shall have the right to become a Substitute Member only if (i)
the Member making such Disposition grants the transferee the right to be a
Substitute Member (which grant (subject to the following clause (ii)) is hereby
permitted) and (ii) such admission as a Substitute Member is consented to by all
of the Members and, until all Securitized Financings involving a SUBI and
involving the Company or a Partnership are paid and satisfied in full, all
members of the Board of Directors (as hereinafter defined), which consent may
not be unreasonably withheld.
(c) The Company shall not recognize for any purpose any
purported Disposition of all or part of the Member's Membership Interest or any
right or interest appertaining thereto unless and until the Company has received
a document (i) executed by both the Member effecting the Disposition and the
Person acquiring such Membership Interest or part thereof, (ii) including the
notice address of any Person to be admitted to the Company as a Substitute
Member and such Person's agreement to be bound by this Agreement in respect of
the Membership Interest or part thereof being obtained, (iii) setting forth the
Membership Interest of the parties to the Disposition after the Disposition, and
(iv) containing a warranty and representation that the Disposition was made in
accordance with this Agreement and all applicable laws and regulations. Each
Disposition and, if applicable, admission complying with the provisions of this
Section 4.4 is effective as of the date of the document described in this
Section 4.4(c), but only if the other requirements of this Section 4.4 have been
met.
Section 4.5 Bankrupt Member. A Member shall not cease to be a Member
as a result of such Member becoming a Bankrupt Member and, upon the occurrence
of such event, the Company shall continue without dissolution.
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ARTICLE V
CAPITAL CONTRIBUTIONS
Section 5.1 Admission and Initial Capital Contributions. The Managing
Member is deemed admitted as the Member of the Company upon its execution and
delivery of this Agreement. The Member has contributed $1000.00, in cash, and no
other property, to the Company and may contribute in the future any additional
capital deemed necessary by the Managing Member, in its sole discretion, for the
operation of the Company. No other Person shall be admitted as an additional
member of the Company without the approval of the Member and the unanimous
approvals of all members of the Board of Directors, including, without
limitation, the affirmative vote of the Independent Directors.
Section 5.2 Additional Capital; Adjustment of Membership Interests.
Except as specifically set forth elsewhere in this Agreement, no Member shall be
required to contribute capital to the company in excess of such Member's initial
Capital Contribution. The Membership Interests of the Members shall be adjusted
to reflect (i) additional capital contributed to the Company by one or more
Members, (ii) the transfer of Membership Interests, or (iii) the withdrawal of a
Member. As of the time of an event specified in the immediately preceding
sentence, the Membership Interest of the Members may be adjusted by the Managing
Member, in its discretion, to reflect the relative Capital Accounts of the
Members after giving effect to any additional capital contributed to, or amounts
distributed by, the Company, as the case may be, and any appreciation or
depreciation in the fair market value of the Company's property.
Section 5.3 Return of Contributions. A Member is not entitled to
demand the return of any part of its Capital Contribution or to payment of
interest in respect of either its Capital Account or its Capital Contribution.
Except as otherwise expressly set forth in this Agreement, neither the Company
nor any Member has any obligation to return the Capital Contribution of an
Member.
ARTICLE VI
ACCOUNTING AND DISTRIBUTION
Section 6.1 Books; Fiscal Year; Accounting Terms.
(a) The books of the Company shall be kept on the accrual
basis and in accordance with generally accepted accounting principles
consistently applied.
(b) The fiscal year of the Company for financial and tax
reporting Purposes shall end on December 31 of each year.
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Section 6.2 Distributions of Cash Flow. From time to time, the
Managing Member shall determine to what extent (if any) there exists sufficient
Cash Flow, after taking into account such working capital, capital expenditures
and debt service reserves as it deems necessary, to permit a distribution of
Cash Flow to the Members. Any such distribution shall be made to the Members
proportionately in accordance with their Membership Interests and shall be
subject to Section 18-607 of the Act and other applicable law.
ARTICLE VII
MANAGEMENT, LIABILITY OF MEMBERS,
RIGHTS TO OBTAIN INFORMATION
Section 7.1 Managing Member. Except as otherwise specifically provided
in this Agreement, the Managing Member shall have the authority to, and shall,
conduct the affairs of the Company.`
Section 7.2 Board of Directors. (a) The Company shall have a Board of
Managers which shall be designated as the Company's "Board of Directors" and
each member of the Board of Directors shall be designated as a "Director." The
Board of Directors shall have the authority set forth in this Agreement. The
Directors are not "managers" within the meaning of the Act. The initial members
of the Board of Directors shall be the Member or its designees and the
Independent Directors. Members of the Board of Directors may be appointed and
removed from time to time by the Managing Member, in its sole discretion,
provided, however, that as long as any Securitized Financing involving a SUBI
and involving the Company or a Partnership is outstanding, the Company shall
have at least two Independent Directors. The Board of Directors shall hold
meetings, at such times and places to be agreed upon by a majority of the Board
of Directors.
Section 7.3 Action by Directors. (a) Except as set forth in Subsection
(b) of this Section, any action required by this Agreement to be taken by the
Directors shall require the agreement of not less than a majority of the
Directors.
(b) Until all Securitized Financings involving a SUBI and
involving the Company or a Partnership are paid and satisfied in full, the
Company may take the following actions only with approval of the Member and
unanimous approvals of all members of the Board of Directors, including, without
limitation, the affirmative vote of the Independent Directors:
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(i) make an assignment for the benefit of creditors;
(ii) file a voluntary petition in bankruptcy;
(iii) file a petition or answer seeking any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any statute, law or regulation;
(iv) file an answer or other pleading admitting or
failing to contest the material allegations of a petition filed against
the Company in any proceeding of the type described in subclauses (i)
through (iii) of this Subsection (b);
(v) seek, consent to, or acquiesce in the appointment
of a trustee, receiver or liquidator of the Company or of all or any
substantial part of the Company's properties;
(vi) voluntarily dissolve and wind up, or consolidate
or merge with or into another entity (except for the Merger) or sell
all or substantially all of the assets of the Company;
(vii) engage in any business activity not set forth
in Section 3.1 of this Agreement; and
(viii) take any action that would cause WOLS LP to:
(a) dissolve or liquidate, in whole or in part, or institute
proceedings to be adjudicated bankrupt or insolvent; (b) consent to the
institution of bankruptcy or insolvency proceedings against it; (c)
file a petition seeking, or consent to, reorganization or relief under
any applicable Federal or state law relating to bankruptcy; (d) consent
to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of it or a substantial part of
its property; (e) make a general assignment for the benefit of
creditors; (f) admit in writing its inability to pay debts generally as
they become; or (g) take any partnership action in furtherance of the
actions set forth in clauses (a) through (f) above, provided however
that the Company shall in no event consent to the institution of
bankruptcy or insolvency proceedings against WOLS LP so long as WOLS LP
is solvent.
(c) Until all Securitized Financings involving a SUBI and
involving the Company or a Partnership are paid and satisfied in full, the
Company may not amend, alter or repeal the definition of Independent Director,
Section 7.2, subsections (b), (c) or (d) of this Section 7.3 or Section 11.1
without the approval of the Member and the majority vote of the full Board of
Directors, including, without limitation, the votes of the Independent Directors
and such additional approvals, if any, as may be required under each Securitized
Financing with regard to amendment of documents or instruments with respect
thereto.
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Except as may be specifically required by applicable law, no
member of the Board of Directors shall be guilty of breaching any fiduciary duty
to any Member or any limited partner of WOLS LP by refusing to consent to any of
the listed actions in subsections (b) or (c) of this Section 7.3.
(d) In the event of the insolvency of the Company or of WOLS
LP and with regard to any action contemplated by subsection (b) or (c) above, no
Independent Director will owe a fiduciary duty to any Person who holds a
Membership Interest or any limited partner of WOLS LP (except as may be
specifically required by applicable law), but any fiduciary duty of such
Independent Director with regard to such action shall be owed instead to the
creditors of the Company or WOLS LP, as the case may be. No Independent Director
shall serve as a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Company, any Affiliate of the Company, or a substantial
part of its respective property.
Section 7.4 Officers. (a) The Company shall have an officer designated
as the Company's President who shall be appointed from time to time by the
Managing Member. The President shall be the chief operating officer of the
Company. The President of the Company is hereby delegated the power, authority
and responsibility of the day-to-day management, administrative, financial and
implementive acts of the Company's business. The President of the Company shall
have the right and power to bind the Company and to make the final determination
on questions relative to the usual and customary daily business decisions,
affairs and acts of the Company. Other primary management functions of the
Company shall be assigned by the Managing Member.
(b) The Company shall also have officers designated as vice
presidents who shall be appointed from time to time by the Managing Member. The
vice presidents shall have such powers and duties as may from time to time be
assigned to them by the Managing Member or the president. At the request of the
president, or in the case of his absence or disability, the vice president
designated by the president (or in the absence of such designation, the vice
president designated by the Managing Member) shall perform all the duties of the
president and when so acting, shall have all the powers of the president.
(c) The Managing Member may appoint such other officers as it
may deem advisable from time to time. Each officer of the Company shall hold
office at the pleasure of the Managing Member, and the Managing Member may
remove any officer at any time, with or without cause. If appointed by the
Managing Member, the officers shall have the duties assigned to them by the
Managing Member.
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Section 7.5 Indemnification.
(a) General. Except as otherwise provided in this Section 7.5,
the Company shall indemnify the Member and any Director or officer and may
indemnify any employee or agent of the Company who was or is a party or is
threatened to be made a party to a threatened, pending, or completed action,
suit, or proceeding (whether civil, criminal, administrative, or investigative
and whether formal or informal) other than an action by or in the right of the
Company, where such Person is a party because such Person is or was a Member,
Director, officer, employee, or agent of the Company. Except as otherwise
provided in this Section 7.5, the Company shall indemnify its Member and
Directors against expenses, including, attorney fees, judgments, penalties,
fines and amounts paid in settlement actually and reasonably incurred by a
Director in connection with an action, suit or proceeding relating to acts or
omissions of that Director regarding the items set forth in Section 7.3(b) of
this Agreement.
(b) Permissive Indemnification. Except as otherwise provided
in this Section 7.5, the Company shall indemnify such Member, Director or
officer and may indemnify such employee or agent against expenses, including
attorneys fees, judgments, penalties, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with the action,
suit or proceeding. To the fullest extent permitted by law, the Company shall
indemnify such Member, Director or officer and may indemnify such employee or
agent if the Person acted in good faith and did not engage in willful misconduct
or gross negligence. With respect to a criminal action or proceeding, the Person
must have had no reasonable cause to believe such Person's misconduct was
unlawful. Unless ordered by a court, any indemnification permitted under this
Section 7.5(b) shall be made by the Company only as the Company authorizes in
the specific case after (i) determining that the indemnification is proper under
the circumstances because the person to be indemnified has met the applicable
standard of conduct and (ii) evaluating the reasonableness of the expenses and
of the amounts paid in settlement. This determination and evaluation shall be
made by a majority vote of the Members who are not parties or threatened to be
made parties to the action, suit or proceeding or, if there is only one Member,
by that Member. However, no indemnification shall be provided to any Member,
Director, officer, employee, or agent of the Company for or in connection with
(i) the receipt of a financial benefit to which the person is not entitled; (ii)
voting for or assenting to a distribution to Members in violation of this
Agreement or the Act; (iii) a knowing violation of law; or (iv) acts or
omissions of such Person constituting willful misconduct or gross negligence.
(c) Mandatory Indemnification. To the extent that a Member,
Director, officer, employee, or agent of the Company has been successful on the
merits or otherwise in defense of an action, suit, or proceeding described in
Section 7.5(a) or in defense of any claim, issue, or other matter in such
action, suit or proceeding, such person shall be indemnified against actual and
reasonable expenses, including reasonable attorney fees, incurred by such person
in connection with the action, suit, proceeding and any action, suit or
proceeding brought to enforce such mandatory indemnification.
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Section 7.6 Exculpation; Duties.
(a) No Member, Director or officer of the Company shall be
liable to the Company or any other Person who has an interest in the Company for
any loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Member, Director or officer in good faith on behalf of the
Company and in a manner reasonably believed to be within the scope of the
authority conferred on such Member, Director or officer by this Agreement,
except that a Member, Director or officer shall be liable for any such loss,
damage or claim incurred by reason of such Member's, Director's or officer's
willful misconduct or gross negligence.
(b) To the extent that at law or in equity, the Managing
Member or a Director, officer, employee or agent of the Company (each, an
"Indemnified Person") has duties (including fiduciary duties) and liabilities
relating thereto to the Company or to any Member, any such Indemnified Person
acting under this Agreement shall not be liable to the Company or to any Member
for its good faith reliance on the provisions of this Agreement. The provisions
of this Agreement, to the extent that they restrict the duties and liabilities
of an Indemnified Person otherwise existing at law or in equity, are agreed by
the Members to replace such other duties and liabilities of such Indemnified
Person.
(c) Whenever in this Agreement the Managing Member is
permitted or required to make a decision (i) in its "sole discretion", or
"discretion" or under a grant of similar authority or latitude, the Managing
Member shall be entitled to consider only such interests and factors as it
desires, including its own interests, and shall have no duty or obligation to
give any consideration to any interest of or factors affecting the Company or
any other Member, or (ii) in its "good faith" or under another expressed
standard, the Managing Member shall act under such express standard and shall
not be subject to any other or different standards imposed by this Agreement or
any other agreement contemplated herein or by relevant provisions of law or in
equity or otherwise.
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ARTICLE VIII
DISSOLUTION, LIQUIDATION AND TERMINATION OF THE COMPANY
Section 8.1 Dissolution. The Company shall be dissolved and its
affairs wound up only upon (i) the written consent of all the Members and, as
long as any Securitized Financing involving a SUBI and involving the Company or
a Partnership is outstanding, all members of the Board of Directors, including,
without limitation, the Independent Directors and (ii) the entry of a decree of
judicial dissolution under Section 18-802 of the Act. The Company shall not be
dissolved as a result of there no longer being any Members of the Company if the
Company is continued in accordance with Section 18-801(a)(4) of the Act.
Notwithstanding anything in this Agreement to the contrary, the Company shall
not be dissolved as long as any Securitized Financing involving a SUBI and
involving the Company or a Partnership is outstanding.
Section 8.2 Liquidation and Termination. On dissolution of the
Company, the Managing Member shall appoint one or more Persons, which appointee
or appointees may include itself, to act as a liquidator. The liquidator shall
proceed diligently to wind up the affairs of the Company and make final
distributions as provided herein and in the Act. The costs of liquidation shall
be borne as a Company expense. Until final distribution, the liquidator shall
continue to operate the Company properties with all of the power and authority
of the Managing Member. A reasonable time shall be allowed for the orderly
liquidation of the assets of the Company and the discharge of liabilities to
creditors so as to enable the liquidator to minimize any losses resulting from
liquidation. The liquidator, as promptly as possible after dissolution and again
after final liquidation, shall cause a proper accounting to be made by a
nationally recognized firm of certified public accountants of the Company's
assets, liabilities, and operations through the last day of the calendar month
in which the dissolution occurs or the final liquidation is completed, as
applicable, and shall apply the proceeds of liquidation as set forth in the
remaining sections of this Article VIII.
Section 8.3 Payment of Debts. The assets shall first be applied to the
satisfaction of the liabilities of the Company (including any loans or advances
that may have been made by Members to the Company and the expenses of
liquidation).
Section 8.4 Remaining Distribution. The remaining assets shall then be
distributed to the Members in accordance with the Members' positive capital
account balances.
Section 8.5 Reserve. Notwithstanding anything to the contrary in
Section 8.4, the liquidator may retain such amount as it deems necessary as a
reserve for any contingent, conditional or unmatured liabilities or obligations
of the Company, which reserve, after the passage of a reasonable period of time
as determined by the liquidator, shall be distributed in accordance with this
Article VIII.
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Section 8.6 Final Accounting. Each of the Members shall be furnished
with a statement prepared by the Company's certified public accountants, which
shall set forth the assets and liabilities of the Company as of the date of the
complete liquidation. Upon compliance by the liquidator with the foregoing
distribution plan, the liquidator shall execute and cause to be filed a
Certificate of Cancellation and any and all other documents necessary with
respect to termination and cancellation of the Company under the Act. The
existence of the Company as a separate legal entity shall continue until the
cancellation of its Certificate of Formation.
ARTICLE IX
AMENDMENTS
Section 9.1 Authority to Amend. Subject to Section 7.3, this Agreement
may only be amended with approval of the Managing Member and the majority vote
of the members of the full Board of Directors and such additional approvals, if
any, as may be required under each Securitized Financing involving a SUBI and
involving the Company or a Partnership with regard to amendment of documents or
instruments with respect thereto. The Managing Member shall provide prior
written notice of any proposed amendment to each nationally recognized
statistical rating agency then rating any class of security issued in any
Securitized Financing involving a SUBI and involving the Company or a
Partnership, but only if such rating initially was provided at the request of
the Company, the Partnership or an affiliate thereof.
ARTICLE X
POWER OF ATTORNEY
Section 10.1 Power. Each member irrevocably constitutes and appoints
the Managing Member as his true and lawful attorney in his name, place and stead
to make, execute, swear to, acknowledge, deliver and file:
(a) Any certificates or other instruments which may be
required to be filed by the Company under the laws of the State of Delaware or
of any other state or jurisdiction in which the Managing Member shall deem it
advisable;
(b) Any documents, certificates or other instruments,
including but not limited to, any and all amendments and modifications of this
Agreement or of the instruments described in Subsection 10.1(a) which may be
required or deemed desirable by the Managing Member to effectuate the provisions
of any part of this Agreement, and, by way of extension and not in limitation,
to do all such other things as shall be necessary to continue and to carry on
the business of the Company; and
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<PAGE>
(c) All documents, certificates or other instruments which may
be required to effectuate the dissolution and termination of the Company, to the
extent such dissolution and termination is authorized hereby. The power of
attorney granted hereby shall not constitute a waiver of, or be used to avoid,
the rights of the Members to approve certain amendments to this Agreement
pursuant to Subsection 9.1 or be used in any other manner inconsistent with the
status of the Company as a limited liability company or inconsistent with the
provisions of this Agreement.
Section 10.2 Survival of Power. It is expressly intended by each
Member that the foregoing power of attorney is coupled with an interest, is
irrevocable and shall survive the death, retirement or adjudication of
incompetency of such Member. The foregoing power of attorney shall survive the
delivery of an assignment by the Member of its entire interest in the Company,
except that where an assignee of such entire interest has become a Substitute
Member, then the foregoing power of attorney of the assignor Member shall
survive the delivery of such assignment for the sole purpose of enabling the
Managing Member to execute, acknowledge and file any and all instruments
necessary to effectuate such substitution.
ARTICLE XI
SEPARATE LEGAL ENTITY
Section 11.1 Separate Legal Entity. The Company shall not commingle
any of its funds or other assets with the funds or assets of any other entity or
person. The Company shall maintain its financial and accounting books and
records separate from those of any other entity or person. The Company shall pay
from its assets all obligations and indebtedness of any kind incurred by the
Company, and shall not pay from its assets any obligations or indebtedness of
any other entity or person, other than expenses, obligations or indebtedness of
the Origination Trust, any Securitization Trust, any trustee of any of the
foregoing with respect thereto, and any Partnership.
ARTICLE XII
MISCELLANEOUS
Section 12.1 Method of Giving Consent. Any consent of the Member
required by this Agreement may be given by a written consent, given by the
consenting Member and received by the Person soliciting such consent. Any
consent of a member of the Board of Director's required by this Agreement may be
given by a written consent given by the consenting member of the Board of
Directors and received by the Person soliciting such consent.
Section 12.2 Governing Law. This Agreement and the rights and duties
of the Members shall be governed by and construed in accordance with the laws of
the State of Delaware, without regard to principles of conflict of laws.
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<PAGE>
Section 12.3 Agreement for Further Execution. At any time or times
upon the request of the Managing Member, each Member agrees to sign and swear to
any certificate, any amendment to or cancellation of such certificate,
acknowledge similar certificates or affidavits or certificates of fictitious
firm name or the like (and any amendments or cancellations thereof) required by
the laws of the State of Delaware, or any other jurisdiction in which the
Company does, or proposes to do, business. This Section 12.3 shall not prejudice
or affect the rights of the Members to approve amendments to this Agreement
pursuant to Section 9.1.
Section 12.4 Entire Agreement. This Agreement contains the entire
understanding between the parties and supersedes any prior understandings or
agreements between them respecting the within subject matter. There are no
representations, agreements, arrangements or understandings, oral or written,
between the parties hereto relating to the subject matter of this Agreement
which are not fully expressed.
Section 12.5. Severability. This Agreement is intended to be performed
in accordance with, and only to the extent permitted by, all applicable laws,
ordinances, rules and regulations of the jurisdictions in which the Company does
business. If any provision of this Agreement or the application thereof to any
Person or circumstance shall, for any reason and to any extent, be invalid or
unenforceable, the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected thereby, but
rather shall be enforced to the greatest extent permitted by law.
Section 12.6. Notices. Notices to Members or to the Company shall be
deemed to have been given when personally delivered or mailed, by prepaid
registered or certified mail, addressed as set forth in this Agreement, unless a
notice of change of address has previously been given in writing by the
addressee to the addressor, in which case such notice shall be addressed to the
address set forth in such notice of change of address.
Section 12.7 Counterparts. This Agreement may be executed in multiple
counterparts, each one of which shall constitute an original executed copy of
this Agreement.
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<PAGE>
Section 12.8 Pronouns. All pronouns and any variations thereof shall
be deemed to refer to the masculine, feminine, neuter, singular or plural, as
the identity of the person or persons may require.
Section 12.9. Titles and Captions. All titles and captions are for
convenience only, do not form a substantive part of this Agreement, and shall
not restrict or enlarge any substantive provisions of this Agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties have hereunto set their hands as of
the day and year first above written.
WORLD OMNI FINANCIAL CORP.
By: /s/ Patrick C. Ossenbeck
----------------------------------
Name: Patrick C. Ossenbeck
Title: Assitant Treasurer
WORLD OMNI LEASE SECURITIZATION LLC
By: World Omni Financial Corp.,
its sole member
By: /s/ Patrick C. Ossenbeck
----------------------------------
Name: Patrick C. Ossenbeck
Title: Assistant Treasurer
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Exhibit 3.4
ASSIGNMENT OF GENERAL PARTNER INTEREST
AND AMENDMENT TO AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
WORLD OMNI LEASE SECURITIZATION L.P.
This Assignment of General Partner Interest and Amendment to
the Amended and Restated Limited Partnership Agreement of World Omni Lease
Securitization L.P., dated as of September 23, 1998 (this "Assignment and
Amendment Agreement"), is entered into by and among World Omni Lease
Securitization, Inc., a Delaware corporation, as the initial general partner of
the Partnership (as defined below) (the "Initial General Partner"), World Omni
Lease Securitization LLC, a Delaware limited liability company, as the new
general partner of the Partnership (the "New General Partner") and World Omni
Financial Corp., a Florida corporation, as the sole limited partner of the
Partnership (the "Limited Partner").
W I T N E S S E T H :
WHEREAS, World Omni Lease Securitization L.P., (the
"Partnership") has been formed as a limited partnership under the Delaware
Revised Uniform Limited Partnership Act (6 Del.C. ss.17-101, et seq.) (the
"Act") pursuant to a Certificate of Limited Partnership of the Partnership, as
filed in the office of the Secretary of State of the State of Delaware (the
"Secretary of State") on June 9, 1994 (the "Certificate"), and a Limited
Partnership Agreement of the Partnership, dated as of June 9, 1994, as such
agreement was amended and restated on July 1, 1994, by the Amended and Restated
Limited Partnership Agreement of the Partnership (as amended and restated, the
"Agreement");
WHEREAS, the Initial General Partner is the sole general
partner of the Partnership and the Limited Partner is the sole limited partner
of the Partnership;
WHEREAS, the Initial General Partner and the Limited Partner
desire to take certain actions required under the Agreement to permit the merger
of the Initial General Partner with and into the New General Partner (the
"Merger"), and to effect the admission of the New General Partner as a successor
general partner of the Partnership, which shall be deemed to occur
contemporaneous with the effectiveness of the Merger;
WHEREAS, the New General Partner desires to be admitted to the
Partnership as a successor general partner of the Partnership, immediately
before the effectiveness of the Merger;
<PAGE>
WHEREAS, immediately after the effectiveness of the Merger,
the New General Partner desires to Transfer a portion of its Partnership
Interest to the Limited Partner such that, following the Transfer, the New
General Partner shall have a .1% interest in the Partnership and the Limited
Partner shall have a 99.9% interest in the Partnership;
WHEREAS, contemporaneous with the effectiveness of the Merger,
the Partnership will no longer be considered an entity classified as a
partnership for federal income tax purposes; and
WHEREAS, the undersigned, being all of the partners of the
Partnership, to accomplish the foregoing, desire to amend the Agreement in the
manner set forth herein.
Unless otherwise defined herein, all capitalized terms used
herein shall have the meanings attributed to them in the Agreement.
NOW, THEREFORE, the undersigned, in consideration of the
premises, covenants and agreements contained herein, do hereby agree as follows:
1. Assignment. Notwithstanding any provision in the Agreement
to the contrary, the Initial General Partner acknowledges that (i) the merger
agreement dated as of the date hereof between the Initial General Partner and
the New General Partner, (ii) the Certificate of Merger of the Initial General
Partner with and into the New General Partner as filed with the Secretary of
State on the date hereof, and (iii) this Assignment and Amendment Agreement,
have been received by it and together constitute written instruments in form
acceptable to it evidencing the Transfer of the Initial General Partner's
Partnership Interest to the New General Partner, as required by clause (i) of
Section 8.02(a) of the Agreement. The parties acknowledge that all approvals
have been obtained for the Transfer of the Initial General Partner's Partnership
Interest to the New General Partner as would be required under each Securitized
Financing for the amendment of documents and agreements with respect thereto, as
required by clause (ii) of Section 8.02(a) of the Agreement.
2. Admission. Notwithstanding any provision in the Agreement
to the contrary, the New General Partner is hereby admitted to the Partnership
as a general partner of the Partnership. The admission shall be effective
contemporaneous with the Merger and upon the filing of an amendment to the
Certificate (in the form attached as Exhibit A hereto) in the office of the
Secretary of State which reflects the fact that the New General Partner is a
general partner of the Partnership, and shall occur, and for all purposes shall
be deemed to have occurred, contemporaneous with the Merger.
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<PAGE>
3. Withdrawal. Notwithstanding any provision in the Agreement
to the contrary, the Initial General Partner hereby withdraws from the
Partnership as a general partner of the Partnership. The withdrawal shall be
effective upon the Merger and upon the filing of an amendment to the Certificate
in the office of the Secretary of State which reflects the fact that the Initial
General Partner is no longer a general partner of the Partnership and shall
occur, and for all purposes shall be deemed to have occurred, contemporaneous
with the admission of the New General Partner to the Partnership as a general
partner of the Partnership.
4. Continuation. The parties hereto agree that following the
withdrawal of the Initial General Partner from the Partnership as a general
partner of the Partnership, the New General Partner is authorized to and hereby
agrees to continue the business of the Partnership without dissolution. In
addition, all references to the "General Partner" in the Agreement shall be
deemed to refer to the New General Partner, all references to the issued and
outstanding shares of common stock of the Initial General Partner shall be
deemed instead to refer to the aggregate membership interests in the New General
Partner and all references to the General Partner being a corporation shall be
deemed instead to refer to a limited liability company and any other term or
provision in the Agreement that is inconsistent with the foregoing is hereby
deemed to be modified accordingly.
5. Amendment Regarding Tax Provisions. The parties hereby
amend the Agreement to delete all of Article Six, Financial Allocations and
Distributions, except for Sections 6.02, 6.07 and 6.08, which are hereby
renumbered to be Sections 6.01, 6.02 and 6.03, respectively. The parties
acknowledge that all approvals have been obtained for this amendment as would be
required under each Securitized Financing for the amendment of documents and
agreements with respect thereto, as required by clause (ii) of Section 8.02(a)
of the Agreement.
6. Transfer of Partnership Interest. Notwithstanding anything
to the contrary contained in the Agreement, the New General Partner and the
Limited Partner hereby agree that the Partnership Interest of the New General
Partner shall for all purposes, be .1% and the Partnership Interest of the
Limited Partner shall for all purposes be 99.9% and that the New General Partner
and the Limited Partner hereby consent to such Transfer of the New General
Partner's Partnership Interest to the Limited Partner as is necessary to
accomplish the foregoing and hereby consent to the amendment of all relevant
provisions of the Agreement so as to reflect the foregoing.
7. Waiver. The Initial General Partner and the Limited Partner
waive the provisions of Section 8.01 of the Agreement that prohibit any of the
foregoing, and acknowledge that such waiver has been approved by each of them
and has been approved as required under each Securitized Financing with regards
to amendment of documents and agreements with respect thereto, as required by
Section 10.10 of the Agreement.
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<PAGE>
8. Books and Records. The general partner of the Partnership
shall take all actions necessary under the Act and the Agreement, including
causing the amendment of the Agreement, to evidence the withdrawal of Initial
General Partner from the Partnership as a general partner of the Partnership and
the admission of the New General Partner to the Partnership as a general partner
of the Partnership.
9. Future Cooperation. Each of the parties hereto agrees to
cooperate at all times from and after the date hereof with respect to all of the
matters described herein, and to execute such further assignments, releases,
assumptions, amendments of the Agreement, notifications and other documents as
may be reasonably requested for the purpose of giving effect to, or evidencing
or giving notice of, the transactions contemplated by this Assignment and
Amendment Agreement.
10. Binding Effect. This Assignment and Amendment Agreement
shall be binding upon, and shall enure to the benefit of, the parties hereto and
their respective successors and assigns.
11. Execution in Counterparts. This Assignment and Amendment
Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same instrument.
12. Agreement in Effect. Except as hereby amended, the
Agreement shall remain in full force and effect.
13. Severability of Provisions. If any one or more of the
covenants, provisions or terms of this Assignment and Amendment Agreement shall
for any reason whatsoever be held invalid, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Assignment and Amendment Agreement and
shall in no way affect the validity or enforceability of other provisions of
this Assignment and Amendment Agreement. To the extent permitted at law, the
parties hereto waive any provision of law that renders any provision of this
Assignment and Amendment Agreement invalid or unenforceable in any respect.
14. Governing Law. This Assignment and Amendment Agreement
shall be governed by, and interpreted in accordance with, the laws of the State
of Delaware, all rights and remedies being governed by such laws.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Amendment Agreement to be duly executed as of the day and year
first above written.
WORLD OMNI LEASE SECURITIZATION LLC,
as General Partner
By: /s/ Patrick C. Ossenbeck
----------------------------
Patrick C. Ossenbeck
Assistant Treasurer
WORLD OMNI FINANCIAL CORP., as
Limited Partner
By: /s/ Patrick C. Ossenbeck
----------------------------
Patrick C. Ossenbeck
Assistant Treasurer
WORLD OMNI LEASE SECURITIZATION, Inc. as
Withdrawing General Partner
By: /s/ Patrick C. Ossenbeck
----------------------------
Patrick C. Ossenbeck
Assistant Treasurer
-5-
Exhibit 3.5
CERTIFICATE OF FORMATION
OF
AUTO LEASE FINANCE LLC
This Certificate of Formation of Auto Lease Finance LLC
(the "Company"), dated as of September 18, 1998, has been duly executed and is
being filed by Daniel J. Munley, as an authorized person, to form a limited
liability company under the Delaware Limited Liability Company Act (6 Del.C.
ss.18-101, et seq.).
FIRST. The name of the limited liability company formed hereby
is Auto Lease Finance LLC.
SECOND. The address of the registered office of the Company in
the State of Delaware is c/o The Corporation Trust Company, Corporation Trust
Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801.
THIRD. The name and address of the registered agent for
service of process on the Company in the State of Delaware are The Corporation
Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, New
Castle County, Delaware 19801.
IN WITNESS WHEREOF, the undersigned authorized person has
executed this Certificate of Formation as of the date first above written.
/s/ Daniel J. Munley
-----------------------------
Daniel J. Munley
Authorized Person
Exhibit 3.6
LIMITED LIABILITY COMPANY AGREEMENT
OF
AUTO LEASE FINANCE LLC
A Delaware Limited Liability Company
THIS LIMITED LIABILITY COMPANY AGREEMENT (this "Agreement") is executed
as of the 23rd day of September, 1998 by the undersigned, the sole member, to
form a limited liability company under the laws of the State of Delaware for the
purposes and upon the terms and conditions hereinafter set forth. The Company
(as defined below) joins in the execution of this Agreement so as to be bound by
this Agreement.
World Omni Financial Corp., as the sole member (the "Member"), by
execution of this Agreement, hereby forms a limited liability company pursuant
to and in accordance with the Delaware Limited Liability Company Act (6 Del.C.
ss.18-101, et seq.), as amended from time to time (the "Act"), and hereby
desires that this Agreement be, and hereby is, the sole governing document of
the Company, superseding all prior agreements and hereby agrees as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Whenever used in this Agreement the following
terms shall have the meanings respectively assigned to them in this Article I
unless otherwise expressly provided herein or unless the context otherwise
requires:
Act: "Act" shall mean the Delaware Limited Liability Company Act, 6
Del. C.ss.ss. 18-101 et seq., as amended from time to time.
Affiliate: "Affiliate" of another Person shall mean any Person directly
or indirectly controlling, controlled by, or under common control with, such
other person.
Agreed Value "Agreed Value" shall mean the fair market value of
Contributed Property or services rendered as agreed to by the contributing
Member and the Company, using such reasonable method of valuation as they may
adopt.
Agreement: "Agreement" shall mean this Limited Liability Company
Agreement of the Company as the same may be amended or restated from time to
time in accordance with its terms.
<PAGE>
Assignee: "Assignee" shall mean a Person who has acquired a share of
the Company's profits and losses and such rights to receive distributions from
the Company as are assigned to that Person, but who is not a Substitute Member.
Bankrupt Member: "Bankrupt Member" shall mean any member (a) that (i)
makes an assignment for the benefit of creditors; (ii) files a voluntary
petition in bankruptcy; (iii) is adjudged a bankrupt or insolvent, or has
entered against such Member an order for relief, in any bankruptcy or insolvency
proceedings; (iv) files a petition or answer seeking for the Member any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any statute, law or regulation; (v) files an answer or
other pleading admitting or failing to contest the material allegations of a
petition filed against the Member in any proceeding of the type described in
subclauses (i) through (iv) of this clause (a); or (vi) seeks, consents to, or
acquiesces in the appointment of a trustee, receiver or liquidator of the Member
or of all or any substantial part of the Member's properties; or (b) against
which, a proceeding seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any statute, law
or regulation has been commenced and one hundred twenty (120) days have expired
without dismissal thereof or with respect to which, without the Member's consent
or acquiescence, a trustee, receiver or liquidator of the Member or of all or
any substantial part of the Member's properties has been appointed and ninety
(90) days have expired without the appointment having been vacated or stayed, or
ninety (90) days have expired after the date of expiration of a stay, if the
appointment has not previously been vacated. The foregoing is intended to and
shall supersede and replace the events of bankruptcy described in Sections
18-304(a) and (b) of the Act.
Capital Contribution: "Capital Contribution" shall mean the amount in
cash contributed and the Agreed Value of other property contributed by each
Member (or its predecessors in interest) to the capital of the Company for such
Member's Membership Interest.
Cash Flow: "Cash Flow" for any period shall mean operating cash flow,
which shall be defined according to generally accepted accounting principles,
before deduction for depreciation, cost recovery or other noncash expenses of
the Company during that period.
Certificates: "Certificates" has the meaning set forth in Section
3.1(b).
Code: "Code" shall mean the Internal Revenue Code of 1986, as amended.
Company: "Company" shall mean Auto Lease Finance LLC, the Delaware
limited liability company formed pursuant to the Act and this Agreement.
Contributed Property "Contributed Property" shall mean each Member's
interest in property or other consideration (excluding services and cash)
contributed to the Company by such Member.
Director: "Director" has the meaning set forth in Section 7.2.
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<PAGE>
Dispose, Disposing or Disposition: "Dispose," "Disposing" or
"Disposition" shall mean a sale, assignment, transfer, exchange, mortgage,
pledge, grant of a security interest, or other disposition or encumbrance
(including, without limitation, by operation of law), or any act thereof.
Independent Director: "Independent Director" shall mean a Director of
the Company who shall at no time be (i) a director, officer, employee or former
employee of any Affiliate, (ii) a natural person related to any director,
officer, employee or former employee of any Affiliate, (iii) a holder (directly
or indirectly) of any voting securities of any Affiliate, or (iv) a natural
person related to a holder (directly or indirectly) of any voting securities of
any Affiliate. For purposes of this definition only, "Affiliate" shall mean any
entity other than the Company or any similarly organized special purpose finance
subsidiary of an Affiliate (i) which owns beneficially, directly or indirectly,
more than 10% of the aggregate Membership Interests of the Company, (ii) which
is in control of the Company, as currently defined under ss. 230.405 of the
Rules and Regulations of the Securities and Exchange Commission, 17 C.F.R. ss.
230.405, (iii) of which 10% or more of the aggregate Membership Interests is
owned beneficially, directly or indirectly, by any entity described in clause
(i) or (ii) above, or (iv) which is controlled by an entity described in clause
(i) or (ii) above, as currently defined under ss. 230.405 of the rules and
Regulations of the Securities and Exchange Commission, 17 C.F.R. ss. 230.405.
IRS: "IRS" shall mean the Internal Revenue Service.
Managing Member: "Managing Member" shall mean the Member and any
successor Managing Member appointed pursuant to this Agreement, each in its
capacity as a managing member of the Company.
Member: "Member" shall mean World Omni Financial Corp. in its capacity
as a managing member of the Company.
Membership Interest: "Membership Interest" shall mean the limited
liability company interest of the Member in the Company, including, without
limitation, rights in the capital of the Company, rights to receive
distributions (liquidating or otherwise) and allocations of profits and losses.
The Member's Membership Interest shall be expressed as a percentage which shall
equal the ratio that the value of the Capital Contributions made by such Member
bears to the Capital Contributions of all members. The Member's initial
Membership interest shall be one hundred percent (100%).
Origination Trust: "Origination Trust" has the meaning set forth in
Section 3.1 (a).
Origination Trust Agreement: "Origination Trust Agreement" has the
meaning set forth in Section 3.1(a).
Origination Trust Interest: "Origination Trust Interest" has the
meaning set forth in Section 3.1(a).
Partnership: "Partnership" has the meaning set forth in Section 3.1(a).
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<PAGE>
Person: "Person" shall have the meaning given that term in Section
18-102(12) of the Act.
Securitization Trust: "Securitization Trust" has the meaning set forth
in Section 3.1(a).
Securitized Financing: "Securitized Financing" has the meaning set
forth in the Origination Trust Agreement.
SUBIs: "SUBIs" has the meaning set forth in Section 3.1(a).
Substitute Member: "Substitute Member" shall mean any Person to whom
the Membership Interest in the Company has been transferred and who was not the
Member immediately prior to such transfer and who has been admitted to the
Company as the Member pursuant to and in accordance with the provisions of
Article IV of this Agreement.
UTIs: "UTIs" has the meaning set forth in Section 3.1(a).
ARTICLE II
ORGANIZATION
Section 2.1 Formation. The Member hereby executes this Agreement for
the purpose of setting forth the rights and obligations of the Member.
Section 2.2 Name. The name of the limited liability company formed
hereby is Auto Lease Finance LLC.
Section 2.3 Certificate of Formation; Foreign Qualification. Daniel J.
Munley, as an authorized person, within the meaning of the Act, shall execute,
deliver and file, or cause the execution, delivery and filing of, the
Certificate of Formation of the Company which is to be filed as of the date
hereof in the office of the Secretary of State of the State of Delaware, in
accordance with the Act. Immediately following such filing, the Managing Member
is hereby designated as an authorized person, with the meaning of the Act, to
execute, deliver and file, or to cause the execution, delivery and filing of,
all certificates (and any amendments and/or restatements thereof) required or
permitted by the Act to be filed in the office of the Secretary of State of the
State of Delaware. Prior to the Company's conducting business in any
jurisdiction other than the State of Delaware, the Managing Member of the
Company shall cause the Company to comply, to the extent procedures are
available and those matters are reasonably within the control of the Managing
Member, with all requirements necessary to qualify the Company as a foreign
limited liability company in that jurisdiction. At the request of the Managing
Member of the Company, each Member shall execute, acknowledge, swear to, and
deliver all certificates and other instruments conforming with this Agreement
that are necessary or appropriate to qualify, continue and terminate the
qualification of the Company as a foreign limited liability company in all such
jurisdictions in which the Company may conduct business.
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<PAGE>
Section 2.4 No State Law Partnership; Liability to Third Parties;
Federal Taxation. The Member intends that the Company not be a partnership
(including, without limitation, a limited partnership) or joint venture, and
that no Member be a partner or joint venturer of any other Member, for any
purpose including federal and state tax purposes, and that this Agreement not be
construed to suggest otherwise. The Member, on behalf of the Company, will elect
for the Company to be a nonentity for federal tax purposes. Except as otherwise
specifically provided in the Act, no Member shall be liable for the debts,
obligations or liabilities of the Company or any other Member, including under a
judgment, decree or order of a court.
ARTICLE III
PURPOSES AND POWERS, PRINCIPAL OFFICE, REGISTERED
AGENT, PERIOD OF DURATION AND MEMBER LIST
Section 3.1 Purposes and Powers. The Company has been formed solely for
the purpose of engaging in only the following activities:
(a) To (i) act as a general partner (and from time to time a
limited partner) of one or more limited partnerships (each, a "Partnership"), a
limited partner of which will be the Member, including without limitation Auto
Lease Finance L.P. ("ALF LP"), which Partnerships may engage in any of the
activities in which the Company is permitted to engage, (ii) act as settlor or
grantor of one or more additional trusts (each a "Securitization Trust") formed
pursuant to a trust agreement or other agreement for the purpose of acquiring
interests in World Omni LT, an Alabama trust (the "Origination Trust")
originally formed under a Trust Agreement dated as of November 1, 1993, as
amended and restated pursuant to an Amended and Restated Trust Agreement dated
as of June 1, 1994 and a Second Amended and Restated Trust Agreement dated as of
July 1, 1994, as amended and supplemented to date (as the same may be further
amended or supplemented from time to time, the "Origination Trust Agreement")
now among Auto Lease Finance L.P., a Delaware limited partnership, VT Inc., an
Alabama corporation, and U.S. Bank National Association (f/k/a First Bank
National Association and successor to Bank of America Illinois, an Illinois
banking corporation f/k/a Continental Bank, successor to Continental Bank
National Association), which Origination Trust originally was formed to issue
beneficial interests ("Origination Trust Interests") representing interests in
various retail closed-end lease contracts of motor vehicles, those related
leased vehicles, and other related rights and assets, as may be transferred
directly or indirectly to the Origination Trust, and which Securitization Trust
may issue certificates ("Certificates") of beneficial interest in the assets of
such Securitization Trust and (iii) acquire, own, hold, sell, transfer, convey,
dispose of, pledge, assign, borrow money against, finance, refinance or
otherwise deal with, publicly or privately and whether with unrelated third
parties or with affiliated entities, Origination Trust Interests, including
without limitation any undivided trust interests ("UTIs") or special units of
beneficial interest ("SUBIs") created with respect to the Origination Trust, and
Certificates;
(b) To loan or otherwise invest funds received as a result of
the Company's interest in any Origination Trust Interests or Certificates and
any other income, as determined by the Company's Board of Directors from time to
time;
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<PAGE>
(c) To borrow money other than pursuant to subsection (a)(iii)
above, but only to the extent that any such borrowing is permitted by the terms
of the transactions contemplated by subsections (a)(ii) and (iii) of this
Section; and
(d) To engage in any lawful act or activity and to exercise
any powers permitted to limited liability companies organized under the Act that
are incidental to and necessary or convenient for the accomplishment of the
foregoing purposes.
The Company is not otherwise authorized to engage in any
activity except the foregoing.
Section 3.2 Principal Office. The initial principal office of the
Company is located at 6150 Omni Park Drive, Mobile, AL 36609. The principal
office of the Company may be relocated from time to time by determination of the
Managing Member.
Section 3.3 Registered Agent. The registered agent for service of
process on the Company in the State of Delaware shall be The Corporation Trust
Company, Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle
County, Delaware 19801.
Section 3.4 Period of Duration. The term of the Company shall continue
in perpetuity, unless the Company is earlier dissolved pursuant to law or the
provisions of this Agreement.
Section 3.5 Merger. Notwithstanding anything to the contrary in this
Agreement and without the vote, consent or approval of any Person, the Company
is hereby authorized to merge with Auto Lease Finance, Inc., a Delaware
corporation, with the Company being the surviving entity (the "Merger").
ARTICLE IV
MEMBERSHIP AND DISPOSITIONS OF INTERESTS
Section 4.1 Members. The name and the mailing address of the Member are
as follows:
Name Address
---- -------
World Omni Financial Corp. 120 NW 12th Avenue
Deerfield Beach, FL 33442
Attn: Corporate Treasurer
Section 4.2 Elimination of Preemptive Rights. No Member shall be
entitled as such, as a matter of right, to subscribe for or purchase interests
in the Company of any class, now or hereafter authorized.
Section 4.3 Resignation. Except as otherwise provided in this
Agreement, a Member does not have the right or power to resign from the Company
as a Member.
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Section 4.4 Restriction on the Disposition of the Membership Interest.
(a) Subject to compliance with all applicable provisions of
this Section 4.4, any Member may Dispose of all or any part of its Membership
Interest. The Person to whom such Disposition is made shall be an Assignee of
such interest but shall not be a Substitute Member unless admitted as a
Substitute Member in accordance with Section 4.4(b).
(b) The Person to whom a Disposition is made as described in
Section 4.4(a) shall have the right to become a Substitute Member only if (i)
the Member making such Disposition grants the transferee the right to be a
Substitute Member (which grant (subject to the following clause (ii)) is hereby
permitted) and (ii) such admission as a Substitute Member is consented to by all
of the Members and, until all Securitized Financings are paid and satisfied in
full, all members of the Board of Directors (as hereinafter defined), which
consent may not be unreasonably withheld.
(c) The Company shall not recognize for any purpose any
purported Disposition of all or part of the Member's Membership Interest or any
right or interest appertaining thereto unless and until the Company has received
a document (i) executed by both the Member effecting the Disposition and the
Person acquiring such Membership Interest or part thereof, (ii) including the
notice address of any Person to be admitted to the Company as a Substitute
Member and such Person's agreement to be bound by this Agreement in respect of
the Membership Interest or part thereof being obtained, (iii) setting forth the
Membership Interest of the parties to the Disposition after the Disposition, and
(iv) containing a warranty and representation that the Disposition was made in
accordance with this Agreement and all applicable laws and regulations. Each
Disposition and, if applicable, admission complying with the provisions of this
Section 4.4 is effective as of the date of the document described in this
Section 4.4(c), but only if the other requirements of this Section 4.4 have been
met.
Section 4.5 Bankrupt Member. A Member shall not cease to be a Member
as a result of such Member becoming a Bankrupt Member and, upon the occurrence
of such event, the Company shall continue without dissolution.
ARTICLE V
CAPITAL CONTRIBUTIONS
Section 5.1 Admission and Initial Capital Contributions. The Managing
Member is deemed admitted as the Member of the Company upon its execution and
delivery of this Agreement. The Member has contributed $1000.00, in cash, and no
other property, to the Company and may contribute in the future any additional
capital deemed necessary by the Managing Member, in its sole discretion, for the
operation of the Company. No other Person shall be admitted as an additional
member of the Company without the approval of the Member and the unanimous
approvals of all members of the Board of Directors, including, without
limitation, the affirmative vote of the Independent Directors.
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Section 5.2 Additional Capital; Adjustment of Membership Interests.
Except as specifically set forth elsewhere in this Agreement, no Member shall be
required to contribute capital to the company in excess of such Member's initial
Capital Contribution. The Membership Interests of the Members shall be adjusted
to reflect (i) additional capital contributed to the Company by one or more
Members, (ii) the transfer of Membership Interests, or (iii) the withdrawal of a
Member. As of the time of an event specified in the immediately preceding
sentence, the Membership Interest of the Members may be adjusted by the Managing
Member, in its discretion, to reflect the relative Capital Accounts of the
Members after giving effect to any additional capital contributed to, or amounts
distributed by, the Company, as the case may be, and any appreciation or
depreciation in the fair market value of the Company's property.
Section 5.3 Return of Contributions. A Member is not entitled to
demand the return of any part of its Capital Contribution or to payment of
interest in respect of either its Capital Account or its Capital Contribution.
Except as otherwise expressly set forth in this Agreement, neither the Company
nor any Member has any obligation to return the Capital Contribution of an
Member.
ARTICLE VI
ACCOUNTING AND DISTRIBUTION
Section 6.1 Books; Fiscal Year; Accounting Terms.
(a) The books of the Company shall be kept on the accrual
basis and in accordance with generally accepted accounting principles
consistently applied.
(b) The fiscal year of the Company for financial and tax
reporting Purposes shall end on December 31 of each year.
Section 6.2 Distributions of Cash Flow. From time to time, the
Managing Member shall determine to what extent (if any) there exists sufficient
Cash Flow, after taking into account such working capital, capital expenditures
and debt service reserves as it deems necessary, to permit a distribution of
Cash Flow to the Members. Any such distribution shall be made to the Members
proportionately in accordance with their Membership Interests and shall be
subject to Section 18-607 of the Act and other applicable law.
ARTICLE VII
MANAGEMENT, LIABILITY OF MEMBERS,
RIGHTS TO OBTAIN INFORMATION
Section 7.1 Managing Member. Except as otherwise specifically provided
in this Agreement, the Managing Member shall have the authority to, and shall,
conduct the affairs of the Company.
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Section 7.2 Board of Directors. (a) The Company shall have a Board of
Managers which shall be designated as the Company's "Board of Directors" and
each member of the Board of Directors shall be designated as a "Director." The
Board of Directors shall have the authority set forth in this Agreement. The
Directors are not "managers" within the meaning of the Act. The initial members
of the Board of Directors shall be the Member or its designees and the
Independent Directors. Members of the Board of Directors may be appointed and
removed from time to time by the Managing Member, in its sole discretion,
provided, however, that as long as any Securitized Financing is outstanding, the
Company shall have at least two Independent Directors. The Board of Directors
shall hold meetings, at such times and places to be agreed upon by a majority of
the Board of Directors.
Section 7.3 Action by Directors. (a) Except as set forth in Subsection
(b) of this Section, any action required by this Agreement to be taken by the
Directors shall require the agreement of not less than a majority of the
Directors.
(b) Until all Securitized Financings are paid and satisfied in
full, the Company may take the following actions only with approval of the
Member and unanimous approvals of all members of the Board of Directors,
including, without limitation, the affirmative vote of the Independent
Directors:
(i) make an assignment for the benefit of creditors;
(ii) file a voluntary petition in bankruptcy;
(iii) file a petition or answer seeking any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any statute, law or regulation;
(iv) file an answer or other pleading admitting or
failing to contest the material allegations of a petition filed
against the Company in any proceeding of the type described in
subclauses (i) through (iii) of this Subsection (b);
(v) seek, consent to, or acquiesce in the appointment
of a trustee, receiver or liquidator of the Company or of all or any
substantial part of the Company's properties;
(vi) voluntarily dissolve and wind up, or consolidate
or merge with or into another entity (except for the Merger) or sell
all or substantially all of the assets of the Company;
(vii) engage in any business activity not set forth
in Section 3.1 of this Agreement; and
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(viii) take any action that would cause ALF LP to:
(a) dissolve or liquidate, in whole or in part, or institute
proceedings to be adjudicated bankrupt or insolvent; (b) consent to
the institution of bankruptcy or insolvency proceedings against it;
(c) file a petition seeking, or consent to, reorganization or relief
under any applicable Federal or state law relating to bankruptcy; (d)
consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of it or a
substantial part of its property; (e) make a general assignment for
the benefit of creditors; (f) admit in writing its inability to pay
debts generally as they become; or (g) take any partnership action in
furtherance of the actions set forth in clauses (a) through (f) above,
provided however that the Company shall in no event consent to the
institution of bankruptcy or insolvency proceedings against ALF LP so
long as ALF LP is solvent.
(c) Until all Securitized Financings are paid and satisfied in
full, the Company may not amend, alter or repeal the definition of Independent
Director, Section 7.2, subsections (b), (c) or (d) of this Section 7.3 or
Section 11.1. without the approval of the Member and the majority vote of the
full Board of Directors, including, without limitation, the votes of the
Independent Directors, and such additional approvals, if any, as may be required
under each Securitized Financing with regard to amendment of documents or
instruments with respect thereto.
Except as may be specifically required by applicable law, no
member of the Board of Directors shall be guilty of breaching any fiduciary duty
to any Member or any limited partner of ALF LP by refusing to consent to any of
the listed actions in subsections (b) or (c) of this Section 7.3.
(d) In the event of the insolvency of the Company or of ALF LP
and with regard to any action contemplated by subsection (b) or (c) above, no
Independent Director will owe a fiduciary duty to any Person who holds a
Membership Interest or any limited partner of ALF LP (except as may be
specifically required by applicable law), but any fiduciary duty of such
Independent Director with regard to such action shall be owed instead to the
creditors of the Company or ALF LP, as the case may be. No Independent Director
shall serve as a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Company, any Affiliate of the Company, or a substantial
part of its respective property.
Section 7.4 Officers. (a) The Company shall have an officer designated
as the Company's President who shall be appointed from time to time by the
Managing Member. The President shall be the chief operating officer of the
Company. The President of the Company is hereby delegated the power, authority
and responsibility of the day-to-day management, administrative, financial and
implementive acts of the Company's business. The President of the Company shall
have the right and power to bind the Company and to make the final determination
on questions relative to the usual and customary daily business decisions,
affairs and acts of the Company. Other primary management functions of the
Company shall be assigned by the Managing Member.
(b) The Company shall also have officers designated as vice
presidents who shall be appointed from time to time by the Managing Member. The
vice presidents shall have such powers and duties as may from time to time be
assigned to them by the Managing Member or the president. At the request of the
president, or in the case of his absence or disability, the vice president
designated by the president (or in the absence of such designation, the vice
president designated by the Managing Member) shall perform all the duties of the
president and when so acting, shall have all the powers of the president.
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(c) The Managing Member may appoint such other officers as it
may deem advisable from time to time. Each officer of the Company shall hold
office at the pleasure of the Managing Member, and the Managing Member may
remove any officer at any time, with or without cause. If appointed by the
Managing Member, the officers shall have the duties assigned to them by the
Managing Member.
Section 7.5 Indemnification.
(a) General. Except as otherwise provided in this Section 7.5,
the Company shall indemnify the Member and any Director or officer and may
indemnify any employee or agent of the Company who was or is a party or is
threatened to be made a party to a threatened, pending, or completed action,
suit, or proceeding (whether civil, criminal, administrative, or investigative
and whether formal or informal) other than an action by or in the right of the
Company, where such Person is a party because such Person is or was a Member,
Director, officer, employee, or agent of the Company. Except as otherwise
provided in this Section 7.5, the Company shall indemnify its Member and
Directors against expenses, including, attorney fees, judgments, penalties,
fines and amounts paid in settlement actually and reasonably incurred by a
Director in connection with an action, suit or proceeding relating to acts or
omissions of that Director regarding the items set forth in Section 7.3(b) of
this Agreement.
(b) Permissive Indemnification. Except as otherwise provided
in this Section 7.5, the Company shall indemnify such Member, Director or
officer and may indemnify such employee or agent against expenses, including
attorneys fees, judgments, penalties, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with the action,
suit or proceeding. To the fullest extent permitted by law, the Company shall
indemnify such Member, Director or officer and may indemnify such employee or
agent if the Person acted in good faith and did not engage in willful misconduct
or gross negligence. With respect to a criminal action or proceeding, the Person
must have had no reasonable cause to believe such Person's misconduct was
unlawful. Unless ordered by a court, any indemnification permitted under this
Section 7.5(b) shall be made by the Company only as the Company authorizes in
the specific case after (i) determining that the indemnification is proper under
the circumstances because the person to be indemnified has met the applicable
standard of conduct and (ii) evaluating the reasonableness of the expenses and
of the amounts paid in settlement. This determination and evaluation shall be
made by a majority vote of the Members who are not parties or threatened to be
made parties to the action, suit or proceeding or, if there is only one Member,
by that Member. However, no indemnification shall be provided to any Member,
Director, officer, employee, or agent of the Company for or in connection with
(i) the receipt of a financial benefit to which the person is not entitled; (ii)
voting for or assenting to a distribution to Members in violation of this
Agreement or the Act; (iii) a knowing violation of law; or (iv) acts or
omissions of such Person constituting willful misconduct or gross negligence.
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(c) Mandatory Indemnification. To the extent that a Member,
Director, officer, employee, or agent of the Company has been successful on the
merits or otherwise in defense of an action, suit, or proceeding described in
Section 7.5(a) or in defense of any claim, issue, or other matter in such
action, suit or proceeding, such person shall be indemnified against actual and
reasonable expenses, including reasonable attorney fees, incurred by such person
in connection with the action, suit, proceeding and any action, suit or
proceeding brought to enforce such mandatory indemnification.
Section 7.6 Exculpation; Duties.
(a) No Member, Director or officer of the Company shall be
liable to the Company or any other Person who has an interest in the Company for
any loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Member, Director or officer in good faith on behalf of the
Company and in a manner reasonably believed to be within the scope of the
authority conferred on such Member, Director or officer by this Agreement,
except that a Member, Director or officer shall be liable for any such loss,
damage or claim incurred by reason of such Member's, Director's or officer's
willful misconduct or gross negligence.
(b) To the extent that at law or in equity, the Managing
Member or a Director, officer, employee or agent of the Company (each, an
"Indemnified Person") has duties (including fiduciary duties) and liabilities
relating thereto to the Company or to any Member, any such Indemnified Person
acting under this Agreement shall not be liable to the Company or to any Member
for its good faith reliance on the provisions of this Agreement. The provisions
of this Agreement, to the extent that they restrict the duties and liabilities
of an Indemnified Person otherwise existing at law or in equity, are agreed by
the Members to replace such other duties and liabilities of such Indemnified
Person.
(c) Whenever in this Agreement the Managing Member is
permitted or required to make a decision (i) in its "sole discretion", or
"discretion" or under a grant of similar authority or latitude, the Managing
Member shall be entitled to consider only such interests and factors as it
desires, including its own interests, and shall have no duty or obligation to
give any consideration to any interest of or factors affecting the Company or
any other Member, or (ii) in its "good faith" or under another expressed
standard, the Managing Member shall act under such express standard and shall
not be subject to any other or different standards imposed by this Agreement or
any other agreement contemplated herein or by relevant provisions of law or in
equity or otherwise.
ARTICLE VIII
DISSOLUTION, LIQUIDATION AND TERMINATION OF THE COMPANY
Section 8.1 Dissolution. The Company shall be dissolved and its
affairs wound up only upon (i) the written consent of all the Members and, so
long as any Securitized Financing is outstanding, all members of the Board of
Directors, including, without limitation, the Independent Directors and (ii) the
entry of a decree of judicial dissolution under Section 18-802 of the Act. The
Company shall not be dissolved as a result of there no longer being any Members
of the Company if the Company is continued in accordance with Section
18-801(a)(4) of the Act. Notwithstanding anything in this Agreement to the
contrary, the Company shall not be dissolved as long as any Securitized
Financing is outstanding.
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Section 8.2 Liquidation and Termination. On dissolution of the
Company, the Managing Member shall appoint one or more Persons, which appointee
or appointees may include itself, to act as a liquidator. The liquidator shall
proceed diligently to wind up the affairs of the Company and make final
distributions as provided herein and in the Act. The costs of liquidation shall
be borne as a Company expense. Until final distribution, the liquidator shall
continue to operate the Company properties with all of the power and authority
of the Managing Member. A reasonable time shall be allowed for the orderly
liquidation of the assets of the Company and the discharge of liabilities to
creditors so as to enable the liquidator to minimize any losses resulting from
liquidation. The liquidator, as promptly as possible after dissolution and again
after final liquidation, shall cause a proper accounting to be made by a
nationally recognized firm of certified public accountants of the Company's
assets, liabilities, and operations through the last day of the calendar month
in which the dissolution occurs or the final liquidation is completed, as
applicable, and shall apply the proceeds of liquidation as set forth in the
remaining sections of this Article VIII.
Section 8.3 Payment of Debts. The assets shall first be applied to the
satisfaction of the liabilities of the Company (including any loans or advances
that may have been made by Members to the Company and the expenses of
liquidation).
Section 8.4 Remaining Distribution. The remaining assets shall then be
distributed to the Members in accordance with the Members' positive capital
account balances.
Section 8.5 Reserve. Notwithstanding anything to the contrary in
Section 8.4, the liquidator may retain such amount as it deems necessary as a
reserve for any contingent, conditional or unmatured liabilities or obligations
of the Company, which reserve, after the passage of a reasonable period of time
as determined by the liquidator, shall be distributed in accordance with this
Article VIII.
Section 8.6 Final Accounting. Each of the Members shall be furnished
with a statement prepared by the Company's certified public accountants, which
shall set forth the assets and liabilities of the Company as of the date of the
complete liquidation. Upon compliance by the liquidator with the foregoing
distribution plan, the liquidator shall execute and cause to be filed a
Certificate of Cancellation and any and all other documents necessary with
respect to termination and cancellation of the Company under the Act. The
existence of the Company as a separate legal entity shall continue until the
cancellation of its Certificate of Formation.
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ARTICLE IX
AMENDMENTS
Section 9.1 Authority to Amend. Subject to Section 7.3, this Agreement
may only be amended with approval of the Managing Member and the majority vote
of the members of the full Board of Directors and such additional approvals, if
any, as may be required under each Securitized Financing with regard to
amendment of documents or instruments with respect thereto. The Managing Member
shall provide prior written notice of any proposed amendment to each nationally
recognized statistical rating agency then rating any class of security issued in
any Securitized Financing, but only if such rating initially was provided at the
request of the Company, the Partnership or an affiliate thereof.
ARTICLE X
POWER OF ATTORNEY
Section 10.1 Power. Each member irrevocably constitutes and appoints
the Managing Member as his true and lawful attorney in his name, place and stead
to make, execute, swear to, acknowledge, deliver and file:
(a) Any certificates or other instruments which may be
required to be filed by the Company under the laws of the State of Delaware or
of any other state or jurisdiction in which the Managing Member shall deem it
advisable;
(b) Any documents, certificates or other instruments,
including but not limited to, any and all amendments and modifications of this
Agreement or of the instruments described in Subsection 10.1(a) which may be
required or deemed desirable by the Managing Member to effectuate the provisions
of any part of this Agreement, and, by way of extension and not in limitation,
to do all such other things as shall be necessary to continue and to carry on
the business of the Company; and
(c) All documents, certificates or other instruments which may
be required to effectuate the dissolution and termination of the Company, to the
extent such dissolution and termination is authorized hereby. The power of
attorney granted hereby shall not constitute a waiver of, or be used to avoid,
the rights of the Members to approve certain amendments to this Agreement
pursuant to Subsection 9.1 or be used in any other manner inconsistent with the
status of the Company as a limited liability company or inconsistent with the
provisions of this Agreement.
Section 10.2 Survival of Power. It is expressly intended by each
Member that the foregoing power of attorney is coupled with an interest, is
irrevocable and shall survive the death, retirement or adjudication of
incompetency of such Member. The foregoing power of attorney shall survive the
delivery of an assignment by the Member of its entire interest in the Company,
except that where an assignee of such entire interest has become a Substitute
Member, then the foregoing power of attorney of the assignor Member shall
survive the delivery of such assignment for the sole purpose of enabling the
Managing Member to execute, acknowledge and file any and all instruments
necessary to effectuate such substitution.
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ARTICLE XI
SEPARATE LEGAL ENTITY
Section 11.1 Separate Legal Entity. The Company shall not commingle
any of its funds or other assets with the funds or assets of any other entity or
person. The Company shall maintain its financial and accounting books and
records separate from those of any other entity or person. The Company shall pay
from its assets all obligations and indebtedness of any kind incurred by the
Company, and shall not pay from its assets any obligations or indebtedness of
any other entity or person, other than expenses, obligations or indebtedness of
the Origination Trust, any Securitization Trust, any trustee of any of the
foregoing with respect thereto, and any Partnership.
ARTICLE XII
MISCELLANEOUS
Section 12.1 Method of Giving Consent. Any consent of the Member
required by this Agreement may be given by a written consent, given by the
consenting Member and received by the Person soliciting such consent. Any
consent of a member of the Board of Director's required by this Agreement may be
given by a written consent given by the consenting member of the Board of
Directors and received by the Person soliciting such consent.
Section 12.2 Governing Law. This Agreement and the rights and duties
of the Members shall be governed by and construed in accordance with the laws of
the State of Delaware, without regard to principles of conflict of laws.
Section 12.3 Agreement for Further Execution. At any time or times
upon the request of the Managing Member, each Member agrees to sign and swear to
any certificate, any amendment to or cancellation of such certificate,
acknowledge similar certificates or affidavits or certificates of fictitious
firm name or the like (and any amendments or cancellations thereof) required by
the laws of the State of Delaware, or any other jurisdiction in which the
Company does, or proposes to do, business. This Section 12.3 shall not prejudice
or affect the rights of the Members to approve amendments to this Agreement
pursuant to Section 9.1.
Section 12.4 Entire Agreement. This Agreement contains the entire
understanding between the parties and supersedes any prior understandings or
agreements between them respecting the within subject matter. There are no
representations, agreements, arrangements or understandings, oral or written,
between the parties hereto relating to the subject matter of this Agreement
which are not fully expressed.
Section 12.5. Severability. This Agreement is intended to be performed
in accordance with, and only to the extent permitted by, all applicable laws,
ordinances, rules and regulations of the jurisdictions in which the Company does
business. If any provision of this Agreement or the application thereof to any
Person or circumstance shall, for any reason and to any extent, be invalid or
unenforceable, the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected thereby, but
rather shall be enforced to the greatest extent permitted by law.
Section 12.6. Notices. Notices to Members or to the Company shall be
deemed to have been given when personally delivered or mailed, by prepaid
registered or certified mail, addressed as set forth in this Agreement, unless a
notice of change of address has previously been given in writing by the
addressee to the addressor, in which case such notice shall be addressed to the
address set forth in such notice of change of address.
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Section 12.7 Counterparts. This Agreement may be executed in multiple
counterparts, each one of which shall constitute an original executed copy of
this Agreement.
Section 12.8 Pronouns. All pronouns and any variations thereof shall
be deemed to refer to the masculine, feminine, neuter, singular or plural, as
the identity of the person or persons may require.
Section 12.9. Titles and Captions. All titles and captions are for
convenience only, do not form a substantive part of this Agreement, and shall
not restrict or enlarge any substantive provisions of this Agreement.
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IN WITNESS WHEREOF, the parties have hereunto set their hands as of
the day and year first above written.
WORLD OMNI FINANCIAL CORP.
By: /s/ Patrick C. Ossenbeck
----------------------------------
Name:
Title:
AUTO LEASE FINANCE LLC
By: World Omni Financial Corp.,
its sole member
By: /s/ Patrick C. Ossenbeck
----------------------------------
Name: Patrick C. Ossenbeck
Title: Assistant Treasurer
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Exhibit 3.8
ASSIGNMENT OF GENERAL PARTNER INTEREST
AND AMENDMENT TO AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
AUTO LEASE FINANCE L.P.
This Assignment of General Partner Interest and Amendment to
the Amended and Restated Limited Partnership Agreement of Auto Lease Finance
L.P., dated as of September 23, 1998 (this "Assignment and Amendment
Agreement"), is entered into by and among Auto Lease Finance, Inc., a Delaware
corporation, as the initial general partner of the Partnership (as defined
below) (the "Initial General Partner"), Auto Lease Finance LLC, a Delaware
limited liability company, as the new general partner of the Partnership (the
"New General Partner") and World Omni Financial Corp., a Florida corporation, as
the sole limited partner of the Partnership (the "Limited Partner").
W I T N E S S E T H :
WHEREAS, Auto Lease Finance L.P., (the "Partnership") has been
formed as a limited partnership under the Delaware Revised Uniform Limited
Partnership Act (6 Del.C. ss.17-101, et seq.) (the "Act") pursuant to a
Certificate of Limited Partnership of the Partnership, as filed in the office of
the Secretary of State of the State of Delaware (the "Secretary of State") on
June 9, 1994 (the "Certificate"), and a Limited Partnership Agreement of the
Partnership, dated as of June 9, 1994, as such agreement was amended and
restated on July 1, 1994, by the Amended and Restated Agreement of Limited
Partnership of the Partnership (as amended and restated, the "Agreement");
WHEREAS, the Initial General Partner is the sole general
partner of the Partnership and the Limited Partner is the sole limited partner
of the Partnership;
WHEREAS, the Initial General Partner and the Limited Partner
desire to take certain actions required under the Agreement to permit the merger
of the Initial General Partner with and into the New General Partner (the
"Merger"), and to effect the admission of the New General Partner as a successor
general partner of the Partnership, which shall be deemed to occur
contemporaneous with the effectiveness of the Merger;
WHEREAS, the New General Partner desires to be admitted to the
Partnership as a successor general partner of the Partnership, immediately
before the effectiveness of the Merger;
<PAGE>
WHEREAS, immediately after the effectiveness of the Merger,
the New General Partner desires to Transfer a portion of its Partnership
Interest to the Limited Partner such that, following the Transfer, the New
General Partner shall have a .1% interest in the Partnership and the Limited
Partner shall have a 99.9% interest in the Partnership;
WHEREAS, contemporaneous with the effectiveness of the Merger,
the Partnership will no longer be considered an entity classified as a
partnership for federal income tax purposes; and
WHEREAS, the undersigned, being all of the partners of the
Partnership, to accomplish the foregoing, desire to amend the Agreement in the
manner set forth herein.
Unless otherwise defined herein, all capitalized terms used
herein shall have the meanings attributed to them in the Agreement.
NOW, THEREFORE, the undersigned, in consideration of the
premises, covenants and agreements contained herein, do hereby agree as follows:
1. Assignment. Notwithstanding any provision in the Agreement
to the contrary, the Initial General Partner acknowledges that (i) the merger
agreement dated as of the date hereof between the Initial General Partner and
the New General Partner, (ii) the Certificate of Merger of the Initial General
Partner with and into the New General Partner as filed with the Secretary of
State on the date hereof, and (iii) this Assignment and Amendment Agreement,
have been received by it and together constitute written instruments in form
acceptable to it evidencing the Transfer of the Initial General Partner's
Partnership Interest to the New General Partner, as required by clause (i) of
Section 8.02(a) of the Agreement. The parties acknowledge that all approvals
have been obtained for the Transfer of the Initial General Partner's Partnership
Interest to the New General Partner as would be required under each Securitized
Financing for the amendment of documents and agreements with respect thereto, as
required by clause (ii) of Section 8.02(a) of the Agreement.
2. Admission. Notwithstanding any provision in the Agreement
to the contrary, the New General Partner is hereby admitted to the Partnership
as a general partner of the Partnership. The admission shall be effective
contemporaneous with the Merger and upon the filing of an amendment to the
Certificate (in the form attached as Exhibit A hereto) in the office of the
Secretary of State which reflects the fact that the New General Partner is a
general partner of the Partnership, and shall occur, and for all purposes shall
be deemed to have occurred, contemporaneous with the Merger.
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<PAGE>
3. Withdrawal. Notwithstanding any provision in the Agreement
to the contrary, the Initial General Partner hereby withdraws from the
Partnership as a general partner of the Partnership. The withdrawal shall be
effective upon the Merger and upon the filing of an amendment to the Certificate
in the office of the Secretary of State which reflects the fact that the Initial
General Partner is no longer a general partner of the Partnership and shall
occur, and for all purposes shall be deemed to have occurred, contemporaneous
with the admission of the New General Partner to the Partnership as a general
partner of the Partnership.
4. Continuation. The parties hereto agree that following the
withdrawal of the Initial General Partner from the Partnership as a general
partner of the Partnership, the New General Partner is authorized to and hereby
agrees to continue the business of the Partnership without dissolution. In
addition, all references to the "General Partner" in the Agreement shall be
deemed to refer to the New General Partner, all references to the issued and
outstanding shares of common stock of the Initial General Partner shall be
deemed instead to refer to the aggregate membership interests in the New General
Partner and all references to the General Partner being a corporation shall be
deemed instead to refer to a limited liability company and any other term or
provision in the Agreement that is inconsistent with the foregoing is hereby
deemed to be modified accordingly.
5. Amendment Regarding Tax Provisions. The parties hereby
amend the Agreement to delete all of Article Six, Financial Allocations and
Distributions, except for Sections 6.02, 6.07 and 6.08, which are hereby
renumbered to be Sections 6.01, 6.02 and 6.03, respectively. The parties
acknowledge that all approvals have been obtained for this amendment as would be
required under each Securitized Financing for the amendment of documents and
agreements with respect thereto, as required by clause (ii) of Section 8.02(a)
of the Agreement.
6. Transfer of Partnership Interest. Notwithstanding anything
to the contrary contained in the Agreement, the New General Partner and the
Limited Partner hereby agree that the Partnership Interest of the New General
Partner shall for all purposes, be .1% and the Partnership Interest of the
Limited Partner shall for all purposes be 99.9% and that the New General Partner
and the Limited Partner hereby consent to such Transfer of the New General
Partner's Partnership Interest to the Limited Partner as is necessary to
accomplish the foregoing and hereby consent to the amendment of all relevant
provisions of the Agreement so as to reflect the foregoing.
7. Waiver. The Initial General Partner and the Limited Partner
waive the provisions of Section 8.01 of the Agreement that prohibit any of the
foregoing, and acknowledge that such waiver has been approved by each of them
and has been approved as required under each Securitized Financing with regards
to amendment of documents and agreements with respect thereto, as required by
Section 10.10 of the Agreement.
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<PAGE>
8. Books and Records. The general partner of the Partnership
shall take all actions necessary under the Act and the Agreement, including
causing the amendment of the Agreement, to evidence the withdrawal of Initial
General Partner from the Partnership as a general partner of the Partnership and
the admission of the New General Partner to the Partnership as a general partner
of the Partnership.
9. Future Cooperation. Each of the parties hereto agrees to
cooperate at all times from and after the date hereof with respect to all of the
matters described herein, and to execute such further assignments, releases,
assumptions, amendments of the Agreement, notifications and other documents as
may be reasonably requested for the purpose of giving effect to, or evidencing
or giving notice of, the transactions contemplated by this Assignment and
Amendment Agreement.
10. Binding Effect. This Assignment and Amendment Agreement
shall be binding upon, and shall enure to the benefit of, the parties hereto and
their respective successors and assigns.
11. Execution in Counterparts. This Assignment and Amendment
Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same instrument.
12. Agreement in Effect. Except as hereby amended, the
Agreement shall remain in full force and effect.
13. Severability of Provisions. If any one or more of the
covenants, provisions or terms of this Assignment and Amendment Agreement shall
for any reason whatsoever be held invalid, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Assignment and Amendment Agreement and
shall in no way affect the validity or enforceability of other provisions of
this Assignment and Amendment Agreement. To the extent permitted at law, the
parties hereto waive any provision of law that renders any provision of this
Assignment and Amendment Agreement invalid or unenforceable in any respect.
14. Governing Law. This Assignment and Amendment Agreement
shall be governed by, and interpreted in accordance with, the laws of the State
of Delaware, all rights and remedies being governed by such laws.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Amendment Agreement to be duly executed as of the day and year
first above written.
AUTO LEASE FINANCE LLC, as
General Partner
By: /s/ Patrick C. Ossenbeck
------------------------------
Patrick C. Ossenbeck
Assistant Treasurer
WORLD OMNI FINANCIAL CORP., as
Limited Partner
By: /s/ Patrick C. Ossenbeck
------------------------------
Patrick C. Ossenbeck
Assistant Treasurer
AUTO LEASE FINANCE, INC. as
Withdrawing General Partner
By: /s/ Patrick C. Ossenbeck
------------------------------
Patrick C. Ossenbeck
Assistant Treasurer
Exhibit 3.9
- ------------------------------------------------------------------------------
WORLD OMNI LEASE SECURITIZATION L.P.,
PNC BANK, DELAWARE, AS OWNER TRUSTEE
AND
THE BANK OF NEW YORK, AS INDENTURE TRUSTEE
WORLD OMNI 1998-A AUTOMOBILE LEASE SECURITIZATION TRUST
SECURITIZATION TRUST AGREEMENT
--------------------
DATED AS OF OCTOBER 1, 1998
- ------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
RECITALS 1
ARTICLE ONE. DEFINITIONS................................................2
Section 1.01. Definitions................................................2
Section 1.02. Article and Section References............................26
ARTICLE TWO. CREATION OF TRUST.........................................26
Section 2.01. Creation of Trust.........................................26
Section 2.02. Conveyance of the 1998-A SUBI Interest....................26
Section 2.03. Acceptance by Owner Trustee...............................27
ARTICLE THREE. DISTRIBUTIONS; RESERVE FUND; STATEMENTS TO
SECURITYHOLDERS.........................................27
Section 3.01. Distribution Account......................................27
Section 3.02. Collections...............................................27
Section 3.03. Distributions.............................................28
Section 3.04. Reserve Fund..............................................32
Section 3.05. Net Deposits..............................................34
Section 3.06. Statements to Noteholders.................................34
ARTICLE FOUR. THE TRANSFEROR CERTIFICATE................................37
Section 4.01. The Transferor Certificate................................37
Section 4.02. Authentication and Delivery of Transferor Certificate.....37
Section 4.03. No Transfer of Transferor Certificate.....................37
Section 4.04. Mutilated, Destroyed, Lost or Stolen Certificates.........37
Section 4.05. Persons Deemed Owners.....................................38
ARTICLE FIVE. THE TRANSFEROR............................................38
Section 5.01. Representations of Transferor.............................38
Section 5.02. Liability of Transferor; Indemnities......................39
Section 5.03. Merger or Consolidation of, or Assumption of the
Obligations of, Transferor; Certain Limitations.........39
Section 5.04. Limitation on Liability of Transferor and Others..........41
Section 5.05. Transferor May Own Notes..................................41
Section 5.06. No Transfer...............................................41
Section 5.07. Tax Matters Partner.......................................41
ARTICLE SIX. THE OWNER TRUSTEE.........................................41
Section 6.01. Duties of Owner Trustee...................................41
Section 6.02. Certain Matters Affecting the Owner Trustee...............42
Section 6.03. Owner Trustee Not Liable for Notes, Transferor
Certificate or Leases...................................43
Section 6.04. Owner Trustee May Own Notes...............................43
Section 6.05. Owner Trustee's Fees and Expenses.........................44
Section 6.06. Eligibility Requirements for Owner Trustee................44
Section 6.07. Resignation or Removal of Owner Trustee...................44
Section 6.08. Successor Owner Trustee...................................45
Section 6.09. Merger or Consolidation of Owner Trustee..................45
Section 6.10. Appointment of Co-Trustee or Separate Owner Trustee.......45
Section 6.11. Representations and Warranties of Owner Trustee...........46
Section 6.12. Tax Returns...............................................47
Section 6.13. Owner Trustee May Enforce Claims Without Possession of
Transferor Certificate..................................47
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Section 6.14. Suit for Enforcement......................................47
Section 6.15. Rights of Indenture Trustee to Direct Owner Trustee.......47
Section 6.16. No Petition...............................................48
Section 6.17. Authority to Execute......................................48
Section 6.18. Management of the Trust...................................48
ARTICLE SEVEN. TERMINATION...............................................48
Section 7.01. Termination of the Trust..................................48
Section 7.02. Optional Purchase of the 1998-A SUBI Interest.............49
ARTICLE EIGHT. EARLY AMORTIZATION EVENTS.................................49
Section 8.01. Early Amortization Events.................................49
ARTICLE NINE. MISCELLANEOUS PROVISIONS..................................51
Section 9.01. Amendment.................................................51
Section 9.02. Protection of Title to Trust..............................53
Section 9.03. Limitation on Rights of Transferor........................53
Section 9.04. Governing Law.............................................54
Section 9.05. Notices...................................................54
Section 9.06. Severability of Provisions................................54
Section 9.07. Assignment................................................54
Section 9.08. Transferor Certificate Nonassessable and Fully Paid.......54
Section 9.09. Successors and Assigns....................................55
ARTICLE TEN. AGENT FOR SERVICE.........................................55
Section 10.01. Agent for Service of Transferor...........................55
Section 10.02. Agent of Owner Trustee....................................55
EXHIBITS:
Exhibit A - Form of Transferor Certificate...................A-1
Exhibit B - Form of Certificate of Trust.....................B-1
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SECURITIZATION TRUST AGREEMENT
THIS SECURITIZATION TRUST AGREEMENT, dated as of October 1, 1998, is
made with respect to the formation of the WORLD OMNI 1998-A AUTOMOBILE LEASE
SECURITIZATION TRUST (the "Trust"), among WORLD OMNI LEASE SECURITIZATION
L.P., a Delaware limited partnership ("WOLS LP" or, in its capacity as
transferor hereunder, the "Transferor"), PNC BANK, DELAWARE, a Delaware
banking corporation, as owner trustee (the "Owner Trustee"), and THE BANK OF
NEW YORK, a national banking association, as indenture trustee (the "Indenture
Trustee").
RECITALS
A. Auto Lease Finance L.P., a Delaware limited partnership ("ALF
LP"), VT Inc., an Alabama corporation (the "Origination Trustee"), and, for
certain limited purposes set forth therein, U.S. Bank National Association, a
national banking association (formerly known as First Bank National
Association and successor trustee to Bank of America Illinois, an Illinois
banking corporation) (together with its successors, "U.S. Bank"), have entered
into that certain Second Amended and Restated Trust Agreement dated as of July
1, 1994, as amended by that certain Amendment No. 1 to Second Amended and
Restated Trust Agreement dated as of November 1, 1994 and that certain
Amendment No. 2 to Second Amended and Restated Trust Agreement dated as of
September 23, 1998 (as the same may be further amended, supplemented or
modified, the "Origination Trust Agreement"), amending and restating that
certain original Trust Agreement dated as of November 1, 1993 among Auto Lease
Finance, Inc. ("ALFI"), the Origination Trustee and U.S. Bank, and that
certain Amended and Restated Trust Agreement dated as of June 1, 1994 among
ALFI, ALF LP, the Origination Trustee and U.S. Bank, pursuant to which ALF LP
and the Origination Trustee formed World Omni LT, an Alabama trust (the
"Origination Trust"), for the purpose of taking assignments and conveyances
of, holding in trust and dealing in various Trust Assets (as defined in the
Origination Trust Agreement) in accordance with the Origination Trust
Agreement. ALFI and World Omni Financial Corp., a Florida corporation
("WOFCO"), ALFI's parent, have entered into that certain Limited Partnership
Agreement dated as of June 1, 1994, as amended and restated pursuant to that
certain Amended and Restated Limited Partnership Agreement dated as of July 1,
1994, pursuant to which ALF LP was formed and ALFI contributed to ALF LP all
of its right, title and interest in and to the Origination Trust.
B. On September 23, 1998, ALFI was merged with and into Auto Lease
Finance, LLC ("ALF LLC"), a Delaware single member limited liability company
the sole member of which is WOFCO, pursuant to that certain Assignment of
General Partnership Interest and Amendment to Amended and Restated Limited
Partnership Agreement of Auto Lease Finance L.P. dated as of September 23,
1998 among WOFCO, ALFI and ALF LLC and that certain Certificate of Merger
dated September 23, 1998 filed by WOFCO with the Secretary of State for the
State of Delaware whereby ALF LLC succeeded to all of the rights and
obligations of ALFI, including but not limited to those as general partner of
ALF LP, as reflected in the Amended and Restated Certificate of Limited
Partnership of ALF LP filed with the Delaware Secretary of State as of
September 23, 1998.
C. The Origination Trustee, on behalf of the Origination Trust, and
WOFCO (in its capacity as servicer, the "Servicer") also have entered into
that certain Second Amended and Restated Servicing Agreement dated as of July
1, 1994, as amended by that certain Amendment No. 1 to Second Amended and
Restated Servicing Agreement dated as of September 23, 1998 (as the same may
be further amended, supplemented or modified, the "Servicing Agreement"),
amending and restating that certain original Servicing Agreement dated as of
November 1, 1993, and that certain Amended and Restated Servicing Agreement
dated as of June 1, 1994, which provides for, among other things, the
servicing of the Trust Assets by the Servicer.
D. Concurrently herewith, and as contemplated by the terms of the
Origination Trust Agreement, ALF LP, the Origination Trustee, U.S. Bank and
WOLS LP have entered into a Supplement
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1998-A to Trust Agreement dated as of October 1, 1998 (the "1998-A SUBI
Supplement") pursuant to which the Origination Trustee, on behalf of the
Origination Trust and at the direction of ALF LP, will create and issue to ALF
LP a special unit of beneficial interest in the Origination Trust, or "SUBI"
(as defined in the Origination Trust Agreement) (such SUBI, the "1998-A
SUBI"), whose beneficiaries generally will be entitled to the net cash flow
arising from, but only from, the related SUBI Portfolio (as defined in the
Origination Trust Agreement) (such SUBI Portfolio, the "1998-A SUBI
Portfolio"), which 1998-A SUBI will be evidenced by a SUBI Certificate (as
defined in the Origination Trust Agreement) representing a 100% beneficial
interest in the 1998-A SUBI (the "1998-A SUBI Certificate"), all as set forth
in the Origination Trust Agreement and the 1998-A SUBI Supplement.
E. Also concurrently herewith, and as contemplated by the terms of
the Servicing Agreement, the Origination Trustee, on behalf of the Origination
Trust, and the Servicer also have entered into a Supplement 1998-A to
Servicing Agreement dated as of October 1, 1998 (the "1998-A Servicing
Supplement"), pursuant to which the terms of the Servicing Agreement will be
supplemented insofar as they apply to the 1998-A SUBI Portfolio, providing for
further specific servicing obligations that will benefit the holder of the
1998-A SUBI Certificate and the parties to the Securitized Financing (as
defined in the Origination Trust Agreement) contemplated by this Agreement.
F. Also concurrently herewith, ALF LP and the Transferor have entered
into that certain SUBI Certificate Purchase and Sale Agreement dated as of
October 1, 1998 (the "SUBI Certificate Agreement"), pursuant to which ALF LP
sold to the Transferor, without recourse, all of ALF LP's right, title and
interest in and to the 1998-A SUBI and the 1998-A SUBI Certificate, all monies
due thereon and paid thereon in respect thereof and the right to realize on
any property that may be deemed to secure the 1998-A SUBI, and all proceeds
thereof, all in consideration of the cash payment to ALF LP of an amount equal
to the Aggregate Net Investment Value (as defined below) of the 1998-A SUBI
Portfolio as of the Initial Cutoff Date (as defined in the 1998-A SUBI
Supplement).
G. The parties desire to enter into this Agreement to create the
Trust.
H. Also concurrently herewith, the Indenture Trustee and the Owner
Trustee are entering into that certain Indenture dated as of October 1, 1998
(the "Indenture") pursuant to which, among other things, the Trust will issue
the Notes (as defined in the Indenture) and the Trust will grant a security
interest to the Indenture Trustee with respect to all of the Trust Estate (as
defined herein).
I. The parties hereto desire, pursuant to this Agreement, to provide
for the issuance by the Trust of the Transferor Certificate (as defined
herein) and to provide for the exchange of the Transferor Certificate and the
Notes for the 1998-A SUBI Certificate in connection with a Securitized
Financing (as defined in the Origination Trust Agreement) by the Transferor.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE ONE. DEFINITIONS.
Section 1.01. Definitions.
For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires, (a) unless otherwise
defined herein, all capitalized terms used herein shall have the meanings
attributed to them by Section 0.01 of the Origination Trust Agreement, by
Section 10.01 of the 1998-A SUBI Supplement or Section 6.01 of the 1998-A
Servicing Supplement, as applicable, (b) the capitalized terms defined in this
Agreement have the meanings assigned to them in this Agreement and include (i)
all genders and (ii) the plural as well as the singular, (c) all references to
words such as "herein", "hereof" and the like shall refer to this Agreement as
a whole and not to any particular article
2
<PAGE>
or section within this Agreement, (d) the term "include" and all variations
thereon shall mean "include without limitation" and (e) the term "or" shall
include "and/or".
"Accelerated Principal Distribution Amount" has the meaning set forth
in Section 3.03(c)(ii).
"Additional Loss Lease" means a 1998-A Lease that has been sold or
otherwise disposed of to pay an Additional Loss Amount.
"Administrative Expense" means any reasonable administrative cost or
expense associated with the Indenture, the Notes, the Trust or the Origination
Trust, including reasonable fees and expenses of attorneys and accountants.
"Advance" means those advances required or permitted to be made by
the Servicer pursuant to Section 9.04 of the 1998-A Servicing Supplement.
"Aggregate Net Investment Value" means, as of any day, the sum of (i)
the aggregate of the Discounted Principal Balances of all 1998-A Leases at
such date, each such Discounted Principal Balance being derived from the
Schedule of Leases and Leased Vehicles as in effect on such date; provided
that as of the last day of any Collection Period, there shall be eliminated
from the Schedule of Leases and Leased Vehicles for the purpose of this
definition (including, without limitation, the determination at any subsequent
time of the Aggregate Net Investment Value as of the last day of any
Collection Period) each 1998-A Lease that became a Charged-off, Liquidated,
Matured or Additional Loss Lease before the end of such Collection Period,
(ii) the aggregate of the Booked Residual Values of those Leased Vehicles that
have been added to Matured Leased Vehicle Inventory within the three
immediately preceding Collection Periods but have not been sold or otherwise
disposed of as of the last day of the most recent Collection Period for no
more than two full Collection Periods, each such Booked Residual Value being
derived from the Schedule of Leases and Leased Vehicles as in effect on such
date, and (iii) prior to the last Transfer Date, the aggregate amount of
Principal Collections (and amounts treated as Principal Collections pursuant
to the last sentence of Section 3.03(b)) that have not been reinvested in
additional 1998-A Leases and 1998-A Leased Vehicles pursuant to Section 11.02
of the 1998-A SUBI Supplement.
"Aggregate Net Losses" means, with respect to a Collection Period, an
amount equal to the aggregate Discounted Principal Balances of all 1998-A
Leases that became Charged-off Leases during such Collection Period minus all
Net Repossessed Vehicle Proceeds and other Net Liquidation Proceeds collected
during such Collection Period with respect to Charged-off Leases.
"Agreement" means this Securitization Trust Agreement and all
amendments hereof and supplements hereto.
"ALFI" means Auto Lease Finance, Inc. and its successors.
"ALF LLC" means Auto Lease Finance LLC, a Delaware single member
limited liability company, the general partner of ALF LP.
"ALF LP" has the meaning set forth in Recital A.
"Alternate Reserve Fund Formula" means that formula pursuant to which
the Reserve Fund Cash Requirement is to be calculated if any Reserve Fund Test
is not satisfied as of any Distribution Date. Pursuant to the Alternate
Reserve Fund Formula, the Reserve Fund Cash Requirement shall equal two times
the Base Reserve Fund Formula, but which amount shall in no event be greater
than the Note Balance on such Distribution Date (after giving effect to
reductions in the Note Balance on such Distribution Date).
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"Amortization Date" means December 1, 1999.
"Amortization Period" means the period beginning with the day
immediately succeeding the last day of the Revolving Period and ending on the
day the Notes have been paid in full and all unpaid Class A-1 Note Principal
Loss Amounts, Class A-2 Note Principal Loss Amounts, Class A-3 Note Principal
Loss Amounts, Class A-4 Note Principal Loss Amounts, Class B Note Principal
Loss Amounts and unpaid Class B Note Principal Carryover Shortfalls have been
paid in full, in each case with accrued interest thereon, or the Trust
otherwise terminates.
"Authorized Newspaper" means a newspaper of general circulation in
the Borough of Manhattan, The City of New York, printed in the English
language and customarily published on each Business Day, whether or not
published on Saturdays, Sundays and holidays.
"Base Reserve Fund Formula" means that formula pursuant to which the
Reserve Fund Cash Requirement is to be calculated if all Reserve Fund Tests
are satisfied as of any Distribution Date. Pursuant to the Base Reserve Fund
Formula the Reserve Fund Cash Requirement with respect to any Distribution
Date will equal the lesser of (i) the amount of the Reserve Fund Initial
Deposit and (ii) the Note Balance as of the related Distribution Date (after
giving effect to reductions in the Note Balance on such Distribution Date).
"Book-Entry Notes" means a beneficial interest in the Class A Notes,
ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 2.10 of the Indenture.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions in New York, New York, Chicago, Illinois,
Wilmington, Delaware, Deerfield Beach, Florida, or Mobile, Alabama are
authorized or obligated by law, executive order or governmental decree to be
closed.
"Business Trust Statute" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code Section 3801 et seq.
"Capped Indenture Trustee Administrative Expenses" means, with
respect to any Distribution Date, the compensation of the Indenture Trustee
pursuant to Section 6.07 of the Indenture and those other Administrative
Expenses with respect to the Indenture and the Notes, including those due
under Section 6.07 of the Indenture that, together with all such
Administrative Expenses paid since the beginning of the calendar year in which
such Distribution Date occurs, do not exceed $50,000 (or $100,000 in any year
in which an Indenture Event of Default occurs and the Indenture Trustee sells
the property of the Trust pursuant to Section 5.17 of the Indenture).
"Capped Owner Trustee Administrative Expenses" means, with respect to
any Distribution Date, the compensation of the Owner Trustee pursuant to
Section 6.05 and those other Administrative Expenses with respect to the
Trust, including those due under Section 6.05, as are due on such Distribution
Date that, together with all such Administrative Expenses paid since the
beginning of the calendar year in which such Distribution Date occurs, do not
exceed $5,000.
"Certificate" means the Transferor Certificate.
"Certificateholder" means the Transferor.
"Certificate of Trust" means the Certificate of Trust in the form of
Exhibit B filed for the Trust pursuant to the Business Trust Statute.
4
<PAGE>
"Charged-off Amount" means, as of any Distribution Date, an amount
equal to the sum of the Discounted Principal Balances, as of the end of the
related Collection Period, of any Charged-off Leases that became Charged-off
Leases during that related Collection Period.
"Charge-off Rate" means, with respect to any Collection Period, a
percentage equivalent to a fraction, the numerator of which is the product of
(a) 12 and (b) the Aggregate Net Losses with respect to such Collection
Period, and the denominator of which is the quotient of (a) the Aggregate Net
Investment Value as of the last day of such Collection Period plus the
Aggregate Net Investment Value as of the last day of the immediately preceding
Collection Period, divided by (b) 2.
"Charge-off Rate Test" means that determination, made on each
Determination Date, of the average of the Charge-off Rates for the immediately
preceding three Collection Periods (or the November 1998 Collection Period, in
the case of the December 1998 Determination Date, or the November and December
1998 Collection Periods, in the case of the January 1999 Determination Date).
The Charge-off Rate Test will be satisfied if such average is 2.75% or less.
"Class" means all Securities whose form is identical except for
variation in denomination, principal amount or owner.
"Class A Interest Rate Swap Agreement" means that certain interest
rate swap agreement dated as of November [ ], 1998 by and between the Trust
and the Class A Swap Counterparty.
"Class A Net Swap Payment" shall mean, to the extent the following
calculation is positive, an amount equal to (i) one twelfth of the product of
(A) the Class A Notional Amount and (B) the Class A Swap Rate minus (ii) the
product of (A) a fraction, the numerator of which is the actual number of days
from and including the prior Distribution Date to but excluding the related
Distribution Date (or, with respect to the first Deposit Date, the actual
number of days from the date of issuance of the Class A Notes to but excluding
the first Distribution Date) and the denominator of which is 360, (B) the
Class A Notional Amount and (C) One-Month LIBOR with respect to the related
Distribution Date. If the result of the above calculation is either zero or a
negative number, then for purposes of this Agreement, the Class A Net Swap
Payment shall be deemed to be zero.
"Class A Net Swap Receipt" shall mean, to the extent the following
calculation is positive, an amount equal to (i) the product of (A) a fraction,
the numerator of which is the actual number of days from and including the
prior Distribution Date to but excluding the related Distribution Date (or,
with respect to the first Deposit Date, the actual number of days from the
date of issuance of the Class A Notes to but excluding the first Distribution
Date) and the denominator of which is 360, (B) the Class A Notional Amount and
(C) One-Month LIBOR with respect to the related Distribution Date minus (ii)
one twelfth of the product of (A) the Class A Notional Amount and (B) the
Class A Swap Rate. If the result of the above calculation is either zero or a
negative number, then for purposes of this Agreement, the Aggregate Class A
Net Swap Receipt shall be deemed to be zero.
"Class A Notes" means the Class A-1 Notes, the Class A-2 Notes, the
Class A-3 Notes and the Class A-4 Notes.
"Class A Note Balance" means the sum of the Class A-1 Note Balance,
the Class A-2 Note Balance, Class A-3 Note Balance and the Class A-4 Note
Balance.
"Class A Noteholder" means any Holder of a Class A-1 Note, Class A-2
Note, Class A-3 Note or Class A-4 Note.
"Class A Notional Amount" means the sum of the Class A-1 Notional
Amount, the Class A-2 Notional Amount, the Class A-3 Notional Amount and the
Class A-4 Notional Amount.
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"Class A Percentage" means the Class A Note Balance immediately after
the Class A-3 Notes have been paid in full as a percentage of the Note Balance
at such time.
"Class A Swap Counterparty" shall mean Merril Lynch Derivative
Products AG, a Swiss share company.
"Class A Swap Rate" means [___] %, or, with respect to the first
Deposit Date, [___] %.
"Class A-1 Additional Loss Amount" means, as of any Distribution
Date, an amount equal to the product of (i) the Class A-1 Allocation
Percentage, (ii) the Investor Percentage with respect to Loss Amounts for the
related Collection Period and (iii) the Additional Loss Amount incurred in
respect of such Collection Period.
"Class A-1 Allocation Percentage" means, as of any Distribution Date,
the Class A-1 Note Balance as of the last day of the related Collection Period
as a percentage of the Note Balance as of such last day.
"Class A-1 Charged-off Amount" means, as of any Distribution Date, an
amount equal to the product of (i) the Class A-1 Allocation Percentage, (ii)
the Investor Percentage with respect to Loss Amounts for the related
Collection Period and (iii) the Charged-off Amount incurred in respect of such
Collection Period.
"Class A-1 Distributable Amount" means, with respect to any
Distribution Date, the sum of the Class A-1 Principal Distributable Amount and
the Class A-1 Interest Distributable Amount.
"Class A-1 Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess, if any, of (i) the Class A-1 Interest
Distributable Amount for such Distribution Date plus any outstanding Class A-1
Interest Carryover Shortfall from the immediately preceding Distribution Date
plus interest on such outstanding Class A-1 Interest Carryover Shortfall, to
the extent permitted by law, at the Class A-1 Note Rate from such immediately
preceding Distribution Date to but not including the current Distribution
Date, over (ii) the amount of interest distributed to Class A-1 Noteholders on
such current Distribution Date.
"Class A-1 Interest Distributable Amount" means, with respect to any
Distribution Date, the product of (i) the Class A-1 Note Rate and (ii) the
Class A-1 Note Balance as of the immediately preceding Distribution Date
(after giving effect to changes in the Class A-1 Note Balance made on such
immediately preceding Distribution Date) or, in the case of the first
Distribution Date, the Initial Class A-1 Note Balance.
"Class A-1 Loss Amount" means, with respect to any Distribution Date,
the product of (a) the Class A-1 Allocation Percentage, (b) the Investor
Percentage with regard to Loss Amounts for the related Collection Period, and
(c) the Loss Amount for the related Collection Period.
"Class A-1 Note" means one of the Notes executed by the Owner Trustee
on behalf of the Trust and authenticated by the Indenture Trustee in
substantially the form set forth in Exhibit A to the Indenture.
"Class A-1 Note Balance" shall initially equal the Initial Class A-1
Note Balance and, on any date, shall equal the Initial Class A-1 Note Balance,
reduced by the sum of (i) all amounts distributed to Class A-1 Noteholders and
allocable to principal on or prior to such date and (ii) the amount, if any,
by which (a) the aggregate of all Class A-1 Note Principal Loss Amounts on or
prior to such date exceeds (b) the aggregate of all Class A-1 Note Principal
Loss Amounts reimbursed on or prior to such date.
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"Class A-1 Note Factor" means, with respect to any Distribution Date,
a seven-digit decimal figure equal to the Class A-1 Note Balance as of the
close of business on such Distribution Date (after giving effect to all
changes in the Class A-1 Note Balance made on that date) divided by the
Initial Class A-1 Note Balance.
"Class A-1 Noteholder" means any Holder of a Class A-1 Note.
"Class A-1 Note Principal Loss Amount" means, with respect to any
Distribution Date, the amount, if any, by which (i) the sum of the Class A-1
Loss Amount for the related Collection Period and any previously unreimbursed
Class A-1 Note Principal Loss Amount exceeds (ii) the amount available to be
distributed in respect of the Class A-1 Notes pursuant to Section 3.03(b)(vii)
or (b)(viii) on such Distribution Date.
"Class A-1 Note Principal Loss Interest Amount" means, with respect
to any Distribution Date, the aggregate amount of accrued and unpaid interest
(at the Class A-1 Note Rate) on the aggregate amount of unreimbursed Class A-1
Note Principal Loss Amounts.
"Class A-1 Note Rate" means One-Month LIBOR plus [___] % calculated
on the basis of the actual number of days from and including the prior
Distribution Date (or in the case of the initial Distribution Date, the
Closing Date) to but excluding the related Distribution Date and a 360-day
year.
"Class A-1 Notional Amount" shall mean, as determined on each Deposit
Date, the Class A-1 Note Balance as of close of business on the preceding
Distribution Date, provided, however, with respect to the first Deposit Date,
the applicable Class A-1 Notional Amount will be equal to the related Initial
Class A-1 Note Balance.
"Class A-1 Principal Distributable Amount" means, with respect to any
Distribution Date related to a Collection Period in the Amortization Period,
the amount (if any) that is distributable to the Class A-1 Noteholders
pursuant to Section 3.03(d).
"Class A-1 Residual Value Loss Amount" means, as of any Distribution
Date, an amount equal to the product of (i) the Class A-1 Allocation
Percentage, (ii) the Investor Percentage with respect to Loss Amounts for the
related Collection Period and (iii) the Residual Value Loss Amount incurred in
respect of such Collection Period.
"Class A-2 Additional Loss Amount" means, as of any Distribution
Date, an amount equal to the product of (i) the Class A-2 Allocation
Percentage, (ii) the Investor Percentage with respect to Loss Amounts for the
related Collection Period and (iii) the Additional Loss Amount incurred in
respect of such Collection Period.
"Class A-2 Allocation Percentage" means, as of any Distribution Date,
the Class A-2 Note Balance as of the last day of the related Collection Period
as a percentage of the then Note Balance as of such last day.
"Class A-2 Charged-off Amount" means, as of any Distribution Date, an
amount equal to the product of (i) the Class A-2 Allocation Percentage, (ii)
the Investor Percentage with respect to Loss Amounts for the related
Collection Period and (iii) the Charged-off Amount incurred in respect of such
Collection Period.
"Class A-2 Distributable Amount" means, with respect to any
Distribution Date, the sum of the Class A-2 Principal Distributable Amount and
the Class A-2 Interest Distributable Amount.
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"Class A-2 Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess, if any, of (i) the Class A-2 Interest
Distributable Amount for such Distribution Date plus any outstanding Class A-2
Interest Carryover Shortfall from the immediately preceding Distribution Date
plus interest on such outstanding Class A-2 Interest Carryover Shortfall, to
the extent permitted by law, at the Class A-2 Note Rate from such immediately
preceding Distribution Date to but not including the current Distribution
Date, over (ii) the amount of interest distributed to Class A-2 Noteholders on
such current Distribution Date.
"Class A-2 Interest Distributable Amount" means, with respect to any
Distribution Date, the product of (i) the Class A-2 Note Rate and (ii) the
Class A-2 Note Balance as of the immediately preceding Distribution Date
(after giving effect to changes in the Class A-2 Note Balance made on such
immediately preceding Distribution Date) or, in the case of the first
Distribution Date, the Initial Class A-2 Note Balance.
"Class A-2 Loss Amount" means, with respect to any Distribution Date,
the product of (a) the Class A-2 Allocation Percentage, (b) the Investor
Percentage with regard to Loss Amounts for the related Collection Period, and
(c) the Loss Amount for the related Collection Period.
"Class A-2 Note" means one of the Notes executed by the Owner Trustee
on behalf of the Trust and authenticated by the Indenture Trustee in
substantially the form set forth in Exhibit B to the Indenture.
"Class A-2 Note Balance" shall initially equal the Initial Class A-2
Note Balance and, on any date, shall equal the Initial Class A-2 Note Balance,
reduced by the sum of (i) all amounts distributed to Class A-2 Noteholders and
allocable to principal on or prior to such date and (ii) the amount, if any,
by which (a) the aggregate of all Class A-2 Note Principal Loss Amounts on or
prior to such date exceeds (b) the aggregate of all Class A-2 Note Principal
Loss Amounts reimbursed on or prior to such date.
"Class A-2 Note Factor" means, with respect to any Distribution Date,
a seven-digit decimal figure equal to the Class A-2 Note Balance as of the
close of business on such Distribution Date (after giving effect to all
changes in the Class A-2 Note Balance made on that date) divided by the
Initial Class A-2 Note Balance.
"Class A-2 Noteholder" means any Holder of a Class A-2 Note.
"Class A-2 Note Principal Loss Amount" means, with respect to any
Distribution Date, the amount, if any, by which (i) the sum of the Class A-2
Loss Amount for the related Collection Period and any previously unreimbursed
Class A-2 Note Principal Loss Amount exceeds (ii) the amount available to be
distributed in respect of the Class A-2 Notes pursuant to Section 3.03(b)(vii)
or (b)(viii) on such Distribution Date.
"Class A-2 Note Principal Loss Interest Amount" means, with respect
to any Distribution Date, the aggregate amount of accrued and unpaid interest
(at the Class A-2 Note Rate) on the aggregate amount of unreimbursed Class A-2
Note Principal Loss Amounts.
"Class A-2 Note Rate" means One-Month LIBOR plus [___] % calculated
on the basis of the actual number of days from and including the prior
Distribution Date (or in the case of the initial Distribution Date, the
Closing Date) to but excluding the related Distribution Date and a 360-day
year.
"Class A-2 Notional Amount" shall mean, as determined on each Deposit
Date, the Class A-2 Note Balance as of close of business on the preceding
Distribution Date, provided, however, with respect to the first Deposit Date,
the applicable Class A-2 Notional Amount will be equal to the related Initial
Class A-2 Note Balance.
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<PAGE>
"Class A-2 Principal Distributable Amount" means, with respect to any
Distribution Date related to a Collection Period in the Amortization Period,
the amount (if any) that is distributable to the Class A-2 Noteholders
pursuant to Section 3.03(d).
"Class A-2 Residual Value Loss Amount" means, as of any Distribution
Date, an amount equal to the product of (i) the Class A-2 Allocation
Percentage, (ii) the Investor Percentage with respect to Loss Amounts for the
related Collection Period and (iii) the Residual Value Loss Amount incurred in
respect of such Collection Period.
"Class A-3 Additional Loss Amount" means, as of any Distribution
Date, an amount equal to the product of (i) the Class A-3 Allocation
Percentage, (ii) the Investor Percentage with respect to Loss Amounts for the
related Collection Period and (iii) the portion of the Additional Loss Amount
incurred in respect of such Collection Period.
"Class A-3 Allocation Percentage" means, as of any Distribution Date,
the Class A-3 Note Balance as of the last day of the related Collection Period
as a percentage of the then Note Balance as of such last day.
"Class A-3 Charged-off Amount" means, as of any Distribution Date, an
amount equal to the product of (i) the Class A-3 Allocation Percentage, (ii)
the Investor Percentage with respect to Loss Amounts for the related
Collection Period and (iii) the Charged-off Amount incurred in respect of such
Collection Period.
"Class A-3 Distributable Amount" means, with respect to any
Distribution Date, the sum of the Class A-3 Principal Distributable Amount and
the Class A-3 Interest Distributable Amount.
"Class A-3 Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess, if any, of (i) the Class A-3 Interest
Distributable Amount for such Distribution Date plus any outstanding Class A-3
Interest Carryover Shortfall from the immediately preceding Distribution Date
plus interest on such outstanding Class A-3 Interest Carryover Shortfall, to
the extent permitted by law, at the Class A-3 Note Rate from such immediately
preceding Distribution Date to but not including the current Distribution
Date, over (ii) the amount of interest distributed to Class A-3 Noteholders on
such current Distribution Date.
"Class A-3 Interest Distributable Amount" means, with respect to any
Distribution Date, the product of (i) the Class A-3 Note Rate and (ii) the
Class A-3 Note Balance as of the immediately preceding Distribution Date
(after giving effect to changes in the Class A-3 Note Balance made on such
immediately preceding Distribution Date) or, in the case of the first
Distribution Date, the Initial Class A-3 Note Balance.
"Class A-3 Loss Amount" means, with respect to any Distribution Date,
the product of (a) the Class A-3 Allocation Percentage, (b) the Investor
Percentage with regard to Loss Amounts for the related Collection Period, and
(c) the Loss Amount for the related Collection Period.
"Class A-3 Note" means one of the Notes executed by the Owner Trustee
on behalf of the Trust and authenticated by the Indenture Trustee in
substantially the form set forth in Exhibit C to the Indenture.
"Class A-3 Note Balance" shall initially equal the Initial Class A-3
Note Balance and, on any date, shall equal the Initial Class A-3 Note Balance,
reduced by the sum of (i) all amounts distributed to Class A-3 Noteholders and
allocable to principal on or prior to such date and (ii) the amount, if any,
by which (a) the aggregate of all Class A-3 Note Principal Loss Amounts on or
prior to such date exceeds (b) the aggregate of all Class A-3 Note Principal
Loss Amounts reimbursed on or prior to such date.
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<PAGE>
"Class A-3 Note Factor" means, with respect to any Distribution Date,
a seven-digit decimal figure equal to the Class A-3 Note Balance as of the
close of business on such Distribution Date (after giving effect to all
changes in the Class A-3 Note Balance made on that date) divided by the
Initial Class A-3 Note Balance.
"Class A-3 Noteholder" means any Holder of a Class A-3 Note.
"Class A-3 Note Principal Loss Amount" means, with respect to any
Distribution Date, the amount, if any, by which (i) the sum of the Class A-3
Loss Amount for the related Collection Period and any previously unreimbursed
Class A-3 Note Principal Loss Amount exceeds (ii) the amount available to be
distributed in respect of the Class A-3 Notes pursuant to Section 3.03(b)(vii)
or (b)(viii) on such Distribution Date.
"Class A-3 Note Principal Loss Interest Amount" means, with respect
to any Distribution Date, the aggregate amount of accrued and unpaid interest
(at the Class A-3 Note Rate) on the aggregate amount of unreimbursed Class A-3
Note Principal Loss Amounts.
"Class A-3 Note Rate" means One-Month LIBOR plus [___] % calculated
on the basis of the actual number of days from and including the prior
Distribution Date (or in the case of the initial Distribution Date, the
Closing Date) to but excluding the related Distribution Date and a 360-day
year.
"Class A-3 Notional Amount" shall mean, as determined on each Deposit
Date, the Class A-3 Note Balance as of close of business on the preceding
Distribution Date, provided, however, with respect to the first Deposit Date,
the applicable Class A-3 Notional Amount will be equal to the related Initial
Class A-3 Note Balance.
"Class A-3 Principal Distributable Amount" means, with respect to any
Distribution Date related to a Collection Period in the Amortization Period,
the amount (if any) that is distributable to the Class A-3 Noteholders
pursuant to Section 3.03(d).
"Class A-3 Residual Value Loss Amount" means, as of any Distribution
Date, an amount equal to the product of (i) the Class A-3 Allocation
Percentage, (ii) the Investor Percentage with respect to Loss Amounts for the
related Collection Period and (iii) the Residual Value Loss Amount incurred in
respect of such Collection Period.
"Class A-4 Additional Loss Amount" means, as of any Distribution
Date, an amount equal to the product of (i) the Class A-4 Allocation
Percentage, (ii) the Investor Percentage with respect to Loss Amounts for the
related Collection Period and (iii) the Additional Loss Amount incurred in
respect of such Collection Period.
"Class A-4 Allocation Percentage" means, as of any Distribution Date,
the Class A-4 Note Balance as of the last day of the related Collection Period
as a percentage of the then Note Balance as of such last day.
"Class A-4 Charged-off Amount" means, as of any Distribution Date, an
amount equal to the product of (i) the Class A-4 Allocation Percentage, (ii)
the Investor Percentage with respect to Loss Amounts for the related
Collection Period and (iii) the Charged-off Amount incurred in respect of such
Collection Period.
"Class A-4 Distributable Amount" means, with respect to any
Distribution Date, the sum of the Class A-4 Principal Distributable Amount and
the Class A-4 Interest Distributable Amount.
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<PAGE>
"Class A-4 Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess, if any, of (i) the Class A-4 Interest
Distributable Amount for such Distribution Date plus any outstanding Class A-4
Interest Carryover Shortfall from the immediately preceding Distribution Date
plus interest on such outstanding Class A-4 Interest Carryover Shortfall, to
the extent permitted by law, at the Class A-4 Note Rate from such immediately
preceding Distribution Date to but not including the current Distribution
Date, over (ii) the amount of interest distributed to Class A-4 Noteholders on
such current Distribution Date.
"Class A-4 Interest Distributable Amount" means, with respect to any
Distribution Date, the product of (i) the Class A-4 Note Rate and (ii) the
Class A-4 Note Balance as of the immediately preceding Distribution Date
(after giving effect to changes in the Class A-4 Note Balance made on such
immediately preceding Distribution Date) or, in the case of the first
Distribution Date, the Initial Class A-4 Note Balance.
"Class A-4 Loss Amount" means, with respect to any Distribution Date,
the product of (a) the Class A-4 Allocation Percentage, (b) the Investor
Percentage with regard to Loss Amounts for the related Collection Period, and
(c) the Loss Amount for the related Collection Period.
"Class A-4 Note" means one of the Notes executed by the Owner Trustee
on behalf of the Trust and authenticated by the Indenture Trustee in
substantially the form set forth in Exhibit D to the Indenture.
"Class A-4 Note Balance" shall initially equal the Initial Class A-4
Note Balance and, on any date, shall equal the Initial Class A-4 Note Balance,
reduced by the sum of (i) all amounts distributed to Class A-4 Noteholders and
allocable to principal on or prior to such date and (ii) the amount, if any,
by which (a) the aggregate of all Class A-4 Note Principal Loss Amounts on or
prior to such date exceeds (b) the aggregate of all Class A-4 Note Principal
Loss Amounts reimbursed on or prior to such date.
"Class A-4 Note Factor" means, with respect to any Distribution Date,
a seven-digit decimal figure equal to the Class A-4 Note Balance as of the
close of business on such Distribution Date (after giving effect to all
changes in the Class A-4 Note Balance made on that date) divided by the
Initial Class A-4 Note Balance.
"Class A-4 Noteholder" means any Holder of a Class A-4 Note.
"Class A-4 Note Principal Loss Amount" means, with respect to any
Distribution Date, the amount, if any, by which (i) the sum of the Class A-4
Loss Amount for the related Collection Period and any previously unreimbursed
Class A-4 Note Principal Loss Amount exceeds (ii) the amount available to be
distributed in respect of the Class A-4 Notes pursuant to Section 3.03(b)(vii)
or (b)(viii) on such Distribution Date.
"Class A-4 Note Principal Loss Interest Amount" means, with respect
to any Distribution Date, the aggregate amount of accrued and unpaid interest
(at the Class A-4 Note Rate) on the aggregate amount of unreimbursed Class A-4
Note Principal Loss Amounts.
"Class A-4 Note Rate" means One-Month LIBOR plus [___] % calculated
on the basis of the actual number of days from and including the prior
Distribution Date (or in the case of the initial Distribution Date, the
Closing Date) to but excluding the related Distribution Date and a 360-day
year.
"Class A-4 Notional Amount" shall mean, as determined on each Deposit
Date, the Class A-4 Note Balance as of close of business on the preceding
Distribution Date, provided, however, with respect to the first Deposit Date,
the applicable Class A-4 Notional Amount will be equal to the related Initial
Class A-4 Note Balance.
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"Class A-4 Principal Distributable Amount" means, with respect to any
Distribution Date related to a Collection Period in the Amortization Period,
the amount (if any) that is distributable to the Class A-4 Noteholders
pursuant to Section 3.03(d).
"Class A-4 Residual Value Loss Amount" means, as of any Distribution
Date, an amount equal to the product of (i) the Class A-4 Allocation
Percentage, (ii) the Investor Percentage with respect to Loss Amounts for the
related Collection Period and (iii) the Residual Value Loss Amount incurred in
respect of such Collection Period.
"Class B Additional Loss Amount" means, as of any Distribution Date,
an amount equal to the product of (i) the Class B Allocation Percentage, (ii)
the Investor Percentage with respect to Loss Amounts for the related
Collection Period and (iii) the Additional Loss Amount incurred in respect of
such Collection Period.
"Class B Allocation Percentage" means, as of any Distribution Date,
the Class B Note Balance as of the last day of the related Collection Period
as a percentage of the then Note Balance as of such last day.
"Class B Charged-Off Amount" means, as of any Distribution Date, an
amount equal to the product of (i) the Class B Allocation Percentage, (ii) the
Investor Percentage with respect to Loss Amounts for the related Collection
Period and (iii) the Charged-off Amount incurred in respect of such Collection
Period.
"Class B Distributable Amount" means, with respect to any
Distribution Date, the sum of the Class B Principal Distributable Amount and
the Class B Interest Distributable Amount.
"Class B Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess, if any, of (i) the Class B Interest
Distributable Amount for such Distribution Date plus any outstanding Class B
Interest Carryover Shortfall from the immediately preceding Distribution Date
plus interest on such outstanding Class B Interest Carryover Shortfall, to the
extent permitted by law, at the Class B Note Rate from such immediately
preceding Distribution Date to but not including the current Distribution Date
over (ii) the amount of interest distributed to Class B Noteholders on such
current Distribution Date.
"Class B Interest Distributable Amount" means, with respect to any
Distribution Date, the product of (i) one-twelfth of the Class B Note Rate or,
in the case of the first Distribution Date, one-sixth of such amount, and (ii)
the Class B Note Balance as of the immediately preceding Distribution Date
(after giving effect to changes in the Class B Note Balance made on such
immediately preceding Distribution Date) or, in the case of the first
Distribution Date, the Initial Class B Note Balance.
"Class B Loss Amount" means, with respect to any Distribution Date,
the product of (a) the Class B Allocation Percentage, (b) the Investor
Percentage with regard to Loss Amounts for the related Collection Period, and
(c) the Loss Amount for the related Collection Period.
"Class B Note" means any one of the Notes executed by the Owner
Trustee on behalf of the Trust and authenticated by the Indenture Trustee in
substantially the form set forth in Exhibit E to the Indenture.
"Class B Note Balance" shall initially equal the Initial Class B Note
Balance and, on any date, shall equal the Initial Class B Note Balance,
reduced by the sum of (i) all amounts distributed to Class B Noteholders and
allocable to principal on or prior to such date, (ii) the amount, if any, by
which (a) the aggregate of all Class B Note Principal Loss Amounts on or prior
to such date exceeds (b) the aggregate of all Class B Note Principal Loss
Amounts reimbursed on or prior to such date, and (iii) the amount, if
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any, by which (a) the aggregate of all Class B Note Principal Carryover
Shortfalls on or prior to such Distribution Date exceeds (b) the aggregate of
all Class B Note Principal Carryover Shortfalls reimbursed on or prior to such
date.
"Class B Note Factor" means, with respect to any Distribution Date, a
seven-digit decimal figure equal to the Class B Note Balance as of the close
of business on such Distribution Date (after giving effect to all changes in
the Class B Note Balance made on that date) divided by the Initial Class B
Note Balance.
"Class B Note Principal Carryover Shortfall" means, with respect to
any Distribution Date, the amount that otherwise would have been made
available for reinvestment in additional 1998-A SUBI Assets pursuant to
Section 11.02 of the 1998-A SUBI Supplement (if on a Distribution Date related
to a Collection Period in the Revolving Period) or distributed to the Class B
Noteholders (if on a Distribution Date related to a Collection Period in the
Amortization Period), in each case in respect of Principal Collections
pursuant to Section 3.03(d), but instead is applied as set forth in clauses
(iii), (vii) and (viii) of Section 3.03(b) pursuant to Section 3.03(e).
"Class B Note Principal Carryover Shortfall Interest Amount" means,
with respect to any Distribution Date, the aggregate amount of accrued and
compounded interest (at the Class B Note Rate) on the aggregate amount of
unreimbursed Class B Note Principal Carryover Shortfall as of the immediately
preceding Distribution Date.
"Class B Note Principal Loss Amount" means, with respect to any
Distribution Date, the amount, if any, by which (i) the sum of the Class B
Loss Amount for the related Collection Period and any previously unreimbursed
Class B Note Principal Loss Amount exceeds (ii) the amount available to be
distributed pursuant to Section 3.03(b)(x) or (b)(xi) on such Distribution
Date.
"Class B Note Principal Loss Interest Amount" means, with respect to
any Distribution Date, the aggregate amount of accrued and unpaid interest (at
the Class B Note Rate) on the aggregate amount of unreimbursed Class B Note
Principal Loss Amounts.
"Class B Note Rate" means [___]% per annum.
"Class B Noteholder" means any Holder of a Class B Note.
"Class B Percentage" means the Class B Note Balance immediately after
the Class A-3 Notes have been paid in full as a percentage of the Note Balance
at such time.
"Class B Principal Distributable Amount" means, with respect to any
Distribution Date related to a Collection Period in the Amortization Period,
the amount (if any) that is distributable to the Class B Noteholders pursuant
to Section 3.03(d).
"Class B Residual Value Loss Amount" means, as of any Distribution
Date, an amount equal to the product of (i) the Class B Allocation Percentage,
(ii) the Investor Percentage with respect to Loss Amounts for the related
Collection Period and (iii) the portion of the Residual Value Loss Amount
incurred in respect of such Collection Period.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with
the Clearing Agency.
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"Closing Date" means November [__], 1998.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collection Period" shall have the meaning set forth in the 1998-A
SUBI Supplement.
"Commission" means the Securities and Exchange Commission, and any
successor thereto.
"Corporate Trust Office" means, (a) with respect to the Indenture
Trustee, as set forth in the Indenture, and (b) with respect to the Owner
Trustee, the Corporate Trust Department of the Owner Trustee located at 222
Delaware Avenue, 17th Floor, Wilmington, Delaware 19801-1600, or at such other
address as the Owner Trustee may designate from time to time by notice to the
Indenture Trustee, the Transferor, the Servicer and the Trust, or the
principal corporate trust office of any successor Owner Trustee.
"Covered Loss Amounts" means, for any Distribution Date, the lesser
of (i) the Investor Percentage of Loss Amounts for such Distribution Date and
(ii) amounts available for distribution described in Section 3.03(b) hereof
remaining after the application of clauses (i) through (vi) thereof.
"Current Lease" means each 1998-A Lease that is not a Charged-off
Lease, a Matured Lease, a Liquidated Lease or an Additional Loss Lease.
"Definitive Notes" shall have the meaning specified in Section 2.10
of the Indenture.
"Delinquency Rate" means, with respect to any Collection Period, the
percentage equivalent to a fraction, the numerator of which is the number of
outstanding 1998-A Leases as to which, as of the last day of such Collection
Period, all or any part of a Monthly Lease Payment in excess of $40 is unpaid
(including without limitation because of a check being returned for
insufficient funds) 61 days or more after its Due Date (other than a 1998-A
Lease as to which an extension has been granted with respect to such Due Date
by the Servicer pursuant to clause (ii) of Section 2.02(b) of the Servicing
Agreement and Section 9.02(a) of the 1998-A Servicing Supplement), whether or
not (a) the related 1998-A Leased Vehicle has been repossessed (or the process
of repossession has been commenced) but has not yet been sold or otherwise
disposed of during such Collection Period, or (b) the related Obligor is the
subject of bankruptcy or similar proceedings, and the denominator of which is
the aggregate number of Current Leases on the last day of such Collection
Period.
"Delinquency Rate Test" means that determination, made on each
Determination Date, of the average of the Delinquency Rates for the three
immediately preceding Collection Periods (or the November 1998 Collection
Period, in the case of the December 1998 Determination Date, or the November
and December 1998 Collection Periods, in the case of the January 1999
Determination Date). The Delinquency Rate Test will be satisfied if such
average is 1.75% or less.
"Deposit Date" shall have the meaning set forth in the 1998-A SUBI
Supplement.
"Designated Maturity" shall mean, for any Determination Date, one
month.
"Determination Date" means, with respect to any Distribution Date,
the second Business Day prior to such Distribution Date.
"Distribution Account" means the account or accounts designated as
such and established and maintained pursuant to Section 3.01.
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"Distribution Date" means, with respect to a Collection Period, the
fifteenth day of the following month, or if that day is not a Business Day,
the next Business Day, beginning with December 15, 1998.
"Downgrade Reserve Fund Formula" means the greatest amount that any
Rating Agency shall require for calculation of the Reserve Fund Cash
Requirement in order to maintain its then-current rating on any Class of
Notes.
"Downgrade Reserve Fund Supplemental Requirement" means the greatest
amount that any Rating Agency shall require to be deposited into the Reserve
Fund in order to maintain its then-current ratings on any Class of Notes.
"Downgrade Trigger Event" means that the RV Insurer's claims paying
ability is downgraded to "Aa3" or lower by Moody's, below "AAA" by Standard &
Poors or (if the RV Insurer's claims paying ability is rated by Fitch) below
"AAA" by Fitch.
"Early Amortization Event" has the meaning set forth in Section 8.01.
"Early Termination Amount" means, as of any Distribution Date, an
amount equal to the sum of the Discounted Principal Balances, as of the end of
the related Collection Period, of any Early Termination Leases that became
Early Termination Leases during that related Collection Period, such
Discounted Principal Balances calculated without reference to payments
received by the Servicer in the form of non-cash items.
"Entitlement Holder" has the meaning set forth in Section 8-102(a)(7)
of the UCC.
"Entitlement Orders" has the meaning set forth in Section 8-102(a)(8)
of the UCC.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Compliance Test" means the timely, true and accurate
certification, on or before each Determination Date, by the Servicer to the
Indenture Trustee and each Rating Agency to the effect set forth in Section
10.03(c) of the 1998-A Servicing Supplement.
"Excess Collections" means, with respect to any Distribution Date,
the remaining amount on deposit in the Distribution Account in respect of such
Distribution Date after all distributions pursuant to Section 3.03(b) have
been made, net of any amount required to maintain the Distribution Account in
good standing.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Final Scheduled Maturity Date" means the November [2004]
Distribution Date.
"Financial Intermediary" means a financial intermediary, as such term
is defined in Section 8-313(4) of the UCC.
"Fitch" means Fitch IBCA, Inc., and its successors.
"Flow-Through Entity" has the meaning set forth in Section 4.03(a).
"Holder" of a Note or "Noteholder" means the Person in whose name
such Note is registered in the Note Register, except that, solely for the
purposes of giving any consent, waiver, request or demand pursuant to this
Agreement, the interest evidenced by any Note registered in the name of the
Transferor, ALF LP or WOFCO, or any Person controlling, controlled by or under
common control with the
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Transferor, ALF LP or WOFCO, shall not be taken into account in determining
whether the requisite percentage necessary to effect any such consent, waiver,
request or demand shall have been obtained. "Holder" of the Transferor
Certificate means the Transferor.
"Indenture" has the meaning set forth in Recital H.
"Indenture Event of Default" means an "Event of Default" as defined
in the Indenture.
"Indenture Trustee" means the Person acting as the Indenture Trustee
under the Indenture, its successor in interest, and any successor trustee
appointed.
"Independent Director" means a director of the general partner of the
Transferor who shall at no time be (i) a director, officer, employee or former
employee of any Affiliate of the Transferor, (ii) a natural person related to
any director, officer, employee or former employee of any Affiliate, (iii) a
holder (directly or indirectly) of any voting securities of any Affiliate, or
(iv) a natural person related to a holder (directly or indirectly) of any
voting securities of any Affiliate. For these purposes, "Affiliate" shall mean
any entity other than the Transferor or any similarly organized special
purpose finance subsidiary of an Affiliate (i) which owns beneficially,
directly or indirectly, more than 10% of the outstanding shares of the common
stock or partnership interests of the Transferor, (ii) which is in control of
the Transferor, as currently defined under Section 230.405 of the Rules and
Regulations of the Commission, 17 C.F.R. Section 230.405, (iii) of which 10% or
more of the outstanding shares of its common stock or partnership interests
are owned beneficially, directly or indirectly, by any entity described in
clause (i) or (ii) above, or (iv) which is controlled by an entity described
in clause (i) or (ii) above, as currently defined under Section 230.405 of the
Rules and Regulations of the Commission, 17 C.F.R. Section 230.405.
"Indorsement" has the meaning set forth in Section 8-304 of the UCC.
"Initial Class A Note Balance" means the sum of the Initial Class A-1
Note Balance, the Initial Class A-2 Note Balance, the Initial Class A-3 Note
Balance and the Initial Class A-4 Note Balance.
"Initial Class A-1 Note Balance" means $[___].
"Initial Class A-2 Note Balance" means $[___].
"Initial Class A-3 Note Balance" means $[___].
"Initial Class A-4 Note Balance" means $[___].
"Initial Class B Note Balance" means $[___].
"Initial Note Balance" means the sum of the Initial Class A Note
Balance and the Initial Class B Note Balance.
"Insurance Policy" means, with respect to a 1998-A Lease, 1998-A
Leased Vehicle or Obligor under a 1998-A Lease, any policy of comprehensive,
collision, public liability, physical damage, personal liability, credit
health or accident, credit life or employment insurance, or any other form of
insurance.
"Insured Residual Value Loss Amount" means, as of any Distribution
Date, the lesser of: (i) the product of (A) the Investor Percentage with
respect to Loss Amounts for the related Collection Period, and (B) the
Residual Value Loss Amount incurred during such Collection Period; and (ii)
the shortfall if any, described in clause (ii) of Section 3.03(e).
"Investment Company Act" means the Investment Company Act of 1940, as
amended.
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"Investor Percentage" means, with respect to any Collection Period,
(a) as used with respect to Interest Collections and Loss
Amounts, the percentage equivalent of a fraction (not to exceed 100%), the
numerator of which is the Note Balance as of the last day of the immediately
preceding Collection Period (or, in the case of the first Collection Period,
the Initial Note Balance), and the denominator of which is the Aggregate Net
Investment Value as of the last day of the immediately preceding Collection
Period (or, in the case of the first Collection Period, the Initial Cutoff
Date); and
(b) as used with respect to Principal Collections allocable
to the 1998-A SUBI Interest, the percentage equivalent of a fraction (not to
exceed 100%), the numerator of which is the Note Balance and the denominator
of which is the Aggregate Net Investment Value, each as of the last day of the
last full Collection Period preceding the first to occur of the Amortization
Date or any Early Amortization Event.
"Liquidated Lease" means a 1998-A Lease that (a) has been the subject
of a Prepayment in full, or (b) has been paid in full, regardless of whether
all or any part of such payment has been made by the Obligor under the related
1998-A Lease, the Servicer pursuant to the Servicing Agreement or 1998-A
Servicing Supplement, an insurer pursuant to an Insurance Policy or the
Residual Value Insurance Policy or otherwise.
"Liquidation Expenses" means reasonable out-of-pocket expenses
incurred by the Servicer in connection with the realization of the full
amounts due or to become due under any 1998-A Lease, including expenses
incurred in connection with the repossession of any 1998-A Leased Vehicle, the
sale or other disposition of a 1998-A Leased Vehicle, whether upon
repossession or upon return of a 1998-A Leased Vehicle related to a Matured
Lease, any collection effort (whether or not resulting in a lawsuit against
the Obligor under such 1998-A Lease) or any application for Insurance
Proceeds.
"Loss Amount" means, with respect to any Distribution Date, an amount
equal to the sum of the Charged-off Amount, the Residual Value Loss Amount and
the Additional Loss Amount, in each case for the related Collection Period.
"Moody's" means Moody's Investors Service, Inc., and its successors.
"1998-A Servicing Supplement" has the meaning set forth in Recital E.
"1998-A SUBI" has the meaning set forth in Recital D.
"1998-A SUBI Certificate" has the meaning set forth in Recital D.
"1998-A SUBI Interest" has the meaning set forth in Section 2.02.
"1998-A SUBI Portfolio" has the meaning set forth in Recital D.
"1998-A SUBI Supplement" has the meaning set forth in Recital D.
"Note Balance" initially means the Initial Note Balance and, as of
any date, means the sum of the Class A Note Balance and the Class B Note
Balance as of the close of business on such date, after giving effect to any
changes therein on such date.
"Noteholder" means the Holder of a Note.
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"Note Owner" means, with respect to a Book-Entry Note, the Person who
is the owner of such Book-Entry Note, as reflected on the books of the
Clearing Agency, or on the books of a Person maintaining an account with such
Clearing Agency (directly or as an indirect participant in accordance with the
rules of such Clearing Agency) and shall mean, with respect to a Definitive
Note, the related Noteholder.
"Note Rate" means the Class A-1 Note Rate, the Class A-2 Note Rate,
the Class A-3 Note Rate, the Class A-4 Note Rate or the Class B Note Rate, as
the case may be.
"Note Register" means the register maintained pursuant to the
Indenture.
"Notice of Adverse Claim" has the meaning set forth in Section
8-102(a)(1) and 8-105 of the UCC.
"Officer's Certificate" means a certificate signed by the President,
any Vice President, the Treasurer or any Assistant Treasurer, the Secretary or
any Assistant Secretary of the general partner of the Transferor or the
Servicer, as the case may be, and delivered to the Indenture Trustee or the
Owner Trustee, as applicable.
"One-Month LIBOR" means, as of any Determination Date, the rate for
deposits in U.S. Dollars for a period of the Designated Maturity (commencing
on the previous Distribution Date) which appears on the Telerate page 3750 as
of 11:00 a.m., London time, on such date. If such rate does not appear on
Telerate Page 3750, the rate for that day will be determined on the basis of
the rates at which deposits in U.S. Dollars are offered by the Reference Banks
at approximately 11:00 a.m., London time, on that day to prime banks in the
London interbank market for a period of the Designated Maturity (commencing on
the previous Distribution Date). The Servicer will request the principal
London office of each of the References Banks to provide a quotation of its
rate. If at least two such quotations are provided, the rate for that day will
be the arithmetic mean of the quotations. If fewer than two quotations are
provided as requested, the rate for that day will be the arithmetic mean of
the rates quoted by major banks in New York City, selected by the Servicer, at
approximately 11:00 a.m., New York City time, on that day for loans in U.S.
Dollars to leading European banks for a period of the Designated Maturity
(commencing on the previous Distribution Date).
"Opinion of Counsel" means a written opinion of counsel (who, in the
case of counsel to the Transferor or the Servicer, may be an employee of or
outside counsel to the Transferor or the Servicer), which counsel, in the case
of an opinion delivered to the Indenture Trustee or the Owner Trustee,
respectively, shall be reasonably acceptable to such Trustee.
"Origination Trust" has the meaning set forth in Recital A.
"Origination Trust Agreement" has the meaning set forth in Recital A.
"Origination Trustee" has the meaning set forth in Recital A.
"Outstanding Advances" means, with respect to a Distribution Date,
the sum of all Advances made as of or prior to such date minus all payments or
collections as of or prior to such date that are specified in Section 9.02(g)
of the 1998-A Servicing Supplement as applied to reimburse such Advance as are
unreimbursed or are Nonrecoverable Advances.
"Owner Trustee" means the Person acting not in its individual
capacity but solely as Owner Trustee on behalf of the Trust under this
Agreement, its successor in interest, and any successor trustee appointed
pursuant to Section 6.08.
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"Percentage Interest" means, as to any Note, the percentage obtained
by dividing the outstanding principal balance of such Note by the Note Balance
or by the Class A Note Balance, the Class A-1 Note Balance, the Class A-2 Note
Balance, the Class A-3 Note Balance, the Class A-4 Note Balance or the Class B
Note Balance, as the context may require; provided, however, that where the
Percentage Interest is relevant in determining whether the vote of the
requisite percentage of Noteholders necessary to effect any consent, waiver,
request or demand shall have been obtained, the aggregate Percentage Interest
shall be deemed to be reduced by the amount equal to the Percentage Interest
(without giving effect to this provision) represented by the interests
evidenced by any such Note that is registered in the name of the Transferor,
WOFCO or any Person controlling, controlled by or under common control with
the Transferor or WOFCO.
"Permitted Investments" means any one or more of the following
instruments, obligations or securities, in each case with a remaining term to
maturity of no more than one year:
(a)(i) direct obligations of, and obligations guaranteed as
to full and timely payment of principal and interest by, the United States or
any agency or instrumentality of the United States the obligations of which
are backed by the full faith and credit of the United States (other than the
Government National Mortgage Association), and (ii) direct obligations of, or
obligations fully guaranteed by, the Federal National Mortgage Association or
any State then rated with the highest available credit rating of Moody's,
Standard & Poor's and (if rated by Fitch) Fitch, for such obligations, which
obligations are, at the time of investment, otherwise acceptable to each
Rating Agency for securities having a rating at least equivalent to the rating
of the Class A Notes at the Closing Date;
(b) certificates of deposit, demand or time deposits of,
bankers' acceptances issued by, or federal funds sold by any depository
institution or trust company (including the Indenture Trustee or Owner
Trustee) incorporated under the laws of the United States or any State and
subject to supervision and examination by federal and/or State banking
authorities and the deposits of which are fully insured by the Federal Deposit
Insurance Corporation, so long as at the time of such investment or
contractual commitment providing for such investment either such depository
institution or trust company has the Required Rating or the Indenture Trustee
shall have received a letter from each Rating Agency to the effect that such
investment would not result in the qualification, downgrading or withdrawal of
the ratings then assigned to any Rated Securities;
(c) repurchase obligations held by the Indenture Trustee
that are acceptable to the Indenture Trustee with respect to (i) any security
described in clause (a) above or (e) below, or (ii) any other security issued
or guaranteed by any agency or instrumentality of the United States, in either
case entered into with a federal agency or depository institution or trust
company (including the Indenture Trustee) acting as principal, whose
obligations having the same maturity as that of the repurchase agreement would
be Permitted Investments under clause (b) above; provided, however, that
repurchase obligations entered into with any particular depository institution
or trust company (including the Indenture Trustee or Owner Trustee) will not
be Permitted Investments to the extent that the aggregate principal amount of
such repurchase obligations with such depository institution or trust company
held by the Indenture Trustee on behalf of the Trust shall exceed 10% of
either the Aggregate Net Investment Value or the aggregate unpaid principal
balance or face amount, as the case may be, of all Permitted Investments held
by the Indenture Trustee on behalf of the Trust;
(d) securities bearing interest or sold at a discount issued
by any corporation incorporated under the laws of the United States or any
State so long as at the time of such investment or contractual commitment
providing for such investment either the long-term, unsecured debt of such
corporation has the highest available rating from Moody's, Standard & Poor's
and (if rated by Fitch) Fitch, or the Indenture Trustee shall have received a
letter from each Rating Agency to the effect that such investment would not
result in the qualification, downgrading or withdrawal of the ratings then
assigned to any Rated Securities, or commercial paper or other short-term debt
having the Required
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Rating; provided, however, that any such commercial paper or other short-term
debt may have a remaining term to maturity of no longer than 30 days after the
date of such investment or contractual commitment providing for such
investment, and that securities issued by any particular corporation will not
be Permitted Investments to the extent that investment therein will cause the
then outstanding principal amount or face amount, as the case may be, of
securities issued by such corporation and held by the Indenture Trustee on
behalf of the Trust to exceed 10% of either the Aggregate Net Investment Value
or the aggregate unpaid principal balance or face amount, as the case may be,
of all Permitted Investments held by the Indenture Trustee on behalf of the
Trust;
(e) interests in any open-end or closed-end management type
investment company or investment trust (i) registered under the Investment
Company Act, the portfolio of which is limited to the obligations of, or
guaranteed by, the United States and to agreements to repurchase such
obligations, which agreements, with respect to principal and interest, are at
least 100% collateralized by such obligations marked to market on a daily
basis and the investment company or investment trust shall take delivery of
such obligations either directly or through an independent custodian
designated in accordance with the Investment Company Act and (ii) acceptable
to each Rating Agency (as approved in writing by each Rating Agency) as
collateral for securities having ratings equivalent to the ratings of the
Rated Securities on the Closing Date;
(f) guaranteed reinvestment agreements issued by any bank,
insurance company or other corporation (as approved in writing by each Rating
Agency) as will not result in the qualification, downgrading or withdrawal of
the ratings then assigned to any Rated Securities by each Rating Agency;
(g) investments in Permitted Investments maintained in
"sweep accounts," short-term asset management accounts and the like utilized
for the investment, on an overnight basis, of residual balances in investment
accounts maintained at the Indenture Trustee or any other depository
institution or trust company organized under the laws of the United States or
any state that is a member of the Federal Deposit Insurance Corporation, the
short-term debt of which has the highest available credit rating of Moody's,
Standard & Poor's and (if rated by Fitch) Fitch; provided, however, that any
such account must be maintained with an institution meeting the requirements
of Section 3.01 applicable to the Distribution Account;
(h) guaranteed investment contracts entered into with any
financial institution having a final maturity of not more than one month from
the date of acquisition, the short-term debt securities of which institution
have the Required Rating;
(i) funds classified as money market funds or invested in
money market instruments consisting of: U.S. Treasury bills, other obligations
issued or guaranteed by the U.S. government, its agencies or
instrumentalities; certificates of deposit; banker's acceptances; and
commercial paper (including variable master demand notes); provided, however,
that the fund or the investment in the fund shall be rated with the highest
available credit rating of Moody's, Standard & Poor's and (if rated by Fitch)
Fitch, and redemptions shall be permitted on a daily or next business day
basis; and
(j) such other investments acceptable to each Rating Agency
(as approved in writing by each Rating Agency) as will not result in the
qualification, downgrading or withdrawal of the ratings then assigned to any
Rated Securities by such Rating Agency.
Notwithstanding anything to the contrary contained in the foregoing
definition:
(a) no Permitted Investment may be purchased at a premium;
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(b) any of the foregoing which constitutes a certificated security
shall not be considered a Permitted Investment unless
(i) in the case of a certificated security that is
in bearer form, (A) the Indenture Trustee acquires physical
possession of such certificated security, or (B) a person, other than
a Securities Intermediary, acquires possession of such certificated
security on behalf of the Indenture Trustee; and
(ii) in the case of a certificated security that is
in registered form, (A)(1) the Indenture Trustee acquires physical
possession of such certificated security, (2) a person, other than a
Securities Intermediary, acquires possession of such certificated
security on behalf of the Indenture Trustee, or (3) a Securities
Intermediary acting on behalf of the Indenture Trustee acquires
possession of such certificated security and such certificated
security has been specially indorsed to the Indenture Trustee, and
(B) (1) such certificated security is indorsed to the Indenture
Trustee or in blank by an effective Indorsement, or (2) such
certificated security is registered in the name of the Indenture
Trustee;
(c) any of the foregoing that constitutes an uncertificated
security shall not be considered a Permitted Investment unless (A) the
Indenture Trustee is registered by the issuer as the owner thereof, (B) a
person, other than a Securities Intermediary, becomes the registered owner of
such uncertificated security on behalf of the Indenture Trustee, or (C) the
issuer of such uncertificated security agrees that it will comply with the
instructions originated by the Indenture Trustee without further consent by
any registered owner of such uncertificated security;
(d) any of the foregoing that constitutes a Security
Entitlement shall not be considered a Permitted Investment unless (A) the
Indenture Trustee becomes the Entitlement Holder thereof, or (B) the
Securities Intermediary has agreed to comply with the Entitlement Orders
originated by the Indenture Trustee without further consent by the Entitlement
Holder; and
(e) any of the foregoing shall not constitute a Permitted
Investment unless the Indenture Trustee (A) has given value, and (B) does not
have Notice of an Adverse Claim.
For purposes of this definition, any reference to the highest
available credit rating of an obligation shall mean the highest available
credit rating for such obligation (excluding any "+" signs associated with
such rating), or such lower credit rating (as approved in writing by each
Rating Agency) as will not result in the qualification, downgrading or
withdrawal of the rating then assigned to any Rated Securities by such Rating
Agency.
"Rated Securities" means each Class of Securities that has been rated
by a Rating Agency at the request of the Transferor.
"Rating Agency" means each of Moody's, Standard & Poor's and Fitch
and any other nationally recognized statistical rating agency, but only if it
has rated any Class of Notes as of the Closing Date at the request of the
Transferor and continues to do so.
"Reallocation Deposit Amount" means any amount required to be
deposited by the Servicer into the 1998-A SUBI Collection Account pursuant to
the last sentence of Section 8.03(a) of the 1998-A Servicing Supplement.
"Record Date" means, with respect to each Distribution Date, (i) in
the case of the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes or
the Class A-4 Notes, the calendar day immediately preceding such Distribution
Date (or, if Definitive Notes have been issued, the last day of the
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immediately preceding calendar month) and (ii) in the case of the Class B
Notes, the last day of the calendar month immediately preceding the month in
which such Distribution Date occurs.
"Reference Banks" means four major banks in the London interbank
market selected by the Servicer.
"Required Amount" means, as of any Deposit Date, the lesser of: (a)
the excess of (i) the sum of any anticipated amounts to be payable as set
forth in clauses (i) through (v) and (vii) through (xii) of Section 3.03(b)
with respect to the related Distribution Date (plus those amounts included in
clauses (a) through (c) of the definition of "Interest Collections" in the
1998-A SUBI Supplement), over (ii) the sum of (A) the product of (x) the
Investor Percentage with respect to Interest Collections and (y) the Interest
Collections collected during or received with respect to the related
Collection Period (plus in the case of section 3.03(b)(ii) the Class A Net
Swap Receipt for the related Distribution Date), (B) any Transferor Amounts
for the related Distribution Date applied pursuant to Section 3.03(e)(i), and
(C) the proceeds of any claim under the Residual Value Insurance Policy
pursuant to Section 9.10(b) of the 1998-A Servicing Supplement, as applied
pursuant to clause (ii) of Section 3.03(e); and (b) the total amount on
deposit in the Reserve Fund after all deposits thereto pursuant to clause (vi)
of Section 3.03(b).
"Required Rating" means a rating on commercial paper or other short
term unsecured debt obligations of Prime-1 by Moody's so long as Moody's is a
Rating Agency, A-1 by Standard & Poor's so long as Standard & Poor's is a
Rating Agency, and if such commercial paper or short term unsecured debt
obligations are rated by Fitch, at least F-1 by Fitch so long as Fitch is a
Rating Agency; and any requirement that deposits or debt obligations have the
"Required Rating" shall mean that such deposits or debt obligations have the
foregoing required ratings from Moody's, Standard & Poor's and (if rated by
Fitch) Fitch.
"Reserve Fund" means the account designated as such and established
and maintained pursuant to Section 3.04.
"Reserve Fund Cash Requirement" means with respect to any
Distribution Date the maximum sum of money required to be on deposit in the
Reserve Fund at any one time and shall be calculated as follows: (a) if a RV
Insurer Trigger Event or Downgrade Trigger Event shall have occurred and be
continuing, (i) if only one of the RV Insurer Trigger Event or Downgrade
Trigger Event shall have occurred and be continuing (and, with respect to a
Downgrade Trigger Event, the 60 day period set forth in the fourth sentence of
Section 3.04(b) has elapsed and the Transferor has elected to comply with the
requirements of clause (ii) thereof rather than clause (i)), then in
accordance with the RV Insurer Trigger Event Reserve Fund Formula or Downgrade
Reserve Fund Formula, as applicable, or (ii) if both the RV Insurer Trigger
Event and the Downgrade Trigger Event shall have occurred and be continuing
(and, with respect to a Downgrade Trigger Event, the 60 day period set forth
in the fourth sentence of Section 3.04(b) has elapsed and the Transferor has
elected to comply with the requirements of clause (ii) thereof rather than
clause (i)), then in accordance with the greater of the RV Insurer Reserve
Fund Formula or Downgrade Reserve Fund Formula from time to time; or (b) if
the ERISA Compliance Test is satisfied as of such Distribution Date and no RV
Insurer Trigger Event or Downgrade Trigger Event shall have occurred and be
continuing, (i) if all applicable Reserve Fund Tests are satisfied as of the
related Determination Date, in accordance with the Base Reserve Fund Formula,
or (ii) if any Reserve Fund Test is unsatisfied as of any Distribution Date,
in accordance with the Alternate Reserve Fund Formula.
"Reserve Fund Deficiency" means, as of any Deposit Date, the excess,
if any, of (a) the sum of any Required Amount (considered without regard to
clause (b) of the definition thereof) and any other amounts payable out of the
Reserve Fund pursuant hereto on such Deposit Date or the related Distribution
Date, over (b) the total amount on deposit in the Reserve Fund, prior to any
deposit therein by, or on behalf of, the Transferor pursuant to Section
3.04(b).
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"Reserve Fund Initial Deposit" means $[___].
"Reserve Fund Test" means either of the Charge-off Rate Test or the
Delinquency Rate Test.
"Reserve Fund Supplemental Requirement" means, as of any Deposit Date
on which there is a Reserve Fund Deficiency, the lesser of (a) such Reserve
Fund Deficiency and (b) $[___] less the aggregate of all amounts previously
deposited by or on behalf of the Transferor into the Reserve Fund to satisfy a
Reserve Fund Deficiency.
"Residual Value Insurance Policy" means that certain Residual Value
Insurance Policy number [___] issued effective November [ ], 1998 by the RV
Insurer, in favor of the Servicer, the Transferor, the Indenture Trustee, the
Owner Trustee, the Origination Trustee and ALF LP.
"Residual Value Loss Amount" means, as of any Distribution Date, the
sum of the following: (a) the Booked Residual Values of all 1998-A Leased
Vehicles included in Matured Leased Vehicle Inventory as of the last day of
the related Collection Period but which as of such day had remained unsold and
not otherwise disposed of by the Servicer for at least two full Collection
Periods; (b) any excess of the sum of the Booked Residual Values of all
Matured Vehicles sold or otherwise disposed of from Matured Leased Vehicle
Inventory during the related Collection Period over Net Matured Vehicle
Proceeds; and (c) any Early Termination Amount for the related Collection
Period.
"Responsible Officer" means an officer of the Owner Trustee or
Indenture Trustee, as applicable, assigned to the applicable Corporate Trust
Office, including any Vice President, any trust officer or any other officer
performing functions similar to those performed by the persons who at the time
shall be such officers, and any other officer of the Owner Trustee or
Indenture Trustee, as applicable, to whom a matter is referred because of his
or her knowledge of and familiarity with the particular subject.
"RV Insurer" means Federal Insurance Company, an Indiana stock
insurance company.
"RV Insurer Reserve Fund Supplemental Requirement" means, at any
time, the difference between (i) the greater of (A) the Reserve Fund Initial
Deposit and (B) the amount then on deposit in the Reserve Fund, and (ii)
$[___].
"RV Insurer Trigger Event" means any of the following:
(a) The RV Insurer shall file a petition commencing a
voluntary case under any chapter of the Federal bankruptcy laws; or the RV
Insurer shall file a petition or answer or consent seeking reorganization,
arrangement, adjustment, or composition under any other similar applicable
Federal law, or shall consent to the filing of any such petition, answer, or
consent; or the RV Insurer shall appoint, or consent to the appointment of a
custodian, receiver, liquidator, trustee, assignee, sequestrator or other
similar official in bankruptcy or insolvency of it or of any substantial part
of its property, or shall make an assignment for the benefit of creditors, or
shall admit in writing its inability to pay its debts generally as they become
due;
(b) any order for relief against the RV Insurer shall have
been entered by a court having jurisdiction in the premises under any chapter
of the Federal bankruptcy laws; or a decree or order by a court having
jurisdiction in the premises shall have been entered approving as properly
filed a petition seeking reorganization, arrangement, adjustment, or
composition of the RV Insurer under any other similar applicable Federal law;
or a decree or order of a court having jurisdiction in the premises for the
appointment of a custodian, receiver, liquidator, trustee, assignee,
sequestrator or other similar official in bankruptcy, receivership or
insolvency of the RV Insurer or of any substantial part of its property, or
for the winding up or liquidation of its affairs, shall have been entered; or
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(c) the Residual Value Insurance Policy shall have been
declared void or unenforceable by a court of competent jurisdiction in a final
judgment as to which the time for noting an appeal has expired and all appeals
have been decided;
in each case without: (i) one or more policies with substantially
similar coverage and provisions to the Residual Value Insurance Policy having
been issued by an insurer acceptable to each Rating Agency (as evidenced by
confirmation (written or oral) from each to the effect that such change would
not result in its then-current rating of any Rated Securities being qualified,
reduced or withdrawn), provided that the Origination Trustee, the Owner
Trustee and the Indenture Trustee shall at all times have the same rights with
respect to any replacement policy as with respect to the original policy; or
(ii) an alternative mechanism to support the Booked Residual Values of the
1998-A Leased Vehicles having been approved in accordance with the procedures
set forth in Section 9.01 for the amendment hereof.
"RV Insurer Trigger Event Reserve Fund Formula" means $[___].
"Schedule of Leases and Leased Vehicles" means the schedule of 1998-A
Leases and 1998-A Leased Vehicles as such schedule shall be amended and
updated from time to time.
"Securities" means the Notes and the Transferor Certificate.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Intermediary" has the meaning set forth in Section
8-102(a)(14) of the UCC.
"Security Entitlement" has the meaning set forth in Section
8-102(a)(17) of the UCC.
"Servicer" means WOFCO, in its capacity as servicer of the 1998-A
Leases and 1998-A Leased Vehicles, and each successor thereto (in the same
capacity) appointed pursuant to Sections 2.10 of the Servicing Agreement and
9.11 of the 1998-A Servicing Supplement, respectively.
"Servicer's Certificate" means an Officer's Certificate of the
Servicer completed and executed pursuant to Section 10.01(b) of the 1998-A
Servicing Supplement.
"Servicing Agreement" has the meaning set forth in Recital C.
"Standard & Poor's" means Standard & Poor's Ratings Services, a
division of The McGraw Hill Companies, Inc., and its successors.
"State" means any state of the United States, the District of
Columbia and the Commonwealth of Puerto Rico.
"SUBI Certificate" has the meaning set forth in Recital D.
"SUBI Certificate Agreement" has the meaning set forth in Recital F.
"Transaction Documents" has the meaning attributed to the term
"Securitization Trust Documents" in the 1998-A SUBI Supplement.
"Transferor" means WOLS LP, in its capacity as transferor of the
1998-A SUBI Certificate and the 1998-A SUBI Interest under this Agreement, and
each successor thereto (in the same capacity) pursuant to Section 2.02.
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"Transferor Amounts" means, with respect to any Distribution Date,
amounts available for distribution to the Transferor in respect of the
Transferor Distributable Amount for such Distribution Date that are instead
distributed pursuant to Section 3.03(e) because of an insufficiency in the
amount of Interest Collections available to make such distributions on such
Distribution Date (as determined pursuant to Section 3.03(e)).
"Transferor Certificate" means the Certificate executed and
authenticated by the Owner Trustee in substantially the form set forth in
Exhibit A to this Agreement.
"Transferor Distributable Amount" means, with respect to any
Distribution Date, the sum of the Transferor Principal Distributable Amount
and the Transferor Interest Distributable Amount.
"Transferor Interest" means, as of any date, an amount equal to (i)
the Aggregate Net Investment Value less (ii) the Note Balance.
"Transferor Interest Distributable Amount" means, with respect to any
Distribution Date, the amount equal to the Transferor Percentage (with respect
to Interest Collections) of all Interest Collections collected during or
received in respect of the related Collection Period, less the Transferor
Percentage of Capped Indenture Trustee Administrative Expenses, Capped Owner
Trustee Administrative Expenses and Uncapped Administrative Expenses.
"Transferor Percentage" means, with respect to Interest Collections
and Principal Collections respectively, received in or with respect to any
Collection Period, 100% minus the Investor Percentage as applied for such
Collection Period with respect to such items, respectively.
"Transferor Principal Distributable Amount" means, with respect to
any Distribution Date related to a Collection Period in the Amortization
Period, the amount equal to the Transferor Percentage (with respect to
Principal Collections) of all Principal Collections collected during or
received in respect of the related Collection Period.
"Trust" means the World Omni 1998-A Automobile Lease Securitization
Trust created by this Agreement, the estate of which consists or will consist
of the Trust Estate.
"Trust Estate" means (i) the property conveyed to the Trust under
Section 2.02 of this Agreement; (ii) the Distribution Account, the Reserve
Fund and such monies as are from time to time deposited therein; (iii) the
Residual Value Insurance Policy and (iv) all proceeds of the foregoing.
"UCC" means (a) in the case of Permitted Investments, the Uniform
Commercial Code as in effect in the State of Illinois, and (b) in all other
cases, the Uniform Commercial Code as in effect in the relevant jurisdiction.
"Uncapped Administrative Expenses" means Administrative Expenses that
would be Capped Contingent and Excess Liability Premiums, Capped Origination
Trust Administrative Expenses, Capped Indenture Trustee Administrative
Expenses or Capped Owner Trustee Administrative Expenses, respectively, except
that they exceed $550,000, $100,000, $100,000 (or $50,000 as applicable) or
$5,000 in any calendar year, respectively.
"Uncovered Loss Amount" means, for any Distribution Date, the excess
of (i) the Investor Percentage of Loss Amounts for such Distribution Date over
(ii) Covered Loss Amounts for such Distribution Date.
"Undistributed Transferor Excess Collections" has the meaning set
forth in Section 3.03(c).
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"Uninvested Principal Collections" means, as of the end of the
Revolving Period, any Principal Collections with respect to the Revolving
Period (or amounts treated as Principal Collections pursuant to Section
3.03(b)) then on deposit in the 1998-A SUBI Collection Account that have not
been reinvested in additional 1998-A Leases and 1998-A Leased Vehicles as
contemplated by Section 8.02 of the 1998-A Servicing Supplement.
"United States" means the United States of America, its territories
and possessions and areas subject to its jurisdiction.
"U.S. Bank" has the meaning set forth in Recital A.
"Vice President" of any Person means any vice president of such
Person, whether or not designated by a number or words before or after the
title "Vice President."
"WOFCO" means World Omni Financial Corp. and its successors.
"WOLS LLC" means World Omni Lease Securitization LLC, a single member
Delaware limited liability company, the general partner of WOLS LP.
"WOLS LP" means World Omni Lease Securitization L.P. and its
successors.
Section 1.02. Article and Section References.
Except as otherwise specified herein, all article and section
references shall be to Articles and Sections in this Agreement.
ARTICLE TWO. CREATION OF TRUST
Section 2.01. Creation of Trust.
Upon the execution of this Agreement by the parties hereto, there is
hereby created the World Omni 1998-A Automobile Lease Securitization Trust. It
is the intention of the parties hereto that the Trust constitute a business
trust under the Business Trust Statute and that this Agreement constitute the
governing instrument of such business trust. The Owner Trustee shall file the
Certificate of Trust with the Secretary of State of the State of Delaware.
Section 2.02. Conveyance of the 1998-A SUBI Interest.
In consideration of the Trust's delivery to, or upon the order of,
the Transferor of executed and authenticated Notes, in authorized
denominations, in an aggregate amount equal to the sum of the Initial Class A
Note Balance and the Initial Class B Note Balance, and of the executed and
authenticated Transferor Certificate, the Transferor does hereby transfer,
assign and otherwise convey to the Trust, in trust for the benefit of the
Noteholders and Certificateholder, to the full extent of the Transferor's
interest therein, without recourse (subject to the Transferor's obligations
herein):
(i) all right, title and interest of the Transferor in and to
its interest in the 1998-A SUBI and the 1998-A SUBI Certificate evidencing
that interest in the 1998-A SUBI (such interest, the "1998-A SUBI Interest")
and all monies due thereon and paid thereon or in respect thereof;
(ii) the right to realize upon any property that may be deemed
to secure the 1998-A SUBI Interest;
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(iii) all rights accruing to the holder of the 1998-A SUBI
Interest as a third-party beneficiary under the Origination Trust Agreement,
the 1998-A SUBI Supplement, the Servicing Agreement and the 1998-A Servicing
Supplement; and
(iv) all proceeds of the foregoing.
The Transferor also does hereby grant to the Trust a security
interest in all of the foregoing, and the Trust shall have all the rights,
powers and privileges of a secured party under the UCC.
Section 2.03. Acceptance by Owner Trustee.
The Owner Trustee does hereby accept on behalf of the Trust all
consideration conveyed by the Transferor pursuant to Section 2.02 and declares
that the Owner Trustee shall hold such consideration in trust as herein set
forth for the benefit of the Noteholders and the Certificateholder, subject to
the terms and provisions of this Agreement and the Indenture.
ARTICLE THREE. DISTRIBUTIONS; RESERVE FUND; STATEMENTS TO SECURITYHOLDERS
Section 3.01. Distribution Account.
(a) Pursuant to Section 9.02(e) of the 1998-A Servicing
Supplement, the Servicer (on behalf of the Owner Trustee) shall establish the
Distribution Account in the name of the Indenture Trustee for the benefit of
the Noteholders and the Certificateholder. The Distribution Account shall be
an account initially established with the Indenture Trustee and maintained
with the Indenture Trustee so long as (i) the commercial paper or other
short-term unsecured debt obligations of the Indenture Trustee have the
Required Rating, or (ii) the Distribution Account is a segregated trust
account bearing a designation clearly indicating that the funds deposited
therein are held in trust for the benefit of the Noteholders and the
Certificateholder, which Distribution Account is located in the Corporate
Trust Office of the Indenture Trustee and, so long as Moody's is a Rating
Agency, the Indenture Trustee has a long term deposit rating from Moody's of
at least Baa3 (or such lower rating as Moody's shall approve in writing) and
corporate trust powers under applicable federal and state laws and is
organized under the laws of the United States or any State. In the event that
the Indenture Trustee no longer meets either of the requirements stated above,
then the Servicer shall, with the Indenture Trustee's assistance as necessary,
cause the Distribution Account to be moved to a bank or trust company that
satisfies the above-mentioned requirements. The Owner Trustee hereby grants a
security interest in the Distribution Account, all Permitted Investments
therein and all proceeds of the foregoing to the Indenture Trustee for the
benefit of the Noteholders.
(b) For so long as the depository institution or trust
company then maintaining the Distribution Account meets the requirements of
either Section 3.01(a)(i) or (ii), all amounts held in the Distribution
Account shall, to the extent permitted by applicable laws, rules and
regulations, be invested, as directed by the Servicer pursuant to Section
9.02(j) of the 1998-A Servicing Supplement, in Permitted Investments (or, if
the Servicer fails to give such directions, as provided in Section 8.03 of the
Indenture); otherwise such amounts shall be maintained in cash. Earnings on
investment of funds in the Distribution Account shall be retained in the
Distribution Account and shall constitute part of the Trust Estate, and losses
shall be charged against the funds on deposit therein.
Section 3.02. Collections.
(a) Pursuant to Sections 9.02(b) and 9.10(b) of the 1998-A
Servicing Supplement, the Servicer shall deposit all proceeds of claims made
under the Residual Value Insurance Policy for insured
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Residual Value Loss Amounts with respect to the Amortization Period into the
Distribution Account within one (1) Business Day after receipt. Pursuant to
Section 12.01(c) of the 1998-A SUBI Supplement and Section 9.02(g) of the
1998-A Servicing Supplement, on each Deposit Date the Servicer shall cause the
transfer from the 1998-A SUBI Collection Account to the Distribution Account
of all Interest Collections and, on each Deposit Date related to the
Collection Period in which the Amortization Date or any Early Amortization
Event occurs, and each subsequent Collection Period, all Principal
Collections, in each case for the preceding Collection Period (including, on
the Deposit Date related to the Collection Period in which an Early
Amortization Event occurs, all Principal Collections with respect to such
Collection Period prior to the Early Amortization Event). On each Deposit Date
the Servicer shall cause the transfer from the 1998-A SUBI Collection Account
to the Distribution Account of the Net Class A Swap Payment, if any, and the
Servicer shall deposit into the Distribution Account the Net Class A Swap
Receipt, if any. Further, on the Deposit Date related to the Collection Period
in which the Amortization Date or any Early Amortization Event occurs, the
Servicer also shall cause the transfer from the 1998-A SUBI Collection Account
to the Distribution Account all Reallocation Deposit Amounts and Uninvested
Principal Collections on deposit in the 1998-A SUBI Collection Account at the
time the Amortization Period commences. Such deposit may be made in the form
of a single deposit and shall be made in immediately available funds, no later
than 3:00 p.m., New York City time, on the relevant Deposit Date.
(b) The Indenture Trustee shall retain, subject to the
provisions of this Agreement and the other Transaction Documents, all
collections on or in respect of the 1998-A SUBI Interest transferred to the
Indenture Trustee, on behalf of the Noteholders, in accordance with such
provisions, in the Distribution Account or the Reserve Fund, as the case may
be. The Indenture Trustee shall be deemed to have possession of such monies
and collections for purposes of Section 9-305 of the UCC of the jurisdiction
in which such property is located.
Section 3.03. Distributions.
(a) On each Determination Date, pursuant to Section 9.02(f)
of the 1998-A Servicing Supplement, the Servicer shall calculate the amounts
to be distributed to the holder of the 1998-A SUBI Certificate, the Class A-1
Distributable Amount, the Class A-2 Distributable Amount, the Class A-3
Distributable Amount, the Class A-4 Distributable Amount, the Class B
Distributable Amount, the Transferor Distributable Amount, and all other
distributions to be made on the related Distribution Date.
(b) The rights of the Class B Noteholders to receive
distributions of Interest Collections in respect of the Class B Notes shall be
and are subordinated to the rights of the Class A Swap Counterparty to receive
the Class A Net Swap Payment, and the Class A-1 Noteholders, the Class A-2
Noteholders, the Class A-3 Noteholders and the Class A-4 Noteholders to
receive distributions of Interest Collections in respect of the Class A-1
Notes, the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes to the
extent provided in this Agreement and the Indenture. On each Distribution Date
the Indenture Trustee shall distribute the product of (i) the Investor
Percentage with respect to Interest Collections, multiplied by (ii) the
Interest Collections paid over to the Indenture Trustee from the 1998-A SUBI
Collection Account pursuant to Section 3.02(a), together with any Transferor
Amounts, any proceeds of a claim made under the Residual Value Insurance
Policy pursuant to Section 9.10(b) of the 1998-A Servicing Supplement and the
Required Amount, if any, for such Distribution Date, and any amount of
Principal Collections that otherwise would be distributed to the Class B
Noteholders pursuant to subsection (d) below but is required to be applied to
the payment of clauses (iii), (vii) and (viii) below pursuant to subsection
(e)(iv) below, in the following amounts and otherwise in the following order
of priority to the following Persons:
(i) in the event of an Indenture Event of Default as a result
of which the Indenture Trustee has elected or has been instructed to sell the
Trust Estate pursuant to Section 5.17
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of the Indenture, to the Indenture Trustee, the Investor Percentage of Capped
Indenture Trustee Administrative Expenses and to the Owner Trustee, the
Investor Percentage of Capped Owner Trustee Administrative Expenses;
(ii) first from the Class A Net Swap Receipt and then from the
amounts remaining after application of clause (i) above, (A) to the Class A-1
Interest Distributable Amount for such Distribution Date together with any
unpaid Class A-1 Interest Carryover Shortfall, the Class A-2 Interest
Distributable Amount for such Distribution Date together with any unpaid Class
A-2 Interest Carryover Shortfall, the Class A-3 Interest Distributable Amount
for such Distribution Date together with any unpaid Class A-3 Interest
Carryover Shortfall and the Class A-4 Interest Distributable Amount for such
Distribution Date together with any unpaid Class A-4 Interest Carryover
Shortfall, to the Class A-1, the Class A-2, the Class A-3 and the Class A-4
Noteholders, respectively and (B) to the Class A Swap Counterparty, the Class
A Net Swap Payment, if any, with respect to such Distribution Date plus any
Class A Net Swap Payments previously due but not paid; provided, however, if
funds available are not sufficient to the make the distributions specified in
subclauses (ii)(A) and (ii)(B), such funds will be allocated pro rata between
the Class A Noteholders and the Class A Swap Counterparty based on the
respective amounts due in each subclause;
(iii) the Class A-1 Note Principal Loss Interest Amount, the
Class A-2 Note Principal Loss Interest Amount, the Class A-3 Note Principal
Loss Interest Amount and the Class A-4 Note Principal Loss Interest Amount, if
any, for such Distribution Date to the Class A-1, Class A-2, Class A-3 and
Class A-4 Noteholders, respectively;
(iv) the Class B Interest Distributable Amount for such
Distribution Date, together with any unpaid Class B Interest Carryover
Shortfall, to the Class B Noteholders;
(v) in circumstances other than those set forth in clause (i),
the Investor Percentage of Capped Indenture Trustee Administrative Expenses
for the preceding Collection Period to the Indenture Trustee and the Investor
Percentage of Capped Owner Trustee Administrative Expenses for the preceding
Collection Period to the Owner Trustee;
(vi) until the amount on deposit in the Reserve Fund equals the
Reserve Fund Cash Requirement, to the Reserve Fund;
(vii) (A) to the Class A Noteholders, so long as the Note
Balance of the Class B Notes has not been reduced to zero, an amount equal to
the Covered Loss Amount for the related Distribution Date, sequentially,
commencing with the Class A-1 Noteholders until the Note Balance on each such
Class has been reduced to zero, or (B) if the Note Balance of the Class B
Notes has been reduced to zero, the A-1 Loss Amount, the Class A-2 Loss
Amount, the Class A-3 Loss Amount and the Class A-4 Loss Amount to the Class
A-1, the Class A-2, the Class A-3 and the Class A-4 Noteholders respectively;
(viii) to the Class A-1, the Class A-2, the Class A-3 and the
Class A-4 Noteholders, respectively, the aggregate amounts of the Class A-1
Note Principal Loss Amounts, Class A-2 Note Principal Loss Amounts, Class A-3
Note Principal Loss Amounts, and Class A-4 Note Principal Loss Amounts, if
any, for previous Distribution Dates that have not been previously reimbursed
to the Class A-1, Class A-2, Class A-3 or Class A-4 Noteholders pursuant to
this clause (viii);
(ix) the Class B Note Principal Loss Interest Amount and the
Class B Note Principal Carryover Shortfall Interest Amount, if any, for such
Distribution Date to the Class B Noteholders;
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(x) the Uncovered Loss Amount incurred during the related
Collection Period shall be allocated to the Class B Noteholders;
(xi) to the Class B Noteholders the aggregate amount of the
Class B Note Principal Loss Amounts and Class B Note Principal Carryover
Shortfall, if any, for previous Distribution Dates that has not been
previously reimbursed to the Class B Noteholders pursuant to this clause (xi);
(xii) the Investor Percentage of Uncapped Administrative
Expenses, (A) to the Origination Trustee, the Indenture Trustee or the Owner
Trustee, as applicable, and then (B) to the Servicer, reimbursement of any
previous advance of Administrative Expenses that was made by the Servicer
pursuant to Section 9.05(a) of the 1998-A Servicing Supplement and has not yet
been reimbursed; and
(xiii) the balance, if any, shall constitute Excess Collections
and shall be applied as set forth in subsection (c) below.
Notwithstanding the foregoing, on any Distribution Date related
to a Collection Period in the Revolving Period, the amounts set forth in
clauses (vii), (viii), (x) and (xi) above shall not be paid to the
Noteholders, but shall be treated as Principal Collections for purposes of
Section 11.02 of the 1998-A SUBI Supplement.
(c) On each Distribution Date, the Indenture Trustee shall
distribute any Excess Collections in the following amounts and in the
following order of priority:
(i) if the Distribution Date relates to a Collection Period in
the Revolving Period, then as follows:
(A) if (1) the ERISA Compliance Test is
unsatisfied, or (2) if a Downgrade Trigger Event has occurred
and is continuing, the 60 day period set forth in the fourth
sentence of Section 3.04(b) has elapsed, and the Transferor
cannot comply with the requirements of either clause (i) or
clause (ii) thereof or has determined in good faith that such
compliance would not be commercially reasonable, then any
remainder to the Reserve Fund; and
(B) if Excess Collections are not required to be
applied as set forth in clause (A) above, then any remainder to
the Transferor;
(ii) if the Distribution Date relates to a Collection Period in
the Amortization Period, then as follows:
(A) any remainder up to but not exceeding the
product of one-twelfth of .25% and the Aggregate Net Investment
Value as of the last day of the related Collection Period (the
"Accelerated Principal Distribution Amount") as an additional
principal distribution to the Noteholders as follows: the
Accelerated Principal Distribution Amount will be distributed
first to the Class A-1 Noteholders until the Class A-1 Notes
have been paid in full, second, to the Class A-2 Noteholders
until the Class A-2 Notes have been paid in full, third, to the
Class A-3 Noteholders until the Class A-3 Notes have been paid
in full and fourth, the Class A Percentage and the Class B
Percentage of any remaining amount will be distributed to the
Class A-4 Noteholders and the Class B Noteholders,
respectively, until such Notes have been paid in full;
(B) if (1) the ERISA Compliance Test is
unsatisfied, or (2) if a Downgrade Trigger Event has occurred
and is continuing, the 60 day period set forth in the fourth
sentence of Section 3.04(b) has elapsed, and the Transferor
cannot comply with the requirements of either clause (i) or
clause (ii) thereof or has determined in good faith that such
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compliance would not be commercially reasonable, then the
balance of any remainder to the Reserve Fund; and
(C) if Excess Collections are not required to be
applied as set forth in clause (B) above, then the balance of
any remainder to the Transferor.
Notwithstanding the foregoing, the Transferor may instruct the
Indenture Trustee and the Servicer to redeposit into the 1998-A SUBI
Collection Account any Excess Collections that otherwise would be payable to
the Transferor pursuant to the foregoing ("Undistributed Transferor Excess
Collections"), for treatment as Collections with respect to the Collection
Period during which such Distribution Date occurs. By so instructing the
Indenture Trustee and the Servicer, the Transferor waives any right that it
may be deemed to have in the related Undistributed Transferor Excess
Collections, except insofar as they become Excess Collections payable to the
Transferor in respect of a subsequent Collection Period.
(d) On each Distribution Date beginning with the
Distribution Date related to the Collection Period in which the Amortization
Period commences and ending on the Distribution Date before the Distribution
Date on which the Class A-3 Notes have been paid in full, the Indenture
Trustee shall distribute an amount equal to the Investor Percentage of all
Principal Collections collected or received in respect of the related
Collection Period to (w) the Class A-1 Noteholders until the Class A-1 Notes
have been paid in full, (x) the Class A-2 Noteholders until the Class A-2
Notes have been paid in full, (y) the Class A-3 Noteholders until the Class
A-3 Notes have been paid in full and (z) the Class A Percentage and the Class
B Percentage thereof to the Class A-4 Noteholders and Class B Noteholders,
respectively. On each Distribution Date after the Class A-3 Notes have been
paid in full, the Indenture Trustee shall distribute (i) to the Class A-4
Noteholders, the Class A Percentage of Principal Collections collected or
received in respect of the related Collection Period and (ii) subject to
subsection (e) below, to the Class B Noteholders, the Class B Percentage of
such Principal Collections. Distributions to Noteholders pursuant to Sections
3.03(b)(vii), (viii), (x), and (xi) also shall constitute distributions of
principal. The aggregate amount of principal distributed to any Class of
Noteholders shall not exceed the Initial Note Balance attributable to that
Class of Notes. Uncovered Loss Amounts will be allocated first to the Class B
Notes until the Note Balance of the Class B Notes has been reduced to zero and
then to the Class A Notes, pro rata, based on the Class A-1 Allocation
Percentage, the Class A-2 Allocation Percentage, the Class A-3 Allocation
Percentage and the Class A-4 Allocation Percentage.
(e) If and to the extent that the amount of Interest
Collections (measured for these purposes without regard to any deduction
therefrom provided for in clauses (a) through (c) of the definition of
"Interest Collections" in the 1998-A SUBI Supplement) available to make
distributions on a Distribution Date (plus, in the case of clause (b)(ii)
above, the Class A Net Swap Receipt) is insufficient to make distributions
(or, on a Distribution Date related to a Collection Period in the Revolving
Period, applications as if such amounts were Principal Collections) pursuant
to Section 3.03(b) and clauses (a) through (c) of the definition of the term
"Interest Collections" in the 1998-A SUBI Supplement, then:
(i) amounts otherwise available for distribution to the
Transferor in respect of the Transferor Interest Distributable Amount for such
Distribution Date, and then in respect of the Transferor Principal
Distributable Amount, will be applied towards such insufficiency;
(ii) if after giving effect to clause (i), there is still a
shortfall (other than any shortfall in amounts available to apply as set forth
in clause (vi) of Section 3.03(b)) in amounts available to make all
distributions (or, on a Distribution Date related to a Collection Period in
the Revolving Period, applications as if such amounts were Principal
Collections) pursuant to Section 3.03(b) and clauses (a) through (c) of the
definition of the term "Interest Collections" in the 1998-A SUBI Supplement,
the proceeds of any claim made by the Servicer pursuant to Section 9.10(b) of
the 1998-A Servicing Supplement will be applied towards such shortfall;
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(iii) if after giving effect to clauses (i) and (ii), there is
still a shortfall (other than any shortfall in amounts available to apply as
set forth in clause (vi) of Section 3.03(b)) in amounts available to make all
distributions (or, on a Distribution Date related to a Collection Period in
the Revolving Period, applications as if such amounts were Principal
Collections) pursuant to Section 3.03(b) and clauses (a) through (c) of the
definition of the term "Interest Collections" in the 1998-A SUBI Supplement,
the Required Amount will be withdrawn from the Reserve Fund and applied
towards such shortfall; and
(iv) if, on a Distribution Date related to a Collection Period
during the Amortization Period, after giving effect to clauses (i), (ii) and
(iii), there is still a shortfall in amounts required to make the
distributions (or, on a Distribution Date related to a Collection Period in
the Revolving Period, available for reinvestment in additional 1998-A SUBI
Assets pursuant to Section 11.02 of the 1998-A SUBI Supplement) pursuant to
clause (iii), (vii) or (viii) of Section 3.03(b), amounts otherwise available
for distribution to the Class B Noteholders in respect of principal pursuant
to subsection (d) above will be applied toward such insufficiency.
In the event that there remain shortfalls in the amounts
required to be distributed pursuant to Section 3.03(b)(ii) to the Class A-1
Noteholders, the Class A-2 Noteholders, the Class A-3 Noteholders and the
Class A-4 Noteholders, and, on any Distribution Date on which the Note Balance
of the Class B Notes has been reduced to zero, there remains any shortfall in
amounts required to be distributed to the Class A-1 Noteholders, the Class A-2
Noteholders, the Class A-3 Noteholders and the Class A-4 Noteholders under
Sections 3.03(b)(iii), (vii) or (viii), the amounts available will be
distributed pro rata to Class A-1 Noteholders, Class A-2 Noteholders, Class
A-3 Noteholders and Class A-4 Noteholders based on the Class A-1 Allocation
Percentage, the Class A-2 Allocation Percentage, the Class A-3 Allocation
Percentage and the Class A-4 Allocation Percentage, respectively.
(f) On each Distribution Date, amounts that otherwise would
be payable to the Transferor in respect of the Transferor Distributable Amount
(other than Transferor Amounts) will be distributed to the Transferor by the
Indenture Trustee as follows: (A) if such Distribution Date relates to a
Collection Period during the Revolving Period, the interest component of such
remaining amounts will be paid in respect of the Transferor Interest
Distributable Amount and (B) if such Distribution Date relates to a Collection
Period during the Amortization Period, (1) the interest component of such
remaining amounts will be paid in respect of the Transferor Interest
Distributable Amount and (2) if and to the extent that the Transferor Interest
will be equal to or greater than zero, after all required distributions have
been made on such Distribution Date, the principal component of such remaining
amounts will be paid in respect of the Transferor Principal Distributable
Amount. Any amounts that would otherwise be payable to the Transferor pursuant
to the foregoing as the Transferor Principal Distributable Amount, but may not
be so paid because the Transferor Interest would be less than or equal to
zero, shall instead be distributed to the Noteholders pursuant to Section
3.03(d). Upon any distribution of amounts to the Transferor, the Noteholders
will have no further rights, in, or claims to, such amounts.
(g) On the Final Scheduled Maturity Date an additional
payment to the Holders of any Class shall be made as and to the extent
required by Section 3.04(f).
Section 3.04. Reserve Fund.
(a) (i) In order to assure that sufficient amounts to make
required distributions to Noteholders will be available, pursuant to Section
9.02(e) of the 1998-A Servicing Supplement the Servicer (on behalf of the
Owner Trustee) shall establish and maintain with and in the name of the
Indenture Trustee a separate trust account to be known as the "Reserve Fund",
which will include the money and other property deposited and held therein
pursuant to Section 3.03(c)(i) and this Section. The Reserve Fund shall be an
account initially established with the Indenture Trustee and maintained
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with the Indenture Trustee so long as (A) the commercial paper or other
short-term unsecured debt obligations of the Indenture Trustee have the Required
Rating, or (B) the Reserve Fund is a segregated trust account bearing a
designation clearly indicating the funds deposited therein are held in trust for
the benefit of the Noteholders, which Reserve Fund is located in the Corporate
Trust Office of the Indenture Trustee and, so long as Moody's is a Rating
Agency, the Indenture Trustee has a long-term deposit rating from Moody's of at
least Baa3 (or such lower rating as Moody's shall approve in writing) and
corporate trust powers under applicable federal and state laws and is organized
under the laws of the United States or any State. In the event that the
Indenture Trustee no longer meets either of the requirements stated above, then
the Servicer shall, with the Indenture Trustee's assistance as necessary, cause
the Reserve Fund to be moved to a bank or trust company that satisfies the
above-mentioned requirements. The Owner Trustee hereby grants a security
interest in the Reserve Fund, all Permitted Investments therein and all proceeds
of the foregoing to the Indenture Trustee for the benefit of the Noteholders.
(ii) For so long as the depository institution or trust
company then maintaining the Reserve Fund meets the requirements of either
Section 3.04(a)(i)(A) or (B), all amounts held in the Reserve Fund shall, to
the extent permitted by applicable laws, rules and regulations, be invested,
as directed by the Servicer pursuant to Section 9.02(j) of the 1998-A
Servicing Supplement, in Permitted Investments (or, if the Servicer fails to
give such directions, as provided in Section 8.03 of the Indenture); otherwise
such amounts shall be maintained in cash. Earnings on investment of funds in
the Reserve Fund shall be retained in the Reserve Fund and shall constitute
part of the Trust Estate, and losses shall be charged against the funds on
deposit therein.
(b) On or prior to the Closing Date, the Transferor shall
deposit an amount equal to the Reserve Fund Initial Deposit into the Reserve
Fund. The Transferor also does hereby grant to the Indenture Trustee a
security interest in such initial deposit, and the Indenture Trustee shall
have all the rights, powers and privileges of a secured party under the UCC.
Amounts on deposit in the Reserve Fund shall be supplemented from time to time
by the deposit therein of other funds as and to the extent described elsewhere
in this Agreement. Within 60 days after receipt of notice that an RV Insurer
Trigger Event exists and is continuing, the Transferor shall deposit into the
Reserve Fund an additional cash amount equal to the RV Insurer Reserve Fund
Supplemental Requirement. Within 60 days after the occurrence of a Downgrade
Trigger Event, then either: (i) the Transferor shall (A) cause one or more
policies with substantially similar coverage and provisions to the Residual
Value Insurance Policy to be issued by an insurer acceptable to each Rating
Agency (as evidenced by confirmation (written or oral) from each to the effect
that such change would not result in its then-current rating of any Rated
Securities being qualified, reduced or withdrawn), provided that the
Origination Trustee and the Indenture Trustee shall at all times have the same
rights with respect to any replacement policy as with respect to the original
policy, or (B) cause an alternative mechanism to support the Booked Residual
Values of the 1998-A Leased Vehicles to be implemented and approved in
accordance with the procedures set forth in Section 9.01 for the amendment
hereof; or (ii) the Transferor shall deposit into the Reserve Fund an
additional cash amount equal to the Downgrade Reserve Fund Supplemental
Requirement; provided that if the Transferor cannot comply with either clause
(i) or clause (ii) or determines in good faith that such compliance would be
commercially unreasonable, Excess Collections shall be deposited into the
Reserve Fund as provided in Section 3.03(c). In addition, on each Deposit Date
relating to a Distribution Date on which a Reserve Fund Deficiency will exist,
the Transferor shall deposit into the Reserve Fund an additional cash amount
equal to the lesser of (i) such Reserve Fund Deficiency and (ii) the Reserve
Fund Supplemental Requirement. On each Distribution Date the amounts on
deposit in the Reserve Fund shall be available for distribution as provided in
Section 3.03 and, on each Distribution Date, if the amount on deposit in the
Reserve Fund (after giving effect to all deposits thereto or withdrawals
therefrom on such Distribution Date) is greater than the Reserve Fund Cash
Requirement and Excess Collections are not required to be deposited into the
Reserve Fund pursuant to Section 3.03(c), the Indenture Trustee will
distribute any remaining amounts to the Transferor.
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(c) In the event there is a Downgrade Trigger Event, the 60
day period set forth in the fifth sentence of Section 3.04(b) has elapsed and
the Transferor has elected to comply with the requirements of clause (ii)
thereof rather than clause (i), or complies with neither of such clauses, the
Rating Agencies may impose additional conditions to the maintenance of their
then-current ratings on any Class of Notes, including conditions that may
require that this Agreement or any other Transaction Document be amended in
accordance with the provisions of Section 9.01(b) hereof or the relevant
provisions thereof.
(d) Upon termination of the Trust pursuant to Section 7.01,
any amounts on deposit in the Reserve Fund shall be available for payment of
any remaining amounts due to the Noteholders, and for payment of any remaining
amounts due to the Indenture Trustee and the Owner Trustee, and after payment
of such amounts due, shall be paid to the Transferor.
(e) Amounts properly received by the Transferor pursuant to
this Agreement shall be free of any claim of the Trust, the Indenture Trustee,
the Owner Trustee, the Class A Swap Counterparty or the Noteholders and shall
not be available to the Indenture Trustee, the Owner Trustee or the Trust for
the purpose of making deposits to the Reserve Fund or making payments to the
Class A Swap Counterparty or the Noteholders, nor shall the Transferor be
required to refund any amount properly received by it.
(f) On the Final Scheduled Maturity Date, to the extent that
the Class A-1 Note Balance, the Class A-2 Note Balance, the Class A-3 Note
Balance, the Class A-4 Note Balance or the Class B Note Balance has not been
reduced to zero the Indenture Trustee shall withdraw funds from the Reserve
Fund, if available, in an amount equal to the lesser of (A) the Class A-1 Note
Balance, the Class A-2 Note Balance, the Class A-3 Note Balance, the Class A-4
Note Balance or the Class B Note Balance, as applicable, and (B) the amount in
the Reserve Fund, and shall pay such funds to the Holders of such Class of
Notes.
Section 3.05 Net Deposits.
For so long as WOFCO shall be the Servicer, the Servicer and the
Indenture Trustee may make all remittances to the Distribution Account
pursuant to this Article net of amounts to be distributed by the applicable
recipient to such remitting party. The Transferor may make remittances to the
Distribution Account pursuant to this Article net of amounts distributable to
the Transferor on the related Distribution Date, provided that such amounts
were to be paid directly to the Transferor on such Distribution Date rather
than deposited into the Reserve Fund pursuant to Section 3.04. Nonetheless,
each such party shall account for all of the above described remittances and
distributions as if the amounts were deposited and/or transferred separately,
and the net remittance may only be made to the extent that the net result
thereof is the same as if the amounts were deposited and/or transferred
separately.
Section 3.06. Statements to Noteholders.
(a) On each Distribution Date, the Indenture Trustee shall
include with each distribution to each Noteholder of record, a statement,
prepared by the Servicer, based on information in the Servicer's Certificate
furnished pursuant to Section 10.01(b) of the 1998-A Servicing Supplement,
setting forth for the related Collection Period and distribution the following
information as of the related Record Date or Deposit Date or such Distribution
Date, as the case may be:
(i) the Investor Percentage for such Collection Period,
stated separately for Interest Collections and Loss Amounts, and for Principal
Collections;
(ii) the total amount being distributed to Noteholders in
such distribution;
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(iii) the total amount being distributed to each Class of
Noteholders in such distribution;
(iv) the total amount of interest being distributed to
each Class of Noteholders in such distribution;
(v) the amount, if any, of Class A-1 Interest Carryover
Shortfall, Class A-2 Interest Carryover Shortfall, Class A-3 Interest
Carryover Shortfall, Class A-4 Interest Carryover Shortfall and Class B
Interest Carryover Shortfall included in such distribution;
(vi) the amount, if any, of the remaining unpaid Class A-1
Interest Carryover Shortfall, Class A-2 Interest Carryover Shortfall, Class
A-3 Interest Carryover Shortfall, Class A-4 Interest Carryover Shortfall and
Class B Interest Carryover Shortfall after giving effect to such distribution;
(vii) the total amount of principal being distributed to
each Class of Noteholders in such distribution;
(viii) the Class A-1 Allocation Percentage, the Class A-2
Allocation Percentage, the Class A-3 Allocation Percentage, the Class A-4
Allocation Percentage, the Class B Allocation Percentage and the amount, if
any, of the reimbursement of Class A-1 Charged-off Amounts, Class A-1 Residual
Value Loss Amounts and Class A-1 Additional Loss Amounts, Class A-2
Charged-off Amounts, Class A-2 Residual Value Loss Amounts and Class A-2
Additional Loss Amounts, Class A-3 Charged-off Amounts, Class A-3 Residual
Value Loss Amounts and Class A-3 Additional Loss Amounts, Class A-4
Charged-off Amounts, Class A-4 Residual Value Loss Amounts and Class A-4
Additional Loss Amounts and Class B Charged-off Amounts, Class B Residual
Value Loss Amounts and Class B Additional Loss Amounts being included in such
distribution;
(ix) the amount, if any, of the reimbursement of Class A-1
Note Principal Loss Amounts, Class A-2 Note Principal Loss Amounts, Class A-3
Note Principal Loss Amounts, Class A-4 Note Principal Loss Amounts and Class B
Note Principal Loss Amounts included in such distribution;
(x) the amount, if any, of the aggregate of unreimbursed
Class A-1 Note Principal Loss Amounts, Class A-2 Note Principal Loss Amounts,
Class A-3 Note Principal Loss Amounts, Class A-4 Note Principal Loss Amounts
and Class B Note Principal Loss Amounts after giving effect to such
distribution;
(xi) the amount, if any, of accrued Class A-1 Note
Principal Loss Interest Amounts, Class A-2 Note Principal Loss Interest
Amounts, Class A-3 Note Principal Loss Interest Amounts, Class A-4 Note
Principal Loss Interest Amounts and Class B Note Principal Loss Interest
Amounts included in such distribution;
(xii) the amount, if any, of accrued and unpaid Class A-1
Note Principal Loss Interest Amounts, Class A-2 Note Principal Loss Interest
Amounts, Class A-3 Note Principal Loss Interest Amounts, Class A-4 Note
Principal Loss Interest Amounts and Class B Note Principal Loss Interest
Amounts after giving effect to such distribution;
(xiii) the amount, if any, of accrued and unpaid Class B
Note Principal Carryover Shortfall after giving effect to such distribution;
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(xiv) the Investor Percentage of the Servicing Fee
allocable to the 1998-A SUBI Interest for such Distribution Date and any
unpaid previous such amounts with respect to prior Distribution Dates;
(xv) the Note Balance, the Class A-1 Note Balance, the
Class A-2 Note Balance, the Class A-3 Note Balance, the Class A-4 Note
Balance, the Class B Note Balance, the Class A-1 Note Factor, the Class A-2
Note Factor, the Class A-3 Note Factor, the Class A-4 Note Factor and the
Class B Note Factor, each after giving effect to such distribution;
(xvi) the Transferor Amount, if any, included in such
distribution and the amount of the Transferor Interest, after giving effect to
all payments made on such Distribution Date;
(xvii) the Required Amount, if any, included in such
distribution;
(xviii) the Aggregate Net Investment Value as of the end
of such Collection Period;
(xix) the amount on deposit in the Reserve Fund on such
Distribution Date, after giving effect to such distributions, the change in
such balance from the immediately preceding Distribution Date, the Reserve
Fund Cash Requirement, the Reserve Fund Supplemental Requirement (if any), the
RV Insurer Reserve Fund Supplemental Requirement (if any) and the Downgrade
Reserve Fund Supplemental Requirement (if any);
(xx) the amount of Payments Ahead on deposit in the 1998-A
SUBI Collection Account and representing Monthly Lease Payments due in one or
more immediately subsequent Collection Periods and the change in such balance
from the immediately preceding Distribution Date;
(xxi) the amount of Outstanding Advances on such
Distribution Date and the changes in such amount from the immediately
preceding Distribution Date;
(xxii) the weighted average Lease Rate of the Leases in
the 1998-A SUBI Portfolio for the immediately preceding Collection Period and
the Charge-off Rate and Delinquency Rate for each of the three immediately
preceding Collection Periods;
(xxiii) the Insured Residual Value Loss Amount, if any,
for such Distribution Date;
(xxiv) the Class A Net Swap Payment and the Class A Net
Swap Receipt, in each case, if any, for such Distribution Date; and
(xxv) the Covered Loss Amounts and Uncovered Loss Amounts,
in each case, if any, for such Distribution Date.
Each amount set forth pursuant to subclauses (ii) through (xiii)
above shall be expressed as a dollar amount per $1,000 of original principal
balance of a Note. Any Note Owner may obtain a copy of any such statement, of
any Servicer's Certificate required pursuant to Section 10.01(b) of the 1998-A
Servicing Supplement, any annual report of Independent Accountants required
pursuant to Section 3.02 of the Servicing Agreement and Section 10.02 of the
1998-A Servicing Supplement, and of any annual Officer's Certificate required
pursuant to Section 3.03 of the Servicing Agreement and Section 10.03(a) of
the 1998-A Servicing Supplement, upon written request to the Indenture Trustee
at the Corporate Trust Office of the Indenture Trustee.
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(b) Within a reasonable period of time after the end of each
calendar year, but not later than the latest date permitted by law, the
Indenture Trustee shall mail to each Person who at any time during such
calendar year shall have been a Holder of a Note, a statement or statements
which in the aggregate contain the sum of the amounts set forth in clauses
(a)(ii) through (vii), (viii) through (xiv) above for such calendar year or,
in the event such Person shall have been a Holder of a Note during a portion
of such calendar year, for the applicable portion of such year, for the
purposes of such Noteholder's preparation of federal income tax returns. In
addition, the Servicer shall furnish to the Indenture Trustee for distribution
to such Person at such time any other information reasonably necessary under
applicable law for the preparation of such income tax returns.
ARTICLE FOUR. THE TRANSFEROR CERTIFICATE
Section 4.01. The Transferor Certificate.
A single Transferor Certificate shall be issued. The Transferor
Certificate shall be executed by the Owner Trustee on behalf of the Trust by
manual or facsimile signature of a Responsible Officer under the Owner
Trustee's seal imprinted thereon and attested on behalf of the Owner Trustee
by the manual or facsimile signature of a Responsible Officer. A Transferor
Certificate bearing the manual or facsimile signatures of an individual who
was, at the time when such signature was affixed, a Responsible Officer of the
Owner Trustee shall be a valid and binding obligation of the Trust,
notwithstanding that such individual ceased to be so authorized prior to the
authentication and delivery of such Transferor Certificate or was not a
Responsible Officer at the date of such Transferor Certificate. The Transferor
Certificate shall be dated the date of its authentication.
Section 4.02. Authentication and Delivery of Transferor Certificate.
In exchange for, and simultaneously with the sale, assignment and
transfer to the Trust of the 1998-A SUBI Interest, the 1998-A SUBI Certificate
and the other assets of the Trust, the Transferor shall receive the Transferor
Certificate and the Notes. The Owner Trustee shall, on behalf of the Trust,
execute and deliver to or upon the order of the Transferor, and shall
authenticate, the Transferor Certificate. The Transferor Certificate shall not
be entitled to any benefit under this Agreement, or be valid for any purpose,
unless there appears on such Certificate a certificate of authentication
substantially in the form set forth in Exhibit A to this Agreement executed by
the Owner Trustee by manual signature, and such certificate upon the
Transferor Certificate shall be conclusive evidence, and the only evidence,
that such Transferor Certificate has been duly authenticated and delivered
under this Agreement.
Section 4.03. No Transfer of Transferor Certificate.
Subject to Section 5.03, the Transferor Certificate shall be owned by
the Transferor and may not be transferred, as provided by Section 5.06.
Section 4.04. Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Transferor Certificate is surrendered to the
Owner Trustee, or the Owner Trustee receives evidence to its satisfaction of
the destruction, loss or theft of the Transferor Certificate, and (ii) there
is delivered to the Owner Trustee such security or indemnity as may be
required by it to save itself and the Trust harmless, then, in the absence of
notice that such Transferor Certificate has been acquired by a bona fide
purchaser, the Owner Trustee on behalf of the Trust shall execute and the
Owner Trustee shall authenticate and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Transferor Certificate, a new
Transferor Certificate of like tenor and fractional undivided interest. Any
duplicate Transferor Certificate issued pursuant to this Section shall
constitute complete and indefeasible evidence of ownership in the Trust, as if
originally issued, whether or not the
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lost, stolen or destroyed Transferor Certificate shall be found at any time,
and any such lost, stolen or destroyed Transferor Certificate shall, upon
issuance of any such duplicate Transferor Certificate, be null, void and of no
effect.
Section 4.05. Persons Deemed Owners.
The Owner Trustee shall treat the Transferor as the owner of the
Transferor Certificate for the purpose of receiving distributions pursuant to
Section 3.03 and for all other purposes whatsoever.
ARTICLE FIVE. THE TRANSFEROR
Section 5.01. Representations of Transferor.
The Transferor hereby makes the following representations on which
the Owner Trustee relies in accepting the 1998-A SUBI Interest and 1998-A SUBI
Certificate in trust and executing and authenticating the Transferor
Certificate and executing the Notes and on which the Indenture Trustee relies
in authenticating the Notes. The representations speak as of the execution and
delivery of this Agreement, but shall survive the sale, transfer and
assignment of the 1998-A SUBI Interest and 1998-A SUBI Certificate to the
Indenture Trustee and the Owner Trustee.
(a) Organization and Good Standing. The Transferor is a
limited partnership validly organized and existing and in good standing under
the laws of the State of Delaware, with power and authority to own its
properties and to conduct its business as such properties shall be currently
owned and such business is presently conducted, and has power, authority and
legal right to acquire, own and sell the 1998-A SUBI Interest and 1998-A SUBI
Certificate.
(b) Due Registration. The Transferor is duly registered as a
foreign limited partnership in good standing, and has obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or lease of
property or the conduct of its business requires such qualifications, except
where the failure to so qualify or to have obtained such licenses and
approvals would not have a material adverse effect on the earnings, business
affairs or business prospects of the Transferor.
(c) Power and Authority. The Transferor has the power and
authority to execute and deliver this Agreement and to carry out its terms,
the Transferor has full power and authority to sell and assign the property to
be sold and assigned to and deposited with the Owner Trustee as part of the
Trust and has duly authorized such sale and assignment to the Owner Trustee by
all necessary partnership action; and the execution, delivery and performance
of this Agreement have been duly authorized by the Transferor by all necessary
partnership action.
(d) Valid Sale; Binding Obligations. This Agreement
evidences a valid sale, transfer and assignment of the 1998-A SUBI Interest
and 1998-A SUBI Certificate, enforceable against creditors of and purchasers
from the Transferor; and constitutes a legal, valid and binding obligation of
the Transferor enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights in general
and by general principles of equity, regardless of whether such enforceability
shall be considered in a proceeding in equity or at law.
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms of this
Agreement do not conflict with, result in any breach of any of the terms and
provisions of, nor constitute (with or without notice or lapse of time) a
default under, the certificate of limited partnership or limited partnership
agreement of the Transferor, or conflict with or violate any of the material
terms or provisions of, or constitute (with or without notice or lapse of
time) a default under, any indenture, agreement or other instrument to which
the Transferor
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is a party or by which it is bound; nor result in the creation or imposition
of any Lien upon any of its properties pursuant to the terms of any such
indenture, agreement or other instrument (other than this Agreement); nor
violate any law or, to the best of the Transferor's knowledge, any order, rule
or regulation applicable to the Transferor of any court or of any federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Transferor or its properties;
which breach, default, conflict, lien or violation would have a material
adverse effect on the earnings, business affairs or business prospects of the
Transferor.
(f) No Proceedings. There are no proceedings or
investigations pending, or to the Transferor's best knowledge, threatened,
before any court, regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Transferor or its properties: (i)
asserting the invalidity of this Agreement or the Transferor Certificate, (ii)
seeking to prevent the issuance of the Transferor Certificate or the
consummation of any of the transactions contemplated by this Agreement, (iii)
seeking any determination or ruling that might materially and adversely affect
the performance by the Transferor of its obligations under, or the validity or
enforceability of, this Agreement or the Transferor Certificate or (iv)
relating to the Transferor and which might adversely affect the federal or
Alabama income tax attributes of the Transferor Certificate.
(g) Title to the 1998-A SUBI Certificate. The Transferor has
good title to, and is the sole legal and beneficial owner of, the 1998-A SUBI
Certificate, free and clear of Liens.
(h) Consents and Approvals. The Transferor has obtained or
made all necessary licenses, consents, approvals, waivers and notifications of
creditors, lessors and other nongovernmental Persons, in each case in
connection with the execution and delivery of this Agreement and the
consummation of all the transactions herein contemplated, and the Transferor
is not required to obtain the consent of any other party or the consent,
license, approval, or authorization from, or registration or declaration with,
any governmental authority, bureau or agency in connection with the execution,
delivery, performance, validity or enforceability of this Agreement.
Section 5.02. Liability of Transferor; Indemnities.
The Transferor shall be liable in accordance with this Agreement only
to the extent of the obligations in this Agreement specifically undertaken by
the Transferor in such capacity under this Agreement and shall have no other
obligations or liabilities hereunder.
Section 5.03. Merger or Consolidation of, or Assumption of the
Obligations of, Transferor; Certain Limitations.
(a) Any Person (i) into which the Transferor may be merged
or consolidated, (ii) which may result from any merger, conversion or
consolidation to which the Transferor shall be a party or (ii) which may
succeed to all or substantially all of the business of the Transferor, shall
be the successor to the Transferor under this Agreement without the execution
or filing of any document or any further act on the part of any of the parties
to this Agreement, except that if the Transferor in any of the foregoing cases
is not the surviving entity, then the surviving entity shall execute an
agreement of assumption to perform every obligation of the Transferor either
generally or specifically as provided herein. The Transferor shall provide
notice of any merger, consolidation or succession pursuant to this Section to
each Rating Agency and shall receive confirmation (written or oral) from each
Rating Agency to the effect that such merger, consolidation, or succession
will not result in a qualification, downgrading or withdrawal of the
then-current rating assigned to any Rated Securities.
(b) (i) Subject to subparagraph (ii) below, the purpose of
the Transferor shall be to engage in any lawful activity for which a limited
partnership may be formed under the laws of the State
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of Delaware other than the practice of a profession permitted to be operated
through a limited partnership under Delaware law.
(ii) Notwithstanding subparagraph (b)(i) above, the
purpose of the Transferor shall be limited to the following purposes:
(A) to act as settlor or grantor of one or more
securitization trusts formed pursuant to a trust agreement or other
agreement for the purpose of acquiring interests in the Origination
Trust, which securitization trust may issue certificates of
beneficial interest in the assets of such securitization trust;
(B) to acquire, own, hold, sell, transfer, convey,
dispose of, pledge, assign, borrow money against, finance, refinance
or otherwise deal with, publicly or privately and whether with
unrelated third parties or with affiliated entities, beneficial
interests in the Origination Trust, including without limitation any
undivided trust interests or special units of beneficial interest
created with respect to the Origination Trust, and certificates of
the securitization trust;
(C) to loan or otherwise invest funds received as a
result of the Transferor's beneficial interest in the Origination
Trust or certificates in the securitization trust and any other
income, as determined by the general partner of the Transferor from
time to time;
(D) to borrow money other than pursuant to clause
(B) above, but only to the extent that any such borrowing is
permitted by the terms of the transactions contemplated by clauses
(A) and (B); and
(E) to engage in any lawful act or activity and to
exercise any powers permitted to limited partnerships organized under
Delaware law that are incidental to and necessary or convenient for
the accomplishment of the foregoing purposes.
(c) Notwithstanding any other provision of this Section and
any provision of law, neither the Transferor nor its general partner, on
behalf of the Transferor, shall do any of the following:
(i) engage in any business or activity other than as set
forth in clause (b) above;
(ii) without the affirmative vote of a majority of the
members of the Board of Directors of the Transferor's general partner (which
must include the affirmative vote of all Independent Directors of the
Transferor's general partner, as required by the limited partnership agreement
of the Transferor), (A) dissolve or liquidate, in whole or in part, or
institute proceedings to be adjudicated bankrupt or insolvent, (B) consent to
the institution of bankruptcy or insolvency proceedings against it, (C) file a
petition seeking or consent to reorganization or relief under any applicable
federal or state law relating to bankruptcy, (D) consent to the appointment of
a receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Transferor or a substantial part of its property, (E) make a
general assignment for the benefit of creditors, (F) admit in writing its
inability to pay its debts generally as they become due, or (G) take any
corporate action or partnership action in furtherance of the actions set forth
in clauses (A) through (F) above; provided, however, that the general partner
shall in no event consent to the institution of bankruptcy or insolvency
proceedings against the Transferor so long as it is solvent; or
(iii) merge or consolidate with any other limited
partnership, corporation, company or entity or sell all or substantially all
of its assets or acquire all or substantially all of the assets or partnership
interests or capital stock or other ownership interest of any other limited
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partnership, corporation, company or entity (except for the acquisition of
beneficial interests in the Origination Trust and the sale, transfer,
conveyance, disposition, pledge, assignment, financing, and refinancing of, or
otherwise dealing with, beneficial interests in the Origination Trust in
accordance with the terms of subparagraph (b)(ii) above, which shall not be
otherwise restricted by this Section 5.03(c)).
Section 5.04. Limitation on Liability of Transferor and Others.
The Transferor and any director or officer or employee or agent of
the Transferor may rely in good faith on the advice of counsel or on any
document of any kind, prima facie properly executed and submitted by any
Person respecting any matters arising under this Agreement.
Section 5.05. Transferor May Own Notes.
Each of the Transferor and any Person controlling, controlled by or
under common control with the Transferor may in its individual or any other
capacity become the owner or pledgee of Notes with the same rights as it would
have if it were not the Transferor or such an affiliate thereof except as
otherwise specifically provided in the definition of the term "Noteholder".
Notes so owned by or pledged to the Transferor or such controlling or commonly
controlled Person shall have an equal and proportionate benefit under the
provisions of this Agreement, without preference, priority or distinction as
among all of the Notes. The Transferor will give notice to each Rating Agency
if any such controlling or commonly controlled Person shall at any time become
the owner or pledgee of Notes.
Section 5.06. No Transfer.
Subject to Section 5.03, the Transferor on behalf of itself and its
successors and assigns hereby covenants that it will not transfer, pledge or
assign to any Person the Transferor Certificate or any part of its right to
receive any Excess Collections pursuant to Section 3.03(c).
Section 5.07. Tax Matters Partner.
If at any time the Trust has two or more beneficial owners and is
treated as a partnership for tax purposes, the Transferor shall act as "Tax
Matters Partner" within the meaning of section 6231 of the Code (i) to
represent the partners before taxing authorities or courts of competent
jurisdiction in any tax matters affecting the Trust as a tax partnership; and
(ii) to execute any agreements or other documents relating to or affecting
such tax matters, including, but not limited to, extending the statute of
limitations for assessment of tax deficiencies and adjusting the Trust's
federal, state or local tax returns. The Transferor shall not be liable to the
Trust or to any Noteholder for any action taken or omitted by the Transferor
with regard to such tax matters or otherwise as a result of its holding the
position of Tax Matters Partner.
ARTICLE SIX. THE OWNER TRUSTEE
Section 6.01. Duties of Owner Trustee.
(a) The Owner Trustee, both prior to and after the
occurrence of a 1998-A Servicer Event of Default under the Servicing Agreement
and the 1998-A Servicing Supplement, undertakes to perform such duties and
only such duties as are specifically set forth in this Agreement.
(b) The Owner Trustee, upon receipt of all resolutions,
certificates, statements, opinions, reports, documents, orders or other
instruments furnished to the Owner Trustee that shall be specifically required
to be furnished pursuant to any provision of this Agreement, shall examine
them to determine whether they conform on their face to the requirements of
this Agreement.
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(c) No provision of this Agreement shall be construed to
relieve the Owner Trustee from liability for its own negligent action, its own
negligent failure to act, its own bad faith or its own willful misfeasance;
provided, however, that
(i) the duties and obligations of the Owner Trustee shall
be determined solely by the express provisions of this Agreement, the Owner
Trustee shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Agreement, no implied
covenants or obligations shall be read into this Agreement against the Owner
Trustee, the permissive right of the Owner Trustee to do things enumerated in
this Agreement shall not be construed as a duty and, in the absence of bad
faith on the part of the Owner Trustee, the Owner Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to the Owner
Trustee and conforming to the requirements of this Agreement;
(ii) the Owner Trustee shall not be personally liable for
an error of judgment made in good faith by a Responsible Officer, unless it
shall be proved that the Owner Trustee was negligent in performing its duties
in accordance with the terms of this Agreement; and
(iii) the Owner Trustee shall not be personally liable
with respect to any action taken, suffered or omitted to be taken in good
faith in accordance with the direction of the Transferor relating to the time,
method and place of conducting any proceeding for any remedy available to the
Owner Trustee, or exercising any trust or power conferred upon the Owner
Trustee, under this Agreement or the Origination Trust Agreement (as
supplemented by the 1998-A SUBI Supplement).
(d) The Owner Trustee shall not be required to expend or
risk its own funds or otherwise incur financial liability in the performance
of any of its duties under this Agreement, or in the exercise of any of its
rights or powers, if there shall be reasonable grounds for believing that the
repayment of such funds or adequate indemnity against such risk or liability
is not reasonably assured to it.
(e) All information obtained by the Owner Trustee regarding
the Obligors and the Leases contained in the 1998-A SUBI, whether upon the
exercise of its rights under this Agreement or any other Transaction Document,
shall be maintained by the Owner Trustee in confidence and shall not be
disclosed to any other Person, unless such disclosure is required by any
applicable law or regulation or pursuant to subpoena.
Section 6.02. Certain Matters Affecting the Owner Trustee.
Except as otherwise provided in Section 6.01:
(i) the Owner Trustee may rely and shall be protected in
acting or refraining from acting upon any resolution, Officer's Certificate,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(ii) the Owner Trustee may consult with counsel and any
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it under this Agreement
or any other Transaction Document in good faith and in accordance with such
Opinion of Counsel;
(iii) the Owner Trustee shall be under no obligation to
exercise any of the rights or powers vested in it, or to institute, conduct or
defend any litigation, at the request, order or
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direction of the Indenture Trustee or the Transferor, unless the Noteholders,
the Indenture Trustee or the Transferor shall have offered to the Owner
Trustee reasonable security or indemnity against the costs, expenses and
liabilities that may be incurred therein or thereby;
(iv) the Owner Trustee shall not be personally liable for
any action taken, suffered or omitted by it in good faith and believed by it
to be authorized or within the discretion or rights or powers conferred upon
it by this Agreement; and
(v) the Owner Trustee may execute any of the trusts or
powers under this Agreement or perform any duties under this Agreement either
directly or by or through agents or attorneys or a custodian.
Section 6.03. Owner Trustee Not Liable for Notes, Transferor
Certificate or Leases.
The Owner Trustee shall make no representations as to the validity,
enforceability or sufficiency of this Agreement, the Indenture, the Notes, the
Transferor Certificate (other than the execution by the Owner Trustee on
behalf of the Trust of the Indenture, the Notes and the Transferor
Certificate, and the certificate of authentication on, the Transferor
Certificate), or of the 1998-A SUBI Interest or 1998-A SUBI Certificate. The
Owner Trustee shall have no obligation to perform any duty unless explicitly
set forth in this Agreement or directed pursuant to Section 6.17. The Owner
Trustee shall at no time have any responsibility or liability for or with
respect to the legality, validity and enforceability of the Indenture, the
Notes, the 1998-A SUBI Interest or 1998-A SUBI Certificate or any 1998-A
Lease, any ownership interest in any 1998-A Leased Vehicle, or the maintenance
of any such ownership interest, or for or with respect to the efficacy of the
Trust or its ability to generate the payments to be distributed to the
Noteholders or the Certificateholder under this Agreement, including without
limitation the validity of the assignment of the 1998-A SUBI Interest or
1998-A SUBI Certificate to the Trust or of any intervening assignment; the
existence, condition, location and ownership of any 1998-A Lease or 1998-A
Leased Vehicle; the existence and enforceability of any physical damage or
credit life or credit disability insurance; the existence and contents of any
1998-A Lease or any computer or other record thereof; the completeness of any
1998-A Lease; the performance or enforcement of any Lease; the compliance by
the Transferor with any covenant or the breach by the Transferor of any
warranty or representation made under this Agreement or in any related
document and the accuracy of any such warranty or representation; the acts or
omissions of the Transferor or the Servicer; or any action or failure to act
by the Owner Trustee taken at the instruction of the Servicer; provided,
however, that the foregoing shall not relieve the Owner Trustee of its
obligation to perform its duties under this Agreement. Except with respect to
a claim based on the failure of the Owner Trustee to perform its duties under
this Agreement or based on the Owner Trustee's willful misconduct, bad faith
or negligence, no recourse shall be had for any claim based on any provision
of this Agreement, the Transferor Certificate, the 1998-A SUBI Interest or
1998-A SUBI Certificate or assignment thereof against the institution serving
as Owner Trustee in its individual capacity. The Owner Trustee shall not have
any personal obligation, liability or duty whatsoever to any Noteholder, the
Indenture Trustee, the Transferor or any other Person with respect to any such
claim, and any such claim shall be asserted solely against the Trust or any
indemnitor who shall furnish indemnity as provided in this Agreement. The
Owner Trustee shall not be accountable for the use or application by the
Transferor of any of the Notes or the Transferor Certificate or of the
proceeds of the Notes or the Transferor Certificate, or for the use or
application of any funds paid to the Servicer in respect of the 1998-A SUBI
Interest or 1998-A SUBI Certificate.
Section 6.04. Owner Trustee May Own Notes.
The Owner Trustee in its individual or any other capacity may become
the owner or pledgee of Notes with the same rights as it would have if it were
not Owner Trustee.
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Section 6.05. Owner Trustee's Fees and Expenses.
The Owner Trustee shall be entitled to reasonable compensation (which
shall not be limited by any provision of law in regard to the compensation of
a trustee of an express trust) for all services rendered by it in the
execution of the trusts created by this Agreement and in the exercise and
performance of any of the powers and duties of the Owner Trustee under this
Agreement, and payment or reimbursement upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Owner Trustee in
its capacity as Owner Trustee in accordance with any of the provisions of this
Agreement (including the reasonable compensation and the expenses and
disbursements of its counsel and of all persons not regularly in its employ)
except any such expense, disbursement or advance as may arise from its
negligence, willful misfeasance or bad faith or that is the responsibility of
the Indenture Trustee, the Noteholders or the Transferor under this Agreement
or any other Transaction Document. Such compensation and reimbursement shall
be paid as set forth in Section 3.03(b) hereof or Section 10.01 of the 1998-A
SUBI Supplement (in the definitions of the terms "Principal Collections" and
"Interest Collections"). Additionally, the Transferor, pursuant to Section
6.02(iii), may agree to indemnify the Owner Trustee under certain
circumstances.
Section 6.06. Eligibility Requirements for Owner Trustee.
The Owner Trustee under this Agreement shall at all times be a
national banking association or corporation having its corporate trust office
in the same State as the location of the Corporate Trust Office of the Owner
Trustee as specified in this Agreement; and organized and doing business under
the laws of such State or the United States; authorized under such laws to
exercise corporate trust powers; having a combined capital and surplus of at
least $50,000,000 and subject to supervision or examination by federal or
state authorities; and having a long-term deposit rating no lower than Baa3 by
Moody's, so long as Moody's is a Rating Agency, or be otherwise acceptable to
each Rating Agency, as evidenced by a letter to such effect from each of them.
If the Owner Trustee shall publish reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising
or examining authority, then for the purpose of this Section, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. In case at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of this Section, the Owner Trustee shall resign
immediately in the manner and with the effect specified in Section 6.07.
Section 6.07. Resignation or Removal of Owner Trustee.
(a) The Owner Trustee may at any time resign and be
discharged from the trusts created by this Agreement by giving written notice
thereof to the Transferor. Upon receiving such notice of resignation, the
Transferor shall promptly appoint a successor Owner Trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to
the resigning Owner Trustee and one copy to the successor Owner Trustee. If no
successor Owner Trustee shall have been so appointed and have accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning Owner Trustee may petition any court of competent jurisdiction for
the appointment of a successor Owner Trustee.
(b) If at any time the Owner Trustee shall cease to be
eligible in accordance with the provisions of Section 6.06 and shall fail to
resign after written request therefor by the Transferor, or if at any time the
Owner Trustee shall be legally unable to act, or shall be adjudged a bankrupt
or insolvent, or a receiver of the Owner Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Owner
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Transferor may remove the Owner Trustee.
If it shall remove the Owner Trustee under the authority of the immediately
preceding sentence, the
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Transferor shall promptly appoint a successor Owner Trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to
the Owner Trustee so removed and one copy to the successor Owner Trustee, and
payment of all fees owed to the outgoing Owner Trustee.
(c) Any resignation or removal of the Owner Trustee and
appointment of a successor Owner Trustee pursuant to any of the provisions of
this Section shall not become effective until acceptance of appointment by the
successor Owner Trustee as provided in Section 6.08. The Servicer shall give
the Indenture Trustee and each Rating Agency notice of any such resignation or
removal of the Owner Trustee and appointment and acceptance of a successor
Owner Trustee.
Section 6.08. Successor Owner Trustee.
Any successor Owner Trustee appointed as provided in Section 6.07
shall execute, acknowledge and deliver to the Transferor and to its
predecessor Owner Trustee an instrument accepting such appointment under this
Agreement, and thereupon the resignation or removal of the predecessor Owner
Trustee shall become effective and such successor Owner Trustee, without any
further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor under this
Agreement, with like effect as if originally named as Owner Trustee. The
predecessor Owner Trustee shall deliver to the successor Owner Trustee all
documents and statements held by it under this Agreement; and the Transferor
and the predecessor Owner Trustee shall execute and deliver such instruments
and do such other things as may reasonably be required for fully and certainly
vesting and confirming in the successor Owner Trustee all such rights, powers,
duties and obligations. No successor Owner Trustee shall accept appointment as
provided in this Section unless at the time of such acceptance such successor
Owner Trustee shall be eligible under the provisions of Section 6.06. Upon
acceptance of appointment by a successor Owner Trustee as provided in this
Section, the Servicer shall cause notice of the successor of such Owner
Trustee under this Agreement to be given by mail to the Indenture Trustee and
each Rating Agency. If the Servicer fails to mail or cause to be mailed such
notice within ten days after acceptance of appointment by the successor Owner
Trustee, the successor Owner Trustee shall cause such notice to be mailed at
the expense of the Servicer.
Section 6.09. Merger or Consolidation of Owner Trustee.
Any corporation (i) into which the Owner Trustee may be merged or
consolidated, (ii) which may result from any merger, conversion, or
consolidation to which the Owner Trustee shall be a party, or (iii) which may
succeed to the corporate trust business of the Owner Trustee, shall be the
successor of the Owner Trustee hereunder, provided such corporation shall be
eligible pursuant to Section 6.06, without the execution or filing of any
instrument or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding, except that if the Owner
Trustee in any of the foregoing cases is not the surviving entity, then the
surviving entity shall execute an agreement of assumption to perform every
obligation of the Owner Trustee, either generally or particularly as provided
herein. Notice of any such event shall be given by the Owner Trustee to each
Rating Agency.
Section 6.10. Appointment of Co-Trustee or Separate Owner Trustee.
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust may at the time be located, the Transferor and the Owner
Trustee acting jointly shall have the power and shall execute and deliver all
instruments to appoint one or more Persons approved by the Owner Trustee to
act as co-trustee, jointly with the Owner Trustee, or separate trustee or
separate trustees, of all or any part of the Trust, and to vest in such
Person, in such capacity and for the benefit of the Noteholders and the
Transferor Certificateholder, such title to the Trust, or any part thereof,
and, subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the Transferor and the Owner Trustee may
consider necessary or desirable. If the Transferor shall not have joined in
such appointment within 15
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days after the receipt by it of a request so to do, the Owner Trustee alone
shall have the power to make such appointment. No co-trustee or separate
trustee under this Agreement shall be required to meet the terms of
eligibility as a successor Owner Trustee pursuant to Section 6.06 and no
notice of a successor Owner Trustee pursuant to Section 6.08 and no notice to
Noteholders or the Indenture Trustee of the appointment of any co-trustee or
separate trustee shall be required pursuant to Section 6.08.
Each separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred
or imposed upon the Owner Trustee shall be conferred upon and exercised or
performed by the Owner Trustee and such separate trustee or co-trustee jointly
(it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Owner Trustee joining in such act),
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed, the Owner Trustee shall be
incompetent or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of title to the
Trust or any portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at the
direction of the Owner Trustee;
(ii) no trustee under this Agreement shall be personally
liable by reason of any act or omission of any other trustee under this
Agreement; and
(iii) the Transferor and the Owner Trustee acting jointly
may at any time accept the resignation of or remove any separate trustee or
co-trustee.
Any notice, request or other writing given to the Owner Trustee shall
be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement
and the conditions of this Section. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Owner Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Owner Trustee. Each such instrument shall be filed with the
Owner Trustee and a copy thereof given to the Transferor and the Servicer.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its
estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Owner Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee. Notwithstanding anything to the
contrary in this Agreement, the appointment of any separate trustee or
co-trustee shall not relieve the Owner Trustee of its obligations and duties
under this Agreement.
Section 6.11. Representations and Warranties of Owner Trustee.
The Owner Trustee makes the following representations and warranties
on which the Transferor and the Noteholders may rely:
(i) Organization and Good Standing. The Owner Trustee is a
Delaware banking corporation organized, existing and in good standing under
the laws of the State of Delaware.
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(ii) Power and Authority. The Owner Trustee has full
power, authority and right to execute, deliver and perform this Agreement and
has taken all necessary action to authorize the execution, delivery and
performance by it of this Agreement.
(iii) Due Execution. This Agreement has been duly executed
and delivered by the Owner Trustee.
(iv) Enforceability. This Agreement constitutes the legal,
valid and binding obligation of the Owner Trustee, enforceable against it in
accordance with its terms except as the enforceability thereof may be limited
by bankruptcy, insolvency, moratorium, reorganization or other similar laws
affecting enforcement of creditors' rights generally and by general principles
of equity.
Section 6.12. Tax Returns.
The Servicer shall on behalf of the Trust, the Owner Trustee and the
Transferor, prepare or shall cause to be prepared any required federal tax
information returns (in a manner consistent with the treatment of the Notes as
indebtedness) and the Owner Trustee shall file and distribute such forms as
required by law in accordance with the Servicer's instructions. If and to the
extent the Trust is treated as a partnership for federal income tax purposes,
the Servicer shall prepare or cause to be prepared any federal and state
income tax returns that may be required with respect to the Trust or the Trust
assets and shall deliver any such returns to the Owner Trustee for signature
by the Transferor at least five days prior to the date such returns are
required by law to be filed.
Section 6.13. Owner Trustee May Enforce Claims Without Possession of
Transferor Certificate.
All rights of action and claims under this Agreement or the
Transferor Certificate may be prosecuted and enforced by the Owner Trustee
without the possession of the Transferor Certificate or the production thereof
in any proceeding relating thereto, and any such proceeding instituted by the
Owner Trustee shall be brought in its own name as trustee. Any recovery of
judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Owner Trustee, its
agents and counsel, be for the ratable benefit of the Noteholders and the
Certificateholder in respect of which such judgment has been obtained.
Section 6.14. Suit for Enforcement.
If a 1998-A Servicer Event of Default shall occur and be continuing
under the Servicing Agreement, as supplemented by the 1998-A Servicing
Supplement with respect to the 1998-A SUBI Portfolio, or if the RV Insurer
shall have failed to comply with its obligations to the Indenture Trustee or
the Owner Trustee as an insured party under the Residual Value Insurance
Policy, the Indenture Trustee or the Owner Trustee, in its discretion may,
subject to the provisions of Sections 6.01 and 6.02 hereof, and Section
11.01(b) of the 1998-A Servicing Supplement (with respect to the Servicer),
and the terms of the Residual Value Insurance Policy (with respect to the RV
Insurer) proceed to protect and enforce its rights and the rights of the
Noteholders and Certificateholder under this Agreement, the Servicing
Agreement and the Servicing Supplement, or the Residual Value Insurance
Policy, as applicable, by a suit, action or proceeding in equity or at law or
otherwise, whether for the specific performance of any covenant or agreement
contained herein or therein or in aid of the execution of any power granted
herein or therein or for the enforcement of any other legal, equitable or
other remedy as the Indenture Trustee or the Owner Trustee, being advised by
counsel, shall deem most effectual to protect and enforce any of the rights of
the Indenture Trustee or the Owner Trustee or the Noteholders and
Certificateholder.
Section 6.15. Rights of Indenture Trustee to Direct Owner Trustee.
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The Indenture Trustee (and, after payment in full of the Notes, the
Transferor) shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Owner Trustee under
this Agreement, or exercising any trust or power conferred on the Owner
Trustee by this Agreement; provided, however, that (a) subject to Sections
6.01 and 6.02, the Owner Trustee shall have the right to decline to follow any
such direction if the Owner Trustee being advised by counsel determines that
the action so directed may not lawfully be taken, or if the Owner Trustee in
good faith shall, by a Responsible Officer, determine that the proceedings so
directed would be illegal or subject it to personal liability and (b) nothing
in this Agreement shall impair the right of the Owner Trustee to take any
action deemed proper by the Owner Trustee and which is not inconsistent with
such direction by the Indenture Trustee (and, after payment in full of the
Notes, the Transferor).
Section 6.16. No Petition.
Each of the Owner Trustee and the Indenture Trustee covenants and
agrees that prior to the date which is one year and one day after the last
date upon which (a) each Class of Notes has been paid in full, and (b) all
obligations due under any other Securitized Financing have been paid in full,
neither the Owner Trustee nor the Indenture Trustee will institute against, or
join any other Person in instituting against (i) ALF LP, the Transferor or any
other Special Purpose Affiliate, (ii) ALF LLC, World Omni Lease Securitization
or any other general partner of a Special Purpose Affiliate that is a
partnership, (iii) any manager (other than WOFCO) of a limited liability
company that is a general partner of a Special Purpose Affiliate that is a
partnership or that itself is a Special Purpose Affiliate, or (iv) the
Origination Trustee or the Origination Trust, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding or other proceedings under
any federal or state bankruptcy or similar law. This Section shall survive the
termination of this Agreement or the resignation or removal of the Owner
Trustee or the Indenture Trustee under this Agreement or the Indenture,
respectively.
Section 6.17. Authority to Execute.
The Transferor hereby authorizes and directs the Owner Trustee (i) to
execute and deliver, on behalf of the Trust, the Indenture, the Notes, the
Transferor Certificate and any other document as the Transferor or the
Indenture Trustee may from time to time direct, (ii) to execute and deliver
all other documents contemplated by the documents referred to in clause (i)
above, and (iii) subject to the terms of this Agreement, to take such other
actions in connection with the foregoing as the Transferor, the Servicer or
the Indenture Trustee may from time to time direct.
Section 6.18. Management of the Trust
The business and affairs of the Trust shall be managed by the Owner
Trustee at the direction of the Transferor, the Servicer and the Indenture
Trustee.
ARTICLE SEVEN. TERMINATION
Section 7.01. Termination of the Trust.
The Trust and the respective obligations and responsibilities of the
Transferor, the Indenture Trustee and the Owner Trustee shall terminate upon
the earliest of (i) the purchase as of any Distribution Date by the Transferor
of the corpus of the Trust as described in Section 7.02 (ii) the day following
the Distribution Date upon which all Notes have been paid in full and after
which there is no unreimbursed Class A-1 Note Principal Loss Amount, Class A-2
Note Principal Loss Amount, Class A-3 Note Principal Loss Amount, Class A-4
Note Principal Loss Amount, Class B Note Principal Loss Amount, Class A-1 Note
Principal Loss Interest Amount, Class A-2 Note Principal Loss Interest Amount,
Class A-3 Note Principal Loss Interest Amount, Class A-4 Note Principal Loss
Interest Amount, Class B Note Principal Loss Interest Amount, Class B Note
Principal Carryover Shortfall or Class B Note
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Principal Carryover Shortfall Interest Amount or (iii) the expiration,
disposition or termination of the 1998-A SUBI Interest; provided, however,
that in no event shall the trust created by this Agreement continue beyond the
expiration of 21 years from the death of the last survivor of the descendants
of William Jefferson Clinton of the State of Arkansas, living on the date of
the Agreement. The Transferor shall promptly notify the Owner Trustee and each
Rating Agency of any prospective termination of the Trust.
Section 7.02. Optional Purchase of the 1998-A SUBI Interest.
(a) On each Distribution Date as of which the Note Balance
shall be less than or equal to ten percent (10%) of the Initial Note Balance,
either before or after giving effect to any payment of principal required to
be made on such Distribution Date, the Transferor shall have the option to
purchase the corpus of the Trust. To exercise such option, the Transferor
shall notify the Indenture Trustee, the Owner Trustee and the Servicer, in
writing, no later than the third Business Day of the month in which such
purchase is to be effected and shall deposit in the Distribution Account an
amount equal to the greater of (i) the Aggregate Net Investment Value as of
the last day of the related Collection Period, and (ii) the sum of (A) the
Note Balance, (B) the accrued and unpaid Class A-1 Interest Distributable
Amount, Class A-2 Interest Distributable Amount, Class A-3 Interest
Distributable Amount, Class A-4 Interest Distributable Amount and Class B
Interest Distributable Amount, (C) any accrued and unpaid Class A-1 Interest
Carryover Shortfall, Class A-2 Interest Carryover Shortfall, Class A-3
Interest Carryover Shortfall, Class A-4 Interest Carryover Shortfall and Class
B Interest Carryover Shortfall, (D) any unpaid Class A-1 Note Principal Loss
Amount, unpaid Class A-2 Note Principal Loss Amount, unpaid Class A-3 Note
Principal Loss Amount, unpaid Class A-4 Note Principal Loss Amount, unpaid
Class B Note Principal Loss Amount and unpaid Class B Note Principal Carryover
Shortfall, and (E) any accrued and unpaid Class A-1 Note Principal Loss
Interest Amount, unpaid Class A-2 Note Principal Loss Interest Amount, unpaid
Class A-3 Note Principal Loss Interest Amount, unpaid Class A-4 Note Principal
Loss Interest Amount, unpaid Class B Note Principal Loss Interest Amount and
Class B Note Principal Carryover Shortfall Interest Amount through the day
preceding the final Distribution Date. The Transferor also shall pay to the
Servicer the aggregate amount of any unreimbursed Advances and the termination
payment, if any, owed by the Trust to the Class A Swap Counterparty for early
termination of the Class A Interest Rate Swap Agreement. Thereupon the
Transferor shall succeed to all of the Trust corpus.
(b) The corpus of the Trust may only be purchased pursuant
to this Section 7.02 if the Indenture Trustee and each Rating Agency receives
an Opinion of Counsel from the Transferor's counsel to the effect that such
purchase would not constitute a fraudulent conveyance, or each Rating Agency
is otherwise satisfied (as evidenced by written notice from each to the
Indenture Trustee).
ARTICLE EIGHT. EARLY AMORTIZATION EVENTS
Section 8.01. Early Amortization Events.
If any one of the following events shall occur during the Revolving
Period:
(a) failure on the part of the Servicer (i) to make any
payment or deposit required with respect to the 1998-A SUBI, the 1998-A SUBI
Interest, or the Notes under this Agreement, the Origination Trust Agreement
or the 1998-A SUBI Supplement, or the Servicing Agreement or the 1998-A
Servicing Supplement, on or before the date occurring five Business Days after
the payment or deposit is required to be made, or (ii) to deliver a Servicer's
Certificate within ten Business Days after any Determination Date;
(b) failure on the part of the Transferor or the Servicer
duly to observe or perform in any material respect any other covenants or
agreements of the Transferor or the Servicer set forth
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in this Agreement, the Origination Trust Agreement or the 1998-A SUBI
Supplement, or the Servicing Agreement or the 1998-A Servicing Supplement,
which failure materially and adversely affects the rights of the holder of the
1998-A SUBI Interest or of the Notes and which continues unremedied and
continues to affect materially and adversely the rights of the holder of the
1998-A SUBI Interest or of the Notes for a period of 60 days after the date on
which written notice of such failure, requiring the same to be remedied, is
given (i) to the Transferor or the Servicer, as the case may be, by the
Indenture Trustee, Owner Trustee or the Origination Trustee, or (ii) to the
Transferor or the Servicer, as the case may be, and to the Indenture Trustee
by the Holders of Notes evidencing not less than 25% of the aggregate
Percentage Interest;
(c) any representation or warranty made by ALF LP in the
SUBI Certificate Agreement, by the Transferor in this Agreement, or the
representation and warranty made by the Servicer in Section 8.01(c) of the
1998-A Servicing Supplement or any certificate given pursuant to Section
8.02(b) of the 1998-A Servicing Supplement, shall prove to have been incorrect
in any material respect when made or given, as a result of which the interests
of the holder of the 1998-A SUBI Interest or of the Noteholders are materially
and adversely affected and which continues to be incorrect in any material
respect and continues to affect materially and adversely affect the interests
of the holder of the 1998-A SUBI Interest or of the Noteholders for a period
of 60 days after the date on which written notice of such failure, requiring
the same to be remedied, is given (i) to ALF LP, the Transferor or the
Servicer, as the case may be, by the Indenture Trustee, Owner Trustee or the
Origination Trustee, or (ii) to ALF LP, the Transferor or the Servicer, as the
case may be, and to the Indenture Trustee by the Holders of Notes evidencing
not less than 25% of the aggregate Percentage Interest; provided, however,
that an Early Amortization Event pursuant to this subparagraph (b) shall not
be deemed to have occurred hereunder if the Servicer has made the deposit
contemplated by Section 8.03 of the 1998-A Servicing Supplement and has
reallocated the relevant 1998-A Lease and 1998-A Leased Vehicle to the UTI
Portfolio within the time provided therefor;
(d) the Transferor shall file a petition commencing a
voluntary case under any chapter of the Federal bankruptcy laws; or the
Transferor shall file a petition or answer or consent seeking reorganization,
arrangement, adjustment, or composition under any other similar applicable
Federal law, or shall consent to the filing of any such petition, answer, or
consent; or the Transferor shall appoint, or consent to the appointment of a
custodian, receiver, liquidator, trustee, assignee, sequestrator or other
similar official in bankruptcy or insolvency of it or of any substantial part
of its property, or shall make an assignment for the benefit of creditors, or
shall admit in writing its inability to pay its debts generally as they become
due;
(e) any order for relief against the Transferor shall have
been entered by a court having jurisdiction in the premises under any chapter
of the Federal bankruptcy laws; or a decree or order by a court having
jurisdiction in the premises shall have been entered approving as properly
filed a petition seeking reorganization, arrangement, adjustment, or
composition of the Transferor under any other similar applicable Federal law;
or a decree or order of a court having jurisdiction in the premises for the
appointment of a custodian, receiver, liquidator, trustee, assignee,
sequestrator or other similar official in bankruptcy or insolvency of the
Transferor or of any substantial part of its property, or for the winding up
or liquidation of its affairs, shall have been entered;
(f) any Lien, other than Liens permitted under this
Agreement, the Indenture, the Origination Trust Agreement or the 1998-A SUBI
Supplement, the Servicing Agreement or the 1998-A Servicing Supplement, or the
Backup Security Agreement, shall be created on or extend to or otherwise arise
upon or burden the 1998-A SUBI Interest, the 1998-A SUBI Certificate, or the
1998-A Leases or 1998-A Leased Vehicles, or any part thereof or any interest
therein or the proceeds thereof, and not be released or bonded over within 60
days thereafter;
50
<PAGE>
(g) the Transferor, the Trust or the Origination Trust shall
become subject to registration as an "investment company" under the Investment
Company Act;
(h) on the twenty-fifth calendar day of any calendar month
(commencing December 25, 1998) the aggregate amount of Principal Collections
(and amounts treated as Principal Collections pursuant to the last sentence of
Section 3.03(b)) collected through the last day of the related Collection
Period that have not been reinvested in new 1998-A Leases and 1998-A Leased
Vehicles, as contemplated by Section 11.02 of the 1998-A SUBI Supplement,
exceeds $1,000,000;
(i) a 1998-A Servicer Event of Default has occurred;
(j) an Indenture Event of Default has occurred;
(k) on any Distribution Date the aggregate amount withdrawn
from the Reserve Fund and deposited in the Distribution Account on or prior to
such Distribution Date (without reference to any subsequent deposits to the
Reserve Fund from any source) exceeds $[___];
(l) any 1998-A Leased Vehicle shall no longer be covered by
(i) the Residual Value Insurance Policy, (ii) one or more policies with
substantially similar coverage and provisions issued by an insurer acceptable
to each Rating Agency (as evidenced by a letter from each to the effect that
such change would not result in its then-current rating of any Rated
Securities being qualified, reduced or withdrawn); provided that the
Origination Trustee, the Indenture Trustee and the Owner Trustee shall at all
times have the same rights with respect to any replacement policy as with
respect to the original policy, or (iii) any alternative mechanism to support
the Booked Residual Value of such 1998-A Leased Vehicle that has been approved
in accordance with the procedures set forth in Section 9.01 for the amendment
hereof;
(m) the failure of the Class A Swap Counterparty to make a
required payment within five calendar days of the date such payment was due;
or
(n) the failure of the Servicer or the Class A Swap
Counterparty, within 30 calendar days of the date on which the counterparty
ratings of the Class A Swap Counterparty is reduced or withdrawn below (1) AA-
by Standard & Poor's, (2) Aa3 by Moody's or (3) AA- by Fitch, if the Class A
Swap Counterparty is rated by Fitch, to (i) obtain a replacement interest rate
swap agreement with terms substantially the same as the Class A Interest Rate
Swap Agreement or (ii) establish any other arrangement satisfactory to the
applicable Rating Agency, in any case such that the Rating Agency will not
reduce or withdraw its rating of any Class of the Class A Notes,
then (but in the case of any event described in subparagraph (a),
(b), (c), (f), (g), (m) or (n) after any applicable grace period) an early
amortization event (an "Early Amortization Event") shall have occurred.
ARTICLE NINE. MISCELLANEOUS PROVISIONS
Section 9.01. Amendment.
(a) This Agreement and the other Transaction Documents may
be amended by the respective parties thereto, without the consent of any of
the Noteholders, to cure any ambiguity, to correct or supplement any
provisions herein or therein, to add, change or eliminate any other provisions
hereof or thereof with respect to matters or questions arising hereunder or
thereunder that shall not be inconsistent with the provisions hereof or
thereof, or to add or amend any provision therein in connection with
permitting transfers of the Class B Notes; provided, however, that any such
action shall not, in the good faith judgment of the parties hereto or thereto,
adversely affect in any material respect the
51
<PAGE>
interests of the Noteholders, and the Origination Trustee and the Indenture
Trustee shall have received an Opinion of Counsel to the effect that such
action shall not affect the legal interests or positions of the Noteholders.
(b) This Agreement and the other Transaction Documents may
also be amended from time to time by the respective parties hereto or thereto
including with respect to (i) changing the formula for determining the Reserve
Fund Cash Requirement, the Reserve Fund Supplemental Requirement, the RV
Insurer Reserve Fund Supplemental Requirement and/or the Downgrade Reserve
Fund Supplemental Requirement (including changing the Reserve Fund Tests)
which change would result in a decrease in the amount of the Reserve Fund Cash
Requirement, the Reserve Fund Supplemental Requirement, the RV Insurer Reserve
Fund Supplemental Requirement and/or the Downgrade Reserve Fund Supplemental
Requirement, (ii) changing the manner by which the Reserve Fund is funded,
which changes could include borrowings by the Transferor to fund all or a
portion of the Reserve Fund Initial Deposit (which borrowings would be payable
from assets or cash flow otherwise payable to the Transferor), (iii) changing
the remittance schedule for collection deposits in the Distribution Account,
(iv) changing the definition of "Permitted Investments", or (v) replacing the
Residual Value Insurance Policy with an alternate mechanism to support the
Booked Residual Value of the 1998-A Leased Vehicles and Early Termination
Amounts, if either (A) the Indenture Trustee has been furnished with
confirmation (written or oral) from each Rating Agency to the effect that such
amendment would not cause its then-current rating of any Rated Securities to
be qualified, reduced or withdrawn, or (B) the Indenture Trustee has received
the consent of the Holders of Notes representing more than 50% of the
aggregate Percentage Interests, acting as a single Class (which consent of any
Holder of a Note given pursuant to this Section or pursuant to any other
provision of this Agreement shall be conclusive and binding on such Holder and
on all future Holders of such Note and of any Note issued upon the transfer
thereof or in exchange thereof or in lieu thereof whether or not notation of
such consent is made upon the Note); provided, however, that: (1) any
amendment (x) eliminating the Reserve Fund or the Residual Value Insurance
Policy, (y) reducing the Reserve Fund Cash Requirement to less than the lesser
of the Reserve Fund Initial Deposit and the Note Balance as of the related
Distribution Date (after giving effect to reductions in the Note Balance on
such Distribution Date), or (z) eliminating or reducing the RV Insurer Reserve
Fund Supplemental Requirement, shall also require that the Indenture Trustee
and each Rating Agency receive an Opinion of Counsel to the effect that, after
such amendment, for Federal income tax purposes the Class A Notes will
properly be characterized as indebtedness that is secured by the assets of the
Trust; (2) with respect to an amendment replacing the Residual Value Insurance
Policy with an alternate mechanism, the Servicer also shall have provided to
the Indenture Trustee and the Origination Trustee an Officer's Certificate to
the effect that the 1998-A Leases may properly be treated as finance leases
for purposes of generally accepted accounting principles, consistently
applied, by virtue of some reason other than maintenance of that policy, and
describing such reasons (which shall be in accordance with generally accepted
accounting principles, consistently applied); and (3) no such amendment shall
(y) except as otherwise provided in Section 9.01(a), increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on the 1998-A SUBI or any 1998-A SUBI Certificate or distributions
that shall be required to be made on any Note or the applicable Note Rate or
(z) reduce the aforesaid percentage of the aggregate Percentage Interest of
the Notes of each Class required to consent to any such amendment, without the
consent of the Holders of all Notes of such Class then outstanding.
(c) The Indenture Trustee shall provide each Rating Agency
prior notice of any proposed amendment hereto and copies of an Opinion of
Counsel, if relevant, whether or not such amendment requires its approval. Any
notice of any such amendment or modification as to which notice is required to
be given to any Rating Agency shall contain both the substance and substantial
form of the proposed amendment or modification.
(d) Promptly after the execution of any such amendment or
consent, the Indenture Trustee shall furnish written notification of the
substance of such amendment or consent to each
52
<PAGE>
Noteholder. It shall not be necessary for the consent of Noteholders pursuant
to Section 9.01(b) to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization by Noteholders of the execution thereof shall be subject to such
reasonable requirements as the Indenture Trustee may prescribe.
(e) Prior to the execution of any amendment to this
Agreement, the Indenture Trustee and the Owner Trustee shall be entitled to
receive and rely upon an Opinion of Counsel stating that the execution of such
amendment is authorized or permitted by this Agreement. The Indenture Trustee
and the Owner Trustee may, but shall not be obligated to, enter into any such
amendment which affects such Trustee's own rights, duties or immunities under
this Agreement or otherwise.
Section 9.02. Protection of Title to Trust.
(a) The Transferor shall execute and file, or cause to be
executed and filed, such financing statements and such continuation and other
statements, all in such manner and in such places as may be required by law
fully to preserve, maintain and protect the interest of the Noteholders and
the Owner Trustee under this Agreement in the 1998-A SUBI Interest, the 1998-A
SUBI Certificate and in the proceeds thereof. The Transferor shall deliver (or
cause to be delivered) to the Owner Trustee file-stamped copies of, or filing
receipts for, any document filed as provided above, as soon as available
following such filing.
(b) The Transferor shall not change its name, identity or
partnership structure in any manner that would, could or might make any
financing statement or continuation statement filed by the Transferor in
accordance with paragraph (a) above seriously misleading within the meaning of
Section 9-402(7) of the UCC, unless it shall have given the Owner Trustee
written notice thereof and shall have promptly filed appropriate amendments to
all previously filed financing statements or continuation statements.
(c) The Transferor shall give the Owner Trustee prior
written notice of any relocation of its principal executive office if, as a
result of such relocation, the applicable provisions of the UCC would require
the filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement and shall promptly make any such
filing.
(d) The Transferor shall deliver to the Owner Trustee
promptly after the execution and delivery of each amendment to this Agreement,
an Opinion of Counsel either (i) stating that, in the opinion of such Counsel,
all financing statements and continuation statements have been executed and
filed that are necessary fully to preserve and protect the interest of the
Owner Trustee in the 1998-A SUBI Interest, and reciting the details of such
filings or referring to prior Opinions of Counsel in which such details are
given, or (ii) stating that, in the opinion of such Counsel, no such action is
necessary to preserve and protect such interest.
(e) The Transferor shall, to the extent required by
applicable law, cause the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes
and Class A-4 Notes to be registered with the Commission pursuant to Section
12(b) or Section 12(g) of the Exchange Act within the time periods specified
in such Sections.
(f) This Agreement may be executed simultaneously in any
number of counterparts, each of which counterparts shall be deemed to be an
original, and all of which counterparts shall constitute but one and the same
instrument.
Section 9.03. Limitation on Rights of Transferor.
53
<PAGE>
The incapacity, bankruptcy or insolvency of the Transferor shall not
operate to terminate this Agreement or the Trust, nor entitle the Transferor's
legal representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the
Trust, nor otherwise affect (except to the extent set forth herein or in the
other Transaction Documents) the rights, obligations and liabilities of the
parties to this Agreement, the other Transaction Documents or any of them.
Section 9.04. Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO ANY OTHERWISE
APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS, EXCEPT THAT THE GRANT OF A
SECURITY INTEREST IN ANY ACCOUNT AND THE FUNDS AND PROPERTY THEREIN AND THE
PERFECTION, EFFECT OF PERFECTION, AND PRIORITY OF SUCH SECURITY INTEREST SHALL
BE GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS.
Section 9.05. Notices.
All demands, notices and communications under this Agreement shall be
in writing, personally delivered or mailed by certified mail, return receipt
requested, and shall be deemed to have been duly given upon receipt (i) in the
case of the Transferor, to the agent for service as specified in this
Agreement, or at such other address as shall be designated by the Transferor
in a written notice to the Owner Trustee and the Indenture Trustee; (ii) in
the case of the Indenture Trustee, at the Corporate Trust Office of the
Indenture Trustee; (iii) in the case of the Owner Trustee, at the Corporate
Trust Office of the Owner Trustee; (iv) in the case of Standard & Poor's, at
25 Broadway, 20th Floor, New York, New York 10004, Attention: Asset Backed
Surveillance Department; (v) in the case of Moody's, at 99 Church Street, New
York, New York 10007 Attention: ABS Monitoring Department; and (vi) in the
case of Fitch, at Fitch Information Services, 1201 E. Seventh Street, Powell,
Wyoming 82435 Attention: Asset Backed Surveillance. Any notice required or
permitted to be mailed to a Noteholder shall be given as provided in Section
1.05 of the Indenture. Any notice so mailed within the time prescribed in this
Agreement shall be conclusively presumed to have been duly given, whether or
not the Noteholder shall receive such notice.
Section 9.06. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions
of this Agreement or of the Securities or the rights of the Holders thereof.
Section 9.07. Assignment.
Notwithstanding anything to the contrary contained in this Agreement,
except as provided in Section 5.03, this Agreement may not be assigned by the
Transferor without the prior written consent of Holders of Notes evidencing
more than 50% of the aggregate Percentage Interests (acting as a single
Class). The Transferor shall provide a copy of any such assignment to each
Rating Agency.
Section 9.08. Transferor Certificate Nonassessable and Fully Paid.
Except as provided in Section 5.02(b) with regard to the Transferor,
the Transferor shall not be personally liable for obligations of the Trust.
The interest represented by the Transferor Certificate shall be nonassessable
for any losses or expenses of the Trust or for any reason whatsoever, and,
upon the
54
<PAGE>
execution and authentication thereof by the Owner Trustee pursuant to Section
4.02, 4.03 or 4.04, the Transferor Certificate is and shall be deemed fully
paid.
Section 9.09. Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. Further,
all references herein to Persons or entities other than parties hereto shall
be deemed to refer to the successors and permitted assigns of such persons, to
the extent that such construction is reasonably possible; to the extent that
such construction is not reasonably possible, the parties hereto shall amend
this Agreement so as to effect the original intent of the parties as closely
as possible in an acceptable manner.
ARTICLE TEN. AGENT FOR SERVICE
Section 10.01. Agent for Service of Transferor.
The agent for service of process for the Transferor shall be its
Treasurer, at 6150 Omni Park Drive, Mobile, Alabama 36609.
Section 10.02. Agent of Owner Trustee.
The Owner Trustee shall maintain an office or offices or agency or
agencies where notices and demands to or upon the Owner Trustee in respect of
the Transferor Certificate and this Agreement may be served. The initial such
office shall be the Corporate Trust Office. The Owner Trustee shall give
prompt written notice to the Transferor, the Servicer and the Indenture
Trustee of any change in the location of any such office or agency.
[SIGNATURES ON NEXT PAGE]
55
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers as of the day and year first above
written.
WORLD OMNI LEASE SECURITIZATION L.P.,
as Transferor
By: World Omni Lease Securitization
LLC, its general partner
By:
-----------------------------------
Patrick C. Ossenbeck
Assistant Treasurer
PNC BANK, DELAWARE, not in its individual
capacity except as expressly provided herein,
but solely as Owner Trustee
By:
-----------------------------------
Name:
----------------------------
Title:
----------------------------
THE BANK OF NEW YORK, as Indenture Trustee
By:
-----------------------------------
Name:
----------------------------
Title:
----------------------------
56
<PAGE>
EXHIBIT A
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE APPLICABLE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE RESOLD OR TRANSFERRED.
WORLD OMNI 1998-A AUTOMOBILE LEASE SECURITIZATION TRUST
AUTOMOBILE LEASE ASSET BACKED TRANSFEROR CERTIFICATE
evidencing the undivided equity interest in the Trust, as defined
below, the property of which includes, among other things, a 100%
interest in a special unit of beneficial interest (the "1998-A SUBI
Interest") in World Omni LT, an Alabama business trust, which 1998-A
SUBI Interest represents a beneficial interest in a pool of retail
lease contracts for new and used automobiles and light duty trucks
(and the related automobiles and light-duty trucks) entered into by
various automobile and light duty truck dealers pursuant to
contractual arrangements with World Omni Financial Corp. and
thereafter assigned to World Omni LT, and which 1998-A SUBI Interest
was originally issued to Auto Lease Finance L.P., and then sold to
World Omni Lease Securitization L.P., and then to the Trust.
(This Certificate does not represent an obligation of, or an interest
in, Auto Lease Finance, Inc., World Omni Lease Securitization, LLC,
World Omni LT, World Omni Financial Corp., or any of their respective
affiliates.)
THIS CERTIFIES THAT WORLD OMNI LEASE SECURITIZATION L.P. (the
"Transferor") is the registered owner of the undivided equity interest in the
World Omni 1998-A Automobile Lease Securitization Trust (the "Trust") formed
by the Transferor. The Trust was created pursuant to a Securitization Trust
Agreement dated as of October 1, 1998 (the "Agreement"), among the Transferor,
PNC Bank, Delaware, a Delaware banking corporation, as trustee (the "Owner
Trustee"), and The Bank of New York, as indenture trustee (the "Indenture
Trustee"). A summary of certain of the pertinent provisions of the Agreement
is set forth below. To the extent not otherwise defined herein the capitalized
terms used herein have the meanings assigned to them in the Agreement.
This Certificate is the Transferor Certificate issued under the
Agreement and designated as the "World Omni 1998-A Automobile Lease
Securitization Trust Automobile Lease Asset Backed Transferor Certificate"
(the "Transferor Certificate"). This Transferor Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Transferor Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
The property of the Trust includes, among other things, a 100%
interest in a special unit of beneficial interest (the "1998-A SUBI Interest")
in World Omni LT, an Alabama business trust (the "Origination Trust"), which
1998-A SUBI Interest represents a beneficial interest in, among other things,
a pool of retail automobile and light duty truck lease contracts ("Leases")
and the new and used automobiles and light duty trucks leased thereby ("Leased
Vehicles") (such pool of Leases and Leased Vehicles, the "1998-A SUBI
Portfolio") entered into by various automobile and light duty truck dealers
pursuant to contractual arrangements with World Omni Financial Corp., which
also acts as servicer (in that capacity, the "Servicer") of the 1998-A SUBI
Portfolio. During the Revolving Period, Principal Collections allocable to the
1998-A SUBI Interest generally will be applied towards the allocation to the
1998-A SUBI Portfolio of additional qualifying Leases and Leased Vehicles from
among all other unallocated Leases and Leased Vehicles owned by the
Origination Trust.
A-1
<PAGE>
Payments in respect of the 1998-A SUBI Interest will be allocated
between the Notes and this Transferor Certificate and paid to the registered
Holder of this Transferor Certificate as provided in the Agreement.
It is the intention of the Transferor, as the Holder of this
Certificate, that the Notes will be indebtedness for federal, state and local
income and franchise tax purposes and for purposes of any other tax imposed on
or measured by income. The Owner Trustee and the Transferor, as the Holder of
this Certificate, by acceptance of this Certificate, agree to treat the Notes,
for purposes of federal, state and local income or franchise taxes and any
other tax imposed on or measured by income, as indebtedness and to report the
transactions contemplated by the Agreement on all applicable tax returns in a
manner consistent with such treatment.
By accepting this Certificate, the Holder hereof waives any claim to
any proceeds or assets of the Origination Trustee and to all assets of the
Origination Trust other than those from time to time included within the
1998-A SUBI Portfolio as 1998-A SUBI Assets and those proceeds or assets
derived from or earned by such 1998-A SUBI Assets.
In the event that, notwithstanding the statement of intentions and
undertakings set forth in Section 4.12(a) of the Agreement and herein, it is
finally determined that the Notes do not evidence indebtedness of the
Transferor for all income and franchise tax purposes, but rather represent an
equity interest in the assets of the Trust, then the Transferor, as Holder
hereof, agrees (i) to treat the Notes, together with this Certificate, as
representing an interest in a partnership for all tax purposes, (ii) to treat
all payments in respect of such Certificate (to the extent not a return of
capital) as a "guaranteed payment" thereon made pursuant to Section 707(c) of
the Code, and (iii) to allocate all other items of income, gain, deduction,
loss or credit with respect to the assets and operations of the Trust to the
Transferor.
This Certificate does not represent an obligation of, or an interest
in, the Transferor, the Servicer, the Indenture Trustee, the Owner Trustee,
the Origination Trust or any of their respective affiliates. This Certificate
is limited in right of payment to certain collections and recoveries
respecting the 1998-A SUBI Interest and the 1998-A SUBI Certificate, Insured
Residual Value Loss Amounts paid under the Residual Value Insurance Policy and
certain monies on deposit in the Reserve Fund and in certain other accounts,
in each case to the extent and as more specifically set forth in the
Agreement. A copy of the Agreement may be examined during normal business
hours at the Corporate Trust Office of the Owner Trustee, and at such other
places, if any, designated by the Owner Trustee, by the Certificateholder upon
request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
parties thereto and the rights of the Certificateholder under the Agreement at
any time by the Transferor, the Servicer, the Indenture Trustee and the Owner
Trustee. In certain limited circumstances, the Agreement may only be amended
with the consent of the Holders of Notes evidencing more than 50% of the
aggregate Percentage Interests of all Notes, voting together as a single
class.
As provided in the Agreement, this Certificate shall be owned by the
Transferor and may not be transferred.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the payment to Noteholders of all
amounts required to be paid to them pursuant to the Agreement and the
disposition of all property held as part of the Trust. The Transferor may at
its option purchase the corpus of the Trust at a price specified in the
Agreement, and such purchase of the 1998-A SUBI Interest and the 1998-A SUBI
Certificate and other property of the Trust will effect early retirement of
this Certificate; provided, however, such right of purchase is exercisable
only on the
A-2
<PAGE>
Distribution Date following the last day of a Collection Period as of which
the Note Balance shall be less than or equal to ten percent (10%) of the
Initial Note Balance.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee, by manual signature,
this Transferor Certificate shall not entitle the Holder hereof to any benefit
under the Agreement or be valid for any purpose.
A-3
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee on behalf of the Trust and not
in its individual capacity has caused this Transferor Certificate to be duly
executed.
Dated: November __, 1998 WORLD OMNI 1998-A AUTOMOBILE LEASE
SECURITIZATION TRUST
PNC BANK, DELAWARE, not in its individual
capacity, but solely as Owner Trustee
(SEAL) By:
-------------------------------------
Authorized Officer
A-4
<PAGE>
This is the Transferor Certificate referred
to in the within-mentioned Agreement.
PNC BANK, DELAWARE, not in its individual
capacity, but solely as Owner Trustee
By:
-------------------------------------
A-5
<PAGE>
EXHIBIT B
[FORM OF]
CERTIFICATE OF TRUST OF
WORLD OMNI 1998-A AUTOMOBILE LEASE SECURITIZATION TRUST
THIS Certificate of Trust of World Omni 1998-A Automobile Lease
Securitization Trust (the "Trust"), dated as of October 1, 1998 is being duly
executed and filed by PNC Bank, Delaware, a Delaware banking corporation, as
trustee, to form a business trust under the Delaware Business Trust Act (12
Del. Code, ss. 3801 et seq.).
1. Name. The name of the business trust formed hereby is WORLD OMNI
1998-A AUTOMOBILE LEASE SECURITIZATION TRUST.
2. Delaware Trustee. The name and business address of the trustee of
the Trust resident in the State of Delaware is PNC Bank, Delaware, 222
Delaware Avenue, 17th Floor, Wilmington, Delaware, 19801-1600.
3. This Certificate of Trust will be effective ____________, 1998.
IN WITNESS WHEREOF, the undersigned, being the trustee of the Trust,
has executed this Certificate of Trust as of the date first above written.
PNC Bank, Delaware, a Delaware banking
corporation, not in its individual
capacity, but solely as owner trustee
of the Trust.
By:
---------------------------------
Name:
--------------------------
Title:
--------------------------
B-1
Exhibit 4.1
WORLD OMNI 1998-A AUTOMOBILE
LEASE SECURITIZATION TRUST
Floating Rate Automobile Lease Asset Backed Notes, Class A-1
Floating Rate Automobile Lease Asset Backed Notes, Class A-2
Floating Rate Automobile Lease Asset Backed Notes, Class A-3
Floating Rate Automobile Lease Asset Backed Notes, Class A-4
[___]% Automobile Lease Asset Backed Notes, Class B
INDENTURE
Dated as of October 1, 1998
THE BANK OF NEW YORK
as Indenture Trustee
<PAGE>
TRUST INDENTURE ACT
CROSS-REFERENCE CHART(1)
TIA SECTION REFERENCE IN THE INDENTURE
310(a)(1)................................................... 6.08(a)
................................................... 6.08(b)
310(a)(2)................................................... 6.08(b)
310(a)(3)................................................... 6.13
310(a)(4)................................................... Not applicable
310(a)(5)................................................... 6.08(c)
310(b)...................................................... 6.08(d)
310(c)...................................................... Not applicable
311(a)...................................................... 6.16
311(b)...................................................... 6.16
311(c)...................................................... Not applicable
312(a)...................................................... 7.01
...................................................... 7.02(a)
312(b)...................................................... 7.02(b), 7.02(c)
312(c)...................................................... 7.02(b)
313(a)...................................................... 7.03(a)
313(b)...................................................... 7.03(a)
313(c)...................................................... 7.03(a)
313(d)...................................................... 7.03(b)
314(a)...................................................... 3.09, 7.04
314(b)...................................................... 3.06
314(c)(1)................................................... 11.01
314(c)(2)................................................... 11.01
314(c)(3)................................................... Not applicable
314(d)...................................................... 3.09(b), 8.04
314(e)...................................................... 11.01(b)
315(a)...................................................... 6.01(a)
315(b)...................................................... 6.02
315(c)...................................................... 6.01(b)
315(d)...................................................... 6.01
315(d)(1)................................................... 6.01(a), 6.01(c)(i)
315(d)(2)................................................... 6.01(c)(ii)
315(d)(3)................................................... 6.01(c)(iii)
315(e)...................................................... 5.16
316(a)...................................................... 5.14; 5.15
316(a)(1)(A)................................................ 5.14
316(a)(1)(B)................................................ 5.15
316(a)(2)................................................... Not applicable
316(b)...................................................... 5.10
316(c)...................................................... 5.09(b)
317(a)(1)................................................... 5.03
317(a)(2)................................................... 5.06
317(b)...................................................... 3.03
318(a)...................................................... 11.07
- ------------
(1) This Trust Indenture Act Cross-Reference Chart is not a part of this
Indenture.
<PAGE>
TABLE OF CONTENTS
Page
RECITALS ......................................................................1
GRANTING CLAUSE ...............................................................1
ARTICLE ONE. DEFINITIONS.......................................................2
Section 1.01. Definitions...............................................2
ARTICLE TWO. THE NOTES.........................................................6
Section 2.01. Form Generally............................................6
Section 2.02. Denominations.............................................6
Section 2.03. Execution, Authentication, Delivery and Dating............6
Section 2.04. Registration of Notes.....................................7
Section 2.05. Mutilated, Destroyed, Lost or Stolen Notes................9
Section 2.06. Payment of Interest and Principal; Principal and
Interest Rights Preserved.................................9
Section 2.07. Persons Deemed Owners....................................10
Section 2.08. Cancellation.............................................11
Section 2.09. Authentication and Delivery of Notes.....................11
Section 2.10. Book-Entry Notes.........................................11
Section 2.11. Notices to the Clearing Agency...........................12
Section 2.12. Definitive Notes.........................................12
Section 2.13. Tax Treatment............................................12
ARTICLE THREE. COVENANTS AND REPRESENTATIONS..................................12
Section 3.01. Payment of Notes.........................................12
Section 3.02. Maintenance of Office or Agency..........................12
Section 3.03. Money for Note Payments to be Held in Trust..............13
Section 3.04. Existence................................................14
Section 3.05. Protection of Trust Estate...............................14
Section 3.06. Opinions as to Trust Estate..............................14
Section 3.07. Performance of Obligations...............................15
Section 3.08. Negative Covenants.......................................15
Section 3.09. Statements as to Compliance..............................16
ARTICLE FOUR. SATISFACTION AND DISCHARGE......................................16
Section 4.01. Satisfaction and Discharge of Indenture..................16
Section 4.02. Application of Trust Money...............................17
ARTICLE FIVE. DEFAULTS AND REMEDIES...........................................17
Section 5.01. Events of Default........................................17
Section 5.02. Acceleration of Maturity; Rescission and Annulment.......18
Section 5.03. Collection of Indebtedness and Suits for Enforcement
by Indenture Trustee.....................................19
Section 5.04. Remedies.................................................19
Section 5.05. Optional Preservation of Trust Estate....................20
Section 5.06. Indenture Trustee May File Proofs of Claim...............20
Section 5.07. Indenture Trustee May Enforce Claims Without
Possession of Notes......................................21
Section 5.08. Application of Money Collected...........................21
Section 5.09. Limitation on Suits......................................21
Section 5.10. Unconditional Rights of Noteholders to Receive Note
Payments.................................................22
Section 5.11. Restoration of Rights and Remedies.......................22
Section 5.12. Rights and Remedies Cumulative...........................22
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Section 5.13. Delay or Omission Not Waiver.............................22
Section 5.14. Control by Noteholders...................................22
Section 5.15. Waiver of Past Defaults..................................23
Section 5.16. Undertaking for Costs....................................23
Section 5.17. Sale of Trust Estate.....................................23
Section 5.18. Action on Notes..........................................24
Section 5.19. Notes held by Issuer or Affiliates Not to Share in
Distribution.............................................25
ARTICLE SIX. THE INDENTURE TRUSTEE............................................25
Section 6.01. Certain Duties and Responsibilities......................25
Section 6.02. Notice of Unmatured Event of Default.....................26
Section 6.03. Certain Rights of Indenture Trustee......................26
Section 6.04. Not Responsible for Recitals or Issuance of Notes........27
Section 6.05. May Hold Notes...........................................27
Section 6.06. Money Held in Trust......................................27
Section 6.07. Indenture Trustee's Fees and Expenses....................27
Section 6.08. Eligibility; Corporate Indenture Trustee Required........28
Section 6.09. Cessation of Eligibility.................................28
Section 6.10. Resignation and Removal; Appointment of Successor........28
Section 6.11. Acceptance of Appointment by Successor...................29
Section 6.12. Merger, Conversion, Consolidation or Succession to
Business of Indenture Trustee............................30
Section 6.13. Co-Trustees and Separate Trustees........................30
Section 6.14. Authenticating Agent.....................................31
Section 6.15. Withholding Taxes........................................32
Section 6.16. Preferential Collection of Claims against the Issuer.....32
Section 6.17. No Petition..............................................32
ARTICLE SEVEN. NOTEHOLDERS' LISTS AND REPORTS.................................32
Section 7.01. Issuer to Furnish Indenture Trustee Names and
Addresses of Noteholders.................................32
Section 7.02. Preservation of Information; Communications to
Noteholders..............................................32
Section 7.03. Reports by Indenture Trustee; Responses to Noteholder
Inquiries................................................33
Section 7.04. Reports by the Issuer....................................33
ARTICLE EIGHT. ACCOUNTS, DISBURSEMENTS AND RELEASES...........................34
Section 8.01. Collection of Moneys.....................................34
Section 8.02. Trust Accounts...........................................34
Section 8.03. General Provisions Regarding the Accounts................34
Section 8.04. Release of Trust Estate..................................35
Section 8.05. Opinion of Counsel.......................................36
ARTICLE NINE. SUPPLEMENTAL INDENTURES.........................................36
Section 9.01. [Intentionally Blank]....................................36
Section 9.02. Supplemental Indentures..................................36
Section 9.03. [Intentionally Blank]....................................36
Section 9.04. Execution of Supplemental Indentures.....................36
Section 9.05. Effect of Supplemental Indentures........................36
Section 9.06. Reference in Notes to Supplemental Indentures............36
Section 9.07. Compliance With TIA......................................37
Section 9.08. Successors and Assigns...................................37
ARTICLE TEN. OPTIONAL REDEMPTION OF NOTES.....................................37
Section 10.01. General..................................................37
Section 10.02. Form of Redemption Notice................................37
Section 10.03. Notes Payable on Redemption Date.........................38
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ARTICLE ELEVEN. MISCELLANEOUS.................................................38
Section 11.01. Compliance Certificates and Opinions.....................38
Section 11.02. Form of Documents Delivered to Indenture Trustee.........38
Section 11.03. Acts of Noteholders......................................39
Section 11.04. Notices, etc., to Indenture Trustee and Issuer...........40
Section 11.05. Notices and Reports to Noteholders; Waiver of Notices....40
Section 11.06. Rules by Indenture Trustee and Agents....................40
Section 11.07. Conflict with Trust Indenture Act........................40
Section 11.08. Effect of Headings and Table of Contents.................40
Section 11.09. Successors and Assigns...................................41
Section 11.10. Severability.............................................41
Section 11.11. Benefits of Indenture....................................41
Section 11.12. Legal Holidays...........................................41
Section 11.13. Governing Law............................................41
Section 11.14. Counterparts.............................................41
Section 11.15. Recording of Indenture...................................41
Section 11.16. Trust Obligation.........................................41
Section 11.17. Inspection...............................................42
Section 11.18. Waiver of Stay, Extension Laws, Trial by Jury............42
Section 11.19. Maximum Interest Payable.................................42
EXHIBIT A - FORM OF CLASS A-1 NOTE...........................................A-1
EXHIBIT B - FORM OF CLASS A-2 NOTE...........................................B-1
EXHIBIT C - FORM OF CLASS A-3 NOTE...........................................C-1
EXHIBIT D - FORM OF CLASS A-4 NOTE...........................................D-1
EXHIBIT E - FORM OF CLASS B NOTE.............................................E-1
EXHIBIT F-1 - FORM OF NON-RULE 144A REPRESENTATION LETTER....................F-1
EXHIBIT F-2 - FORM OF RULE 144A REPRESENTATION LETTER........................F-2
iii
<PAGE>
INDENTURE, dated as of October 1, 1998, between WORLD OMNI 1998-A
AUTOMOBILE LEASE SECURITIZATION TRUST, a Delaware business trust (the "Issuer"),
and THE BANK OF NEW YORK, a New York banking association, solely as indenture
trustee and not in its individual capacity (the "Indenture Trustee").
RECITALS
WHEREAS, the Issuer intends to issue notes of substantially the tenor
hereinafter provided; and, to secure the notes and to provide for the
authentication and delivery thereof, the Issuer will execute and deliver of this
Indenture;
WHEREAS, the notes, to be known as Floating Rate Automobile Lease-Secured
Notes, Class A-1 (the "Class A-1 Notes"), Floating Rate Automobile Lease Asset
Backed Notes, Class A-2 (the "Class A-2 Notes"), Floating Rate Automobile Lease
Asset Backed Notes, Class A-3 (the "Class A-3 Notes"), Floating Rate Automobile
Lease Asset Backed Notes, Class A-4 (the "Class A-4 Notes" and, together with
the Class A-1 Notes, Class A-2 Notes and Class A-3 Notes, the "Class A Notes")
and [___] % Automobile Lease Asset Backed Notes, Class B (the "Class B Notes"
and, together with the Class A Notes, the "Notes"), and the certificate of
authentication for the Notes, are to be substantially in the forms set forth in
Exhibits A, B, C, D and E attached hereto, respectively, with such variations as
are permitted in this Indenture; and
WHEREAS, all acts necessary to make the Notes, when executed, authenticated
and issued, the valid obligations of the Issuer, and to constitute this
Indenture a valid and binding instrument for the security of the Notes, in
accordance with its and their terms, have been done; NOW, THEREFORE,
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee or its nominee all of the
Issuer's right, title and interest in, to and under the following property:
(i) all right, title and interest of the Issuer in and to the 1998-A SUBI
and SUBI Assets and the 1998-A SUBI Certificate evidencing the 1998-A SUBI
Interest and all monies due thereon and paid thereon or in respect thereof;
(ii) the right to realize upon any property that may be deemed to secure
the 1998-A SUBI Interest;
(iii) all rights accruing to the holder of the 1998-A SUBI Interest as a
third-party beneficiary under the Origination Trust Agreement, the 1998-A SUBI
Supplement, the Servicing Agreement and the 1998-A Servicing Supplement;
(iv) the Residual Value Insurance Policy;
(v) the Accounts and the funds therein; and
(vi) all proceeds of the foregoing.
Such Grants are made, however, in trust, to secure the Notes equally and
ratably without prejudice, priority or distinction, except as expressly provided
in the Transaction Documents, between any Note and any other Note by reason of
difference in time of issuance or otherwise, and to secure (i) the payment of
all amounts due on the Notes in accordance with their terms; (ii) the payment of
all other sums payable under this Indenture; and (iii) compliance with the
provisions of this Indenture, all as provided in this Indenture. To the extent
that the Issuer may be deemed to have a security interest in,
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rather than to own, any of the foregoing property, the Issuer hereby assigns to
the Indenture Trustee or its nominee all of the Issuer's right, title and
interest in such property.
The Indenture Trustee acknowledges such Grants, accepts the trusts
hereunder in accordance with the provisions hereof and agrees to perform the
duties herein required to the end that the interests of the Noteholders may be
adequately and effectively protected.
ARTICLE ONE. DEFINITIONS
Section 1.01. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires, (a) the terms defined in this Article
have the meanings assigned to them in this Article and include (i) the plural as
well as the singular and (ii) all genders; (b) all other terms used herein which
are defined in the TIA, either directly or by reference therein, have the
meanings assigned to them therein; (c) all accounting terms not otherwise
defined herein have the meanings assigned to them in accordance with generally
accepted accounting principles as at the time applicable in the United States;
(d) all references in this instrument to designated "Articles", "Sections" and
other subdivisions are to the designated Articles, Sections and other
subdivisions of this instrument as originally executed and amended from time to
time; and (e) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Indenture as a whole. Capitalized terms used herein
which are not defined herein shall have the meanings set forth in the
Securitization Trust Agreement dated as of the date hereof (the "Securitization
Trust Agreement") among the Transferor, PNC Bank, Delaware, as Owner Trustee and
the Indenture Trustee, the Origination Trust Agreement, the 1998-A SUBI
Supplement or the 1998-A Servicing Supplement (as such terms are defined in the
Securitization Trust Agreement), as applicable.
"Account" means any of the 1998-A SUBI Collection Account, the Distribution
Account, the Reserve Account and any 1998-A SUBI Lease Account.
"Accountant" means a Person qualified to pass upon accounting questions,
whether or not (unless herein required to be Independent) such Person shall be
an officer or employee of the Issuer or of an Affiliate of the Issuer.
"Act", with respect to any Noteholder, has the meaning specified in Section
11.03.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control," when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Applicants" shall have the meaning specified in Section 7.02(b).
"Authenticating Agent" means any Authenticating Agent appointed as such
pursuant to Section 6.14, and includes any successor thereto.
"Book-Entry Note" means the direct or indirect interest beneficially owned
by any Note Owner in any Note held by or on behalf of DTC as Noteholder pursuant
to Section 2.10 hereof.
"Cash" means such coin or currency of the United States as at the time
shall be legal tender for payment of public and private debts.
2
<PAGE>
"Cede" means Cede & Co., as the nominee of DTC, the initial Clearing
Agency.
"Class A-1 Stated Maturity" means the December [___] Distribution Date.
"Class A-2 Stated Maturity" means the December [___] Distribution Date.
"Class A-3 Stated Maturity" means the December [___] Distribution Date.
"Class A-4 Stated Maturity" means the December [___] Distribution Date.
"Class B Stated Maturity" means the December [___] Distribution Date.
"Corporate Trust Office" means (a) with respect to the Indenture Trustee,
the Corporate Trust Department of the Indenture Trustee located at 1 Wall
Street, New York, New York, 10286, Attention: Corporate Trust Office, or at such
other address as the Indenture Trustee may designate from time to time by notice
to the Noteholders, the Servicer and the Issuer, or the principal corporate
trust office of any successor Indenture Trustee, except that, with respect to
presentation of Notes for payment, for registration of transfer or for exchange,
and with respect to the location of the Note Register, such term shall mean the
office or agency of the Indenture Trustee maintained for that purpose, which as
of the date of this Indenture is the same as set forth above, and (b) with
respect to the Owner Trustee, shall have the meaning set forth in the
Securitization Trust Agreement.
"Definitive Notes" shall have the meaning specified in Section 2.10.
"DTC" means The Depository Trust Company and its successors.
"Event of Default" has the meaning specified in Section 5.01.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate, remise,
release, convey, assign, transfer, create, grant a lien upon and a security
interest in and right of set-off against, deposit, set over and confirm pursuant
to the Indenture. A Grant of the Trust Estate or of any other agreement or
instrument shall include all rights, powers and options (but none of the
obligations) of the Granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of the Trust Estate and all other moneys
payable thereunder, to give and receive notices and other communications, to
make waivers or other agreements, to exercise all rights and options, to bring
Proceedings in the name of the Granting party or otherwise and generally to do
and receive anything that the Granting party is or may be entitled to do or
receive thereunder or with respect thereto. Other forms of the verb "to Grant"
shall have correlative meanings.
"Indenture" or "this Indenture" means this instrument as originally
executed, as the same may from time to time be amended or modified and in
effect.
"Indenture Trustee" means The Bank of New York, until a successor Person
shall have become the Indenture Trustee pursuant to Article Six of this
Indenture, and thereafter "Indenture Trustee" shall mean such successor Person.
"Independent" means, when used with respect to any specified Person, such a
Person who (a) is in fact independent of the Issuer, any other obligor upon the
Notes and any of their respective Affiliates; (b) does not have any direct
financial interest or any material indirect financial interest in the Issuer,
any such other obligor or any of their respective Affiliates; and (c) is not
connected with the Issuer, any such other obligor or any of their respective
Affiliates as an officer, employee, promoter, underwriter, trustee, partner,
director or Person performing similar functions. "Independent" when used with
respect to any Accountant means such an Accountant, who may also be the
Accountant who audits the books
3
<PAGE>
of the Issuer, any other obligor upon the Notes or any of their respective
Affiliates, who is independent with respect to the Issuer, any other obligor
upon the Notes and their respective Affiliates as contemplated by Rule 101 of
the Code of Professional Conduct of the American Institute of Certified Public
Accountants. Whenever it is herein provided that any Independent Person's
opinion or certificate shall be furnished to the Indenture Trustee, such Person
shall be acceptable to the Indenture Trustee if selected in the exercise of
reasonable care, and such opinion or certificate shall state that the signer has
read this direction and that the signer is independent within the meaning
thereof.
"Issuer" means the World Omni 1998-A Automobile Lease Securitization Trust
and its successors.
"Issuer Order" and "Issuer Request" means a written order or request signed
by any officer of Owner Trustee who is authorized to act for the Issuer, and
delivered to the Indenture Trustee.
"Lien" means a mortgage, pledge, lien, security interest or other charge or
encumbrance of any kind, including the retained interest of a conditional vendor
or lessor.
"Maturity" means the date on which the entire unpaid principal amount of
the Class A-1 Notes, Class A-2 Notes, Class A-3, Class A-4 Notes or Class B
Notes becomes due and payable as therein or herein provided, whether at the
Class A-1 Stated Maturity, Class A-2 Stated Maturity, Class A-3 Stated Maturity,
Class A-4 Stated Maturity or Class B Stated Maturity, respectively, or
otherwise.
"Note Register" and "Note Registrar" shall have the respective meanings
specified in Section 2.04 hereof.
"Notes" means the Class A Notes and the Class B Notes.
"Outstanding" means, with respect to the Notes, as of any date of
determination, all Notes theretofore authenticated and delivered under this
Indenture except:
(a) Notes theretofore canceled by the Indenture Trustee or delivered
to the Indenture Trustee for cancellation;
(b) Notes or portions thereof for whose payment or redemption Cash in
the necessary amount has been theretofore irrevocably deposited with the
Indenture Trustee or any Paying Agent in trust for the Holders of such Notes;
provided, however, that, if such Notes or portions thereof are to be redeemed,
notice of such redemption has been duly given pursuant to this Indenture or
provision therefor satisfactory to the Indenture Trustee has been made; and
(c) Notes in exchange for or in lieu of which other Notes have been
authenticated and delivered pursuant to this Indenture unless proof satisfactory
to the Indenture Trustee is presented that any such Notes are held by a holder
in due course;
provided, however, that for purposes of determining required percentages for
voting rights, consents and other actions of the Noteholders hereunder, Notes
owned by the Transferor or any Affiliate of the Transferor, as shown on the Note
Register, shall not be deemed to be Outstanding.
"Overdue Interest Rate" means the lesser of (1) the highest legally
permissible interest rate per annum and (2) the greater of (a) the Class A-1
Note Rate, Class A-2 Note Rate, Class A-3 Note Rate, Class A-4 Note Rate or
Class B Note Rate, as applicable, plus 16-2/3 basis points, or (b) the monthly
interest rate announced from time to time by the Indenture Trustee as its
reference rate.
4
<PAGE>
"Paying Agent" means the Indenture Trustee or any other Person that meets
the eligibility standards for the Indenture Trustee specified in Section 6.08
hereof and is authorized by the Issuer to pay on behalf of the Issuer the
principal or any interest that may become payable on any Notes.
"Person" means any individual, corporation, partnership, joint venture,
limited liability company, association, joint stock company, trust, bank, trust
company or estate (including any beneficiaries thereof), unincorporated
organization or government or any agency or political subdivision thereof.
"Predecessor Notes" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.05 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Proceeding" means any suit in equity, action at law or other judicial or
administrative proceeding.
"Redemption Date" means, with respect to any Note to be redeemed pursuant
to Article Ten hereof, any date fixed for such redemption pursuant to this
Indenture, which date shall be a Distribution Date.
"Redemption Price" means:
(a) with respect to any Class A-1 Note to be redeemed, the sum of (A)
the Class A-1 Note Balance, (B) the accrued and unpaid Class A-1 Interest
Distributable Amount, (C) any accrued and unpaid Class A-1 Interest Carryover
Shortfall, (D) any unpaid Class A-1 Note Principal Loss Amount, and (E) any
accrued and unpaid Class A-1 Note Principal Loss Interest Amount, in each case
through the day preceding the final Distribution Date;
(b) with respect to any Class A-2 Note to be redeemed, the sum of (A)
the Class A-2 Note Balance, (B) the accrued and unpaid Class A-2 Interest
Distributable Amount, (C) any accrued and unpaid Class A-2 Interest Carryover
Shortfall, (D) any unpaid Class A-2 Note Principal Loss Amount, and (E) any
accrued and unpaid Class A-2 Note Principal Loss Interest Amount, in each case
through the day preceding the final Distribution Date;
(c) with respect to any Class A-3 Note to be redeemed, the sum of (A)
the Class A-3 Note Balance, (B) the accrued and unpaid Class A-3 Interest
Distributable Amount, (C) any accrued and unpaid Class A-3 Interest Carryover
Shortfall, (D) any unpaid Class A-3 Note Principal Loss Amount, and (E) any
accrued and unpaid Class A-3 Note Principal Loss Interest Amount, in each case
through the day preceding the final Distribution Date;
(d) with respect to any Class A-4 Note to be redeemed, the sum of (A)
the Class A-4 Note Balance, (B) the accrued and unpaid Class A-4 Interest
Distributable Amount, (C) any accrued and unpaid Class A-4 Interest Carryover
Shortfall, (D) any unpaid Class A-4 Note Principal Loss Amount, and (E) any
accrued and unpaid Class A-4 Note Principal Loss Interest Amount, in each case
through the day preceding the final Distribution Date; and
(e) with respect to any Class B Note to be redeemed, the sum of (A)
the Class B Note Balance, (B) the accrued and unpaid Class B Interest
Distributable Amount, (C) any accrued and unpaid Class B Interest Carryover
Shortfall, (D) any unpaid Class B Note Principal Loss Amount, (E) any accrued
and unpaid Class B Note Principal Loss Interest Amount,(F) any unpaid Class B
Note Principal Carryover Shortfall, and (G) any Class B Note Principal Carryover
Shortfall Interest Amount, in each case through the day preceding the final
Distribution Date.
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"Residual Note" has the meaning set forth in Section 2.02(b).
"Sale" has the meaning specified in Section 5.17(a).
"Stated Maturity" means, with respect to any Note, as applicable, the Class
A-1 Stated Maturity, the Class A-2 Stated Maturity, the Class A-3 Stated
Maturity, the Class A-4 Stated Maturity or the Class B Stated Maturity.
"Transferor" means World Omni Lease Securitization L.P. and its successors.
"Trust Estate" means the interests granted to the Indenture Trustee in the
Granting Clause of this Indenture.
"Trustees" means the Indenture Trustee and the Owner Trustee.
"TIA" means the Trust Indenture Act of 1939, as amended.
"Unmatured Event of Default" means any occurrence which with notice or the
lapse of time or both would become an Event of Default.
ARTICLE TWO. THE NOTES
Section 2.01. Form Generally. The Class A-1 Notes, Class A-2 Notes, Class
A-3 Notes, Class A-4 Notes and Class B Notes, and the certificates of
authentication thereon, shall be in substantially the forms set forth in
Exhibits A, B, C, D and Exhibit E hereto, respectively with such appropriate
insertions, omissions, substitutions and other variations as are required by
this Indenture, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may,
consistently herewith, be determined by the officers executing such Notes, as
evidenced by their execution thereof. Any portion of the text of any Note may be
set forth on the reverse thereof, in which case the following reference to the
portion of the text appearing on the reverse of the Note shall be inserted on
the face of the Note, immediately prior to the paragraph stating that the
certificate of authentication on the Note must be executed by manual signature
of the Indenture Trustee or an Authenticating Agent as a condition to the
validity of such Note:
"Reference is hereby made to the further provisions of this
Note set forth on the reverse hereof which provisions shall
for all purposes have the same effect as if set forth at
this place."
The Notes shall be printed, lithographed, typewritten, mimeographed,
photocopied or otherwise produced or may be produced in any other manner as may,
consistently herewith, be determined by the officers executing such Notes, as
evidenced by their execution thereof.
Section 2.02. Denominations.
(a) Subject to Section 2.12 hereof, the Notes will be issued in book-entry
form.
(b) The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the
Class A-4 Notes shall be issuable in minimum denominations of $1,000 and
integral multiples in excess thereof and the Class B Notes shall be issuable in
minimum denominations of $[250,000] and integral multiples of $1,000 in excess
thereof (provided that no Class B Note may be issued or transferred in a
denomination that would cause there to be, immediately after such issuance or
transfer, one hundred (100) or more Class B Noteholders); provided, however,
that one Class A-1 Note, one Class A-2 Note, one Class A-3 Note, one Class A-4
Note and one Class B Note may be issued in a denomination that includes any
remaining
6
<PAGE>
portion of the Initial Class A-1 Note Balance, the Initial Class A-2 Note
Balance, the Initial Class A-3 Note Balance, the Initial Class A-4 Note Balance
and the Initial Class B Note Balance, respectively (each, a "Residual Note").
Section 2.03. Execution, Authentication, Delivery and Dating. The Notes
shall be executed on behalf of the Issuer by a Responsible Officer of the Owner
Trustee, which signature may be in facsimile form and be imprinted or otherwise
reproduced thereon.
Notes bearing the manual or facsimile signature of individuals who were at
any time the Responsible Officers of the Owner Trustee shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of issuance of such Notes.
At any time and from time to time after the execution and delivery of this
Indenture and the collateral assignment to the Indenture Trustee of the portion
of the Trust Estate to be Granted to the Indenture Trustee on the Closing Date,
the Issuer may deliver Notes executed by the Issuer to the Indenture Trustee for
authentication, and the Indenture Trustee shall authenticate and deliver such
Notes as provided in this Indenture and not otherwise.
Notes which are authenticated and delivered by the Indenture Trustee or the
Authenticating Agent to or upon the order of the Issuer on the Closing Date
shall be dated as of the Closing Date. All other Notes which are authenticated
after the Closing Date for any other purpose hereunder shall be dated the date
of their authentication.
No Note shall be entitled to any benefit under this Indenture or be valid
or obligatory for any purpose, unless there appears on such Note a certificate
of authentication substantially in the form herein before provided for executed
by the Indenture Trustee or the Authenticating Agent by the manual signature of
one of its authorized officers, and such certificate upon any Note shall be
conclusive evidence, and the only evidence, that such Note has been duly
authenticated and delivered hereunder.
Section 2.04. Registration of Notes. The Issuer shall cause to be kept a
register (the "Note Register") in which, subject to such reasonable regulations
as it may prescribe, the Issuer shall provide for the registration of Notes and
the registration of transfers of Notes. The Indenture Trustee is hereby
initially appointed "Note Registrar" for the purposes of maintaining the Note
Register and registering Notes and transfers of Notes as herein provided, and
the Indenture Trustee hereby accepts such appointment.
Upon surrender for registration of transfer of any Note at the office or
agency of the Issuer to be maintained as provided in Section 3.02 hereof, the
Issuer shall execute, and the Indenture Trustee shall authenticate and deliver,
in the name of the designated transferee or transferees, one or more new Notes
of any authorized denominations and of the same aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes in any
authorized denominations, of the same class and of a like aggregate principal
amount, upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, the Issuer shall execute,
and the Indenture Trustee shall authenticate and deliver, the Notes which the
Noteholder making the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
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Every Note presented or surrendered for registration of transfer or
exchange shall (if so required by the Issuer or the Indenture Trustee) be duly
endorsed, or be accompanied by such other documentation reasonably satisfactory
to the Issuer and the Indenture Trustee, duly executed by the Holder thereof or
its attorney-in-fact duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Notes, but the Issuer may require payment of a sum sufficient to
cover any tax or other governmental charge which may be imposed in connection
with any registration of transfer or exchange of Notes.
No transfer of a Class B Note shall be made unless the registration
requirements of the Securities Act and any applicable state securities laws are
complied with, or such transfer is exempt from the registration requirements
under the Securities Act and such state securities laws. In the event that a
transfer is to be made in reliance upon an exemption from the Securities Act and
such state securities laws, the Indenture Trustee shall require one of the
following, at the option of the Noteholder desiring to effect such transfer: (i)
that such Noteholder and its prospective transferee jointly deliver an Opinion
of Counsel with respect to the Securities Act and a memorandum of law with
respect to any applicable state securities laws acceptable to and in form and
substance satisfactory to the Indenture Trustee and the Transferor upon which
the Indenture Trustee and the Transferor may conclusively rely, to the effect
that such transfer may be made pursuant to an exemption, describing the
applicable exemption and the basis therefor, from the Securities Act and such
state securities laws or is being made pursuant to the Securities Act and such
state securities laws, which Opinion of Counsel and memorandum of law, as the
case may be, shall not be an expense of the Issuer, the Indenture Trustee, the
Transferor or the Servicer; or (ii) that the transferee execute a representation
letter acceptable to and in form and substance satisfactory to the Transferor
and the Indenture Trustee (provided that the forms attached as Exhibits F-1 and
F-2 shall be deemed acceptable if completed in a manner acceptable to the
Indenture Trustee) certifying to the Issuer, the Indenture Trustee, the
Transferor and the Servicer the facts surrounding such transfer, which
representation letter shall not be an expense of the Issuer, the Indenture
Trustee, the Transferor or the Servicer. The Holder of a Class B Note desiring
to effect such transfer shall, and does hereby agree to, indemnify the Issuer,
the Indenture Trustee, the Transferor and the Servicer against any liability
that may result if the transfer is not so exempt or is not made in accordance
with the Securities Act and such state laws. Neither the Issuer, the Transferor,
the Servicer nor the Indenture Trustee is under any obligation to register the
Class B Notes under the Securities Act or any state securities laws.
Notwithstanding anything to the contrary contained herein, no resale or
other transfer of a Class B Note or any interest therein shall be made unless
(i) immediately after giving effect to such resale or other transfer, there
would be less than 100 Class B Noteholders and (ii) the Indenture Trustee shall
have received either a representation letter or Opinion of Counsel from the
prospective transferee of such Class B Note, in form and substance satisfactory
to the Transferor and the Indenture Trustee (provided that the forms attached as
Exhibits F-1 and F-2 shall be deemed acceptable if completed in a manner
acceptable to the Indenture Trustee), to the effect that (A) (1) such transferee
will not acquire such Class B Note on behalf of or with the assets of any
"employee benefit plan" as defined in Section 3(3) of ERISA, or (2) no
"prohibited transaction" under ERISA or the Internal Revenue Code of 1986, as
amended, will occur in connection with such transferee's acquisition or holding
of such Class B Notes because the relevant conditions for exemptive relief under
one or more of the following prohibited transaction class exemptions have been
satisfied: Prohibited Transaction Class Exemption ("PTCE") 96-23, regarding
transactions effected by "In-House Asset Managers"; PTCE 95-60, regarding
transactions for insurance company general accounts; PTCE 90-1, regarding
transactions effected for insurance company separate accounts; PTCE 91-38,
regarding transactions affected for bank collective investment funds; or PTCE
84-14, regarding transactions effected by "Qualified Professional Asset
Managers", and (B) if the transferee (or any person or entity for whom such
transferee is acting as agent or custodian in connection with the acquisition of
such Class B Note) is a partnership, grantor trust or S corporation for federal
income tax purposes (a "Flow-Through Entity"), any Class B Notes owned by or on
behalf of
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such Flow-Through Entity will represent less than 50% of the value of all the
assets owned by or on behalf of such Flow-Through Entity and no special
allocation of income, gain, loss, deduction or credit from such Class B Notes
will be made among the beneficial owners of such Flow-Through Entity. Each
prospective transferee of any Class B Note will be required to represent to the
Indenture Trustee whether it will purchase such Class B Note with the assets of
an "employee benefit plan" as defined under ERISA or other benefit plan
investor.
The Class B Notes, this Indenture and related documents may be amended or
supplemented from time to time to modify restrictions on and procedures for
resale and other transfer of such Class B Notes to reflect any change in
applicable law or regulation (or the interpretation thereof) or practices
relating to the resale or transfer of restricted securities generally.
No Class B Note shall be listed for trading on any recognized securities
exchange or treated as traded on "established securities market" as defined in
Treas. Reg. Section 7704-1(e) (including an interdealer quotation system that
regularly disseminates firm buy or sell quotations by identified brokers or
dealers by electronic means or otherwise).
Section 2.05. Mutilated, Destroyed, Lost or Stolen Notes. If (a) any
mutilated Note is surrendered to the Indenture Trustee, or the Issuer and the
Indenture Trustee receive evidence to their mutual satisfaction of the
mutilation, destruction, loss or theft of any Note, and (b) there is delivered
to the Issuer and the Indenture Trustee such security or indemnity as may be
reasonably required by them to save each of them harmless, then the Issuer shall
execute and, upon receipt of an Issuer Request, the Indenture Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Note, a new Class A-1 Note, Class A-2 Notes, Class A-3
Note, Class A-4 Note or Class B Note, as the case may be, of the same tenor and
principal amount (expressed in terms of the principal amount on the date the
original Note was first issued and authenticated) bearing a number not
contemporaneously outstanding; provided, however, that if any such mutilated,
destroyed, lost or stolen Note shall have become or shall be about to become due
and payable, or shall have been selected or called for redemption in full,
instead of issuing a new Note, the Issuer may pay such Note without surrender
thereof, except that any mutilated Note shall be surrendered.
Upon the issuance of any new Note under this Section, the Issuer may
require the payment of a sum sufficient to cover any transfer tax or other
governmental charge that may be imposed in relation thereto.
Every new Note issued pursuant to this Section in lieu of any mutilated,
destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Issuer, whether or not the mutilated, destroyed,
lost or stolen Note shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
Section 2.06. Payment of Interest and Principal; Principal and Interest
Rights Preserved.
(a) Interest and principal, if any, payable on any Note on any Distribution
Date shall be paid to the Person in whose name such Note is registered at the
close of business on the Record Date for such Distribution Date by (i) check
mailed to such Person's address as it appears in the Note Register on such
Record Date, (ii) if DTC, its nominee or a Clearing Agency is such Person, by
wire transfer of immediately available funds or pursuant to other arrangements,
or (iii) with respect to a
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registered owner of a Class B Notes having an aggregate initial denomination of
$[250,000] or more, upon written instructions received by the Indenture Trustee
not later than five days prior to the related Record Date, by wire transfer of
immediately available funds to an account maintained by such Person at a
depositary institution in the United States having appropriate facilities
therefor except in any case for the final payment of principal of and interest
on a Note, which shall be payable only upon presentation and surrender of such
Note as provided in subsection (b) of this Section.
Any payments on the Notes and checks for amounts that include principal on
a Note shall be paid to the Person entitled thereto at the address of such
Person as it appears on the Note Register as of the applicable Record Date or,
in the event such payment is to be paid by wire transfer, to the Person entitled
thereto at the wire transfer account as specified in clause (a)(ii) or (a)(iii)
of this Section 2.06, in either case without requiring that such Note be
submitted for notation of payment, and checks returned undelivered will be held
for payment to the Person entitled thereto, subject to the terms of Section 3.03
hereof, at the office or agency in the United States designated by the Issuer
for such purpose pursuant to Section 3.02 hereof. Any reduction in the principal
amount of a Note (or any one or more Predecessor Notes) effected by any payments
made on any Distribution Date shall be binding upon all future Holders of such
Note and of any Note issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof, whether or not noted thereon.
(b) Interest and principal of each Note shall be payable in accordance with
Section 3.03 of the Securitization Trust Agreement, but no later than the Class
A-1 Stated Maturity, Class A-2 Stated Maturity, Class A-3 Stated Maturity, Class
A-4 Stated Maturity or Class B Stated Maturity, as applicable, unless such Note
becomes due and payable at an earlier date by declaration of acceleration, call
for redemption or otherwise. The final payment of principal of and interest on
each Note (or the payment of the Redemption Price thereof in the case of a Note
called for redemption pursuant to Article Ten hereof) shall be payable only upon
presentation and surrender thereof on or after the Maturity of the Class A-1
Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes or Class B Notes, as
applicable, at the Corporate Trust Office of the Indenture Trustee or at the
office of any Paying Agent. The Indenture Trustee shall notify the Person in
whose name a Note is registered at the close of business on the Distribution
Date immediately preceding the month in which the Distribution Date on which the
Issuer expects that the final payment of principal of and interest on such Note
will be paid is to occur. Such notice shall be given no earlier than the
thirtieth day and no later than the fifteenth day prior to such final
Distribution Date, shall specify that such final payment will be payable only
upon presentation and surrender of such Note, and shall specify the place where
such Note may be presented and surrendered for such final payment.
(c) No further interest will accrue with respect to any Note from and after
the final Distribution Date with respect thereto.
(d) The rights of the Class B Noteholders shall be and hereby are
subordinated to the rights of the Class A-1 Noteholders, the Class A-2
Noteholders, the Class A-3 Noteholders and the Class A-4 Noteholders to the
extent provided in Section 3.03 of the Securitization Trust Agreement and
Section 5.08 of this Indenture.
(e) Subject to the foregoing provisions of this Section, each Note
delivered under this Indenture upon registration or transfer of or in exchange
for or in lieu of any other Note shall carry the rights to unpaid principal and
interest, if any, that were carried by such other Note.
Section 2.07. Persons Deemed Owners. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Indenture Trustee and any
agent of the Issuer or of the Indenture Trustee may treat the Person in whose
name any Note is registered as the owner of such Note for the purpose of
receiving payments of the principal and interest on such Note and for all other
purposes whatsoever, whether or not such Note is overdue, and neither the
Issuer, the Indenture Trustee nor any
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agent of the Issuer or the Indenture Trustee shall be affected by notice to the
contrary.
Section 2.08. Cancellation. All Notes surrendered for payment, registration
of transfer or exchange or redemption shall, if surrendered to any Person other
than the Indenture Trustee, be delivered to the Indenture Trustee and shall be
promptly canceled by it. The Issuer may at any time deliver to the Indenture
Trustee for cancellation any Note previously authenticated and delivered
hereunder that the Issuer may have acquired in any manner whatsoever, and all
Notes so delivered shall be promptly canceled by the Indenture Trustee. No Notes
shall be authenticated in lieu of or in exchange for any Notes canceled as
provided in this Section, except as expressly permitted by this Indenture. All
canceled Notes held by the Indenture Trustee shall be destroyed unless the
Issuer shall direct by an Issuer Order that they be returned to it.
Section 2.09. Authentication and Delivery of Notes. The aggregate principal
amount of Notes that may be authenticated and delivered under this Indenture is
limited to an amount equal to the Initial Note Balance, and the aggregate
principal amount of Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4
Notes and Class B Notes respectively, that may be issued and delivered under
this Indenture is limited to an amount equal to the Initial Class A-1 Note
Balance, the Initial Class A-2 Note Balance, the Initial Class A-3 Note Balance,
the Initial Class A-4 Note Balance and the Initial Class B Note Balance,
respectively, except for Notes authenticated and delivered upon registration and
transfer of, or in exchange for, or in lieu of, other Notes pursuant to Sections
2.04 or 2.05 hereof.
Notes complying with the foregoing requirements may from time to time be
executed by the Issuer and delivered to the Indenture Trustee for
authentication, and the same shall be authenticated and delivered by the
Indenture Trustee upon Issuer Request.
Section 2.10. Book-Entry Notes. Unless otherwise specified, the Class A
Notes (except for any Residual Notes), upon original issuance, will be issued in
the form of one or more Notes representing the Book-Entry Notes, to be delivered
to the Indenture Trustee, as agent for DTC, the initial Clearing Agency, by, or
on behalf of, the Issuer. The Class A Notes delivered to DTC evidencing the
Book-Entry Notes shall initially be registered on the Note Register in the name
of Cede, and no Note Owner will receive an individual definitive,
fully-registered note (collectively, the "Definitive Notes") representing such
Note Owner's interest in the Class A Notes, except as provided in Section 2.12
hereof. Subject to Section 2.12 hereof, unless and until Definitive Notes have
been issued to Note Owners of Class A Notes pursuant to Section 2.12:
(i) the provisions of this Section shall be in full force and effect;
(ii) the Issuer, the Transferor, the Servicer, the Note Registrar and
the Indenture Trustee may deal with the Clearing Agency for all purposes
(including the making of distributions on the Notes) as the authorized
representative of the Class A Note Owners;
(iii) to the extent that the provisions of this Section conflict with
any other provisions of this Indenture, the provisions of this Section shall
control;
(iv) the rights of Note Owners of Class A Notes shall be exercised
only through (or through procedures established by) the Clearing Agency and
shall be limited to those established by law and agreements between such Note
Owners and the Clearing Agency and/or the Clearing Agency Participants and,
unless and until Definitive Notes are issued pursuant to Section 2.12 hereof,
the Clearing Agency will make book-entry transfers among the Clearing Agency
Participants and receive and transmit distributions of principal and interest on
such Notes to such Clearing Agency Participants; and
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(v) whenever this Indenture requires or permits actions to be taken
based upon instructions or directions of Noteholders of Class A Notes evidencing
a specified aggregate Percentage Interest of Class A-1 Notes, Class A-2 Notes,
Class A-3 Notes, Class A-4 Notes, the Clearing Agency shall be deemed to
represent such percentage (if and to the extent that it will act on behalf of
Note Owners and/or Clearing Agency Participants) only to the extent that it has
received instructions to such effect from Note Owners and/or Clearing Agency
Participants owning or representing, respectively, such required percentages of
the beneficial interest in such Notes and has delivered such instructions to the
Indenture Trustee.
Section 2.11. Notices to the Clearing Agency. Whenever notice or other
communication to any Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued pursuant to Section 2.12 hereof,
the Indenture Trustee and the Servicer shall give solely to the Clearing Agency
all such notices and communications specified herein to be given to the Holders.
Section 2.12. Definitive Notes. If (i)(A) the Transferor advises the
Indenture Trustee in writing that the Clearing Agency is no longer willing or
able to properly discharge its responsibilities with respect to the Class A
Notes and (B) the Indenture Trustee or the Issuer is unable to locate a
qualified successor, (ii) the Transferor, at its option, advises the Indenture
Trustee in writing that it elects to terminate the book-entry system through the
Clearing Agency, or (iii) after the occurrence of an Event of Default, Note
Owners representing beneficial interests in the Class A Notes aggregating more
than 50% of the aggregate Percentage Interests (voting as a single Class)
thereof advise the Indenture Trustee through the Clearing Agency, in writing
that the continuation of a book-entry system through the Clearing Agency is no
longer in the best interests of such Note Owners, then the Indenture Trustee
shall notify all Note Owners of such Notes, through the Clearing Agency, of the
occurrence of any such event and of the availability of Definitive Notes to such
Note Owners requesting the same. Upon surrender to the Indenture Trustee of the
Class A Notes by the Clearing Agency, accompanied by registration instructions
from the Clearing Agency for registration, the Indenture Trustee shall issue
Definitive Notes and deliver such Definitive Notes in accordance with the
instructions of the Clearing Agency. Neither the Issuer, the Transferor, the
Servicer, the Note Registrar nor the Indenture Trustee shall be liable for any
delay in delivery of such instructions and may conclusively rely on, and shall
be protected in relying on, such instructions. Upon the issuance of such
Definitive Notes, the Indenture Trustee shall recognize the holders of such
Definitive Notes as Noteholders hereunder. The Indenture Trustee shall not be
liable if the Indenture Trustee or the Issuer is unable to locate a qualified
successor to DTC.
Section 2.13. Tax Treatment. Issuer has entered into this Indenture, and
the Notes shall be issued, with the intention that, for federal, state and local
income and franchise tax purposes, the Notes shall qualify as indebtedness of
the Issuer secured by the Trust Estate. Issuer, by entering into this Indenture,
and each Noteholder, by its acceptance of a Note (and each Note Owner by its
acceptance of an interest in the applicable Book-Entry Note), agree to treat the
Notes for federal, state and local income and franchise tax purposes as
indebtedness of Issuer.
ARTICLE THREE. COVENANTS AND REPRESENTATIONS
Section 3.01. Payment of Notes. The Issuer will cause to be duly and
punctually paid the principal and interest on the Notes in accordance with the
terms of the Notes, the Securitization Trust Agreement and this Indenture.
Section 3.02. Maintenance of Office or Agency. The Issuer will maintain at
least one office or agency, which may be changed in the discretion of the
Issuer, within the United States at which Notes may be presented or surrendered
for payment, Notes may be surrendered for registration of transfer or exchange
and notices and demands to or upon the Issuer in respect of the Notes and this
Indenture may be served. The Issuer hereby initially appoints the Indenture
Trustee at its Corporate Trust Office as
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such office or agency. The Issuer will give prompt written notice to the
Indenture Trustee of the location, and of any change in the location, of any
such office or agency. If at any time the Issuer shall fail to maintain any such
office or agency or shall fail to furnish the Indenture Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office, and the Issuer hereby appoints the
Indenture Trustee at its Corporate Trust Office its agent to receive all such
presentations, surrenders, notices and demands.
Section 3.03. Money for Note Payments to be Held in Trust. All payments of
amounts due and payable with respect to the Notes that are to be made from
amounts withdrawn from the Accounts pursuant to Section 8.02(b) hereof shall be
made on behalf of the Issuer by the Indenture Trustee or by a Paying Agent, and
no amounts so withdrawn from any Account shall be paid over to or at the
direction of the Issuer except as provided in the Transaction Documents.
Whenever the Issuer shall have a Paying Agent other than the Indenture
Trustee, it will, on or before the Business Day next preceding each Distribution
Date, direct the Indenture Trustee to deposit with such Paying Agent an
aggregate sum sufficient to pay the amounts then becoming due or payable, such
sum to be held in trust for the benefit of the Persons entitled thereto.
The Issuer will cause each Paying Agent other than the Indenture Trustee to
execute and deliver to the Indenture Trustee an instrument in which such Paying
Agent shall agree with the Indenture Trustee, subject to the provisions of this
Section 3.03, that such Paying Agent, in acting as Paying Agent, is an express
agent of the Indenture Trustee and, further, that such Paying Agent will:
(a) hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled thereto
until such sums shall be paid to such Persons or otherwise disposed of as herein
provided and pay such sums to such Persons as herein provided;
(b) give the Indenture Trustee notice of any default by the Issuer (or
any other obligor upon the Notes) in the making of any payment required to be
made with respect to the Notes;
(c) at any time during the continuance of any such default, upon the
written request of the Indenture Trustee, forthwith pay to the Indenture Trustee
all sums so held in trust by such Paying Agent;
(d) immediately resign as a Paying Agent and forthwith pay to
Indenture Trustee all sums held by it in trust for the payment of Notes if at
any time it ceases to meet the standards required to be met by a Paying Agent at
the time of its appointment; and
(e) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any applicable
withholding taxes imposed thereon and with respect to any applicable reporting
requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, by Issuer Order direct
any Paying Agent to pay to the Indenture Trustee all sums held in trust by such
Paying Agent, such sums to be held by the Indenture Trustee upon the same trusts
as those upon which such sums were held by such Paying Agent; and upon such
payment by any Paying Agent to the Indenture Trustee, such Paying Agent shall be
released from all further liability with respect to such money.
Any money held by the Indenture Trustee or any Paying Agent in trust for
the payment of any amount due with respect to any Note and remaining unclaimed
for three years after the Maturity of the Class A-1 Notes, Class A-2 Notes,
Class A-3 Notes, Class A-4 Notes and Class B Notes, as the case
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may be, upon receipt of an Issuer Request, shall be paid to the Issuer (or,
after termination of the Issuer, the Transferor) and the Holder of such Note
shall thereafter, as an unsecured general creditor, look only to the Issuer (or,
after termination of the Issuer, the Transferor) for payment thereof (but only
to the extent of the amounts so paid to the Issuer (or, after termination of the
Issuer, the Transferor)), and all liability of the Indenture Trustee or such
Paying Agent with respect to such trust money shall thereupon cease. The
Indenture Trustee may adopt and employ, at the expense of the Issuer, any
reasonable means of notification of such payment by the Indenture Trustee to the
Issuer (or, after termination of the Issuer, the Transferor) (including, but not
limited to, mailing notice of such payment to Holders whose Notes have been
called but have not been surrendered for redemption or whose right to or
interest in moneys due and payable but not claimed is determinable from records
of the Indenture Trustee or any Paying Agent, at the last address of record for
each such Holder).
Section 3.04. Existence. The Issuer will keep in full effect its existence,
rights and franchises as a business trust under the laws of the State of
Delaware and the Issuer will obtain and preserve its qualification to do
business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, and each instrument or agreement
included in the Trust Estate.
Section 3.05. Protection of Trust Estate. The Issuer and (at the request of
the Issuer, the Servicer or the Indenture Trustee) the Owner Trustee will from
time to time execute, deliver and file all financing statements, continuation
statements, instruments of further assurance, the 1998-A SUBI Certificate and
other instruments reasonably required or necessary to maintain the Lien and
security interest created by this Indenture or to protect the Trust Estate
generally, and will take such other action necessary or advisable to:
(i) Grant more effectively all or any portion of the Trust Estate to
or for the benefit of the Indenture Trustee;
(ii) maintain or preserve the Lien of this Indenture or carry out more
effectively the purposes hereof;
(iii) perfect, publish notice of, or protect the validity of, any
Grant made or to be made by this Indenture;
(iv) enforce any of the Contracts; or
(v) preserve and defend title to the Trust Estate and the rights of
the Indenture Trustee and the Noteholders in such Trust Estate against the
claims of all persons and parties.
Each of the Issuer and the Owner Trustee hereby designates the Indenture
Trustee its agent and attorney-in-fact to execute and file any financing
statement, continuation statement or other instrument designated in writing by
the Issuer or the Servicer pursuant to this Section. It is understood that in no
event will the Issuer or the Owner Trustee be required to take any action to
cause any Lien notation on, or any other action with respect to, any Certificate
of Title for any 1998-A Leased Vehicle.
Section 3.06. Opinions as to Trust Estate. On or before November 15 in each
calendar year commencing with the November 15 occurring at least six months
after the Closing Date, the Issuer shall furnish to the Indenture Trustee
Opinions of Counsel, either stating that, in the opinion of such counsel, such
action has been taken with respect to the recording, filing, re-recording and
re-filing of this Indenture, any indentures supplemental hereto and any other
requisite documents and with respect to the execution and filing of any
financing statements and continuation statements as is necessary to maintain the
Liens and security interests created by this Indenture and the Backup Security
Agreement
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and reciting the details of such action or stating that in the opinion of such
counsel no such action is necessary to so maintain such Liens and security
interests. Such Opinions of Counsel shall also describe the recording, filing,
re-recording and re-filing of this Indenture, any indentures supplemental hereto
and any other requisite documents and the execution and filing of any financing
statements and continuation statements that will, in the opinion of such
counsel, be required to maintain the Liens and security interests of this
Indenture and the Backup Security Agreement until November 15 in the following
calendar year.
Section 3.07. Performance of Obligations.
(a) The Issuer will punctually perform and observe all of its obligations
and agreements contained in each of the Transaction Documents to which it is a
party or by which it is bound, including without limitation its obligation under
Section 3.05 hereof.
(b) The Issuer will not take any action that would release any Person from
any of such Person's material covenants or obligations under any instrument
included in the Trust Estate, or that would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument, except as expressly provided
in the Transaction Documents or any such instrument.
(c) If the Issuer shall have knowledge of the occurrence of (i) an Event of
Default or an Unmatured Event of Default, or (ii) a 1998-A Servicer Event of
Default, the Issuer shall promptly notify the Indenture Trustee and each Rating
Agency thereof by means of an Officer's Certificate specifying the action, if
any, the Issuer is taking in respect of such Event of Default, Unmatured Event
of Default or 1998-A Servicer Event of Default.
Section 3.08. Negative Covenants. So long as any Notes are outstanding, the
Issuer shall not:
(a) sell, transfer, exchange or otherwise dispose of any of the Trust
Estate except as expressly permitted by the Transaction Documents;
(b) claim any credit on, or make any deduction from, the principal or
interest on the Notes by reason of the payment of any taxes levied or assessed
upon any part of the Trust Estate;
(c) without the consent of the Noteholders representing 100% of the
aggregate Percentage Interests (voting as a single Class) (with respect to which
the Issuer promptly shall notify the Rating Agencies), (i) engage in any
business or activity other than financing, owning, managing and selling the
Trust Estate and the issuance of the Notes pursuant to this Indenture and the
other Transaction Documents or (ii) create, incur, assume or in any manner
become liable in respect of any indebtedness for money borrowed other than the
Notes, or as otherwise contemplated by the Transaction Documents;
(d) dissolve, reorganize or liquidate in whole or in part;
(e) merge or consolidate with any corporation;
(f) (to the extent that it may lawfully so covenant) without the consent of
the Indenture Trustee, voluntarily commence any proceeding or file any petition
under any bankruptcy, insolvency or similar law or seek dissolution or
reorganization or the appointment of a receiver, trustee, custodian or
liquidator for itself or a substantial portion of its property, assets or
business or to effect such a plan or other arrangement with its creditors;
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(g) (i) permit the validity or effectiveness of this Indenture to be
impaired, or permit the Lien of this Indenture to be amended, hypothecated,
subordinated, terminated or discharged, or permit any Person to be released from
any covenants or obligations under this Indenture, except as may be expressly
permitted hereby; (ii) permit any Lien, charge, security interest, mortgage or
other encumbrance (other than the Lien of this Indenture) to be created on or
extend to or otherwise arise upon or burden the Trust Estate or any part thereof
or any interest therein or the proceeds thereof; or (iii) permit the Lien of
this Indenture not to constitute a valid first priority perfected security
interest in the Trust Estate.
Section 3.09. Statements as to Compliance.
(a) The Issuer will deliver to the Indenture Trustee and each Rating
Agency, within 120 days after December 31 of each year, an Officer's Certificate
stating, as to the signer thereof, that
(i) a review of the activities of the Issuer during such year (or
since the Closing Date in the case of the first such statement) and of
performance of the Issuer under this Indenture has been made under such
officer's supervision; and
(ii) to the best of such officer's knowledge, based on such review,
the Issuer has fulfilled all its obligations under this Indenture
throughout such year (or since the Closing Date in the case of the first
such statement), or, if there has been a default in the fulfillment of any
such obligation, specifying each such default known to such officer and the
nature and status thereof.
(b) In lieu of the certificates and opinions that would be required by
Section 314(d)(1) of the TIA, the Issuer will deliver to the Indenture Trustee,
within thirty days after June 30 and December 31 of each year commencing with
December 31, 1998, an Officer's Certificate of the Transferor, stating that (i)
a review of all releases and reallocations of 1998-A SUBI Assets during the
preceding semi-annual period has been made under the signing officer's
supervision; (ii) to the best of his or her knowledge, all of such releases and
reallocations complied with all of the requirements of the relevant provisions
of the Indenture and were made in the ordinary course of the businesses of the
Issuer; (iii) all proceeds from the disposition of the related released 1998-A
SUBI Leased Vehicles were used in the business of the Issuer to make payments on
the Notes or as otherwise permitted by the Indenture; and (iv) in his or her
opinion, such releases and reallocations did not impair the security under the
Indenture in contravention of the provisions thereof.
ARTICLE FOUR. SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction and Discharge of Indenture.
(a) This Indenture shall cease to be of further effect, and the Indenture
Trustee, at the request of the Issuer, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture with respect to the
Notes, when:
(i) either
(A) all Notes theretofore authenticated and delivered (other than
(1) Notes which have been mutilated, destroyed, lost or stolen and
which have been replaced or paid as provided in Section 2.05 hereof,
and (2) Notes for whose payment money has theretofore been deposited
in trust or segregated and held in trust and thereafter repaid or
discharged from such trust, as provided in Section 3.03 hereof) have
been delivered to the Indenture Trustee for cancellation; or
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(B) all Notes not theretofore delivered to the Indenture Trustee
for cancellation (other than Notes described in clauses (i)(A)(1) or
(i)(A)(2) above)
(1) have become due and payable, or
(2) are to be called for redemption pursuant to Article Ten
within one year under arrangements satisfactory to the Indenture
Trustee for the giving of notice of redemption by the Indenture
Trustee in the name, and at the expense, of the Issuer, and the
Issuer, in the case of either of clauses (i)(B)(1) or (i)(B)(2)
above, has irrevocably deposited or caused to be irrevocably
deposited in a segregated account with the Indenture Trustee, in
trust for such purpose, an amount of Cash sufficient to pay and
discharge the entire indebtedness on such Notes not theretofore
delivered to the Indenture Trustee for cancellation, for
principal and interest to the Class A-1 Stated Maturity, the
Class A-2 Stated Maturity, the Class A-3 Stated Maturity, the
Class A-4 Stated Maturity or Class B Stated Maturity, as
applicable, or the applicable Redemption Date, as the case may
be, and in the case of Notes which were not paid at the Class A-1
Stated Maturity, the Class A-2 Stated Maturity, the Class A-3
Stated Maturity, the Class A-4 Stated Maturity or Class B Stated
Maturity, as applicable, for all overdue principal and all
interest payable on such Notes through the next succeeding
Distribution Date therefor, in each case without reliance upon
anticipated investment earnings on such Cash, and if any Notes
are to be redeemed prior to the Class A-1 Stated Maturity, the
Class A-2 Stated Maturity, the Class A-3 Stated Maturity, the
Class A-4 Stated Maturity or Class B Stated Maturity, as
applicable, the Issuer has made irrevocable arrangements
satisfactory to the Indenture Trustee for the giving of notice of
redemption by the Indenture Trustee in the name and at the
expense of the Issuer;
(ii) the Issuer has paid or caused to be paid all other amounts
payable hereunder or under any of the Transaction Documents by the Issuer;
and
(iii) the Issuer has delivered to the Indenture Trustee and the
Servicer an Officer's Certificate and an Opinion of Counsel stating that
all conditions precedent herein provided for the satisfaction and discharge
of this Indenture have been complied with.
(b) Notwithstanding the satisfaction and discharge of this Indenture, the
provisions of Articles Eight and Nine hereof, the obligations of the Indenture
Trustee to Noteholders and the Issuer under Section 3.03 hereof, of the Issuer
to the Indenture Trustee under Section 6.07 hereof, of the Indenture Trustee to
Noteholders under Section 4.02 hereof, and of the Indenture Trustee under
Section 6.17 hereof, and the provisions of this Indenture with respect to
registration of transfers of Notes, replacement of mutilated, destroyed, lost or
stolen Notes, and rights to receive payments of principal of and interest on the
Notes, shall survive the termination of this Indenture.
Section 4.02. Application of Trust Money. All money deposited with the
Indenture Trustee pursuant to Section 4.01 hereof shall be held in trust and
applied by the Indenture Trustee, in accordance with the provisions of the Notes
and this Indenture, as the case may be, to the payment, either directly or
through any Paying Agent, as the Indenture Trustee may determine, to the Persons
entitled thereto, of the principal and any interest for whose payment such money
has been deposited with the Indenture Trustee.
ARTICLE FIVE. DEFAULTS AND REMEDIES
Section 5.01. Events of Default. "Event of Default", wherever used herein,
means, with respect to the Notes, any one of the following events (whatever the
reason for such Event of Default, and whether it shall be voluntary or
involuntary, or be effected by operation of law or pursuant to any
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judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) if the Issuer shall default in the payment of any interest or principal
on any Note for a period of five Business Days after any such payment is due;
(b) failure on the part of the Issuer duly to observe or perform in any
material respect any other covenants or agreements of the Issuer set forth in
any of the Transaction Documents, or any representation or warranty made by the
Issuer in any Transaction Document shall fail to have been correct in any
material respect when made or given, which failure materially and adversely
affects the rights of the Holders of the Notes and which continues unremedied
and continues to affect materially and adversely the rights of the Holders of
the Notes for a period of 60 days after the date on which written notice of such
failure, requiring the same to be remedied, is given (i) to the Issuer by the
Indenture Trustee, or (ii) to the Issuer and to the Indenture Trustee by the
Holders of Notes representing not less than 25% of the aggregate Percentage
Interests (voting as a single Class);
(c) the Issuer shall file a petition commencing a voluntary case under any
chapter of the Federal bankruptcy laws; or the Issuer shall file a petition or
answer or consent seeking reorganization, arrangement, adjustment, or
composition under any other similar applicable Federal law, or shall consent to
the filing of any such petition, answer, or consent; or the Issuer shall
appoint, or consent to the appointment of a custodian, receiver, liquidator,
trustee, assignee, sequestrator or other similar official in bankruptcy or
insolvency of it or of any substantial part of its property, or shall make an
assignment for the benefit of creditors, or shall admit in writing its inability
to pay its debts generally as they become due; or
(d) any order for relief against the Issuer shall have been entered by a
court having jurisdiction in the premises under any chapter of the Federal
bankruptcy laws, or a decree or order by a court having jurisdiction in the
premises shall have been entered approving as properly filed a petition seeking
reorganization, arrangement, adjustment, or composition of the Issuer under any
other similar applicable Federal law, or a decree or order of a court having
jurisdiction in the premises for the appointment of a custodian, receiver,
liquidator, trustee, assignee, sequestrator or other similar official in
bankruptcy or insolvency of the Issuer or of any substantial part of its
property, or for the winding up or liquidation of its affairs, shall have been
entered, and any such order or decree shall remain unstayed and in effect for a
period of 60 consecutive days.
Section 5.02. Acceleration of Maturity; Rescission and Annulment.
(a) If an Event of Default occurs and is continuing and no election to act
in accordance with the provisions of Section 5.05 shall have been made (or, if
made, have been rescinded), then and in every such case the Indenture Trustee or
Noteholders representing not less than 25% of the aggregate Percentage Interests
(voting as a single Class) may declare all the Notes to be immediately due and
payable, by a notice in writing to the Issuer (and to the Indenture Trustee if
given by Noteholders), and upon any such declaration the Notes shall become
immediately due and payable; provided, that, if an Event of Default specified in
Section 5.01(c) or (d) hereof shall occur, the Notes shall become immediately
due and payable automatically without the giving of any notice.
(b) At any time after such a declaration of acceleration of maturity has
been made and before a judgment or decree for payment of the money due has been
obtained by the Indenture Trustee as hereinafter in this Article provided,
Noteholders representing more than 50% of the aggregate Percentage Interests
(voting as a single Class), by written notice to the Issuer and the Indenture
Trustee, may rescind and annul such declaration and its consequences if:
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(i) (A) the Issuer has paid or deposited with the Indenture Trustee a
sum sufficient to pay:
(1) all payments of principal and interest on the Notes and all
other amounts which would then be due hereunder or upon the Notes if
the Event of Default giving rise to such acceleration had not
occurred; and
(2) all sums paid or advanced by the Indenture Trustee hereunder
and the reasonable compensation and reasonable and documented
expenses, disbursements and advances of the Indenture Trustee, its
agents and counsel; and
(B) all Events of Default, other than the nonpayment of the
interest on or the principal of the Notes which have become due solely by
such acceleration, have been cured or waived as provided in Section 5.15
hereof; or
(ii) the Indenture Trustee elects or is required to act in accordance
with the provisions of Section 5.05 with respect to the Event of Default
that gave rise to such declaration.
(c) No such rescission shall affect any subsequent Event of Default or
impair any right consequent thereon.
Section 5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee. The Issuer covenants that if an Event of Default shall occur
and be continuing, the Issuer will, upon demand of the Indenture Trustee in
accordance with the provisions of this Indenture, pay to it, for the benefit of
the Noteholders, (a) the entire unpaid principal amount of all Notes; (b)
interest on the entire unpaid principal amount of all Notes and interest on any
principal and accrued interest on such Notes that was not paid when due, at the
applicable Overdue Interest Rate but only to the extent that payments of
interest at such rate shall be legally enforceable; and (c) in addition thereto,
such further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation and reasonable and documented
expenses, disbursements and advances of the Indenture Trustee and its agents and
counsel (including in-house counsel).
If the Issuer fails to pay such amounts forthwith upon such demand, the
Indenture Trustee, in its own name and as Indenture Trustee of an express trust,
may institute a Proceeding for the collection of the sums so due and unpaid, and
may prosecute such Proceeding to judgment or final decree, and may enforce the
same against the Issuer or any other obligor upon the Notes and collect the
moneys adjudged or decreed to be payable in the manner provided by law.
If an Event of Default occurs and is continuing, the Indenture Trustee may
in its discretion proceed to protect and enforce its rights and the rights of
the Noteholders by such appropriate Proceedings as the Indenture Trustee shall
deem most effective to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid of
the exercise of any power granted herein, or enforce any other proper remedy.
Section 5.04. Remedies. If an Event of Default shall have occurred and be
continuing, the Indenture Trustee may, to the extent not inconsistent with the
provisions of Section 5.05 hereof, if applicable, do one or more of the
following:
(a) institute Proceedings for the collection of all amounts then payable on
the Notes, or under this Indenture, whether by declaration or otherwise, enforce
any judgment obtained, and collect from the Issuer and the Trust Estate moneys
adjudged due;
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(b) subject to Section 5.17 hereof, sell the Trust Estate or any portion
thereof or rights or interest therein, at one or more public or private Sales
called and conducted in any manner permitted by law;
(c) institute Proceedings from time to time for the complete or partial
foreclosure of this Indenture with respect to the Trust Estate;
(d) exercise any remedies of a secured party under the UCC or other
applicable law and take any other appropriate action to protect and enforce the
rights and remedies of the Indenture Trustee or the Holders of the Notes
hereunder; and
(e) as provided in Section 6.15 of the Securitization Trust Agreement,
direct the Owner Trustee with regard to appropriate actions thereunder.
Section 5.05. Optional Preservation of Trust Estate. Notwithstanding
anything in this Indenture to the contrary (including, without limitation,
Sections 5.14 and 5.17), if the Notes have been declared due and payable (and
such declaration shall not have been rescinded or annulled), then the Indenture
Trustee may, in its sole discretion, retain the Trust Estate and apply all
amounts receivable with respect to the Trust Estate to the payment of principal
and interest on the Notes as and when such principal and interest would have
become due pursuant to the terms of the Notes and the Transaction Documents if
there had not been a declaration of acceleration of the Maturity of the Notes.
Section 5.06. Indenture Trustee May File Proofs of Claim. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, composition or other similar Proceeding relative to
the Issuer or any other obligor upon any of the Notes or the property of the
Issuer or of such other obligor or their respective creditors, the Indenture
Trustee (irrespective of whether the Notes shall then be due and payable as
therein expressed or by declaration or otherwise and irrespective of whether the
Indenture Trustee shall have made any demand on the Issuer for the payment of
overdue principal of or any interest on the Notes) and the Owner Trustee shall
be entitled and empowered, by intervention in such Proceeding or otherwise:
(i) to file such proofs of claim for the whole amount owing and unpaid
in respect of the Notes and to file such other papers or documents as may
be necessary or advisable in order to have the claims of the Indenture
Trustee and the Owner Trustee (including any claim for the reasonable
compensation and reasonable and documented expenses, disbursements and
advances of the Indenture Trustee and the Owner Trustee and their
respective agents and counsel, including in-house counsel) and of the
Noteholders allowed in such Proceeding, and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any
receiver, assignee, trustee, liquidator, sequestrator or other similar
official in any such Proceeding is hereby authorized by each Noteholder to
make such payments to the Indenture Trustee and the Owner Trustee and, in
the event that the Indenture Trustee shall consent to the making of such
payments directly to the Noteholders, to pay to the Indenture Trustee and
the Owner Trustee any amount due to it for the reasonable compensation and
reasonable and documented expenses, disbursements and advances of the
Indenture Trustee and the Owner Trustee and their respective agents and
counsel (including in-house counsel), and any other Capped Indenture
Trustee Administrative Expenses due the Indenture Trustee and Capped Owner
Trustee Administrative Expenses due the Owner Trustee.
Nothing herein contained shall be deemed to authorize the Indenture Trustee
to authorize or consent to or accept or adopt on behalf of any Noteholder any
plan of reorganization, arrangement,
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adjustment, or composition affecting any of the Notes or the rights of any
Holder thereof, or to authorize the Indenture Trustee to vote in respect of the
claim of any Noteholder in any such Proceeding.
Section 5.07. Indenture Trustee May Enforce Claims Without Possession of
Notes. All rights of action and claims under this Indenture or any of the Notes
may be prosecuted and enforced by the Indenture Trustee without the possession
of any of the Notes or the production thereof in any Proceeding relating
thereto, and any such Proceeding instituted by the Indenture Trustee shall be
brought in its own name as Indenture Trustee of an express trust, and any
recovery of judgment shall, after provision for the payment of the reasonable
compensation and reasonable and documented expenses, disbursements and advances
of the Indenture Trustee, its agents and counsel (including in-house counsel),
be for the ratable benefit of the Noteholders in respect of which such judgment
has been recovered.
Section 5.08. Application of Money Collected. Except as provided in Section
5.05 hereof, if applicable, any money collected by the Indenture Trustee
pursuant to this Article Five shall be applied in the order provided for
Principal Collections and Interest Collections received during the Amortization
Period under the Securitization Trust Agreement at the date or dates fixed by
the Indenture Trustee and, in case of the distribution of the entire amount due
on account of principal of and any interest on the Notes, upon presentation and
surrender thereof; provided that amounts received upon a Sale of all or any
portion of the Trust Estate and treated as Principal Collections will be
distributed first, upon the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes
and Class A-4 Notes, ratably, without preference or priority of any kind, and
second, upon the Class B Notes, ratably, without preference or priority of any
kind, according to such amounts due and payable on such Notes; and provided
further that the Servicer, on behalf of the Indenture Trustee, shall determine
conclusively without liability for such determination the amount of the proceeds
of such Sale which are allocable to Interest Collections and the amount of such
proceeds which are allocable to Principal Collections.
Section 5.09. Limitation on Suits.
(a) No Noteholder shall have any right to institute any Proceeding,
judicial or otherwise, with respect to this Indenture, or for the appointment of
a receiver or trustee, or for any other remedy hereunder unless:
(i) such Holder has previously given written notice to the Indenture
Trustee of a continuing Event of Default;
(ii) Noteholders representing not less than 25% of the aggregate
Percentage Interests (voting as a single Class) shall have made a written
request to the Indenture Trustee to institute Proceedings in respect of
such Event of Default in its own name as Indenture Trustee hereunder;
(iii) such Holder or Holders have offered to the Indenture Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(iv) the Indenture Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute any such
Proceeding; and
(v) no direction inconsistent with such written request has been given
to the Indenture Trustee during such 60-day period by Noteholders
representing more than 50% of the aggregate Percentage Interests (voting as
a single Class);
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it being understood and intended that no one or more Noteholders shall have any
right in any manner whatever by virtue of, or by availing themselves of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Noteholders or to obtain or to seek to obtain priority or preference over
any other Holders (other than the subordination of the Class B Notes to the
extent set forth in the Transaction Documents) or to enforce any right under
this Indenture, except in the manner herein provided and for the equal and
ratable benefit of all Noteholders.
(b) No Noteholder shall have any right to vote (except as provided in the
Transaction Documents) or in any manner otherwise control the operation and
management of the Trust, or the obligations of the parties to any of the
Transaction Documents, nor shall any Noteholder be under any liability to any
third person by reason of any action pursuant to any provision of the
Transaction Documents. However, in connection with any action as to which
Noteholders are entitled to vote or consent under the Transaction Documents, the
Issuer may set a record date for purposes of determining the identity of
Noteholders entitled to vote or consent in accordance with TIA Section 316(c).
Section 5.10. Unconditional Rights of Noteholders to Receive Note Payments.
Notwithstanding any other provision in this Indenture, the Holder of any Note
shall have the right which is absolute and unconditional to receive payment of
the principal of and interest on such Note, on or after the due date therefor as
specified in such Note, and to institute suit for the enforcement of any such
payment, and such right shall not be impaired without the consent of such
Holder.
Section 5.11. Restoration of Rights and Remedies. If the Indenture Trustee
or any Noteholder has instituted any Proceeding to enforce any right or remedy
under this Indenture or any other Transaction Document and such Proceeding has
been discontinued or abandoned for any reason, or has been determined adversely
to the Indenture Trustee or to such Noteholder, then and in every such case the
Issuer, the Indenture Trustee and the Noteholders shall, subject to any
determination in such Proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Indenture Trustee and the Noteholders shall continue as though no such
Proceeding had been instituted.
Section 5.12. Rights and Remedies Cumulative. Except as otherwise expressly
provided in Section 2.05 hereof, no right or remedy herein conferred upon or
reserved to the Indenture Trustee or to the Noteholders is intended to be
exclusive of any other right or remedy, and every right and remedy shall to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
Section 5.13. Delay or Omission Not Waiver. No delay or omission of the
Indenture Trustee or of any Holder of any Note to exercise any right or remedy
accruing upon any Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article Five or by law to the Indenture
Trustee or to the Noteholders may be exercised from time to time, and as often
as may be deemed expedient, by the Indenture Trustee or by the Noteholders, as
the case may be.
Section 5.14. Control by Noteholders. Subject to the provisions of Sections
5.09, 6.03(d) and 6.03(e) hereof, the Holders of Notes representing more than
50% of the aggregate Percentage Interests (voting as a single Class) shall have
the right to direct the time, method and place of conducting any Proceeding for
any remedy available to the Indenture Trustee with respect to the Notes or with
respect to exercising any trust power conferred on the Indenture Trustee,
including without limitation the Indenture Trustee's power to direct the action
of the Owner Trustee pursuant to Section 6.15 of the Securitization Trust
Agreement; provided that:
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(a) such direction shall not, as determined by the Indenture Trustee
based on the advice of counsel, be in conflict with any rule of law or with this
Indenture;
(b) any Sale of the Trust Estate shall be subject to Section 5.17
hereof;
(c) if any other provision of the Transaction Documents requires the
vote of a greater Percentage Interest for a particular action, or Class voting,
such greater Percentage Interest or Class voting shall be required; and
(d) the Indenture Trustee may take any other action deemed proper by
the Indenture Trustee which is not inconsistent with such direction; provided,
however, that, subject to Section 6.01 hereof, the Indenture Trustee need not
take any action which it determines might involve it in liability or be unjustly
prejudicial to the Noteholders not consenting.
Section 5.15. Waiver of Past Defaults. The Holders of Notes representing
more than 50% of the aggregate Percentage Interests (voting as a single Class),
may on behalf of the Holders of all the Notes waive any past Unmatured Event of
Default or Event of Default hereunder and its consequences, except that Holders
of Notes representing 100% of the aggregate Percentage Interest shall be
required to waive an Unmatured Event of Default or Event of Default:
(a) in the payment of principal of or interest due on any Note, or
(b) in respect of a covenant or provision hereof which under Section
9.03 hereof cannot be modified or amended without the consent of the Holder of
each Outstanding Note affected.
Upon any such waiver, such Unmatured Event of Default or Event of Default
shall cease to exist and shall be deemed to have been cured for every purpose of
this Indenture; but no such waiver shall extend to any subsequent or other
Unmatured Event of Default or Event of Default or impair any right consequent
thereon.
Section 5.16. Undertaking for Costs. All parties to this Indenture agree,
and each Holder of any Note by his acceptance thereof shall be deemed to have
agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, including those of the Indenture
Trustee (except that the Indenture Trustee need not be required to post an
undertaking to pay its costs of any such suit), and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Indenture Trustee, to any suit instituted by any Noteholder, or group of
Noteholders, holding in the aggregate Notes representing more than 10% of the
then aggregate Percentage Interests, or to any suit instituted by any Noteholder
for the enforcement of the payment of the principal of or interest on any Note
on or after the Maturity of such Note.
Section 5.17. Sale of Trust Estate.
(a) If an Event of Default shall have occurred and be continuing, the
Indenture Trustee may, and, subject to paragraph (b) of this Section 5.17, upon
receipt of a notice from Noteholders representing more than 50% of the aggregate
Percentage Interests of the Class A Notes (voting as a single Class) or 50% of
the aggregate Percentage Interests of all Notes (voting as a single Class),
shall (i) publish a notice in Authorized Newspapers that the Indenture Trustee
intends to sell, dispose of or otherwise liquidate (a "Sale") the 1998-A SUBI
Interest, the 1998-A SUBI Certificate and the other property of the Trust Estate
in a commercially reasonable manner. Following such publication, the
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Indenture Trustee shall, unless otherwise prohibited by applicable law from any
such action, sell, dispose of, or otherwise liquidate the 1998-A SUBI Interest,
the 1998-A SUBI Certificate and the other property of the Trust Estate, in a
commercially reasonable manner and on commercially reasonable terms, which shall
include the solicitation of competitive bids, and shall proceed to consummate
the sale, liquidation or disposition thereof as provided above with the highest
bidder. The Transferor and the Servicer shall be permitted to bid for the Trust
Estate. The Indenture Trustee may obtain a prior determination from the
conservator, receiver, or trustee in bankruptcy of the Issuer that the terms and
manner of any proposed sale, disposition or liquidation are commercially
reasonable. The power to effect any Sale of any portion of the Trust Estate
pursuant to Section 5.04 hereof and this Section 5.17 shall not be exhausted by
any one or more Sales as to any portion of such Trust Estate remaining unsold,
but shall continue unimpaired until the entire Trust Estate shall have been sold
or all amounts payable on the Notes and under this Indenture shall have been
paid. The Indenture Trustee may from time to time postpone any Sale by public
announcement made at the time and place of such Sale.
(b) Notwithstanding the foregoing, the Indenture Trustee shall not sell or
otherwise dispose of the Trust Estate following an Event of Default (i) unless
the anticipated proceeds of such Sale or other disposition distributable to the
Noteholders will be sufficient to discharge in full the amounts then due and
unpaid upon the Notes for principal and interest, and the termination payment,
if any, due to the Class A Swap Counterparty for early termination of the Class
A Interest Rate Swap Agreement, or (ii) if such proceeds will not be sufficient,
unless the Indenture Trustee obtains the consent of the Holders of all Notes
then Outstanding (in which such case, payments shall be made first to the Class
A Swap Counterparty and the Class A Notes, pro rata, based on the amount of the
termination payment, if any, due to the Class A Swap Counterparty for early
termination of the Class A Interest Rate Swap Agreement and the Class A Note
Balance), provided that without the consent or direction to the contrary by the
Holders of all Notes then Outstanding, at any Sale at which no other Person bids
an amount equal to or greater than the amount described in clause (i) above, the
Indenture Trustee shall bid on behalf of the Noteholders an amount at least
equal to $1.00 more than the highest other bid.
(c) The Indenture Trustee may bid for and acquire any portion of the Trust
Estate in connection with a Sale thereof, and may pay all or part of the
purchase price by crediting against amounts owing on the Notes or other amounts
secured by this Indenture, all or part of the net proceeds of such Sale after
deducting the costs, charges and expenses incurred by the Indenture Trustee in
connection with such Sale notwithstanding the provisions of any other Section
hereof. The Notes need not be produced in order to complete any such Sale. The
Indenture Trustee may, subject to this Indenture, hold, lease, operate, manage
or otherwise deal with any property so acquired in any manner permitted by law.
(d) The Indenture Trustee shall execute and deliver an appropriate
instrument of conveyance transferring its interest in any portion of a Trust
Estate in connection with a Sale thereof. In addition, the Indenture Trustee is
hereby irrevocably appointed the agent and attorney-in-fact of the Issuer to
transfer and convey its interest in any portion of a Trust Estate in connection
with a Sale thereof (including changing the designation of the secured party on
any financing or continuation statements), and to take all action necessary to
effect such Sale. No purchaser or transferee at such a Sale shall be bound to
ascertain the Indenture Trustee's authority, inquire into the satisfaction of
any conditions precedent or see to the application of any moneys.
Section 5.18. Action on Notes. The Indenture Trustee's right to seek and
recover judgment on the Notes or under this Indenture shall not be affected by
the seeking, obtaining or application of any other relief under or with respect
to this Indenture. Neither the Lien of this Indenture nor any rights or remedies
of the Indenture Trustee or Noteholders shall be impaired by the recovery of any
judgment by the Indenture Trustee against the Issuer or by the levy of any
execution under such judgment upon any portion of the Trust Estate.
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Section 5.19. Notes held by Issuer or Affiliates Not to Share in
Distribution. Notes owned or held by, or for the account or benefit of, the
Issuer or any Affiliate thereof shall not be entitled to share in any payment or
distribution provided for in this Article.
ARTICLE SIX. THE INDENTURE TRUSTEE
Section 6.01. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default:
(i) the Indenture Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and, pursuant
to clause (e) below, the other Transaction Documents; and
(ii) in the absence of bad faith on its part or as otherwise required
by the TIA, the Indenture Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein, upon
certificates, opinions or reports furnished to the Indenture Trustee and
conforming to the requirements of this Indenture, but in the case of any
such certificates or opinions that by any provision hereof are specifically
required to be furnished to the Indenture Trustee, the Indenture Trustee
shall be under a duty to examine the same to determine whether or not they
conform to the requirements of this Indenture, but need not verify the
accuracy of the contents thereof or whether procedures specified by or
pursuant to the provisions of this Indenture have been followed in the
preparation thereof.
(b) In case an Event of Default has occurred and is continuing, the
Indenture Trustee shall exercise such of the rights and powers vested in it by
this Indenture, and use the same degree of care and skill in their exercise, as
a prudent person would exercise or use under the circumstances.
(c) No provision of this Indenture shall be construed to relieve the
Indenture Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:
(i) this subsection shall not be construed to limit the effect of
subsection (a) of this Section;
(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it shall be
proved that the Indenture Trustee was negligent in ascertaining the
pertinent facts;
(iii) the Indenture Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
the direction of Noteholders representing more than 50% of the aggregate
Percentage Interests (voting as a single Class) relating to the time,
method and place of conducting any Proceeding for any remedy available to
the Indenture Trustee, or exercising any trust or power conferred upon the
Indenture Trustee, under this Indenture; and
(iv) no provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it.
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(d) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of and affording
protection to the Indenture Trustee shall be subject to the provisions of this
Section.
(e) The Indenture Trustee agrees to comply with all of the provisions of
and to perform all of the obligations under the Trust Agreement, the Servicing
Agreement, the SUBI Supplement, the Servicing Supplement and the Backup Security
Agreement required to be complied with or performed by the Indenture Trustee,
whether or not the Indenture Trustee is expressly a party thereto.
Section 6.02. Notice of Unmatured Event of Default. Within 60 days after
the occurrence of any Unmatured Event of Default, the Indenture Trustee shall
transmit by mail notice of such Unmatured Event of Default hereunder known to it
to all Noteholders, unless such Unmatured Event of Default shall have been cured
or waived; provided, however, that except in the case of an Unmatured Event of
Default in the payment of the principal of or any interest on any Note, the
Indenture Trustee shall be protected in withholding such notice if and so long
as a corporate trust committee of the Corporate Trust Department and/or
Responsible Officers of the Indenture Trustee in good faith determine(s) that
the withholding of such notice is in the interests of the Noteholders.
Section 6.03. Certain Rights of Indenture Trustee. Except as otherwise
provided in Section 6.01 hereof:
(a) in the absence of negligence or bad faith, the Indenture Trustee may
rely and shall be protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, note or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties;
(b) any request or direction of the Issuer mentioned herein shall be
sufficiently evidenced by an Issuer Request or Issuer Order;
(c) whenever in the administration of this Indenture the Indenture Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Indenture Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officer's Certificate;
(d) the Indenture Trustee may consult with counsel, and the advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon;
(e) the Indenture Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or direction
of any of the Noteholders pursuant to this Indenture, unless such Noteholders
shall have offered to the Indenture Trustee reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction;
(f) the Indenture Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
note or other paper or document;
(g) the Indenture Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys, and the Indenture
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Trustee shall not be responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder; and
(h) the Indenture Trustee shall not be liable for any action taken,
suffered or omitted by it without negligence and in good faith and believed by
it to be authorized or within the discretion or rights or powers conferred upon
it by this Indenture.
Section 6.04. Not Responsible for Recitals or Issuance of Notes. The
recitals contained herein and in the Notes, except the certificates of
authentication on the Notes, shall be taken as the statements of the Issuer, and
the Indenture Trustee assumes no responsibility for their correctness. The
Indenture Trustee makes no representations as to the validity or sufficiency of
this Indenture or of the Notes. The Indenture Trustee shall not be accountable
for the use or application by the Issuer of Notes or the proceeds thereof.
Section 6.05. May Hold Notes. The Indenture Trustee, any Paying Agent, Note
Registrar, Authenticating Agent or any other agent of the Issuer, in its
individual or any other capacity, may become the owner or pledgee of Notes and
may otherwise deal with the Issuer with the same rights it would have if it were
not Indenture Trustee, Paying Agent, Note Registrar, Authenticating Agent or
such other agent.
Section 6.06. Money Held in Trust. Money held by the Indenture Trustee in
trust hereunder need not be segregated from other funds except to the extent
required by this Indenture or by law. The Indenture Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Issuer and except to the extent of income or other gain on
investments which are obligations of the Indenture Trustee and income or other
gain actually received by the Indenture Trustee on Permitted Investments.
Section 6.07. Indenture Trustee's Fees and Expenses.
(a) The Indenture Trustee shall be entitled to reasonable compensation for
all services rendered by it pursuant to the Transaction Documents and in the
exercise and performance of any of the powers and duties of the Indenture
Trustee under this Indenture, and payment or reimbursement upon its request for
all reasonable expenses, disbursements and advances incurred or made by the
Indenture Trustee in its capacity as Indenture Trustee in accordance with any of
the provisions of this Indenture (including the reasonable compensation and the
expenses and disbursements of its counsel and of all persons not regularly in
its employ) except any such expense, disbursement or advance as may arise from
its negligence, willful misfeasance or bad faith or that is the responsibility
of the Transferor or the Issuer under the Transaction Documents. Such
compensation and reimbursement shall be paid as set forth in Section 3.03(b) of
the Securitization Trust Agreement or Section 10.01 of the 1998-A SUBI
Supplement (in the definitions of the terms "Principal Collections" and
"Interest Collections"). Additionally, the Transferor, pursuant to Section
6.02(iii) or (v) of the Securitization Trust Agreement, may agree to indemnify
the Indenture Trustee under certain circumstances.
(b) The Indenture Trustee shall not institute any Proceeding, or make any
filing, on account of the Issuer failing to perform its obligations under this
Section that might result, with the giving of notice or the passage of time or
both, in the occurrence of any Event of Default specified in Sections 5.01(c) or
5.01(d) hereof. Notwithstanding the failure of the Issuer to perform any of its
obligations under this Section, the Indenture Trustee shall continue to perform
its obligations under this Indenture.
(c) Prior to the termination of this Indenture, the obligations of the
Indenture Trustee hereunder shall not be subject to any defense, counterclaim or
right of offset which the
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Indenture Trustee in its individual capacity has or may have against the Issuer,
the Transferor or the Servicer, whether in respect of this Indenture, the Notes,
the Transaction Documents or otherwise, and the Indenture Trustee hereby waives
any and all statutory or common law rights of setoff or banker's lien against
the Issuer or any of its assets that the Indenture Trustee may have in any
capacity other than on behalf of the Noteholders, including without limitation,
any rights under UCC Section 9-306(4)(d) as enacted in the State of New York.
Section 6.08. Eligibility; Corporate Indenture Trustee Required.
(a) This Indenture shall always have a Indenture Trustee who satisfies the
requirements of TIA Section 310(a)(1).
(b) There shall at all times be a Indenture Trustee hereunder that shall
(i) be a corporation organized and doing business under the laws of the United
States or of any State, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least $100,000,000, and
subject to supervision or examination by federal or State authority and (ii)
either have a rating from Moody's for its long term deposits of at least Baa3 or
be otherwise acceptable to each of Moody's, Standard & Poor's and Fitch, as
evidenced by a letter to such effect from each of Moody's, Standard & Poor's and
Fitch. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
(c) Neither the Issuer nor any affiliate thereof may serve as Indenture
Trustee.
(d) The Indenture Trustee shall at all times be subject to TIA Section
310(b).
Section 6.09. Cessation of Eligibility. If at any time the Indenture
Trustee shall cease to be eligible in accordance with the provisions of this
Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
Section 6.10. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Indenture Trustee and no appointment
of a successor Indenture Trustee pursuant to this Article shall become effective
until the acceptance of appointment by the successor Indenture Trustee under
Section 6.11 hereof.
(b) The Indenture Trustee may resign at any time by giving written notice
thereof to the Issuer and the Noteholders. If an instrument of acceptance by a
successor Indenture Trustee shall not have been delivered to the Indenture
Trustee within 30 days after the giving of such notice of resignation, the
resigning Indenture Trustee may petition any court of competent jurisdiction for
the appointment of a successor Indenture Trustee.
(c) The Indenture Trustee may be removed at any time by Act of Noteholders
representing more than 50% of the aggregate Percentage Interests (voting as a
single Class) delivered to the Indenture Trustee and to the Issuer.
(d) If at any time:
(i) the Indenture Trustee shall cease to be eligible under Section
6.08 hereof and shall fail to resign after written request therefor by the
Issuer or by any Noteholder, or
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(ii) the Indenture Trustee shall become incapable of acting or shall
be adjudged bankrupt or insolvent, or a receiver of the Indenture Trustee
or of its property shall be appointed, or any public officer shall take
charge or control of the Indenture Trustee or of its property or affairs
for the purpose of rehabilitation, conservation or liquidation,
then, in any such case (A) the Issuer may remove the Indenture Trustee, or (B)
subject to Section 5.16 hereof, any Noteholder who has been a bona fide
Noteholder for at least six months may, on behalf of such Noteholder and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Indenture Trustee and the appointment of a successor Indenture
Trustee. In any event, should the Indenture Trustee cease to be eligible under
Section 6.08(b), the Issuer shall, within thirty (30) days after notice thereof,
remove the Indenture Trustee and replace the Indenture Trustee with a successor
Indenture Trustee meeting the eligibility requirements of Section 6.08.
(e) If the Indenture Trustee shall resign, be removed or become incapable
of acting, or if a vacancy shall occur in the office of the Indenture Trustee
for any cause, the Issuer shall promptly appoint a successor Indenture Trustee,
provided that Noteholders representing more than 50% of the aggregate Percentage
Interests (voting as a single class) shall not have objected to such
appointment. If within one year after such resignation, removal or incapability,
or the occurrence of such vacancy, a successor Indenture Trustee shall be
appointed by Act of Noteholders representing more than 50% of the aggregate
Percentage Interests (voting as a single Class) delivered to the Issuer and the
retiring Indenture Trustee, the successor Indenture Trustee so appointed shall,
forthwith upon its acceptance of such appointment, become the successor
Indenture Trustee and supersede the successor Indenture Trustee appointed by the
Issuer. If no successor Indenture Trustee shall have been so appointed by the
Issuer or Noteholders and shall have accepted appointment in the manner
hereinafter provided, any Noteholder who has been a bona fide Noteholder for at
least six months may, on behalf of such Noteholder and all others similarly
situated, petition any court of competent jurisdiction for the appointment of a
successor Indenture Trustee. The appointment by the Noteholders or a court of a
successor Indenture Trustee shall not invalidate or void any act taken by a
prior successor Indenture Trustee appointed by the Issuer.
(f) The Issuer shall give notice of each resignation and each removal of
the Indenture Trustee and each appointment of a successor Indenture Trustee by
mailing written notice of such event to the Noteholders and each of Moody's,
Standard & Poor's and Fitch. Each such notice shall include the name of the
successor Indenture Trustee and the address of its Corporate Trust Office.
Section 6.11. Acceptance of Appointment by Successor.
(a) Every successor Indenture Trustee appointed hereunder shall execute,
acknowledge and deliver to the Issuer and the retiring Indenture Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Indenture Trustee shall become effective and such successor
Indenture Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Indenture
Trustee; but, on request of the Issuer or the successor Indenture Trustee, such
retiring Indenture Trustee shall, upon payment of its charges in connection
therewith and all amounts owing under Section 6.07(a) hereof, execute and
deliver an instrument transferring to such successor Indenture Trustee all the
rights, powers and trusts of the retiring Indenture Trustee, and shall duly
assign, transfer and deliver to such successor Indenture Trustee all property
and money held by such retiring Indenture Trustee hereunder. Upon request of any
such successor Indenture Trustee, the Issuer shall execute and deliver any and
all instruments necessary or appropriate for more fully and certainly vesting in
and confirming to such successor Indenture Trustee all such rights, powers and
trusts.
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(b) No successor Indenture Trustee shall accept its appointment unless at
the time of such acceptance such successor Indenture Trustee shall be qualified
and eligible under this Article.
(c) Upon any successor Indenture Trustee being appointed and accepting its
appointment, the Issuer shall, within 120 days thereafter, cause all acts to be
done and file all instruments in each jurisdiction to the extent necessary to
perfect in the name of the successor Indenture Trustee the Lien in the Trust
Estate Granted by this Indenture to the same extent as such Lien had previously
been perfected in the Indenture Trustee.
Section 6.12. Merger, Conversion, Consolidation or Succession to Business
of Indenture Trustee. Any corporation into which the Indenture Trustee may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Indenture
Trustee shall be a party, or any corporation succeeding to all or substantially
all of the corporate trust business of the Indenture Trustee, shall be the
successor of the Indenture Trustee hereunder, provided such corporation shall be
otherwise qualified and eligible under this Article, without the execution or
filing of any paper or any further act on the part of any of the parties hereto.
Upon request of any successor to the Indenture Trustee pursuant to this Section
6.12, the Issuer shall execute any and all instruments necessary or appropriate
for more fully and certainly vesting in and confirming to such successor
Indenture Trustee all rights, powers and trusts of the Indenture Trustee. In
case any Notes have been authenticated, but not delivered, by the Indenture
Trustee then in office, any successor by merger, conversion or consolidation to
such authenticating Indenture Trustee may adopt such authentication and deliver
the Notes so authenticated with the same effect as if such successor Indenture
Trustee had itself authenticated such Notes.
Section 6.13. Co-Trustees and Separate Trustees. At any time or times, for
the purpose of meeting the legal requirements of any jurisdiction in which any
of the Trust Estate may at any time be located, the Issuer and the Indenture
Trustee shall have power to appoint, and, upon the written request of the
Indenture Trustee or of Noteholders representing at least 25% of the aggregate
Percentage Interests (acting as a single Class), the Issuer shall for such
purpose join with the Indenture Trustee in the execution, delivery and
performance of all instruments and agreements necessary or proper to appoint one
or more banks or trust companies approved by the Indenture Trustee either to act
as co-trustee, jointly with the Indenture Trustee, of all or any part of such
Trust Estate, or to act as separate trustee of any such property, in either case
with such powers as may be provided in the instrument of appointment, and to
vest in such Person or Persons in the capacity aforesaid any property, title,
right or power deemed necessary or desirable, subject to the other provisions of
this Section. If the Issuer does not join in such appointment within 15 days
after the receipt by it of a request to do so, or in case an Event of Default
has occurred and is continuing, the Indenture Trustee alone shall have the power
to make such appointment.
Should any written instrument from the Issuer be required by any co-trustee
or separate trustee so appointed for more fully confirming to such co-trustee or
separate trustee such property, title, right or power, any and all such
instruments shall, on request, be executed, acknowledged and delivered by the
Issuer.
Every co-trustee or separate trustee shall, to the extent permitted by law,
but to such extent only, be appointed subject to the following terms:
(a) The Notes shall be authenticated and delivered and all rights,
powers, duties and obligations hereunder in respect of the custody of
securities, Cash and other personal property held by, or required to be
deposited or pledged with, the Indenture Trustee hereunder, shall be exercised
solely by the Indenture Trustee.
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(b) The rights, powers, duties and obligations hereby conferred or
imposed upon the Indenture Trustee shall be conferred or imposed upon and
exercised or performed by the Indenture Trustee or by the Indenture Trustee and
such co-trustee or separate trustee jointly, as shall be provided in the
instrument appointing such co-trustee or separate trustee, except to the extent
that under any law of any jurisdiction in which any particular act is to be
performed, the Indenture Trustee shall be incompetent or unqualified to perform
such act, in which event such rights, powers, duties and obligations shall be
exercised and performed by such co-trustee or separate trustee.
(c) The Indenture Trustee at any time, by an instrument in writing
executed by it, may accept the resignation of or remove any co-trustee or
separate trustee appointed under this Section, and, in case an Event of Default
has occurred and is continuing, the Indenture Trustee shall have power to accept
the resignation of, or remove, any such co-trustee or separate trustee without
the concurrence of the Issuer. Upon the written request of the Indenture
Trustee, the Issuer shall join with the Indenture Trustee in the execution,
delivery and performance of all instruments and agreements necessary or proper
to effectuate such resignation or removal. A successor to any co-trustee or
separate trustee so resigned or removed may be appointed in the manner provided
in this Section.
(d) No co-trustee or separate trustee hereunder shall be personally
liable by reason of any act or omission of the Indenture Trustee, or any other
such Indenture Trustee hereunder, and each co-trustee or separate trustee
hereunder shall not be liable for any action taken, suffered or omitted by it
without negligence and in good faith and believed by it to be authorized or
within the discretion or powers conferred upon it by this Indenture.
(e) Any Act of Noteholders delivered to the Indenture Trustee shall be
deemed to have been delivered to each such co-trustee and separate trustee.
Section 6.14. Authenticating Agent. Upon the request of the Issuer, the
Indenture Trustee shall appoint an Authenticating Agent with power to act on its
behalf and subject to its direction in the authentication and delivery of the
Notes designated for such authentication by the Issuer and containing provisions
therein for such authentication (or with respect to which the Issuer has made
other arrangements, satisfactory to the Indenture Trustee and such
Authenticating Agent, for notation on the Notes of the authority of an
Authenticating Agent appointed after the initial authentication and delivery of
such Notes) in connection with transfers and exchanges of Notes under Sections
2.04 and 2.05 hereof, as fully to all intents and purposes as though the
Authenticating Agent had been expressly authorized by those Sections to
authenticate and deliver Notes. For all purposes of this Indenture, the
authentication and delivery of Notes by the Authenticating Agent pursuant to
this Section shall be deemed to be the authentication and delivery of Notes by
the Indenture Trustee. Such Authenticating Agent shall at all times be a Person
that meets the requirements of Section 6.08 hereof for the Indenture Trustee
hereunder.
Any corporation into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authenticating Agent
shall be a party, or any corporation succeeding to the corporate trust business
of any Authenticating Agent, shall be the successor of the Authenticating Agent
hereunder, if such successor corporation is otherwise eligible under this
Section, without the execution or filing of any further act on the part of the
parties hereto or the Authenticating Agent or such successor corporation.
Any Authenticating Agent may at any time resign by giving written notice of
resignation to the Indenture Trustee and the Issuer. The Indenture Trustee may
at any time terminate the agency of any Authenticating Agent by giving written
notice of termination to such Authenticating Agent and the Issuer. Upon
receiving such a notice of resignation or upon such a termination, or in case at
any time any Authenticating Agent shall cease to be eligible under this Section,
the Indenture Trustee may promptly appoint a successor Authenticating Agent,
shall give written notice of such appointment to the
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Issuer and shall mail notice of such appointment to all Noteholders as the names
and addresses of such Holders appear on the Note Register.
The Indenture Trustee agrees to pay to the Authenticating Agent from time
to time reasonable compensation for its services and the Indenture Trustee shall
be entitled to be reimbursed for such payments, subject to Section 6.07 hereof.
The provisions of Sections 2.09, 6.04 and 6.05 hereof shall be applicable to any
Authenticating Agent.
Section 6.15. Withholding Taxes. Whenever it is acting as a Paying Agent
for the Notes, the Indenture Trustee shall comply with all requirements of the
Code, and all regulations thereunder, with respect to the withholding from any
payments made on such Notes of any withholding taxes imposed thereon and with
respect to any reporting requirements in connection therewith.
Section 6.16. Preferential Collection of Claims against the Issuer. The
Indenture Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). An Indenture Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated
therein.
Section 6.17. No Petition. The Indenture Trustee covenants and agrees that
prior to the date which is one year and one day after the date upon which (a)
each Class of Notes has been paid in full, and (b) all obligations due under any
other Securitized Financing has been paid in full, the Trustee will not
institute against, or join any other Person in instituting against (i) the
Issuer, (ii) ALF LP, the Transferor or any other Special Purpose Affiliate,
(iii) ALF LLC, World Omni Lease Securitization LLC or any other general partner
of a Special Purpose Affiliate that is a partnership, (iv) any manager (other
than WOFCO) of a limited liability company that is a general partner of a
Special Purpose Affiliate that is a partnership or that itself is a Special
Purpose Affiliate, or (v) the Origination Trustee or the Origination Trust, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding or
other proceedings under any federal or state bankruptcy or similar law. This
Section shall survive the termination of this Indenture or the resignation or
removal of the Indenture Trustee under this Indenture.
ARTICLE SEVEN. NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. Issuer to Furnish Indenture Trustee Names and Addresses of
Noteholders. The Issuer will furnish or cause to be furnished to the Indenture
Trustee (a) quarterly, not more than 45 days after each March 15, June 15,
September 15, and December 15 Distribution Date, a list in such form as the
Indenture Trustee may reasonably require, of the names and addresses of
Noteholders, and (b) at such other times, as the Indenture Trustee may
reasonably request in writing, within 30 days after receipt by the Issuer of any
such request, a list of similar form and content; provided, however, that so
long as either (y) the Indenture Trustee is the Note Registrar or (z) a Class of
Notes is issued in book-entry form, no such list (with respect to such Class, if
applicable) shall be required to be furnished. Any such list which is required
to be furnished may be dated as of a date not more than 15 days prior to the
time such list is furnished and need not include information received after such
date.
Section 7.02. Preservation of Information; Communications to Noteholders.
(a) The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Noteholders contained in the
most recent list furnished to the Indenture Trustee as provided in Section 7.01
hereof and the names and addresses of Noteholders received by the Indenture
Trustee in its capacity as Note Registrar. The Indenture Trustee may destroy any
list furnished to it as provided in said Section 7.01 upon receipt of a new list
so furnished.
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(b) If three or more Noteholders or holders of Notes evidencing not less
than 25% of the aggregate Percentage Interests of any Class (hereinafter
referred to as "Applicants") apply in writing to the Indenture Trustee, and such
application states that the Applicants desire to communicate with other
Noteholders with respect to their rights under this Agreement or under the Notes
and such application is accompanied by a copy of the communication that such
Applicants propose to transmit, then the Indenture Trustee shall, within five
Business Days after the receipt of such application, afford such Applicants
access, during normal business hours, to the current list of Noteholders. Every
Noteholder, by receiving and holding a Note, agrees with the Servicer, the
Transferor, the Issuer and the Indenture Trustee that neither the Servicer, the
Transferor, the Issuer nor the Indenture Trustee shall be held accountable by
reason of the disclosure of any such information as to the names and addresses
of the Noteholders under the Indenture, regardless of the source from which such
information was derived.
(c) The Note Registrar shall furnish or cause to be furnished to the
Servicer, within 15 days after receipt by the Note Registrar of a written
request therefor from the Servicer, a list, in such form as the Servicer may
reasonably require, of the names and addresses of the Noteholders as of the most
recent Record Date.
Section 7.03. Reports by Indenture Trustee; Responses to Noteholder
Inquiries.
(a) Within 60 days after December 31 in each year, commencing with the
December 31 that is six months after the Closing Date, the Indenture Trustee
shall mail to the Holders a brief report dated as of such reporting date that
complies with TIA Section 313(a); provided, however, if no event described in
TIA Section 313(a) shall have occurred within such calendar year no report need
be transmitted. The Indenture Trustee also shall comply with TIA Section 313(b).
The Indenture Trustee shall also transmit by mail all reports as required by TIA
Section 313(c).
(b) A copy of each such report shall, at the time of such transmission to
Noteholders, be filed by the Indenture Trustee with each stock exchange upon
which the Notes are listed, and also with the Commission. The Issuer will notify
the Indenture Trustee when the Notes are listed on any stock exchange.
(c) Copies of the above reports need not be mailed to Noteholders who have
previously requested that they not receive copies of such reports.
(d) The Indenture Trustee shall acknowledge and respond to any reasonable
inquiry of any Noteholder relating to the Trust Estate or this Indenture,
provided, however, that in making such response, the Indenture Trustee shall
have no obligation to (i) seek or obtain information not otherwise within its
possession or control or (ii) expend its own funds.
Section 7.04. Reports by the Issuer. The Issuer will:
(a) File with the Indenture Trustee, within 15 days after the Issuer is
required to file the same with the Commission, copies of the annual reports and
of the information, documents and other reports (or copies of such portions of
any of the foregoing as the Commission may from time to time by rules and
regulations prescribe) that the Issuer may be required to file with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act; or, if the
Issuer is not required to file information, documents or reports pursuant to
either of said Sections, then it will either (i) file with the Indenture Trustee
such information, documents and reports as may be required by any exemption from
the requirements of the TIA granted by the Commission or (ii) file with the
Indenture Trustee and the Commission, in accordance with rules and regulations
prescribed from time to time by the Commission, such of the supplementary and
periodic information, documents and reports that may be required pursuant to
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Section 13 or 15 of the Exchange Act in respect of a security listed and
registered on a national securities exchange as may be prescribed from time to
time in such rules and regulations;
(b) File with the Indenture Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by the
Issuer with the conditions and covenants of this Indenture as may be required
from time to time by such rules and regulations; and
(c) Transmit by mail to all Noteholders, as their names and addresses
appear in the Note Register, within 30 days after the filing thereof with the
Indenture Trustee, such summaries of any information, documents and reports
required to be filed by the Issuer pursuant to Subsections (a) and (b) of this
Section as may be required by rules and regulations prescribed from time to time
by the Commission.
ARTICLE EIGHT. ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01. Collection of Moneys. Except as otherwise expressly provided
herein or in the Transaction Documents, the Indenture Trustee shall have the
right, but not the obligation, to demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or
receivable by the Indenture Trustee pursuant to this Indenture and the other
Transaction Documents. The Indenture Trustee shall hold all such money and
property received by it as part of the Trust Estate, and shall apply them as
provided in this Indenture. Except as otherwise expressly provided in this
Indenture, if any default occurs in the making of any payment or performance
under any of the Transaction Documents, the Indenture Trustee may, and upon the
request of Noteholders representing more than 50% of the aggregate Percentage
Interests (voting as a single Class) shall, take such action as may be
appropriate to enforce such payment or performance, including the institution
and prosecution of appropriate Proceedings, and including directing the Owner
Trustee under Section 6.15 of the Securitization Trust Agreement with regard to
appropriate action thereunder. Any such action shall be without prejudice to any
right to claim an Unmatured Event of Default or Event of Default under this
Indenture and to proceed thereafter as provided in Article Five hereof.
Section 8.02. Trust Accounts.
(a) On or prior to the Closing Date, the Issuer shall cause the Servicer
(on behalf of the Origination Trustee or Owner Trustee) to establish, in the
name of the Indenture Trustee, for the benefit of the Noteholders the
Distribution Account pursuant to Section 3.01 of the Securitization Trust
Agreement, the 1998-A SUBI Collection Account pursuant to Section 12.01 of the
1998-A SUBI Supplement , the 1998-A SUBI Lease Account pursuant to Section 12.02
of the 1998-A SUBI Supplement and the Reserve Account pursuant to Section 3.04
of the Securitization Trust Agreement.
(b) On each Distribution Date, subject to the provisions of Article Five,
the Indenture Trustee shall make all of the distributions set forth in Section
3.03 of the Securitization Trust Agreement in the order of priority set forth
therein.
Section 8.03. General Provisions Regarding the Accounts.
(a) All Accounts and all deposits therein shall constitute a portion of the
Trust Estate. Other than as expressly provided for in this Indenture or the
other Transaction Documents, neither the Issuer nor the Servicer shall have any
claim upon or rights in such Accounts or the deposits therein or any right to
cause the withdrawal of funds therefrom. So long as no Event of Default shall
have occurred and be continuing, but subject to the remaining provisions of this
Section 8.03, all or a portion of the funds in the Accounts shall be separately
invested and reinvested by the Indenture
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Trustee at the Servicer's direction in one or more Permitted Investments. All
income or other gain from investment of moneys deposited in any Account shall be
deposited therein immediately upon receipt, and any loss resulting from such
investment shall be charged to such respective account, as the case may be.
(b) [Intentionally Blank]
(c) Absent negligence or bad faith on its part, the Indenture Trustee shall
not in any way be held liable by reason of any insufficiency in any Accounts
resulting from any loss on any Permitted Investment included therein.
(d) All investments of funds in any Account and all sales of Permitted
Investments held in any such Account shall, except as otherwise expressly
provided in this Indenture, be made by the Indenture Trustee as directed by the
Servicer. Such direction may specify specific actions or may be a general,
standing order authorizing the Indenture Trustee to act within certain general
parameters or to act on written, telegraphic or telephonic instructions of
specified personnel or agents of the Servicer.
In the event that:
(i) the Servicer shall have failed to give investment directions to
the Indenture Trustee by 11:00 a.m., New York City time, on any Business
Day authorizing the Indenture Trustee to invest the funds then in any
Account;
(ii) an Event of Default shall have occurred but the Notes shall not
have been declared due and payable, or if the Notes shall have been
declared due and payable following an Event of Default, amounts collected
or receivable from the related Trust Estate are being applied in accordance
with Section 5.05 hereof; or
(iii) an Event of Default shall have occurred, the Notes shall have
been declared due and payable, and amounts collected or receivable from the
related Trust Estate are being applied in accordance with Section 5.08
hereof,
the Indenture Trustee shall invest and reinvest the funds then in each such
account in United States Treasury Bills maturing no later than the Business Day
immediately preceding the next succeeding Distribution Date.
(e) Upon the satisfaction and discharge of this Indenture in accordance
with Article Four hereof, the Indenture Trustee shall pay or transfer to the
Issuer all remaining money or Permitted Investments then in the Accounts.
Section 8.04. Release of Trust Estate.
(a) The Indenture Trustee may, and when required by the provisions of this
Indenture or the Transaction Documents shall, execute instruments to release
property from the lien of this Indenture and the Backup Security Agreement, or
convey the Indenture Trustee's interest in the same, in a manner and under
circumstances that are not inconsistent with the provisions of this Indenture.
No party relying upon an instrument executed by the Indenture Trustee as
provided in this Article Eight shall be bound to ascertain the Indenture
Trustee's authority, inquire into the satisfaction of any conditions precedent
or see to the application of any moneys.
(b) The Indenture Trustee shall, at such time as there are no Notes
outstanding, release any remaining portion of the Trust Estate that secured the
Notes from the lien of this Indenture, release to Issuer or any other Person
entitled thereto any funds then on deposit in the Accounts and release any
property subject to the lien of the Backup Security Agreement.
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(c) In particular, but without limitation of subparagraphs (a) and (b), it
is understood that the Servicer shall have the authority to sell and/or
reallocate out of the 1998-A SUBI free and clear of any Lien under this
Indenture and the Backup Security Agreement, 1998-A SUBI Assets in accordance
with the provisions of the Transaction Documents. In all circumstances other
than the foregoing, the Indenture Trustee shall release property from the lien
of this Indenture and the Backup Security Agreement pursuant to this paragraph
only upon receipt of an Issuer Request accompanied by an Officer's Certificate,
an Opinion of Counsel and (if required by the TIA) a certificate or opinion of
an Independent appraiser in accordance with TIA Sections 314(c) and 314(d)(1),
in each case meeting any applicable requirements of Section 11.1.
Section 8.05. Opinion of Counsel. The Indenture Trustee shall receive at
least seven days' notice when requested by Issuer to take any action pursuant to
Section 8.04(a) (other than as set forth in the first sentence of Section
8.04(c)), accompanied by copies of any instruments involved, and (also except as
set forth in the first sentence of Section 8.04(c)) the Indenture Trustee may
also require as a condition to such action, an Opinion of Counsel, in form and
substance satisfactory to the Indenture Trustee, stating the legal effect of any
such action, outlining the steps required to complete the same, and concluding
that all conditions precedent to the taking of such action have been complied
with and such action will not materially and adversely impair the legal
interests of the Noteholders in contravention of the provisions of this
Indenture; provided that in no event shall such Opinion of Counsel be required
to express an opinion as to the fair value of the Trust Estate. Counsel
rendering any such opinion may rely, without independent investigation, on the
accuracy and validity of any certificate or other instrument delivered to
Indenture Trustee in connection with any such action.
ARTICLE NINE. SUPPLEMENTAL INDENTURES
Section 9.01. [Intentionally Blank]
Section 9.02. Supplemental Indentures. The Issuer and the Indenture
Trustee, at any time and from time to time, may amend the Indenture or enter
into one or more indentures supplemental hereto, only as to the extent provided
in Section 4.01 of the Securitization Trust Agreement.
Section 9.03. [Intentionally Blank]
Section 9.04. Execution of Supplemental Indentures. In executing, or
accepting the additional trusts created by, any supplemental indenture permitted
by this Article or the modifications thereby of the trusts created by this
Indenture, in addition to any opinion of Counsel required pursuant to Section
9.01 of the Securitization Trust Agreement, the Indenture Trustee also shall be
entitled to receive an Opinion of Counsel stating that the execution of such
supplemental indenture conforms to the requirements of TIA, to the extent
applicable. Subject to Section 9.01 of the Securitization Trust Agreement, the
Indenture Trustee shall be fully protected in relying on any such Opinion of
Counsel. The Indenture Trustee may, but shall not be obligated to, enter into
any such supplemental indenture which affects the Indenture Trustee's own
rights, duties or immunities under this Indenture or otherwise.
Section 9.05. Effect of Supplemental Indentures. Upon the execution of any
supplemental indenture under this Article, this Indenture shall be modified in
accordance therewith, and such supplemental indenture shall form a part of this
Indenture for all purposes; and every Holder of Notes which have theretofore
been or thereafter are authenticated and delivered hereunder shall be bound
thereby.
Section 9.06. Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article may, and if required by the Indenture Trustee shall,
bear a notation in form approved by the Indenture Trustee as to any
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matter provided for in such supplemental indenture. If the Issuer shall so
determine, new Notes so modified as to conform, in the opinion of the Indenture
Trustee, the Issuer and the Company, to any such supplemental indenture may be
prepared and executed by the Issuer and authenticated and delivered by the
Indenture Trustee in exchange for Outstanding Notes.
Section 9.07. Compliance With TIA. Each supplemental indenture shall comply
with the applicable requirements therefor contained in TIA.
Section 9.08. Successors and Assigns. This Indenture shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns. Further, all references herein to Persons or entities
other than parties hereto shall be deemed to refer to the successors and
permitted assigns of such persons, to the extent that such construction is
reasonably possible; to the extent that such construction is not reasonably
possible, the parties hereto shall amend this Indenture so as to effect the
original intent of the parties as closely as possible in an acceptable manner.
ARTICLE TEN. OPTIONAL REDEMPTION OF NOTES
Section 10.01. General. (a) The Notes are subject to redemption in whole,
but not in part, at the direction of Transferor pursuant to Section 7.02 of the
Securitization Trust Agreement, on any Distribution Date on which the Transferor
exercises its option to purchase the corpus of the Trust pursuant to said
Section, for a redemption price equal to the Redemption Price for such Notes. If
the Notes are to be redeemed pursuant to this Section, the Issuer shall furnish
notice of such election to the Indenture Trustee not later than the time
required for the delivery of its notice that it desires to purchase the corpus
of the Trust pursuant to Section 7.02 of the Securitization Trust Agreement. The
Issuer shall deposit with the Indenture Trustee in the Distribution Account the
Redemption Price of the Notes to be redeemed together any other payments as
required pursuant to Section 7.02 of the Securitization Trust Agreement,
whereupon all such Notes shall be due and payable on the Redemption Date upon
the furnishing of a notice complying with Section 10.02 to each Holder of a
Note. The Issuer shall promptly notify each Rating Agency of any prospective
redemption of the Notes.
Section 10.02. Form of Redemption Notice. Notice of redemption shall be
given by the Issuer or by the Indenture Trustee pursuant to Section 11.05 in the
name of and at the expense of the Issuer, not more than 30 days and not less
than 15 days prior to the applicable Redemption Date to each Holder of Class A-1
Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, or Class B Notes, as
applicable, such Holders being determined as of the most recent Record Date.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) that on the Redemption Date the Redemption Price will become due
and payable upon each such Note, and that, upon the irrevocable deposit of such
funds with the Indenture Trustee on or before such Redemption Date, the amount
payable on each such Note shall be limited to the Redemption Price therefor and
that no interest shall accrue on such Redemption Price or the Notes for any
period after the date fixed for redemption; and
(d) the place where such Notes are to be surrendered for payment of
the Redemption Price, which shall be the office or agency of the Issuer to be
maintained as provided in Section 3.02 hereof.
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Failure to give notice of redemption, or any defect therein, to any Holder
of any Note selected for redemption shall not impair or affect the validity of
the redemption of any other Note.
Section 10.03. Notes Payable on Redemption Date. Notice of redemption
having been given as provided in Section 10.02 hereof, the Notes so to be
redeemed shall, on the applicable Redemption Date, become due and payable at the
Redemption Price and (unless the Issuer shall default in the payment of the
Redemption Price) no interest shall accrue on the Notes for any period after
such Redemption Date. Upon surrender of such Notes for redemption in accordance
with said notice, such Notes shall be paid by the Issuer at the Redemption
Price.
If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the amount of the Redemption Price shall, until paid,
bear interest from the Redemption Date at the applicable Overdue Interest Rate
(but only to the extent permitted by applicable law).
ARTICLE ELEVEN. MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions.
(a) Upon any application or request by the Issuer to the Indenture Trustee
to take any action under any provision of this Indenture, the Issuer shall
furnish to the Indenture Trustee (with a copy to the other party hereto) an
Officer's Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with,
and an Opinion of Counsel stating that, in the opinion of such counsel, all such
conditions precedent, if any, have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.
(b) Every certificate or opinion (other than any Opinion of Counsel) with
respect to compliance with a condition or covenant provided for in this
Indenture (including one furnished pursuant to specific requirements of this
Indenture relating to a particular application or request) shall include:
(i) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(iii) a statement that, in the opinion of each such individual, such
individual has made such examination or investigation as is necessary to
enable him or her to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 11.02. Form of Documents Delivered to Indenture Trustee. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
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Any certificate or opinion of an officer of the Issuer may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which such officer's certificate or opinion is
based are erroneous. Any such certificate or Opinion of Counsel may be based,
insofar as it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Issuer stating that the
information with respect to such factual matters is in the possession of the
Issuer, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Wherever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted and to the
sufficiency of such certificate or report.
Section 11.03. Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture or any other Transaction Document to
be given or taken by Noteholders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Noteholders in person
or by an agent duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are delivered to the Indenture Trustee and, where it is hereby or
thereby expressly required, to the Issuer, the Owner Trustee or other applicable
party. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the
Noteholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture or any other Transaction Document and (subject
to Section 6.01 hereof) conclusive in favor of the Indenture Trustee, the
Issuer, the Owner Trustee or other applicable party if made in the manner
provided in this Section.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by
the certificate of any notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Whenever such execution is
by an officer of a corporation or a member of a partnership on behalf of such
corporation or partnership, such certificate or affidavit shall also constitute
sufficient proof of his authority.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Notes shall bind the Holder of every Note
issued upon the registration thereof or in exchange therefor or in lieu thereof,
in respect of anything done, omitted or suffered to be done by the Indenture
Trustee the Issuer, the Owner Trustee or other applicable party in reliance
thereon, whether or not notation of such action is made upon such Notes.
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(e) In the event of any vote to be taken pursuant thereto by Noteholders or
Note Owners, no vote may be cast by the Holder or Note Owner of any Note issued
to or held on behalf of the Issuer, or any Affiliate thereof, and the
outstanding principal balance of each such Note shall be deducted from the
aggregate Percentage Interest before making any calculation of whether the
necessary percentage of such aggregate Percentage Interest has been met with
respect to any vote.
Section 11.04. Notices, etc., to Indenture Trustee and Issuer. All demands
notices or communications under this Indenture shall be in writing, personally
delivered or mailed by certified mail, return receipt requested, and shall be
deemed to have been duly given upon receipt (i) in the case of Indenture
Trustee, at the Corporate Trust Office of the Indenture Trustee; (ii) in the
case of the Issuer or Owner Trustee on behalf of the Issuer, at the Corporate
Trust Office of the Owner Trustee, with a copy to the Servicer at the address
set forth in Section 5.04 of the Servicing Agreement. Any notice required or
permitted to be mailed to a Noteholder shall be given as provided in Section
11.05 hereof. Any notice so mailed within the time prescribed in this Indenture
shall be conclusively presumed to have been duly given, whether or not the
Noteholder shall receive such notice.
Section 11.05. Notices and Reports to Noteholders; Waiver of Notices. Where
this Indenture or any other Transaction Document provides for notice to
Noteholders of any event or the mailing of any report to Noteholders, such
notice or report shall be sufficiently given (unless otherwise herein expressly
provided) if mailed, first-class postage prepaid, or delivered by prepaid
courier service to each Noteholder affected by such event or to whom such report
is required to be mailed, at the address of such Noteholder as it appears on the
Note Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice or the mailing of such report. In
any case where notice or report to Noteholders is mailed or transmitted in the
matter provided above, neither the failure to mail or transmit such notice or
report, nor any defect in any notice or report so mailed or transmitted, to any
particular Noteholder shall affect the sufficiency of such notice or report with
respect to other Noteholders, and any notice or report which is mailed or
transmitted in the manner herein provided shall be conclusively presumed to have
been duly given or provided.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by any Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Noteholders shall be filed with the Indenture Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a result of
a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Noteholders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be reasonable under the circumstances to the Indenture Trustee
shall be deemed to be a sufficient giving of such notice.
Section 11.06. Rules by Indenture Trustee and Agents. The Indenture Trustee
may make reasonable rules for any meeting of Noteholders. Each of the Note
Registrar, Paying Agent or any Authenticating Agent may make reasonable rules
and set reasonable requirements for its respective functions.
Section 11.07. Conflict with Trust Indenture Act. If any provision hereof
limits, qualifies or conflicts with another provision hereof which is required
to be included in this Indenture by any of the provisions of the TIA, such
required provision shall control.
Section 11.08. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
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Section 11.09. Successors and Assigns. All covenants and agreements in this
Indenture shall bind, and inure to the benefit of, the parties hereto and their
successors and permitted assigns, whether so expressed or not.
Section 11.10. Severability. In case one or more of the provisions
contained in this Indenture or in the Notes should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein or therein shall not in any way be
affected or impaired thereby.
Section 11.11. Benefits of Indenture. Nothing in this Indenture or in the
Notes, expressed or implied, shall give to any Person, other than the parties
hereto and their successors and permitted assigns hereunder, any separate
Indenture Trustee or co-Indenture Trustee appointed under Section 6.13 hereof
and the Noteholders, any benefit or any legal or equitable right, remedy or
claim under this Indenture.
Section 11.12. Legal Holidays. In any case where the date of any
Distribution Date or Redemption Date, or any date on which principal of or
interest on any Note is proposed to be paid shall not be a Business Day, then
(notwithstanding any other provision of the Notes or this Indenture) payment
shall be made on the next succeeding Business Day with the same force and effect
as if made on the nominal date of any such Distribution Date or Redemption Date,
as the case may be, and no interest shall accrue for the period from and after
any such nominal date, provided such payment is made in full on such next
succeeding Business Day.
Section 11.13. Governing Law. THIS INDENTURE AND EACH NOTE SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO ANY OTHERWISE APPLICABLE PRINCIPLES OF CONFLICT OF
LAWS.
Section 11.14. Counterparts. This instrument may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.
Section 11.15. Recording of Indenture. This Indenture is subject to
recording in all appropriate public recording offices, such recording to be
effected by the Issuer and at its expense on direction by the Indenture Trustee
accompanied by an Opinion of Counsel to the Indenture Trustee and the
Noteholders (which may be counsel to the Indenture Trustee or any other counsel
reasonably acceptable to the Indenture Trustee) to the effect that such
recording is necessary either for the protection of the Noteholders or for the
enforcement of any right or remedy granted to the Indenture Trustee under this
Indenture.
Section 11.16. Trust Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer on the Notes or the
obligations of the Indenture Trustee, the Servicer, the Transferor, the Issuer
or the Owner Trustee under any Transaction Document or any certificate or other
writing delivered in connection herewith or therewith, against (i) the Servicer,
the Transferor, the Indenture Trustee or the Owner Trustee in its individual
capacity, (ii) any owner of a beneficial interest in the Issuer or (iii) any
partner, owner, beneficiary, agent, officer, director, employee or agent of the
Servicer, the Transferor, the Indenture Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Servicer, the Transferor, the Owner Trustee or the Indenture Trustee or of any
successor or assign of the Servicer, the Transferor, the Indenture Trustee or
the Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed (it being understood that the Indenture Trustee and the Owner
Trustee have no such obligations in their individual capacity). For all purposes
of this Indenture, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the
41
<PAGE>
benefits of, the terms and provisions of Article Six of the Securitization Trust
Agreement.
Section 11.17. Inspection. The Issuer agrees that it will permit any
representative of the Indenture Trustee, during the Issuer's normal business
hours and, except during the continuation of an Event of Default, upon
reasonable notice, to examine all of the books of account, records, reports and
other papers of the Issuer relating to the Notes, to make copies and extracts
therefrom, to cause such books to be audited by Independent Accountants selected
by the Indenture Trustee, and to discuss the Issuer's finances and accounts with
its officers, employees and Independent Accountants (and by this provision the
Issuer hereby authorizes its Independent Accountants to discuss with such
representatives such affairs, finances and accounts). Such rights shall include,
but shall not be limited to, any off-site storage facilities at which any data
(including, without limitation, computerized records), together with all
operating software and appropriate documentation, may be held. The Indenture
Trustee shall keep confidential all confidential information of the Issuer and
the Servicer acquired during any such examination as if such information were
its own confidential information, except to the extent necessary for the
purposes of this Indenture.
Section 11.18. Waiver of Stay, Extension Laws, Trial by Jury. The Issuer
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or at
any time hereafter in force, that may affect the covenants in or its performance
of this Indenture; and the Issuer (to the extent that it may lawfully do so)
hereby expressly waive all benefit or advantage of any such law, including any
right to trial by jury to which it may be entitled in any such proceeding; and
covenants that it will not hinder, delay or impede the execution of any power
herein granted to the Indenture Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.
Section 11.19. Maximum Interest Payable. Anything herein to the contrary
notwithstanding, the sum of all interest and all other amounts that would be
deemed interest under New York or other applicable law which may be paid to a
Noteholder pursuant to this Indenture shall not exceed the maximum lawful
interest rate permitted by such law from time to time. The Issuer and the
Indenture Trustee intend and agree that under no circumstances shall the Issuer
be required to pay interest on the Notes at a rate in excess of the maximum
interest rate permitted by applicable law from time to time, and in the event
any such interest is received by the Noteholders in excess of that rate, the
Issuer shall be entitled to an immediate refund of any such excess interest by a
credit to and payment toward the unpaid principal of the Notes (such credit to
be considered to have been made at the time of the payment of the excess
interest) with any excess interest retained by the Indenture Trustee or
recovered from any Noteholder and not so credited to be immediately paid to the
Issuer by the Indenture Trustee.
[INTENTIONALLY LEFT BLANK.]
42
<PAGE>
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused this
Indenture to be duly executed by their respective officers thereunto duly
authorized, all as of the day and year first above written.
WORLD OMNI 1998-A AUTOMOBILE LEASE
SECURITIZATION TRUST
PNC Bank, Delaware, a Delaware
banking corporation, not in its individual
capacity but solely as Owner Trustee,
By:_______________________________
Name:__________________________
Title:_________________________
THE BANK OF NEW YORK
a New York banking association, not in its
individual capacity but solely as
Indenture Trustee,
By:_______________________________
Name:__________________________
Title:_________________________
43
<PAGE>
EXHIBIT A
FORM OF CLASS A-1 NOTES
Unless this Note is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer or its
agent for registration of transfer, exchange or payment, and any Note issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
REGISTERED $____________(2)
No. R-_______ CUSIP NO.__________
THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.
WORLD OMNI 1998-A AUTOMOBILE LEASE SECURITIZATION TRUST
FLOATING RATE AUTOMOBILE LEASE ASSET BACKED NOTES, CLASS A-1
The World Omni 1998-A Automobile Lease Securitization Trust, a business
trust organized and existing under the laws of the State of Delaware (including
any successor, the "Issuer"), for value received, hereby promises to pay to CEDE
& CO., or registered assigns, the principal sum of ______________ DOLLARS
($_____________), in monthly installments on each Distribution Date, commencing
on December 15, 1998, and to pay interest on the Class A-1 Note Balance, each as
and to the extent described below; provided that the entire Class A-1 Note
Balance shall be due and payable on the earlier of the Class A-1 Stated Maturity
and the Redemption Date, if any.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee by manual signature, this Note shall not be entitled to any
benefit under the Indenture referred to on the reverse hereof, or be valid or
obligatory for any purpose.
- ------------
(2) Denominations of $1,000 and integral multiples of $1,000 in excess thereof.
A-1
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Responsible Officer.
Dated: _____________, 1998
WORLD OMNI 1998-A AUTOMOBILE LEASE
SECURITIZATION TRUST
By: PNC BANK, DELAWARE, a Delaware
banking corporation, not in its
individual capacity but solely as
Owner Trustee under the
Securitization Trust Agreement
By:______________________________
Name:_________________________
Title:________________________
A-2
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Dated: ________________, 1998
THE BANK OF NEW YORK
a New York banking association, not in
its individual capacity but solely as
Indenture Trustee,
By:______________________________
Name:_________________________
Title:________________________
A-3
<PAGE>
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Floating Rate Automobile Lease Asset Backed Notes, Class A-1
(herein called the "Class A-1 Notes" or the "Notes"), all issued under an
Indenture dated as of October 1, 1998 (such Indenture, as supplemented or
amended, is herein called the "Indenture"), between the Issuer and The Bank of
New York, a New York banking association, not in its individual capacity but
solely as indenture trustee (the "Indenture Trustee"), which term includes any
successor Indenture Trustee under the Indenture, to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Notes. The Notes are subject to all terms of the
Indenture and to all terms of that certain Securitization Trust Agreement dated
as of October 1, 1998 (the "Agreement"), among PNC Bank, Delaware, as owner
trustee (the "Owner Trustee"), World Omni Lease Securitization, L.P. (the
"Transferor") and the Indenture Trustee. All capitalized terms used in this
Note, whether first used above or below, that are not otherwise defined herein
shall have the meanings assigned to them pursuant to the Indenture.
Under the Indenture, there will be distributed on each Distribution Date
(i.e., the fifteenth day of each month or, if such fifteenth day is not a
Business Day, the next succeeding Business Day), commencing on December 15,
1998, to the Person in whose name this Class A-1 Note is registered at the close
of business on the last calendar day immediately preceding the related
Distribution Date or, if Definitive Notes are issued, the last day of the
immediately preceding calendar month, such Class A-1 Noteholder's Percentage
Interest multiplied by (i) the Class-A-1 Distributable Amount for such
Distribution Date and (ii) the amount of any repayment of any outstanding Class
A-1 Interest Carryover Shortfall, Class A-1 Loss Amounts, Class A-1 Note
Principal Loss Amounts and Class A-1 Note Principal Loss Interest Amounts being
made on such Distribution Date, all to the extent and as more specifically set
forth in the Indenture and the Agreement.
The Notes, the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes
are and will be equally and ratably secured by the collateral pledged as
security therefor as provided in the Indenture. However, to the extent provided
in the Indenture and the Agreement, no principal payments shall be made in
respect of the Class A-2 Notes until the Class A-1 Notes have been paid in full,
no principal payments shall be made in respect of the Class A-3 Notes until the
Class A-2 Notes have been paid in full, and no principal payments shall be made
in respect of the Class A-4 Notes or the Class B Notes until the Class A-3 Notes
have been paid in full. The Class B Notes are subordinated to the Class A Notes,
and the Transferor Certificate is subordinated to the Notes to the extent
described in the Indenture and the Agreement.
Each Holder or Note Owner, by acceptance of a Note, or, in the case of a
Note Owner, a beneficial interest in the Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Transferor, the Servicer, the Owner Trustee or the Indenture
Trustee on the Notes or under the Indenture or any certificate or other writing
delivered in connection herewith or therewith, against (i) the Transferor, the
Servicer, the Indenture Trustee or the Owner Trustee in its individual capacity,
(ii) any owner of a beneficial interest in the Issuer or (iii) any partner,
owner, beneficiary, agent, officer, director, employee or agent of the
Transferor, the Servicer, the Indenture Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Transferor, the Servicer, the Owner Trustee or the Indenture Trustee or of any
successor or assign of the Transferor, the Servicer, the Indenture Trustee or
the Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed (it being understood that Indenture Trustee and Owner Trustee
have no such obligations in their individual capacity) and except that any such
partner, owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.
A-4
<PAGE>
It is the intent of the Transferor, the Servicer, the Noteholders and the
Note Owners that, for purposes of Federal and State income tax and any other tax
measured in whole or in part by income, the Notes will qualify as indebtedness
of the Issuer. The Noteholders, by acceptance of a Note, and the Note Owners, by
acceptance of a beneficial interest in a Note, agree to treat, and to take no
action inconsistent with the treatment of, the Notes for such tax purposes as
indebtedness of the Issuer.
By accepting a Note, each Holder (and by accepting a beneficial interest in
a Note, each Note Owner) waives any claim to any proceeds or assets of the
Origination Trustee and to all assets of the Origination Trust other than those
from time to time included within the 1998-A SUBI Portfolio as 1998-A SUBI
Assets and those proceeds or assets derived from or earned by such 1998-A SUBI
Assets.
By accepting a Note, each Holder (and by accepting a beneficial interest in
a Note, each Note Owner) covenants and agrees that prior to the date which is
one year and one day after the last date upon which (a) each Class of Notes has
been paid in full, and (b) all obligations due under any other Securitized
Financing have been paid in full, the Holder or Note Owner will not institute
against, or join any other Person in instituting against the Transferor, World
Omni Lease Securitization LLC, ALF LLC, ALF LP, the Origination Trustee or the
Origination Trust any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding or other proceedings under any federal or state
bankruptcy or similar law. The foregoing shall not limit the Holder's right to
file any claim in or otherwise take actions with respect to any such proceeding
instituted by any Person not under such a constraint. This non-petition covenant
shall survive the termination of the Indenture.
This Note and the Indenture shall be construed in accordance with the laws
of the State of New York, without reference to its conflict of law provisions,
and the obligations, rights and remedies of the parties hereunder and thereunder
shall be determined in accordance with such laws.
No reference herein to the Indenture or the Agreement and no provision of
this Note or of the Indenture or the Agreement shall alter or impair the
obligation of the Issuer, which is absolute and unconditional, to pay the
principal of and interest on this Note at the times, place and rate, and in the
coin or currency, herein prescribed.
A-5
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or
other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints _______________________, attorney, to transfer said Note on the
books kept for registration thereof, with full power of substitution in the
premises.
Dated:______________________
___________________________*/
Signature Guaranteed:
___________________________
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
- ------------
*/ NOTE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular without alteration, enlargement or any change whatsoever.
A-6
<PAGE>
EXHIBIT B
FORM OF CLASS A-2 NOTES
Unless this Note is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer or its
agent for registration of transfer, exchange or payment, and any Note issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
REGISTERED $____________(3)
No. R-_______ CUSIP NO.__________
THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.
WORLD OMNI 1998-A AUTOMOBILE LEASE SECURITIZATION TRUST
FLOATING RATE AUTOMOBILE LEASE ASSET BACKED NOTES, CLASS A-2
The World Omni 1998-A Automobile Lease Securitization Trust, a business
trust organized and existing under the laws of the State of Delaware (including
any successor, the "Issuer"), for value received, hereby promises to pay to CEDE
& CO., or registered assigns, the principal sum of ___________ DOLLARS
($________), in monthly installments on each Distribution Date, commencing on
December 15, 1998, and to pay interest on the Class A-2 Note Balance, each as
and to the extent described below; provided that the entire Class A-2 Note
Balance shall be due and payable on the earlier of the Class A-2 Stated Maturity
and the Redemption Date, if any.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee by manual signature, this Note shall not be entitled to any
benefit under the Indenture referred to on the reverse hereof, or be valid or
obligatory for any purpose.
- ------------
(3) Denominations of $1,000 and integral multiples of $1,000 in excess thereof.
B-1
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Responsible Officer.
Dated: ______________, 1998
WORLD OMNI 1998-A AUTOMOBILE LEASE
SECURITIZATION TRUST
By: PNC BANK, DELAWARE, a Delaware
banking corporation, not in its
individual capacity but solely as
Owner Trustee under the
Securitization Trust Agreement
By:______________________________
Name:_________________________
Title:________________________
B-2
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Dated: _____________________, 1998
THE BANK OF NEW YORK
a New York banking association, not in
its individual capacity but solely as
Indenture Trustee,
By:________________________________
Name:___________________________
Title:__________________________
B-3
<PAGE>
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Floating Rate Automobile Lease Asset Backed Notes, Class A-2
(herein called the "Class A-2 Notes" or the "Notes"), all issued under an
Indenture dated as of October 1, 1998 (such Indenture, as supplemented or
amended, is herein called the "Indenture"), between the Issuer and The Bank of
New York, a New York banking association, not in its individual capacity but
solely as indenture trustee (the "Indenture Trustee"), which term includes any
successor Indenture Trustee under the Indenture, to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Notes. The Notes are subject to all terms of the
Indenture and to all terms of that certain Securitization Trust Agreement dated
as of October 1, 1998 (the "Agreement"), among PNC Bank, Delaware, as owner
trustee (the "Owner Trustee"), World Omni Lease Securitization, L.P. (the
"Transferor") and the Indenture Trustee. All capitalized terms used in this
Note, whether first used above or below, that are not otherwise defined herein
shall have the meanings assigned to them pursuant to the Indenture.
Under the Indenture, there will be distributed on each Distribution Date
(i.e., the fifteenth day of each month or, if such fifteenth day is not a
Business Day, the next succeeding Business Day), commencing on December 15,
1998, to the Person in whose name this Class A-2 Note is registered at the close
of business on the last calendar day immediately preceding the related
Distribution Date or, if Definitive Notes are issued, the last day of the
immediately preceding calendar month, such Class A-2 Noteholder's Percentage
Interest multiplied by (i) the Class A-2 Distributable Amount for such
Distribution Date and (ii) the amount of any repayment of any outstanding Class
A-2 Interest Carryover Shortfall, Class A-2 Loss Amounts, Class A-2 Note
Principal Loss Amounts and Class A-2 Note Principal Loss Interest Amounts being
made on such Distribution Date, all to the extent and as more specifically set
forth in the Indenture and the Agreement.
The Notes, the Class A-1 Notes, the Class A-3 Notes and the Class A-4 Notes
are and will be equally and ratably secured by the collateral pledged as
security therefor as provided in the Indenture. However, to the extent provided
in the Indenture and the Agreement, no principal payments shall be made in
respect of the Class A-2 Notes until the Class A-1 Notes have been paid in full,
no principal payments shall be made in respect of the Class A-3 Notes until the
Class A-2 Notes have been paid in full, and no principal payments shall be made
in respect of the Class A-4 Notes or the Class B Notes until the Class A-3 Notes
have been paid in full. The Class B Notes are subordinated to the Class A Notes,
and the Transferor Certificate is subordinated to the Notes to the extent
described in the Indenture and the Agreement.
Each Holder or Note Owner, by acceptance of a Note, or, in the case of a
Note Owner, a beneficial interest in the Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Transferor, the Servicer, the Owner Trustee or the Indenture
Trustee on the Notes or under the Indenture or any certificate or other writing
delivered in connection herewith or therewith, against (i) the Transferor, the
Servicer, the Indenture Trustee or the Owner Trustee in its individual capacity,
(ii) any owner of a beneficial interest in the Issuer or (iii) any partner,
owner, beneficiary, agent, officer, director, employee or agent of the
Transferor, the Servicer, the Indenture Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Transferor, the Servicer, the Owner Trustee or the Indenture Trustee or of any
successor or assign of the Transferor, the Servicer, the Indenture Trustee or
the Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed (it being understood that Indenture Trustee and Owner Trustee
have no such obligations in their individual capacity) and except that any such
partner, owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.
B-4
<PAGE>
It is the intent of the Transferor, the Servicer, the Noteholders and the
Note Owners that, for purposes of Federal and State income tax and any other tax
measured in whole or in part by income, the Notes will qualify as indebtedness
of the Issuer. The Noteholders, by acceptance of a Note, and the Note Owners, by
acceptance of a beneficial interest in a Note, agree to treat, and to take no
action inconsistent with the treatment of, the Notes for such tax purposes as
indebtedness of the Issuer.
By accepting a Note, each Holder (and by accepting a beneficial interest in
a Note, each Note Owner) waives any claim to any proceeds or assets of the
Origination Trustee and to all assets of the Origination Trust other than those
from time to time included within the 1998-A SUBI Portfolio as 1998-A SUBI
Assets and those proceeds or assets derived from or earned by such 1998-A SUBI
Assets.
By accepting a Note, each Holder (and by accepting a beneficial interest in
a Note, each Note Owner) covenants and agrees that prior to the date which is
one year and one day after the last date upon which (a) each Class of Notes has
been paid in full, and (b) all obligations due under any other Securitized
Financing have been paid in full, the Holder or Note Owner will not institute
against, or join any other Person in instituting against the Transferor, World
Omni Lease Securitization LLC, ALF LLC, ALF LP, the Origination Trustee or the
Origination Trust any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding or other proceedings under any federal or state
bankruptcy or similar law. The foregoing shall not limit the Holder's right to
file any claim in or otherwise take actions with respect to any such proceeding
instituted by any Person not under such a constraint. This non-petition covenant
shall survive the termination of the Indenture.
This Note and the Indenture shall be construed in accordance with the laws
of the State of New York, without reference to its conflict of law provisions,
and the obligations, rights and remedies of the parties hereunder and thereunder
shall be determined in accordance with such laws.
No reference herein to the Indenture or the Agreement and no provision of
this Note or of the Indenture or the Agreement shall alter or impair the
obligation of the Issuer, which is absolute and unconditional, to pay the
principal of and interest on this Note at the times, place and rate, and in the
coin or currency, herein prescribed.
B-5
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or
other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints _______________________, attorney, to transfer said Note on the
books kept for registration thereof, with full power of substitution in the
premises.
Dated:______________________
___________________________*/
Signature Guaranteed:
___________________________
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
- ------------
*/ NOTE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular without alteration, enlargement or any change whatsoever.
B-6
<PAGE>
EXHIBIT C
FORM OF CLASS A-3 NOTES
Unless this Note is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer or its
agent for registration of transfer, exchange or payment, and any Note issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
REGISTERED $____________(4)
No. R-_______ CUSIP NO.__________
THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.
WORLD OMNI 1998-A AUTOMOBILE LEASE SECURITIZATION TRUST
FLOATING RATE AUTOMOBILE LEASE ASSET BACKED NOTES, CLASS A-3
The World Omni 1998-A Automobile Lease Securitization Trust, a business
trust organized and existing under the laws of the State of Delaware (including
any successor, the "Issuer"), for value received, hereby promises to pay to CEDE
& CO., or registered assigns, the principal sum of ___________ DOLLARS
($_________), in monthly installments on each Distribution Date, commencing on
December 15, 1998, and to pay interest on the Class A-3 Note Balance, each as
and to the extent described below; provided that the entire Class A-3 Note
Balance shall be due and payable on the earlier of the Class A-3 Stated Maturity
and the Redemption Date, if any.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee by manual signature, this Note shall not be entitled to any
benefit under the Indenture referred to on the reverse hereof, or be valid or
obligatory for any purpose.
- ------------
(4) Denominations of $1,000 and integral multiples of $1,000 in excess thereof.
C-1
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Responsible Officer.
Dated: _______________, 1998
WORLD OMNI 1998-A AUTOMOBILE LEASE
SECURITIZATION TRUST
By: PNC BANK, DELAWARE, a Delaware
banking corporation, not in its
individual capacity but solely as
Owner Trustee under the
Securitization Trust Agreement
By:______________________________
Name:_________________________
Title:________________________
C-2
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Dated:___________________, 1998
THE BANK OF NEW YORK
a New York banking association, not in
its individual capacity but solely as
Indenture Trustee,
By:_____________________________
Name:________________________
Title:_______________________
C-3
<PAGE>
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Floating Rate Automobile Lease Asset Backed Notes, Class A-3
(herein called the "Class A-3 Notes" or the "Notes"), all issued under an
Indenture dated as of October 1, 1998 (such Indenture, as supplemented or
amended, is herein called the "Indenture"), between the Issuer and The Bank of
New York, a New York Banking Association, not in its individual capacity but
solely as indenture trustee (the "Indenture Trustee"), which term includes any
successor Indenture Trustee under the Indenture, to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Notes. The Notes are subject to all terms of the
Indenture and to all terms of that certain Securitization Trust Agreement dated
as of October 1, 1998 (the "Agreement"), among PNC Bank, Delaware, as owner
trustee (the "Owner Trustee"), World Omni Lease Securitization, L.P. (the
"Transferor") and the Indenture Trustee. All capitalized terms used in this
Note, whether first used above or below, that are not otherwise defined herein
shall have the meanings assigned to them pursuant to the Indenture.
Under the Indenture, there will be distributed on each Distribution Date
(i.e., the fifteenth day of each month or, if such fifteenth day is not a
Business Day, the next succeeding Business Day), commencing on December 15,
1998, to the Person in whose name this Class A-3 Note is registered at the close
of business on the last calendar day immediately preceding the related
Distribution Date or, if Definitive Notes are issued, the last day of the
immediately preceding calendar month, such Class A-3 Noteholder's Percentage
Interest multiplied by (i) the Class A-3 Distributable Amount for such
Distribution Date and (ii) the amount of any repayment of any outstanding Class
A-3 Interest Carryover Shortfall, Class A-3 Loss Amounts, Class A-3 Note
Principal Loss Amounts and Class A-3 Note Principal Loss Interest Amounts being
made on such Distribution Date, all to the extent and as more specifically set
forth in the Indenture and the Agreement.
The Notes, the Class A-1 Notes, the Class A-2 Notes and the Class A-4 Notes
are and will be equally and ratably secured by the collateral pledged as
security therefor as provided in the Indenture. However, to the extent provided
in the Indenture and the Agreement, no principal payments shall be made in
respect of the Class A-2 Notes until the Class A-1 Notes have been paid in full,
no principal payments shall be made in respect of the Class A-3 Notes until the
Class A-2 Notes have been paid in full, and no principal payments shall be made
in respect of the Class A-4 Notes or the Class B Notes until the Class A-3 Notes
have been paid in full. The Class B Notes are subordinated to the Class A Notes,
and the Transferor Certificate is subordinated to the Notes to the extent
described in the Indenture and the Agreement.
Each Holder or Note Owner, by acceptance of a Note, or, in the case of a
Note Owner, a beneficial interest in the Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Transferor, the Servicer, the Owner Trustee or the Indenture
Trustee on the Notes or under the Indenture or any certificate or other writing
delivered in connection herewith or therewith, against (i) the Transferor, the
Servicer, the Indenture Trustee or the Owner Trustee in its individual capacity,
(ii) any owner of a beneficial interest in the Issuer or (iii) any partner,
owner, beneficiary, agent, officer, director, employee or agent of the
Transferor, the Servicer, the Indenture Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Transferor, the Servicer, the Owner Trustee or the Indenture Trustee or of any
successor or assign of the Transferor, the Servicer, the Indenture Trustee or
the Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed (it being understood that Indenture Trustee and Owner Trustee
have no such obligations in their individual capacity) and except that any such
partner, owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.
C-4
<PAGE>
It is the intent of the Transferor, the Servicer, the Noteholders and the
Note Owners that, for purposes of Federal and State income tax and any other tax
measured in whole or in part by income, the Notes will qualify as indebtedness
of the Issuer. The Noteholders, by acceptance of a Note, and the Note Owners, by
acceptance of a beneficial interest in a Note, agree to treat, and to take no
action inconsistent with the treatment of, the Notes for such tax purposes as
indebtedness of the Issuer.
By accepting a Note, each Holder (and by accepting a beneficial interest in
a Note, each Note Owner) waives any claim to any proceeds or assets of the
Origination Trustee and to all assets of the Origination Trust other than those
from time to time included within the 1998-A SUBI Portfolio as 1998-A SUBI
Assets and those proceeds or assets derived from or earned by such 1998-A SUBI
Assets.
By accepting a Note, each Holder (and by accepting a beneficial interest in
a Note, each Note Owner) covenants and agrees that prior to the date which is
one year and one day after the last date upon which (a) each Class of Notes has
been paid in full, and (b) all obligations due under any other Securitized
Financing have been paid in full, the Holder or Note Owner will not institute
against, or join any other Person in instituting against the Transferor, World
Omni Lease Securitization LLC, ALF LLC, ALF LP, the Origination Trustee or the
Origination Trust any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding or other proceedings under any federal or state
bankruptcy or similar law. The foregoing shall not limit the Holder's right to
file any claim in or otherwise take actions with respect to any such proceeding
instituted by any Person not under such a constraint. This non-petition covenant
shall survive the termination of the Indenture.
This Note and the Indenture shall be construed in accordance with the laws
of the State of New York, without reference to its conflict of law provisions,
and the obligations, rights and remedies of the parties hereunder and thereunder
shall be determined in accordance with such laws.
No reference herein to the Indenture or the Agreement and no provision of
this Note or of the Indenture or the Agreement shall alter or impair the
obligation of the Issuer, which is absolute and unconditional, to pay the
principal of and interest on this Note at the times, place and rate, and in the
coin or currency, herein prescribed.
C-5
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or
other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints _______________________, attorney, to transfer said Note on the
books kept for registration thereof, with full power of substitution in the
premises.
Dated:______________________
___________________________*/
Signature Guaranteed:
___________________________
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
- ------------
*/ NOTE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular without alteration, enlargement or any change whatsoever.
C-6
<PAGE>
EXHIBIT D
FORM OF CLASS A-4 NOTES
Unless this Note is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer or its
agent for registration of transfer, exchange or payment, and any Note issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
REGISTERED $____________(5)
No. R-_______ CUSIP NO.__________
THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.
WORLD OMNI 1998-A AUTOMOBILE LEASE SECURITIZATION TRUST
FLOATING RATE AUTOMOBILE LEASE ASSET BACKED NOTES, CLASS A-4
The World Omni 1998-A Automobile Lease Securitization Trust, a business
trust organized and existing under the laws of the State of Delaware (including
any successor, the "Issuer"), for value received, hereby promises to pay to CEDE
& CO., or registered assigns, the principal sum of ___________ DOLLARS
($_________), in monthly installments on each Distribution Date, commencing on
December 15, 1998, and to pay interest on the Class A-4 Note Balance, each as
and to the extent described below; provided that the entire Class A-4 Note
Balance shall be due and payable on the earlier of the Class A-4 Stated Maturity
and the Redemption Date, if any.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee by manual signature, this Note shall not be entitled to any
benefit under the Indenture referred to on the reverse hereof, or be valid or
obligatory for any purpose.
- -----------
(5) Denominations of $1,000 and integral multiples of $1,000 in excess thereof.
D-1
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Responsible Officer.
Dated: _______________, 1998
WORLD OMNI 1998-A AUTOMOBILE LEASE
SECURITIZATION TRUST
By: PNC BANK, DELAWARE, a Delaware
banking corporation, not in its
individual capacity but solely as
Owner Trustee under the
Securitization Trust Agreement
By:______________________________
Name:_________________________
Title:________________________
D-2
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Dated:___________________, 1998
THE BANK OF NEW YORK
a New York banking association, not in
its individual capacity but solely as
Indenture Trustee,
By:_____________________________
Name:________________________
Title:_______________________
D-3
<PAGE>
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Floating Rate Automobile Lease Asset Backed Notes, Class A-4
(herein called the "Class A-4 Notes" or the "Notes"), all issued under an
Indenture dated as of October 1, 1998 (such Indenture, as supplemented or
amended, is herein called the "Indenture"), between the Issuer and the Bank of
New York, a New York banking association, not in its individual capacity but
solely as indenture trustee (the "Indenture Trustee"), which term includes any
successor Indenture Trustee under the Indenture, to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Notes. The Notes are subject to all terms of the
Indenture and to all terms of that certain Securitization Trust Agreement dated
as of October 1, 1998 (the "Agreement"), among PNC Bank, Delaware, as owner
trustee (the "Owner Trustee"), World Omni Lease Securitization, L.P. (the
"Transferor") and the Indenture Trustee. All capitalized terms used in this
Note, whether first used above or below, that are not otherwise defined herein
shall have the meanings assigned to them pursuant to the Indenture.
Under the Indenture, there will be distributed on each Distribution Date
(i.e., the fifteenth day of each month or, if such fifteenth day is not a
Business Day, the next succeeding Business Day), commencing on December 15,
1998, to the Person in whose name this Class A-4 Note is registered at the close
of business on the last calendar day immediately preceding the related
Distribution Date or, if Definitive Notes are issued, the last day of the
immediately preceding calendar month, such Class A-4 Noteholder's Percentage
Interest multiplied by (i) the Class A-4 Distributable Amount for such
Distribution Date and (ii) the amount of any repayment of any outstanding Class
A-4 Interest Carryover Shortfall, Class A-4 Loss Amounts, Class A-4 Note
Principal Loss Amounts and Class A-4 Note Principal Loss Interest Amounts being
made on such Distribution Date, all to the extent and as more specifically set
forth in the Indenture and the Agreement.
The Notes, the Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes
are and will be equally and ratably secured by the collateral pledged as
security therefor as provided in the Indenture. However, to the extent provided
in the Indenture and the Agreement, no principal payments shall be made in
respect of the Class A-2 Notes until the Class A-1 Notes have been paid in full,
no principal payments shall be made in respect of the Class A-3 Notes until the
Class A-2 Notes have been paid in full, and no principal payments shall be made
in respect of the Class A-4 Notes or the Class B Notes until the Class A-3 Notes
have been paid in full. The Class B Notes are subordinated to the Class A Notes,
and the Transferor Certificate is subordinated to the Notes to the extent
described in the Indenture and the Agreement.
Each Holder or Note Owner, by acceptance of a Note, or, in the case of a
Note Owner, a beneficial interest in the Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Transferor, the Servicer, the Owner Trustee or the Indenture
Trustee on the Notes or under the Indenture or any certificate or other writing
delivered in connection herewith or therewith, against (i) the Transferor, the
Servicer, the Indenture Trustee or the Owner Trustee in its individual capacity,
(ii) any owner of a beneficial interest in the Issuer or (iii) any partner,
owner, beneficiary, agent, officer, director, employee or agent of the
Transferor, the Servicer, the Indenture Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Transferor, the Servicer, the Owner Trustee or the Indenture Trustee or of any
successor or assign of the Transferor, the Servicer, the Indenture Trustee or
the Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed (it being understood that Indenture Trustee and Owner Trustee
have no such obligations in their individual capacity) and except that any such
partner, owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.
D-4
<PAGE>
It is the intent of the Transferor, the Servicer, the Noteholders and the
Note Owners that, for purposes of Federal and State income tax and any other tax
measured in whole or in part by income, the Notes will qualify as indebtedness
of the Issuer. The Noteholders, by acceptance of a Note, and the Note Owners, by
acceptance of a beneficial interest in a Note, agree to treat, and to take no
action inconsistent with the treatment of, the Notes for such tax purposes as
indebtedness of the Issuer.
By accepting a Note, each Holder (and by accepting a beneficial interest in
a Note, each Note Owner) waives any claim to any proceeds or assets of the
Origination Trustee and to all assets of the Origination Trust other than those
from time to time included within the 1998-A SUBI Portfolio as 1998-A SUBI
Assets and those proceeds or assets derived from or earned by such 1998-A SUBI
Assets.
By accepting a Note, each Holder (and by accepting a beneficial interest in
a Note, each Note Owner) covenants and agrees that prior to the date which is
one year and one day after the last date upon which (a) each Class of Notes has
been paid in full, and (b) all obligations due under any other Securitized
Financing have been paid in full, the Holder or Note Owner will not institute
against, or join any other Person in instituting against the Transferor, World
Omni Lease Securitization LLC, ALF LLC, ALF LP, the Origination Trustee or the
Origination Trust any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding or other proceedings under any federal or state
bankruptcy or similar law. The foregoing shall not limit the Holder's right to
file any claim in or otherwise take actions with respect to any such proceeding
instituted by any Person not under such a constraint. This non-petition covenant
shall survive the termination of the Indenture.
This Note and the Indenture shall be construed in accordance with the laws
of the State of New York, without reference to its conflict of law provisions,
and the obligations, rights and remedies of the parties hereunder and thereunder
shall be determined in accordance with such laws.
No reference herein to the Indenture or the Agreement and no provision of
this Note or of the Indenture or the Agreement shall alter or impair the
obligation of the Issuer, which is absolute and unconditional, to pay the
principal of and interest on this Note at the times, place and rate, and in the
coin or currency, herein prescribed.
D-5
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or
other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints _______________________, attorney, to transfer said Note on the
books kept for registration thereof, with full power of substitution in the
premises.
Dated:______________________
___________________________*/
Signature Guaranteed:
___________________________
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
- ------------
*/ NOTE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular without alteration, enlargement or any change whatsoever.
D-6
<PAGE>
EXHIBIT E
FORM OF CLASS B NOTES
THIS NOTE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A-1 NOTES, THE
CLASS A-2 NOTES, THE CLASS A-3 NOTES AND THE CLASS A-4 NOTES AS DESCRIBED IN THE
INDENTURE AND THE TRANSACTION DOCUMENTS REFERRED TO HEREIN.
THIS NOTE HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR WITH ANY STATE SECURITIES OR BLUE SKY AUTHORITY UNDER ANY STATE SECURITIES
LAWS IN RELIANCE ON EXEMPTIONS PROVIDED BY THE SECURITIES ACT AND SUCH STATE
SECURITIES LAWS. NO RESALE OR OTHER TRANSFER OF THIS NOTE MAY BE MADE UNLESS
SUCH RESALE OR TRANSFER (A) IS MADE IN ACCORDANCE WITH SECTION 2.04 OF THE
INDENTURE REFERRED TO HEREIN AND (B) IS MADE (i) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (ii) IN A TRANSACTION EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS, (iii) TO WORLD OMNI LEASE SECURITIZATION, L.P. (THE
"TRANSFEROR") OR (iv) TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE
SECURITIES ACT THAT IS AWARE THAT THE RESALE OR OTHER TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A. NEITHER THE TRANSFEROR NOR U.S. BANK NATIONAL
ASSOCIATION, AS INDENTURE TRUSTEE (THE "INDENTURE TRUSTEE"), IS OBLIGATED TO
REGISTER THE NOTES UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES
LAWS. IN THE EVENT THAT THE TRANSFER OF A CLASS B NOTE IS TO BE MADE, EITHER (A)
AN OPINION OF COUNSEL OR (B) A REPRESENTATION LETTER FROM THE PROSPECTIVE
INVESTOR, IN EITHER CASE IN FORM AND SUBSTANCE SATISFACTORY TO THE INDENTURE
TRUSTEE AND THE TRANSFEROR, IS REQUIRED TO BE DELIVERED TO THE INDENTURE TRUSTEE
AND THE TRANSFEROR, TO THE EFFECT THAT SUCH TRANSFER MAY BE MADE WITHOUT
REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS.
NO RESALE OR OTHER TRANSFER OF THIS NOTE MAY BE MADE UNLESS THE INDENTURE
TRUSTEE SHALL HAVE RECEIVED A REPRESENTATION LETTER OR OPINION OF COUNSEL FROM
THE TRANSFEREE OF THIS NOTE, ACCEPTABLE TO AND IN FORM AND SUBSTANCE
SATISFACTORY TO THE TRANSFEROR AND THE INDENTURE TRUSTEE, TO THE EFFECT THAT:
(A)(1) SUCH TRANSFEREE WILL NOT ACQUIRE THIS NOTE ON BEHALF OR WITH THE ASSETS
OF ANY "EMPLOYEE BENEFIT PLAN" AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR (2) NO
"PROHIBITED TRANSACTION" UNDER ERISA OR THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED, WILL OCCUR IN CONNECTION WITH SUCH TRANSFEREE'S ACQUISITION OR HOLDING
OF THIS CLASS B NOTE BECAUSE THE RELEVANT CONDITIONS FOR EXEMPTIVE RELIEF UNDER
ONE OR MORE OF THE FOLLOWING PROHIBITED TRANSACTION CLASS EXEMPTIONS HAS BEEN
SATISFIED: PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE") 96-23, REGARDING
TRANSACTIONS EFFECTED BY "IN-HOUSE ASSET MANAGERS"; PTCE 95-60, REGARDING
TRANSACTIONS FOR INSURANCE COMPANY GENERAL ACCOUNTS; PTCE 90-1, REGARDING
TRANSACTIONS EFFECTED FOR INSURANCE COMPANY SEPARATE ACCOUNTS; PTCE 91-38,
REGARDING TRANSACTIONS EFFECTED FOR BANK COLLECTIVE INVESTMENT FUNDS; OR PTCE
84-14, REGARDING TRANSACTIONS
E-1
<PAGE>
EFFECTED BY "QUALIFIED PROFESSIONAL ASSET MANAGERS" AND (B) IF SUCH TRANSFEREE
(OR ANY PERSON OR ENTITY FOR WHOM SUCH TRANSFEREE IS ACTING AS AGENT OR
CUSTODIAN IN CONNECTION WITH THE ACQUISITION OF THIS NOTE) IS A PARTNERSHIP,
GRANTOR TRUST OR S CORPORATION FOR FEDERAL INCOME TAX PURPOSES (A "FLOW-THROUGH
ENTITY"), ANY CLASS B NOTES OWNED BY OR ON BEHALF OF SUCH FLOW-THROUGH ENTITY
WILL REPRESENT LESS THAN 50% OF THE VALUE OF ALL THE ASSETS OWNED BY SUCH
FLOW-THROUGH ENTITY AND NO SPECIAL ALLOCATION OF INCOME, GAIN, LOSS, DEDUCTION
OR CREDIT FROM SUCH CLASS B NOTES WILL BE MADE AMONG THE BENEFICIAL OWNERS OF
SUCH FLOW-THROUGH ENTITY.
THE RESTRICTIONS ON RESALE OR TRANSFER DESCRIBED ABOVE ARE SUBJECT TO ANY
REQUIREMENT OF LAW THAT THE DISPOSITION OF THE HOLDER'S PROPERTY SHALL AT ALL
TIMES BE AND REMAIN WITHIN ITS CONTROL.
REGISTERED $____________(6)
No. R-_______ CUSIP NO.__________
THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF. THIS NOTE IS SUBORDINATED TO THE CLASS A NOTES
TO THE EXTENT PROVIDED IN THE INDENTURE AND THE TRANSACTION DOCUMENTS.
WORLD OMNI 1998-A AUTOMOBILE LEASE SECURITIZATION TRUST
[_________]% AUTOMOBILE LEASE ASSET BACKED NOTES, CLASS B
The World Omni 1998-A Automobile Lease Securitization Trust, a trust
organized and existing under the laws of the State of Delaware (including any
successor, the "Issuer"), for value received, hereby promises to pay to
_______, or registered assigns, the principal sum of ______________ DOLLARS
($ ______________ ), in monthly installments on each Distribution Date,
commencing on December 15, 1998, and to pay interest on the Class B Note
Balance, each as and to the extent described below; provided that the entire
Class B Note Balance shall be due and payable on the earlier of the Class B
Stated Maturity and the Redemption Date, if any.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee by manual signature, this Note shall not be entitled to any
benefit under the Indenture referred to on the reverse hereof, or be valid or
obligatory for any purpose.
- ------------
(6) Denominations of $[250,000] and integral multiples of $1,000 in excess
thereof.
E-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Responsible Officer.
Dated: _______________, 1998
WORLD OMNI 1998-A AUTOMOBILE LEASE
SECURITIZATION TRUST
By: PNC BANK, DELAWARE, a Delaware
banking corporation, not in its
individual capacity but solely as
Owner Trustee under the
Securitization Trust Agreement
By:______________________________
Name:_________________________
Title:________________________
E-3
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Dated:___________________, 1998
THE BANK OF NEW YORK
a New York banking association, not in
its individual capacity but solely as
Indenture Trustee,
By:_____________________________
Name:________________________
Title:_______________________
E-4
<PAGE>
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its [_______]% Automobile Lease Asset Backed Notes, Class B
(herein called the "B Notes" or the "Notes"), all issued under an Indenture
dated as of October 1, 1998 (such Indenture, as supplemented or amended, is
herein called the "Indenture"), between the Issuer and The Bank of New York, a
New York banking association, not in its individual capacity but solely as
indenture trustee (the "Indenture Trustee"), which term includes any successor
Indenture Trustee under the Indenture, to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights and obligations thereunder of the Issuer, the Indenture Trustee and the
Holders of the Notes. The Notes are subject to all terms of the Indenture and to
all terms of that certain Securitization Trust Agreement dated as of October 1,
1998 (the "Agreement"), among PNC Bank, Delaware, as owner trustee (the "Owner
Trustee"), World Omni Lease Securitization, L.P. (the "Transferor") and the
Indenture Trustee. All capitalized terms used in this Note, whether first used
above or below, that are not otherwise defined herein shall have the meanings
assigned to them pursuant to the Indenture.
Under the Indenture, there will be distributed on each Distribution Date
(i.e., the fifteenth day of each month or, if such fifteenth day is not a
Business Day, the next succeeding Business Day), commencing on December 15,
1998, to the Person in whose name this Class B Note is registered at the close
of business on the last day of the immediately preceding calendar month, such
Class B Noteholder's Percentage Interest multiplied by (i) the Class B
Distributable Amount for such Distribution Date and (ii) the amount of any
repayment of any outstanding Class B Interest Carryover Shortfall, Class B Loss
Amounts, Class B Note Principal Loss Amounts, Class B Note Principal Loss
Interest Amounts, Class B Note Principal Carryover Shortfall and Class B Note
Principal Carryover Shortfall Interest Amount being made on such Distribution
Date, all to the extent and as more specifically set forth in the Indenture and
the Agreement.
The Notes are subordinated to the Class A Notes and are secured by the
collateral pledged as security therefor on a subordinated basis as provided in
the Indenture and the Transaction Documents.
Each Holder, by acceptance of a Note, covenants and agrees that no recourse
may be taken, directly or indirectly, with respect to the obligations of the
Issuer, the Transferor, the Servicer, the Owner Trustee or the Indenture Trustee
on the Notes or under the Indenture or any certificate or other writing
delivered in connection herewith or therewith, against (i) the Transferor, the
Servicer, the Indenture Trustee or the Owner Trustee in its individual capacity,
(ii) any owner of a beneficial interest in the Issuer or (iii) any partner,
owner, beneficiary, agent, officer, director, employee or agent of the
Transferor, the Servicer, the Indenture Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Transferor, the Servicer, the Owner Trustee or the Indenture Trustee or of any
successor or assign of the Transferor, the Servicer, the Indenture Trustee or
the Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed (it being understood that Indenture Trustee and Owner Trustee
have no such obligations in their individual capacity) and except that any such
partner, owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.
It is the intent of the Transferor, the Servicer and the Noteholders that,
for purposes of Federal and State income tax and any other tax measured in whole
or in part by income, the Notes will qualify as indebtedness of the Issuer. The
Noteholders, by acceptance of a Note, agree to treat, and to take no action
inconsistent with the treatment of, the Notes for such tax purposes as
indebtedness of the Issuer.
By accepting this Note, the Holder hereof covenants and agrees that prior
to the date which is one year and one day after the last date upon which (a)
each Class of Notes has been paid in full, and (b) all obligations due under any
other Securitized Financing have been paid in full, the Holder will not
E-5
<PAGE>
institute against, or join any other Person in instituting against the
Transferor, World Omni Lease Securitization LLC, ALF LLC, ALF LP, the
Origination Trustee or the Origination Trust any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding or other proceedings under any
federal or state bankruptcy or similar law. The foregoing shall not limit the
Holder's right to file any claim in or otherwise take actions with respect to
any such proceeding instituted by any Person not under such a constraint. This
non-petition covenant shall survive the termination of the Agreement.
By accepting this Note, the Holder hereof waives any claim to any proceeds
or assets of the Origination Trustee and to all assets of the Origination Trust
other than those from time to time included within the 1998-A SUBI Portfolio as
1998-A SUBI Assets and those proceeds or assets derived from or earned by such
1998-A SUBI Assets.
This Note and the Indenture shall be construed in accordance with the laws
of the State of New York, without reference to its conflict of law provisions,
and the obligations, rights and remedies of the parties hereunder and thereunder
shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency, herein prescribed.
E-6
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or
other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints _______________________, attorney, to transfer said Note on the
books kept for registration thereof, with full power of substitution in the
premises.
Dated:______________________
___________________________*/
Signature Guaranteed:
___________________________
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
- ------------
*/ NOTE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular without alteration, enlargement or any change whatsoever.
E-7
<PAGE>
EXHIBIT F-1
NON-RULE 144A REPRESENTATION LETTER
World Omni Lease Securitization L.P.,
c/o World Omni Lease Securitization LLC,
its general partner
120 N.W. 12th Avenue
Deerfield Beach, Florida 33442
The Bank of New York
1 Wall Street,
New York, New York 10286
Credit Suisse First Boston Corporation
Eleven Madison Avenue
6th Floor
New York, New York 10010-3629
Re: World Omni 1998-A Automobile Lease Securitization Trust
[___] % Automobile Lease Asset Backed Notes, Class B
Ladies and Gentlemen:
The undersigned purchaser (the "Purchaser") understands that the purchase
of the above-referenced Notes (the "Notes") may be made only by institutions
which are "Accredited Investors" under Regulation D, as promulgated under the
Securities Act of 1933, as amended (the "Securities Act"), which includes banks,
savings and loan associations, registered brokers and dealers, insurance
companies, investment companies and organizations described in Section 501(c)(3)
of the Internal Revenue Code of 1986, as amended (the "Code"), corporations,
business trusts and partnerships, not formed for the specific purpose of
acquiring the Notes offered, with total assets in excess of $5,000,000. The
undersigned represents on behalf of the Purchaser that the Purchaser is an
"Accredited Investor" within the meaning of such definition. The Purchaser is
urged to review carefully the responses, representations and warranties it is
making herein. Capitalized terms not defined herein have the meanings assigned
to such terms in or pursuant to the Indenture described below.
Representations and Warranties
The Purchaser makes the following representations and warranties in order
to permit the Bank of New York , as indenture trustee (the "Indenture Trustee"),
World Omni 1998-A Automobile Lease Securitization Trust (the "Trust"), World
Omni Lease Securitization L.P. (the "Transferor") and Credit Suisse First Boston
Corporation to determine its suitability as a purchaser of Notes and to
determine that the exemption from registration relied upon by the Transferor
under Section 4(2) of the Securities Act is available to it.
1. The Purchaser understands that the Notes have not been, and throughout
their term will not be, registered or qualified under the Securities Act or the
securities law of any state and may be resold (which resale is not currently
contemplated) only if registered pursuant to the provisions of the Securities
Act or if an exemption from registration under the Securities Act and other
applicable state securities laws are available, that neither the Transferor nor
the Indenture Trustee is required to register the Notes under the Securities Act
or any applicable state securities laws and that any transfer
F-1-1
<PAGE>
must comply with Section 2.04 of the Indenture dated as of October 1, 1998 (the
"Indenture") between the Trust and the Indenture Trustee.
2. The Purchaser will comply with all applicable federal and state
securities laws in connection with any subsequent resale of the Notes.
3. The Purchaser is an "accredited investor" within the meaning of Rule
501(a) under the Securities Act and a sophisticated institutional investor and
has knowledge and experience in financial and business matters (and, in
particular, in such matters related to securities similar to the Notes) and is
capable of evaluating the merits and risks of its investment in the Notes and is
able to bear the economic risk of such investment. The Purchaser has been given
such information concerning the Notes, the Trust, World Omni Financial Corp. and
the Transferor as it has requested.
4. The Purchaser is acquiring the Notes as principal for its own account
(or for the account of one or more other sophisticated institutional investors
for which it is acting as duly authorized fiduciary or agent) for the purpose of
investment and not with a view to or for sale in connection with any
distribution thereof, subject nevertheless to any requirement of law that the
disposition of the Purchaser's property shall at all times be and remain within
its control.
5. Neither the Purchaser nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of any Note, any interest in
any Note or any other similar security of the Transferor to, or solicited any
offer to buy or accept a transfer, pledge or other disposition of any Note, any
interest in any Note or any other similar security of the Transferor with, any
person in any manner, or made any general solicitation by means of general
advertising or in any other manner, or taken any other action, which would
constitute a distribution of the Notes under the Securities Act or which would
render the disposition of any Note a violation of Section 5 of the Securities
Act or any state securities law, require registration or qualification pursuant
thereto, or require registration of the Trust or the Transferor as an
"investment company" under the Investment Company Act of 1940, as amended, nor
will it act, nor has it authorized or will it authorize any person to act in
such manner with respect to the Notes.
6. The Purchaser has reviewed the Private Placement Memorandum with respect
to the Notes dated November [ ], 1998, including the Prospectus attached thereto
as Exhibit A (the "Private Placement Memorandum"), and the agreements and other
materials referred to therein, and has had the opportunity to ask questions and
receive answers concerning the terms and conditions of the transaction
contemplated by the Private Placement Memorandum and to obtain additional
information necessary to verify the accuracy and completeness of any information
furnished to the Purchaser or to which the Purchaser had access.
7. Purchaser required to select applicable sentence:
_____ The Purchaser will not acquire the Notes on behalf of or with the
assets of any "employee benefit plan" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
_____ No "prohibited transaction" under ERISA or the Internal Revenue Code
of 1986, as amended, will occur in connection with such transferee's acquisition
or holding of the Class B Notes because the relevant conditions for exemptive
relief under one or more of the following prohibited transaction class
exemptions have been satisfied: Prohibited Transaction Class Exemption ("PTCE")
96-23, regarding transactions effected by "In-House Asset Managers"; PTCE 95-60,
regarding transactions for insurance company general accounts; PTCE 90-1,
regarding transactions effected for insurance company separate accounts; PTCE,
regarding transactions affected for bank collective investment funds; or PTCE
84-14, regarding transactions effected by "Qualified Professional Asset
Managers".
F-1-2
<PAGE>
8. The Purchaser understands that the Notes will bear a legend
substantially as set forth in the form of Note included as Exhibit E to the
Indenture.
9. The Purchaser understands that there is no market, nor is there any
assurance that a market will develop, for the Notes and that the Transferor does
not have any obligation to make or facilitate any such market (or to otherwise
repurchase the Notes from the Purchaser) under any circumstances.
10. The Purchaser has consulted with its own legal counsel, independent
accountants and financial advisors to the extent it deems necessary regarding
the tax consequences to it of ownership of the Notes, is aware that its taxable
income with respect to the Notes in any accounting period may not correspond to
the cash flow (if any) from the Notes for such period, and is not purchasing the
Notes in reliance on any representations of the Transferor or its counsel with
respect to tax matters.
11. The Purchaser represents, on behalf of itself (or any person or entity
for whom the Purchaser is acting as agent or custodian in connection with the
acquisition of the Notes) that if the Purchaser or any such other person or
entity is a partnership, grantor trust or S corporation for federal income tax
purposes (a "Flow-Through Entity"), any Notes owned by or on behalf of such
Flow-Through Entity will represent less than 50% of the value of all the assets
owned by such Flow-Through Entity and no special allocation of income, gain,
loss, deduction or credit from such Notes will be made among the beneficial
owners of such Flow-Through Entity.
12. The Purchaser agrees that it will obtain from any subsequent purchaser
of the Notes substantially the same representations, warranties and agreements
contained in the foregoing paragraphs 1 through 11 and in this paragraph 12.
Capitalized terms used herein that are not otherwise defined shall have the
meanings ascribed thereto in the Indenture or the Private Placement Memorandum,
as the case may be.
The representations and warranties contained herein shall be binding upon
the successors of the undersigned.
F-1-3
<PAGE>
Executed at _______________, this _____ day of ____________ 199__
_________________________________
Purchaser's Name (Print)
By_______________________________
Signature
Its______________________________
_________________________________
Address of Purchaser
_________________________________
Purchaser's Taxpayer
Identification Number
F-1-4
<PAGE>
EXHIBIT F-2
RULE 144A REPRESENTATION LETTER
World Omni Lease Securitization L.P.,
c/o World Omni Lease Securitization, Inc.,
its general partner
120 N.W. 12th Avenue
Deerfield Beach, Florida 33442
The Bank of New York
1 Wall Street,
New York, New York 10286
Credit Suisse First Boston Corporation
Eleven Madison Avenue
6th Floor
New York, New York 10010-3629
Re: World Omni 1998-A Automobile Lease Securitization Trust
[___] % Automobile Lease Asset Backed Notes, Class B
Ladies and Gentlemen:
________________________ (the "Purchaser") is today purchasing in a private
resale from _______________ (the "Transferor") $__________ aggregate principal
amount of the above-captioned Notes (the "Notes"), issued pursuant to the
Indenture dated as of November [ ], 1998 (the "Indenture") between World Omni
1998-A Automobile Lease Securitization Trust (the "Trust") and the Bank of New
York , as indenture trustee (the "Indenture Trustee").
In connection with the purchase of the Notes, the Purchaser hereby
represents and warrants to each of you as follows:
1. The Purchaser understands that the Notes have not been registered under
the Securities Act of 1933, as amended (the "Securities Act"), or the securities
laws of any state.
2. The Purchaser is acquiring the Notes for its own account only for
investment and not for any other person, and not with a view to, or for resale
in connection with, a distribution that would constitute a violation of the
Securities Act or any state securities laws (subject to the understanding that
disposition of the Purchaser's property will remain at all times within its
control). The Purchaser is not an affiliate of the Transferor, World Omni, the
Indenture Trustee, the Owner Trustee, any custodian of the Notes or any of their
respective affiliates.
3. The Purchaser agrees that the Notes must be held indefinitely by it
unless (i) the Notes are subsequently registered under the Securities Act or
(ii) an exemption from the registration requirements of the Securities Act is
available.
4. The Purchaser agrees that if at some time it wishes to dispose of or
exchange any of the Notes, it will not transfer or exchange any of the Notes
unless such transfer or exchange is in accordance with the provisions of Section
2.04 of the Indenture.
F-2-1
<PAGE>
5. The Purchaser is a qualified institutional buyer as defined in Rule 144A
of the Securities Act and has completed and is delivering herewith either of the
forms of certification to that effect attached as Annexes hereto, it is aware
that the sale to it is being made in reliance on Rule 144A, it is acquiring the
Notes for its own account or for the account of a qualified institutional buyer
and it understands that such Notes may be resold, pledged or transferred only
(i) to a person who the Transferor reasonably believes is a qualified
institutional buyer that purchases for its own account or for the account of a
qualified institutional buyer to whom notice is given that the resale, pledge or
transfer is being made in reliance on Rule 144A or (ii) pursuant to another
exemption from registration under the Securities Act and applicable state
securities laws.
6. Neither the Purchaser nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of any Note, any interest in
any Note or any other similar security of the Transferor to, or solicited any
offer to buy or accept a transfer, pledge or other disposition of any Note any
interest in any Note or any other similar security of the Transferor with, any
person in any manner, or made any general solicitation by means of general
advertising or in any other manner, or taken any other action, which would
constitute a distribution of the Notes under the Securities Act or which would
render the disposition of any Note a violation of Section 5 of the Securities
Act or any state securities law, require registration or qualification pursuant
thereto, or require registration of the World Omni 1998-A Automobile Lease
Securitization Trust (the "Trust") or the Transferor as an "investment company"
under the Investment Company Act of 1940, as amended, nor will it act, nor has
it authorized or will it authorize any person to act in such manner with respect
to the Notes.
7. Purchaser required to select applicable sentence:
_____ The Purchaser will not acquire the Notes on behalf of or with the
assets of any "employee benefit plan" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
_____ No "prohibited transaction" under ERISA or the Internal Revenue Code
of 1986, as amended, will occur in connection with such transferee's acquisition
or holding of the Class B Notes because the relevant conditions for exemptive
relief under one or more of the following prohibited transaction class
exemptions have been satisfied: Prohibited Transaction Class Exemption ("PTCE")
96-23, regarding transactions effected by "In-House Asset Managers"; PTCE 95-60,
regarding transactions for insurance company general accounts; PTCE 90-1,
regarding transactions effected for insurance company separate accounts; PTCE
91-38 regarding transactions effected for bank collective investment funds; or
PTCE 84-14, regarding transactions effected by "Qualified Professional Asset
Managers".
8. The Purchaser understands that there is no market, nor is there any
assurance that a market will develop, for the Notes and that the Transferor does
not have any obligation to make or facilitate any such market (or to otherwise
repurchase the Notes from the Purchaser) under any circumstances.
9. The Purchaser has consulted with its own legal counsel, independent
accountants and financial advisors to the extent it deems necessary regarding
the tax consequences to it of ownership of the Notes, is aware that its taxable
income with respect to the Notes in any accounting period may not correspond to
the cash flow (if any) from the Notes for such period, and is not purchasing the
Notes in reliance on any representations of the Transferor or its counsel with
respect to tax matters.
10. The Purchaser has reviewed the Private Placement Memorandum with
respect to the Notes dated November [ ], 1998, including the Prospectus attached
as Exhibit A thereto (the "Private Placement Memorandum"), and the agreements
and other materials referred to therein, and has had the opportunity to ask
questions and receive answers concerning the terms and conditions of the
transaction contemplated by the Private Placement Memorandum and to obtain
additional information
F-2-2
<PAGE>
necessary to verify the accuracy and completeness of any information furnished
to the Purchaser or to which the Purchaser had access.
11. The Purchaser understands that the Notes will bear a legend
substantially as set forth in the form of Note included as Exhibit E to the
Indenture.
12. The Purchaser hereby further agrees to be bound by all the terms and
conditions of the Notes as provided in the Indenture.
13. The Purchaser represents that if the Purchaser (or any other person or
entity for whom the Purchaser is acting as agent or custodian in connection with
the acquisition of the Notes) is a partnership, grantor trust or S corporation
for federal income tax purposes (a "Flow-Through Entity"), any Notes owned by
such Flow-Through Entity will represent less than 50% of the value of all the
assets owned by such Flow-Through Entity and no special allocation of income,
gain, loss deduction or credit from such Notes will be made among the beneficial
owners of such Flow-Through Entity.
14. If the Purchaser sells any of the Notes, the Purchaser will obtain from
any subsequent purchaser substantially the same representations contained in
this Representation Letter.
Capitalized terms used herein that are not otherwise defined shall have the
meanings ascribed thereto in the Indenture or the Private Placement Memorandum,
as the case may be.
The representations and warranties contained herein shall be binding upon
the successors of the undersigned.
F-2-3
<PAGE>
Executed at _______________, this _____ day of ____________ 199__
_________________________________
Purchaser's Name (Print)
By_______________________________
Signature
Its______________________________
_________________________________
Address of Purchaser
_________________________________
Purchaser's Taxpayer
Identification Number
F-2-4
<PAGE>
ANNEX 1 TO EXHIBIT F-2
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "Purchaser") hereby certifies as follows to the
addressees of the Rule 144A Representation Letter to which this certification is
attached with respect to the Notes described therein:
1. As indicated below, the undersigned is the President, Chief Financial
Officer, Senior Vice President or other executive officer of the Purchaser.
2. In connection with purchases by the Purchaser, the Purchaser is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144 A") because (i) the Purchaser
owned and/or invested on a discretionary basis $_________(7) in securities
(except for the excluded securities referred to below) as of the end of the
Purchaser's most recent fiscal year (such amount being calculated in accordance
with Rule 144A) and (ii) the Purchaser satisfies the criteria in the category
marked below.
___ Corporation. etc. The Purchaser is a corporation (other than a bank,
savings and loan association or similar institution), Massachusetts or
similar business trust, partnership, or charitable organization
described in Section 501(c)(3) of the Internal Revenue Code of 1986, as
amended.
___ Bank. The Purchaser (a) is a national bank or banking institution
organized under the laws of any State, territory or the District of
Columbia, the business of which is substantially confined to banking
and is supervised by the State or territorial banking commission or
similar official or is a foreign bank or equivalent institution, and
(b) has an audited net worth of at least $25,000,000 as demonstrated in
its latest annual financial statements.
___ Savings and Loan. The Purchaser (a) is a savings and loan association,
building and loan association, cooperative bank, homestead association
or similar institution, which is supervised and examined by a State or
Federal authority having supervision over any such institutions or is a
foreign savings and loan association or equivalent institution and (b)
has an audited net worth of at least $25,000,000 as demonstrated in its
latest annual financial statements, a copy of which is attached hereto.
___ Broker-dealer. The Purchaser is a dealer registered pursuant to Section
15 of the Securities Exchange Act of 1934.
___ Insurance Company. The Purchaser is an insurance company whose primary
and predominant business activity is the writing of insurance or the
reinsuring of risks underwritten by insurance companies and which is
subject to supervision by the insurance commissioner or a similar
official or agency of a State, territory or the District of Columbia.
- ------------
(7) Buyer must own and/or invest on a discretionary basis at least $100,000,000
in securities unless Buyer is a dealer, and, in that case, Buyer must own
and/or invest on a discretionary basis at least $10,000,000 in securities.
A-1-F-2-1
<PAGE>
___ State or Local Plan. The Purchaser is a plan established and maintained
by a State, its political subdivisions, or any agency or
instrumentality of the State or its political subdivisions, for the
benefit of its employees.
___ ERISA Plan. The Purchaser is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security Act of
1974.
___ Investment Advisor. The Purchaser is an investment advisor registered
under the Investment Advisors Act of 1940.
___ Small Business Investment Company. The Purchaser is a small business
investment company licensed by the U.S. Small Business Administration
under Section 301(c) or (d) of the Small Business Investment Act of
1958.
___ Business Development Company. The Purchaser is a business development
company as defined in Section 202(a) (22) of the Investment Advisors
Act of 1940.
___ Trust Fund. The Purchaser is a trust fund whose trustee is a bank or
trust company and whose participants are exclusively State or Local
Plans or ERISA Plans as defined above, and no participant of the
Purchaser is an individual retirement account or an H.R. 10 (Keogh)
plan.
3. The term "securities" as used herein does not include (i) securities of
issuers that are affiliated with the Purchaser, (ii) securities that are part of
an unsold allotment to or subscription by the Purchaser, if the Purchaser is a
dealer, (iii) bank deposit notes and Notes of deposit, (iv) loan participations,
(v) repurchase agreements, (vi) securities owned but subject to a repurchase
agreement and (vii) currency, interest rate and commodity swaps.
4. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Purchaser, the Purchaser used
the cost of such securities to the Purchaser and did not include any of the
securities referred to in the preceding paragraph, except (i) where the
Purchaser reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market. Further, in
determining such aggregate amount, the Purchaser may have included securities
owned by subsidiaries of the Purchaser, but only if such subsidiaries are
consolidated with the Purchaser in its financial statements prepared in
accordance with generally accepted accounting principles and if the investments
of such subsidiaries are managed under the Purchaser's direction. However, such
securities were not included if the Purchaser is a majority owned, consolidated
subsidiary of another enterprise and the Purchaser is not itself a reporting
company under the Securities Exchange Act of 1934, as amended.
5. The Purchaser acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Notes are
relying and will continue to rely on the statements made herein because one or
more sales to the Purchaser may be in reliance on Rule 144A.
6. Until the date of purchase of the Notes, the Purchaser will notify each
of the parties to which this certification is made of any changes in the
information and conclusions herein. Until such notice is given, the Purchaser's
purchase of the Notes will constitute a reaffirmation of this certification as
of the date of such purchase. In addition, if the Purchaser is a bank or savings
and loan is provided above, the Purchaser agrees that it will furnish to such
parties updated annual financial statements promptly after they become
available.
A-1-F-2-2
<PAGE>
____________________________________
Name of Purchaser or Adviser
By:_________________________________
Name:
Title:
Date:_______________________________
A-1-F-2-3
<PAGE>
ANNEX 2 TO EXHIBIT F-2
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees That are Registered Investment Companies]
The undersigned (the "Purchaser") hereby certifies as follows to the
addressees of the Rule 144A Representation Letter which this certification is
attached with respect to the Transferor Notes described therein:
1. As indicated below, the undersigned is the President, Chief Financial
Officer or Senior Vice President of the Purchaser or, if the Purchaser is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because the Purchaser is part
of a Family of Investment Companies (as defined below), is such an officer of
the Adviser.
2. In connection with purchases by the Purchaser, the Purchaser is a
"qualified institutional buyer" as defined in SEC Rule 144A because (i) the
Purchaser is an investment company registered under the Investment Company Act
of 1940, as amended and (ii) as marked below, the Purchaser alone, or the
Purchaser's Family of Investment Companies, owned at least $100,000,000 in
securities (other than the excluded securities referred to below) as of the end
of the Purchaser's most recent fiscal year. For purposes of determining the
amount of securities owned by the Purchaser or the Purchaser's Family of
Investment Companies, the cost of such securities was used, except (i) where the
Purchaser or the Purchaser's Family of Investment Companies reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market.
___ The Purchaser owned $____________ in securities (other than the
excluded securities referred to below) as of the end of the Purchaser's
most recent fiscal year (such amount being calculated in accordance
with Rule 144A).
___ The Purchaser is part of a Family of Investment Companies which owned
in the aggregate $__________ in securities (other than the excluded
securities referred to below) as of the end of the Purchaser's most
recent fiscal year (such amount being calculated in accordance with
Rule 144A).
3. The term "Family of Investment Companies" as used herein means two or
more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i) securities of
issuers that are affiliated with the Purchaser or are part of the Purchaser's
Family of Investment Companies, (ii) bank deposit notes and Notes of deposit,
(iii) loan participations, (iv) repurchase agreements, (v) securities owned but
subject to a repurchase agreement and (vi) currency, interest rate and commodity
swaps.
5. The Purchaser is familiar with Rule 144A and understands that the
parties listed in the Rule 144A Representation Letter to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Purchaser will be in reliance on
Rule 144A. In addition, the Purchaser will only purchase for the Purchaser's own
account.
6. Until the date of purchase of the Transferor Notes, the undersigned will
notify the parties listed in the Rule 144A Transferee Note to which this
certification relates of any changes in the
A-1-F-2-1
<PAGE>
information and conclusions herein. Until such notice is given, the Purchaser's
purchase of the Notes will constitute a reaffirmation of this certification by
the undersigned as of the date of such purchase.
___________________________________
Name of Purchaser or Adviser
By:________________________________
Name:
Title:
Date:______________________________
IF AN ADVISER:
___________________________________
Name of Adviser
Date:______________________________
A-1-F-2-2
Exhibit 5.1
October , 1998
World Omni Lease Securitization L.P.
6150 Omni Park Avenue
Mobile, Alabama 36609
Re: World Omni 1998-A Automobile Lease Securitization Trust __%,
Automobile Lease Asset Backed Notes, Class A-1 (the "Class A-1
Notes"), ____% Automobile Lease Asset Backed Notes, Class A-2
(the "Class A-2 Notes"), ____% Automobile Lease Asset Backed
Notes, Class A-3 (the "Class A-3 Notes"), and ____% Automobile
Lease Agreement Backed Notes, Class A-4 (the "Class A-4 Notes"
and, together with the Class A-1 Notes, the Class A-2 Notes
and the Class A-3 Notes, the "Class A Notes")
--------------------------------------------------------------
Ladies and Gentlemen:
We have acted as special Illinois and New York counsel for World Omni
Financial Corp., a Florida corporation ("WOFCO"), and World Omni Lease
Securitization L.P., a Delaware limited partnership (the "Transferor"), in
connection with the proposed offering by the Transferor of $_________ initial
principal amount of Class A-1 Notes, $_________ initial principal amount of
Class A-2 Notes, $__________ initial principal amount of Class A-3 Notes and
$__________ initial principal amount of Class A-4 Notes, in each case to be
issued pursuant to an Indenture, dated as of October , 1998 (the "Indenture"),
between The Bank of New York, as indenture trustee (in such capacity, the
"Indenture Trustee"), and PNC Bank, Delaware, a Delaware banking corporation, as
owner trustee (in such capacity, the "Owner Trustee"). The Class A Notes are to
be acquired by Credit Suisse First Boston Corporation and Merrill Lynch and Co.,
Inc., as representatives of the several underwriters (collectively, the
"Underwriters") named in the Underwriting Agreement (the "Underwriting
Agreement"), dated October __, 1998, among the Transferor, Auto Lease Finance
L.P., WOFCO and the Underwriters and offered by the Underwriters as provided in
the Registration Statement on Form S-1 (File No. 333-63367), filed with the
Securities and Exchange Commission ("SEC") on September 14, 1998, as amended
from time to time (the "Registration Statement").
In connection with this opinion, we have relied as to matters of fact,
without investigation, upon (a) certificates of public officials and others and
(b) the representations and warranties contained in the Securitization Trust
Agreement (as defined in the Indenture) and the Underwriting Agreement. We have
also examined originals or copies, certified or otherwise identified to our
satisfaction, of the Registration Statement, the form of Indenture filed as
Exhibit 4.1 to the Registration Statement, including the form of each Class A
Note attached thereto, and the form of Underwriting Agreement filed as Exhibit
1.1 to the Registration Statement.
In connection with this opinion, we have assumed the accuracy and
completeness of all documents and records that we have reviewed, the genuineness
of all signatures, the authenticity of the documents submitted to us as
originals and the conformity to authentic original documents of all documents
submitted to us as certified, conformed or reproduced copies.
<PAGE>
We have also assumed that the Securitization Trust Agreement and the
Underwriting Agreement will be governed by the laws of either New York or
Illinois, without regard to any applicable principles of conflicts of laws, and
that each such agreement has been duly and validly executed and delivered and
constitutes the legal, valid and binding obligation of each party thereto in
accordance with its terms. In addition, we have assumed that each Class A Note,
when issued, will conform to the form thereof attached to the Indenture, each
Class A Note has been duly and validly executed and delivered in accordance with
the terms of the Indenture and the Underwriting Agreement, and each Class A Note
constitutes the legal, valid and binding obligation of the Issuer in accordance
with its terms.
Based upon and subject to the foregoing, it is our opinion that when
each Class A Note is executed by PNC Bank, Delaware, as owner trustee, on behalf
of the Issuer and is issued and authenticated by the Indenture Trustee, in each
case in accordance with the terms of the Indenture, and sold and delivered to
the Underwriters in accordance with the provisions of the Underwriting
Agreement, it will be legally issued, fully paid and nonassessable.
Our opinions expressed above are limited to the laws of the States of
Illinois and New York (excluding the state securities laws thereof), and we do
not express any opinion herein concerning any other law. Specifically and
without limiting the generality of the preceding sentence, we express no opinion
herein as to the applicability of or compliance with any state securities laws,
federal securities laws or other federal laws, including without limitation the
Securities Act of 1933, as amended, and the Trust Indenture Act of 1939, as
amended. This opinion letter is given as of the date hereof and we assumed no
obligation to advise you of changes that may hereafter be brought to our
attention. This opinion letter is solely for the information of the addressees
hereof and is not to be quoted in whole or in part or otherwise referred to, nor
is it to be filed with any governmental agency or any other person, without our
prior written consent. No one other than the addressees hereof is entitled to
rely on this opinion letter.
We hereby consent to (a) the use of this opinion for filing as Exhibit
5.1 to the Registration Statement and (b) to the use of our name under the
heading "Legal Matters" in the Prospectus included in the Registration
Statement, as the same may be further amended and declared effective by the SEC.
Very truly yours,
Exhibit 8.1
Charles M. Adelman
Direct Dial: 212 504-6477
Internet: [email protected]
[CADWALADER LETTERHEAD]
October __, 1998
World Omni Lease Securitization L.P.
6150 Omni Park Drive
Mobile, Alabama 36609
Re: World Omni 1998-A Automobile Lease Securitization Trust
Dear Sirs:
We have acted as special federal income tax counsel to World Omni Lease
Securitization, L.P. (the "Transferor") in connection with the filing of a
Registration Statement on Form S-1 (File No. 333-63367) with the Securities and
Exchange Commission (the "Commission") on September 14, 1998 (such registration
statement, together with the exhibits and any amendments thereto, the
"Registration Statement"), including a form of prospectus contained therein (the
"Prospectus"), relating to the offering of approximately $___________________
aggregate principal amount of World Omni 1998-A Automobile Lease Securitization
Trust __% Automobile Lease Asset Backed Notes, Class A-1 (the "Class A-1
Notes"), approximately $____________ aggregate principal amount of World Omni
1998-A Automobile Lease Securitization Trust __% Automobile Lease Asset Backed
Notes, Class A-2 (the "Class A-2 Notes"), approximately $_________ aggregate
principal amount of World Omni 1998-A Automobile Lease Securitization Trust __%
Automobile Lease Asset Backed Notes, Class A-3 (the "Class A-3 Notes") and
approximately $______________ aggregated principal amount of World Omni 1998-A
Automobile Lease Securitization Trust __% Automobile Lease Asset Backed Notes,
Class A-4 (the "Class A-4 Notes" and, together with the Class A-1 Notes, the
Class A-2 Notes and the Class A-3 Notes, the "Notes") to be issued pursuant to
an Indenture dated as of ________ __, 1998 (the "Indenture"), between PNC Bank,
Delaware, as owner trustee and The Bank of New York, as indenture trustee (the
"Trustee").
<PAGE>
World Omni Lease -2- October __, 1998
Securization L.P.
As such counsel, we have reviewed the Registration Statement, the
Prospectus, the form of the Indenture filed as an exhibit to the Registration
Statement, the forms of the Notes included in the Indenture and such agreements,
instruments, certificates and other documents as we have deemed necessary for
the purposes of this opinion. In addition, we have examined such questions of
law as we have deemed necessary for purposes of this opinion.
We have advised the Registrant with respect to material federal income
tax consequences of the proposed issuance of the Notes. This advice is
summarized under the headings "Summary -- Tax Status" and "Material Income Tax
Considerations -- Federal Taxation" in the Prospectus. Such description does not
purport to discuss all possible Federal income tax ramifications of the proposed
issuance, but with respect to those material federal income tax consequences
that are discussed, in our opinion the description is accurate in all material
respects.
We hereby consent to the filing of this letter as an exhibit to the
Registration Statement and to the use of our name under the headings "Material
Income Tax Considerations -- Federal Taxation" and "Legal Matters" in the
Prospectus, without implying or admitting that we are "experts" within the
meaning of the Securities Act of 1933, as amended, or the rules and regulations
of the Commission promulgated thereunder, with respect to any part of the
Registration Statement, including this exhibit.
Very truly yours,
/s/ Cadwalader, Wickersham & Taft
Exhibit 8.2
JUDITH L. KEISER
Admitted in Florida and New York
October 28, 1998
World Omni Lease Securitization L.P., Auto Lease Finance, L.P.,
Limited Partnership Limited Partnership
6150 Omni Park Drive 6150 Omni Park Drive
Mobile, Alabama 36609 Mobile, Alabama 36609
World Omni LT, an Alabama Trust
6150 Omni Park Drive
Mobile, Alabama 36609
RE: World Omni 1998-A
Automobile Lease Securitization Trust
-------------------------------------
Ladies and Gentlemen:
We have acted as special Florida tax counsel for: World Omni Financial
Corp., a Florida corporation ("WOFCO"); World Omni Lease Securitization L.P.,
Limited Partnership, a Delaware limited partnership ("WOLS LP" or "Transferor");
World Omni Lease Securitization, LLC, a Delaware limited liability company
("WOLS LLC"); Auto Lease Finance, LLC, a Delaware limited liability company
("ALF LLC"); Auto Lease Finance L.P., Limited Partnership, a Delaware limited
partnership ("ALP LP"); World Omni LT, an Alabama trust (the "Origination
Trust"); and World Omni 1998-A Automobile Lease Securitization Trust, a Delaware
business trust (the "Trust") (WOFCO, Transferor, WOLS LLC, ALF LLC, ALF LP, the
Origination Trust and the Trust are referred to collectively as the "Clients")
in connection with certain matters of Florida law arising in connection with the
offering by Transferor of: (a) $__________ principal amount of Floating Rate
Automobile Lease Asset Backed Notes, Class A-1; $___________ principal amount of
Floating Rate Automobile Lease Asset Backed Notes, Class A-2; $__________
principal amount of Floating Rate Automobile Lease Asset Backed Notes, Class
A-3; and $______________ principal amount of Floating Rate Automobile Lease
Asset Backed Notes, Class A-4 (collectively, the "Class A Notes"); and (B)
$_______ principal amount of ____% Automobile Lease Asset Backed Notes, Class B
(the "Class B Notes", and together with the Class A Notes,
<PAGE>
World Omni Lease Securitization, L.P.
Auto Lease Finance, L.P.
World Omni LT
October 28, 1998
Page 2
the "Notes"), to be issued pursuant to an Indenture, date __________, 1998 (the
"Indenture"), between PNC Bank, Delaware, a Delaware banking corporation ("PNC
Bank") as Owner Trustee on behalf of the Trust (the "Owner Trustee") and The
Bank of New York, a New York banking association ("BONY") as Indenture Trustee
(the "Indenture Trustee"). The Trust will be formed pursuant to a Securitization
Trust Agreement dated as of [_______], 1998 (the "Securitization Trust
Agreement") among Transferor, the Owner Trustee, and the Indenture Trustee.
Simultaneously with the issuance of the Notes, pursuant to the Securitization
Trust Agreement, the Trust will issue a certificate representing the interest in
the Trust not evidenced by the Notes (the "Transferor Certificate" and together
with the Notes, the "Securities").
This Opinion is solely for the benefit of and may be relied upon only
by you in connection with the transactions contemplated by the Indenture and the
Securitization Trust Agreement.
This Opinion may not be relied upon by, nor may copies be delivered to,
any other Person or used for any other purpose without our prior written consent
except as required by any bank regulatory agency.
Capitalized terms for which meanings are provided in the Indenture or
the Securitization Trust Agreement, unless otherwise defined herein, are used
herein with such meanings. The term "Florida Contract" shall refer to any of the
Contracts, in the forms attached hereto as Exhibit A, entered into on or after
October 1, 1995, in the State of Florida, and governed by the laws of the State
of Florida. All references in this Opinion to Florida Statutes ("F.S.") shall
refer to F.S. 1997 and the Laws of 1998 in effect as of the date hereof. As used
in this Opinion, the phrase "to our knowledge" shall mean to the actual
knowledge and conscious attention of the attorneys of this firm who are
materially involved in this matter, without any further independent
investigation of any kind except as set forth herein.
We are members of the Bar of the State of Florida and do not express
any opinion with respect to the applicability of the laws of any jurisdiction
other than the State of Florida. We do not express any opinion with respect to
the application or applicability of:
<PAGE>
World Omni Lease Securitization, L.P.
Auto Lease Finance, L.P.
World Omni LT
October 28, 1998
Page 3
(a) the securities laws, the tax laws, and the regulations of Florida (or any
other state) and the federal government (except as provided in numbered
paragraphs 1 and 2 of this Opinion):
(b) laws or regulations relating to commodity and other futures indices and
other similar instruments;
(c) pension and employee benefit laws and regulations;
(d) state or federal antitrust and unfair competition laws and regulations;
(e) state or federal laws and regulations concerning filing and notice
requirements;
(f) fraudulent transfer and fraudulent conveyance laws; or
(g) other federal laws,
to the transactions contemplated by the Reviewed Documents (as hereinafter
defined) (the "Transactions").
DOCUMENTS REVIEWED: INVESTIGATIONS; AND ASSUMPTIONS
---------------------------------------------------
In connection with this Opinion, we have examined copies of the
following documents (the "Reviewed Documents"):
(a) the Securitization Trust Agreement, the Indenture and the other Transaction
Documents;
(b) the Underwriting Agreement dated November __, 1998 (the "Underwriting
Agreement"), among Transferor, ALF LP, WOFCO, and the Underwriters;
(c) the registration statement on Form S-1 (No. 333-63367) filed by Transferor
with the Securities and Exchange Commission (the "Commission") on September
14, 1998 pursuant to the Securities Act of 1933, as amended (the "Act"), as
amended by Amendment No. 1 thereto filed with the Commission on _________,
1998 (the registration statement in the amended form in which it became
effective on ____________, 1998 and the related prospectus
<PAGE>
World Omni Lease Securitization, L.P.
Auto Lease Finance, L.P.
World Omni LT
October 28, 1998
Page 4
contained therein, the "Registration Statement" and the "Prospectus");
and
(d) the Florida Contracts.
In addition to the Reviewed Documents, we have reviewed originals or
copies certified or authenticated to our satisfaction of all such corporate
records, agreements, instruments and documents of the Clients, certificates of
public officials, any certificates provided to us by the officers of any of the
Clients (the "Officer's Certificates"), and other certificates and opinions, and
have made such other investigations, as we have deemed necessary in connection
with the opinions set forth herein. In our examination, we have assumed the
capacity of natural persons, the genuineness of all documents submitted to us as
originals, the conformity to originals of all documents submitted to us as
copies, and the authenticity of the originals from which any such copies were
made, none of which assumptions have we independently confirmed.
We have assumed without further investigation that all Officer's
Certificates (which expressly permit our reliance on such certificates) and
other information and documentation provided to us by any of the Clients are
true, complete and not misleading and that all statements and assumptions of
fact set forth therein and herein are and will remain true and valid. Each
assumption specifically described in this Opinion is made with your express
consent and approval. However, with respect to the assumptions we have made and
as to our reliance upon such matters of fact and information, to our knowledge,
there is no information that conflicts with such assumptions or that would make
such reliance unwarranted.
This Opinion is given as of the date hereof, and we expressly disclaim
any obligation to update this Opinion or to give notice to any Reliance Party or
any third party of any future changes in facts or law, including changes that
might affect the opinions set forth herein.
<PAGE>
World Omni Lease Securitization, L.P.
Auto Lease Finance, L.P.
World Omni LT
October 28, 1998
Page 5
OPINIONS
--------
Based on the foregoing, it is our opinion that 1/:
1. The Notes as Debt; Classification as a Partnership
(a) Based upon the assumptions, authorities and reasoning set forth
below, upon their issuance in accordance with the Reviewed Documents the Class A
Notes and the Class B Notes will represent debt (i.e., will be treated as
indebtedness) under Florida law.
Florida law references standard accepted definitions and sources in
defining the term "debt." For example, in Holman et al. v. Hollis, 94 Fla. 614
(1927), the court stated that the accepted definition of "debt" is: "That which
is due from one person to another, whether money, goods, or services; that which
one person is bound to pay to another; a thing owed." Similarly, In Turner v.
Gruver, 168 So.2d 192 (Fla. 3rd DCA 1964), after citing Holman with approval,
the court cited Black's Law Dictionary for the proposition that a debt is: "....
an obligation to pay a sum certain; or a sum which may be ascertained by simple
mathematical calculation from known facts, regardless of whether the liability
arises by contract or by operation of law." See, also, Waters' Dictionary of
Florida Law. The Notes will represent debt under all such definitions and,
accordingly, the Notes will represent debt under Florida law generally.
Cadwalder, Wickersham & Taft, special federal income tax counsel to
WOLS LP has opined and, with the consent of the Reliance Parties, we have
assumed, that the Class A Notes and the Class B Notes will represent debt rather
than equity for federal income tax purposes, and we know of no reason why we
should not so assume. Accordingly, because Florida income tax law utilizes
federal definitions and concepts, the Class A Notes and the Class B Notes will
represent debt rather than equity for Florida
- -----------------
1/ In rendering this opinion as of the date hereof, we are assuming that
the Transactions will occur as set forth in the versions of the
Transaction Documents (as defined in the Securitization Trust
Agreement) which have been delivered to us as of the date hereof, and
that the facts and circumstances known to us concerning the
Transactions and the parties thereto will be the same as of the date
the Transactions occur as known by us to exist as of the date hereof.
<PAGE>
World Omni Lease Securitization, L.P.
Auto Lease Finance, L.P.
World Omni LT
October 28, 1998
Page 6
income tax purposes. Moreover, because the factors utilized in distinguishing
debt from equity for federal income tax purposes are well developed and based
upon standard, accepted criteria, the Class A Notes and the Class B Notes will
represent debt, rather than equity for purposes of Florida law generally.
In addition to generally defining the term "debt", Florida law also
uses it in several specific contexts, none of which is inconsistent with finding
that the Notes represent debt for purposes of Florida law. For example, it is
clear that the Notes will represent debt for purposes of the Florida Statutes
governing attachment and garnishment. Similarly, it is clear that the Notes will
represent debt for purposes of the Florida Statutes governing fraudulent
conveyances.
A debt is distinguished from an advancement in that a debt is founded
on a valuable consideration, entails the obligation of repayment, and confers on
the creditor the right to enforce it in the courts. See 17 Fla. Jur. 2d,
Decedents' Property, Section 92, citing 3 Am. Jur. 2d, Advancements, Section 2.
It is clear that the Notes will be based upon valuable consideration, compel
repayment and permit enforcement in a Florida court.
In distinguishing a debt from a trust, it has been held that the matter
depends upon the manifested intention of the parties, and that, if it is
intended that the person receiving money shall have unrestricted use thereof,
being liable to pay a similar amount with or without interest, a debt is
created. Bankers Life & Causalty Co. v. Gaines Constr. Co., 199 So.2d 482
(Fla. 3rd DCA 1967). It is manifestly clear on the face of the Reviewed
Documents that the Transactions contemplate the creation of a debtor-creditor
relationship between the Issuer and the holders of the Notes.
In light of the foregoing, and because the Notes will represent
unconditional promises to pay sums certain plus interest on definitely
ascertainable dates, it is our opinion that the Class A Notes and the Class B
Notes will represent debt (i.e., will be treated as indebtedness) for purposes
of Florida law.
(b) Based on the opinion set forth in subsection (a) above, and based
on the principle that Florida tax law utilizes federal tax law definitions and
concepts, we are
<PAGE>
World Omni Lease Securitization, L.P.
Auto Lease Finance, L.P.
World Omni LT
October 28, 1998
Page 7
further of the opinion that the Trust will not be classified as an association
or publicly traded partnership taxable as a corporation under Florida law.
2. Florida Loan Rule
Although the matter is not free from doubt, and assuming that the Notes
are deemed to be debt pursuant to numbered paragraph 1 herein, if the matter
were properly presented to a Florida court having jurisdiction, and assuming
interpretation of relevant law on a basis consistent with existing authority,
such Florida court would hold that Florida Administrative Code Section
12C-1.011(1)(s) (the "Loan Rule") will not be applied so as to subject the
holders of Notes, which holders are financial organizations with absolutely no
other Florida contacts 2/, to Florida income or franchise taxation solely as a
result of an investment in the Notes.
The Loan Rule provides that a financial organization is subject to
Florida income or franchise taxation if it earns or receives interest from loans
secured by real or tangible property located in Florida, even if it has no other
Florida contacts. Section 220.15(6), F.S., defines the term "financial
organization" to include any bank, trust company, savings bank, industrial bank,
land bank, safe deposit company, private banker, savings and loan association,
credit union, cooperative bank, small loan company, sales finance company and
investment company.
A threshold issue is the meaning of the term "loans" under the Loan
Rule. In this regard, some guidance is provided in TAA 90(M)-005 (December 12,
1990).3/ At issue there was a Massachusetts investment company, which was to
invest in a portfolio of tax-exempt municipal securities of Florida issuers,
including the State, counties, municipalities
- -----------------
2/ Other Florida contacts, which might require a different opinion than
the one given herein, might include the purchase of any other
asset-backed security from a Florida issuer, or the making of any
secured loan in Florida, or other minimal contacts, such as sending
into Florida any employee, agent or contractor, or having any affiliate
in Florida. No opinion is given herein as to such circumstances.
3/ A Technical Assistance Advisement or TAA is a particular response by
the Florida Department of Revenue to an inquiry made by a particular
taxpayer, and generally may not be relied upon by any other taxpayer.
However, the reasoning of a particular TAA may be instructive.
<PAGE>
World Omni Lease Securitization, L.P.
Auto Lease Finance, L.P.
World Omni LT
October 28, 1998
Page 8
and political subdivisions, agencies and instrumentalities of the State of
Florida. It was found that, under the scenario described, the company would not
be subject to Florida income taxation. It also was noted that, should the
company obtain any loans secured by real or tangible property located in
Florida, the company would become subject to Florida income tax.
The class of securities described in the TAA includes some that might
be secured by real or tangible property located in Florida, such as industrial
development bonds. Thus, the TAA suggests a distinction between bonds or other
debt securities, which should not be subject to the Loan Rule, and loans arising
out of more traditional commercial settings, which would be subject to the Loan
Rule.
Such a distinction was further suggested by TAA 93(M)-003 (April 2,
1993). At issue there was a Massachusetts Business Trust, which included a fund
invested in tax-exempt municipal securities of Florida issuers. The TAA noted
that the Fund would become subject to Florida income taxation if the Fund held
loans secured by mortgages, deeds of trust, or other liens upon real or tangible
personal property located in Florida. However, the TAA then noted that:
"Investment in Florida Bonds, including general obligation bonds ('GOs'),
revenue bonds ('RBs'), and industrial revenue bonds ('IRBs') will not in itself
subject the Fund to Florida Income tax. While these bonds may be secured, the
investment in these publicly traded bonds is to be distinguished from a private
loan secured by a mortgage, deed of trust, or other lien upon real or tangible
personal property located within Florida."
A similar distinction, one between bonds and notes arising in
traditional commercial transactions, has been made under Rev. Rul. 79-251.
1979-2 Cum. Bull. 271. The Ruling considered a taxpayer, which purchased
mortgage-backed, pass-through trust certificates, and which would have been
subject to tax if it were deemed to be receiving interest from mortgage notes.
However, the Ruling determined that, in part because the certificates were
freely transferable, the certificates were bonds rather than notes; the taxpayer
was
<PAGE>
World Omni Lease Securitization, L.P.
Auto Lease Finance, L.P.
World Omni LT
October 28, 1998
Page 9
not subject to federal income tax, because it was receiving interest on a bond
rather than interest on the underlying mortgage notes.4/
A similar distinction has been made under the federal and Florida
securities laws. Although the applicable statutes treat notes as securities,
applicable case law has created a distinction between securities and certain
notes arising in traditional commercial settings. See Reves v. Ernst & Young,
110 S.Ct. 945 (1990); Chemical Bank v. Arthur Andersen & Co., 726 F.2d 930 at
939 (CA2 1984); Hunssinger v. Rockford Business Credits, Inc., 745 F.2d 484, 488
(CA7 1984); Exchange Nat'l Bank of Chicago v. Touche Ross & Co., 544 F.2d 1126,
1137 (CA2 1976); Juanita McClure v. First National Bank of Lubbock, Texas, 497
F.2d 490, 492-494 (1974); and State v. Fried, 357 So.2d 211 (1978). In our
opinion the Notes would be treated as a security rather than a mere note under
the federal and Florida securities laws.
Although the TAA and the Loan Rule might be interpreted differently,
the most rational and compelling interpretation is that which differentiates
between obligations evidenced by bonds or other debt instruments, defined as
"securities" under federal and Florida securities laws, which should be subject
to the Loan Rule, and loans arising in more traditional commercial settings,
which might be subject to the Loan Rule. Moreover, such a distinction would
likely provide a basis for preserving the Loan Rule from invalidation on
constitutional grounds, discussed below.
The Loan Rule is subject to constitutional attack both under the Due
Process Clause of the Fourteenth Amendment to the U.S. Constitution and under
the Commerce Clause (Article I, sec. 8, cl. 3 of the U.S. Constitution). Both
the Due Process and the Commerce Clauses require that there be some connection
or "nexus" between a state and a person sought to be taxed by the state, and
both of those nexus requirements were recently reviewed by the U.S. Supreme
Court in Quill Corporation v. North Dakota, 112 S.Ct. 1904 (1992).
- ----------------
4/ Also of note is the fact that the Ruling dealt with a pass-through,
"grantor" trust. Although each beneficiary of a grantor trust generally is
"treated as the owner" of a portion of the trust, the Ruling did not extend
the legal "fiction" so as to treat the taxpayer as the owner of and the
recipient of interest on any of the underlying mortgage (the trust assets).
<PAGE>
World Omni Lease Securitization, L.P.
Auto Lease Finance, L.P.
World Omni LT
October 28, 1998
Page 10
The nexus requirement under the Due Process Clause is the more easily
met of the two nexus requirements. Generally, it will be met if a person
purposefully directs its activities towards the residents of a state, so as to
establish some definite link or minimum connection with the state, such that the
person has fair warning that it may be subject to the jurisdiction of the state
and such that requiring the person to defend a suit in the state would be
reasonable and would not offend traditional notions of fair play and substantial
justice. See Quill, at pages 1909 through 1911, and the cases therein cited.
It seems questionable to suggest that a single purchase of a single
security in a nationally marketed public offering (or in a private offering
derivative to such nationally distributed public offering) constitutes
purposeful direction of one's activities toward Florida residents, or otherwise
establishes a definite link or minimal connection with the State of Florida, so
as to give one fair warning and cause it to be reasonable and inoffensive to
require one to defend a suit in the State of Florida.
While the Due Process Clause focuses on concerns over fundamental
fairness, the Commerce Clause is concerned with the effects of state regulation
on the national economy. Accordingly, the nexus requirement under the Commerce
Clause is different from and more stringent than the nexus requirement under the
Due Process Clause. Under the Commerce Clause, there must, among other things,
be a "substantial nexus" between the person and the state and a tax must be
"fairly related" to services provided by the state. See Quill, at pages 1911 et
seq., and the cases there cited, including Complete Auto Transit, Inc. v. Brady,
430 U.S. 274 (1977).
At Issue in Quill was a North Dakota law which on its face imposed a
use tax collection duty on every vendor who advertised in North Dakota three
times in a single year. The Supreme Court stated that the North Dakota law
illustrated well how a state tax might unduly burden interstate commerce. See
Quill, at footnote 6, and accompanying text.
The Loan Rule is subject to the same objections as the North Dakota law
found to be unconstitutional in Quill. The Supreme Court found it unreasonably
burdensome that the North Dakota law required only three contacts per year. On
its face, the Loan Rule requires only one contact with Florida at any time. The
Supreme Court found it
<PAGE>
World Omni Lease Securitization, L.P.
Auto Lease Finance, L.P.
World Omni LT
October 28, 1998
Page 11
unreasonably burdensome that the North Dakota law might subject a person to
similar laws in multiple jurisdictions, thus leading to a plethora of filing
requirements. The same is true of the Loan Rule. Moreover, it is also true that
Loan Rule presents the very rule possibility of a person being subjected to
multiple taxation. In addition, without diminishing the significance of the
interests which the Supreme Court protected in Quill, we note that the free flow
of credit and free access to sources of credit are of particular and vital
importance to interstate commerce and the national economy. The Loan Rule might
strangle that flow by making it more difficult, more expensive or, in some
cases, perhaps even impossible to access national or regional credit markets
through public offerings of securities or through nationally or regionally
marketed private placements of securities.5/
The dubious constitutional status of the Loan Rule is exacerbated by
its uncertain scope and its uncertain statutory underpinning.6/ For example,
although it may be argued that the concept of "doing business" in Florida, for
purposes of the Florida income and franchise tax, need not be entirely the same
as the concept of "transacting business" in Florida, for purposes of the Florida
intangible tax, it is nevertheless of note that Section 199.175(b)3, F.S., an
intangible tax statute, provides that the "ownership of any interest in a
participation or syndication loan or pool of loans, notes, or receivables shall
not be sufficient to support a finding that the owner of such interest is
transacting business" in Florida.
Under the circumstances, a Florida court should determine that it is
entitled to the benefit of clear and reasonable statute, rather than vague and
questionable administrative pronouncement, and should refuse to enforce the Loan
Rule pending some specific action on the part of the Florida legislature.
- -----------------
5/ The Loan Rule also might fall under the Commerce Clause by causing the
tax to be "discriminatory" against interstate commerce because it is
not "fairly apportioned." For example, on its face, the Loan Rule might
cause all of the income from a loan to be apportioned to Florida, even
if only a very small part of the security for the loan consists of
Florida real or tangible property.
6/ It is true that Section 220.15. F.S. includes somewhat similar
provisions relating to financial organizations. However, it is an
apportionment statute, which presupposes that the financial
organizations are subject to tax. It does not address the nexus issue.
It is interesting to note, however, that its provisions include some
which are at lease partially consistent with those of the intangible
tax statute discussed in the text following this footnote.
<PAGE>
World Omni Lease Securitization, L.P.
Auto Lease Finance, L.P.
World Omni LT
October 28, 1998
Page 12
Further, even if the Notes were deemed to be loans for purposes of the
Loan Rule, and even if the Loan Rule were upheld on constitutional grounds, the
Notes should not be taxable under the Loan Rule since the Notes are not secured
directly by real or tangible personal property located in Florida. The holders
of the Notes merely have benefical interest in the Trust which in turn has a
beneficial interest in the Origination Trust. Consequently, the corpus of the
Origination Trust does contain vehicles, some of which are located in Florida,
the Notes are not directly secured by those vehicles.
Our opinions in this numbered paragraph 2 are limited to the possible
subjugation of the holders of Notes, which holders are financial organizations
with no other Florida contacts, to Florida income or franchise taxation solely
as a result of their investment in the Notes. The opinions in this numbered
paragraph 2 do not purport to deal with any other aspect of the Florida tax
laws, do not address the tax consequences to any other natural or other person
or persons, and do not address any federal tax consequences, any other state tax
consequences or any local tax consequences.
We hereby consent to the filing of this Opinion as an exhibit to the
Registration Statement. We also consent to the use of our name under the
headings "Legal Matters" and "Material Income Tax Considerations -- Florida
Income Taxation" in the Prospectus constituting part of the Registration
Statement.
<PAGE>
World Omni Lease Securitization, L.P.
Auto Lease Finance, L.P.
World Omni LT
October 28, 1998
Page 13
The opinions expressed herein are limited to the matters expressly set
forth herein, and no opinion is to be inferred or implied beyond the matters so
stated. Captions used in this Opinion are for convenience only, and should not
be regarded as having any independent meaning. The foregoing Opinion is
expressly subject to there being no material change in the law after the date
hereof.
Very truly yours,
ENGLISH, McCAUGHAN & O'BRYAN, P.A.
By: /s/ Judith L. Keiser
--------------------------------
Judith L. Keiser, Vice President
Exhibit 10.3
This instrument prepared by:
Charles A. Sweet
WILLIAMS & CONNOLLY
725 - 12th St., N.W.
Washington, D.C. 20005
AMENDMENT NO. 2
TO
SECOND AMENDED AND RESTATED TRUST AGREEMENT
AMENDMENT NO. 2 TO SECOND AMENDED AND RESTATED TRUST AGREEMENT, dated
as of September 23, 1998 (the "Amendment"), among AUTO LEASE FINANCE L.P., a
Delaware limited partnership (as grantor and sole beneficiary, together with any
successor or permitted assign, the "Grantor" and the "Beneficiary,"
respectively), VT INC., an Alabama corporation, as trustee (in such capacity,
together with any successor or permitted assign, the "Trustee") and, for the
limited purposes set forth therein, U.S. BANK NATIONAL ASSOCIATION, a national
banking association (formerly known as First Bank National Association and
successor to Bank of America Illinois, an Illinois banking corporation which
formerly was known as Continental Bank, and which was a successor to Continental
Bank National Association, a national banking association) (together with any
successor, "U.S. Bank").
RECITALS
A. The undersigned are parties to the Second Amended and Restated Trust
Agreement dated as of July 1, 1994, as amended by Amendment No. 1 thereto dated
as of November 1, 1994 (as so amended, the "Original Agreement").
B. The undersigned desire to amend the Original Agreement to make
certain changes related to the merger of Auto Lease Finance, Inc., a Delaware
corporation and the former general partner of the Grantor/Beneficiary, with and
into Auto Lease Finance LLC, a Delaware limited liability company.
NOW, THEREFORE, in consideration of the foregoing and for other
consideration, the receipt and sufficiency of which are acknowledged, the
parties agree as follows:
Section 1. Definitions.
For all purposes of this Amendment, except as otherwise expressly
provided for or unless the context otherwise requires, (a) unless otherwise
defined herein, all capitalized terms used herein shall have the meanings
attributed to them by the Original Agreement, (b) all terms used in this
Amendment include (i) all genders and (ii) the plural as well as the singular,
(c) all references to words such as "herein", "hereof" and the like shall refer
to this Amendment as a whole and not to any particular article or sections
within this Amendment, (d) the term "include" and all variations thereon shall
mean "include without limitation", and (e) the term "or" shall include "and/or".
<PAGE>
Section 2. Amendment of Section 6.09.
Section 6.09 is hereby amended and restated in its entirety as follows:
Each of the Trustee and U.S. Bank, as Trust Agent, covenants and agrees
that prior to the date which is one year and one day after the date
upon which all obligations under each Securitized Financing have been
paid in full, it will not institute against, or join any other Person
in instituting against (i) the Initial Grantor, the Assignee Grantor,
World Omni Lease Securitization L.P. or any other Special Purpose
Affiliate, (ii) Auto Lease Finance LLC, World Omni Lease Securitization
LLC or any other general partner of a Special Purpose Affiliate that is
a partnership, (iii) any manager (other than World Omni Financial
Corp.) of a limited liability company that is a general partner of a
Special Purpose Affiliate that is a partnership or that itself is a
Special Purpose Affiliate, or (iv) with respect to U.S. Bank, the
Trustee or the Trust, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceeding or other proceedings under any
federal or state bankruptcy or similar law. This Section shall survive
the termination of this Agreement or the resignation or removal of the
Trustee under this Agreement.
Section 3. New Section 9.06.
The following new Section 9.06 is added immediately after existing
Section 9.05:
Section 9.06. Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and permitted
assigns. Further, all references herein to Persons or entities other
than parties hereto shall be deemed to refer to the successors and
permitted assigns of such persons, to the extent that such construction
is reasonably possible; to the extent that such construction is not
reasonably possible, the parties hereto shall amend this Agreement so
as to effect the original intent of the parties as closely as possible
in an acceptable manner.
Section 4. Effect of Amendment.
Other than as specifically amended by this Amendment, the Original
Agreement remains in full force and effect and is hereby reaffirmed in all
respects. Further, all references therein to the "Agreement" shall be deemed to
refer to the Original Agreement, as amended by this Amendment.
- 2 -
<PAGE>
Section 5. Governing Law.
THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF ALABAMA, WITHOUT REGARD TO ANY OTHERWISE APPLICABLE
PRINCIPLES OF CONFLICT OF LAWS.
Section 6. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Amendment shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provision or terms of this Amendment and shall
in no way affect the validity or enforceability of the other provisions of this
Amendment. To the extent permitted by law, the parties hereto waive any
provision of law that renders any provision of this Amendment invalid or
unenforceable in any respect.
- 3 -
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Amendment to be
executed as of the date first set forth above.
AUTO LEASE FINANCE L.P., as Grantor and
Beneficiary
By: Auto Lease Finance LLC, its general partner
By: World Omni Financial Corp., as managing member
By: /s/ Patrick C. Ossenbeck
--------------------------
Name: Patrick C. Ossenbeck
Title: Assistant Treasury
VT INC., as Trustee
By: /s/ David S. Vick
--------------------------
Name: David S. Vick
Title: President
U.S. BANK NATIONAL ASSOCIATION, as Trust
Agent
By: /s/ David S. Vick
--------------------------
Name: David S. Vick
Title: Vice President
- 4 -
<PAGE>
STATE OF_____________________ )
)
COUNTY OF____________________ )
I, the undersigned, a Notary Public in and for said County, in said
State, hereby certify that __________, whose name as __________ of World Omni
Financial Corp., a Florida corporation, in its capacity as the managing member
of Auto Lease Finance LLC, a Delaware limited liability company, in its capacity
as general partner of Auto Lease Finance, L.P., a Delaware limited partnership,
is signed to the foregoing instrument, and who is known to me, acknowledged
before me on this day, that, being informed of the contents thereof, he, as such
officer and with full authority, executed the same voluntarily for and as the
act of said corporation.
Given under my hand and official seal, this the ____ day of __________,
1998.
----------------------------------
(SEAL) NOTARY PUBLIC
My Commission Expires: __________
- 5 -
<PAGE>
STATE OF____________________ )
)
COUNTY OF___________________ )
I, the undersigned, a Notary Public in and for said County, in said
State, hereby certify that _________________________, whose name as
_________________________ of VT Inc., an Alabama corporation, is signed to the
foregoing instrument, and who is known to me, acknowledged before me on this
day, that, being informed of the contents thereof, he, as such officer and with
full authority, executed the same voluntarily for and as the act of said
corporation.
Given under my hand and official seal, this the ____ day of __________,
1998.
----------------------------------
(SEAL) NOTARY PUBLIC
My Commission Expires: __________
- 6 -
<PAGE>
STATE OF_____________________ )
)
COUNTY OF____________________ )
I, the undersigned, a Notary Public in and for said County, in said
State, hereby certify that _________________________, whose name as
_________________________ of U.S. Bank, National Association, a national banking
association, is signed to the foregoing instrument, and who is known to me,
acknowledged before me on this day, that, being informed of the contents
thereof, he, as such officer and with full authority, executed the same
voluntarily for and as the act of said corporation.
Given under my hand and official seal, this the ____ day of __________,
1998.
----------------------------------
(SEAL) NOTARY PUBLIC
My Commission Expires: __________
- 7 -
Exhibit 10.4
- --------------------------------------------------------------------------------
AUTO LEASE FINANCE L.P.,
VT INC.,
AS TRUSTEE OF WORLD OMNI LT,
AND
FOR CERTAIN LIMITED PURPOSES ONLY
U.S. BANK NATIONAL ASSOCIATION
(FORMERLY KNOWN AS FIRST BANK NATIONAL ASSOCIATION AND
SUCCESSOR TRUSTEE TO BANK OF AMERICA ILLINOIS)
SUPPLEMENT 1998-A TO THE
TRUST AGREEMENT
DATED AS OF OCTOBER 1, 1998
- ------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
RECITALS......................................................................1
Part X. DEFINITIONS...........................................................3
Section 10.01. Definitions..................................................3
Section 10.02. Rights in Respect of 1998-A SUBI............................13
Part XI. CREATION OF 1998-A SUBI.............................................14
Section 11.01. Initial Creation of 1998-A SUBI Portfolio and 1998-A SUBI...14
Section 11.02. Subsequent Additions to 1998-A SUBI Portfolio...............15
Section 11.03. Issuance and Form of the 1998-A SUBI Certificate............16
Section 11.04. Actions and Filings.........................................16
Section 11.05. Termination of 1998-A SUBI..................................17
Section 11.06. Merger or Consolidation of Trustee..........................17
Section 11.07. Representations and Warranties of Trustee...................17
Section 11.08. Other SUBIs.................................................18
Section 11.09. Minimum Net Worth...........................................18
Part XII. SUBI ACCOUNTS......................................................18
Section 12.01. 1998-A SUBI Collection Account..............................18
Section 12.02. 1998-A SUBI Lease Account...................................19
Section 12.03. Servicer Calculations.......................................20
Part XIII. MISCELLANEOUS PROVISIONS..........................................20
Section 13.01. Amendment, Etc..............................................20
Section 13.02. Governing Law...............................................20
Section 13.03. Notices.....................................................21
Section 13.04. Severability of Provisions..................................21
Section 13.05. Effect of Supplement on Trust Agreement.....................21
Section 13.06. Successors and Assigns......................................22
EXHIBITS:
EXHIBIT A - Schedule of 1998-A Leases and 1998-A Leased
Vehicles as of the Initial Cutoff Date...........................A-1
EXHIBIT B - Form of 1998-A SUBI Certificate..................................B-1
EXHIBIT C - Forms of 1998-A Leases ..........................................C-1
i
<PAGE>
SUPPLEMENT 1998-A TO
TRUST AGREEMENT
SUPPLEMENT 1998-A TO TRUST AGREEMENT (the "Supplement"), dated and
effective as of October 1, 1998, among AUTO LEASE FINANCE L.P., a Delaware
limited partnership ("ALF LP" or, in its capacity as grantor, the "Grantor" and
in its capacity as beneficiary, the "Beneficiary"), VT INC., an Alabama
corporation, as trustee (in such capacity, together with any successor or
permitted assign, the "Trustee"), and for certain limited purposes only, U.S.
BANK NATIONAL ASSOCIATION, a national banking association (formerly known as
First Bank National Association and successor to Bank of America Illinois, an
Illinois banking corporation) (together with any predecessor or successor,
("U.S. Bank").
RECITALS
A. The Grantor, the Trustee and U.S. Bank have entered into that certain
Second Amended and Restated Trust Agreement dated as of July 1, 1994 (amending
and restating that certain original Trust Agreement among Auto Lease Finance,
Inc., a Delaware corporation ("ALFI" or, in its capacity as initial grantor, the
"Initial Grantor"), the Trustee and U.S. Bank dated as of November 1, 1993, and
that certain Amended and Restated Trust Agreement dated as of June 1, 1994 among
the Initial Grantor, the Grantor, the Trustee and U.S. Bank, as amended by that
certain Amendment No. 1 to Second Amended and Restated Trust Agreement dated as
of November 1, 1994 among the same parties and as amended by that certain
Amendment No. 2 to Second Amended and Restated Trust Agreement dated as of
September 23, 1998 among the same parties (as so amended and restated, and as it
may be further amended, supplemented or modified, the "Trust Agreement"),
pursuant to which the Initial Grantor and the Trustee formed World Omni LT, an
Alabama trust (the "Trust"), for the purpose of taking assignments and
conveyances of, holding in trust and dealing in, various Trust Assets (as
defined in the Trust Agreement) in accordance with the Trust Agreement. The
Initial Grantor and World Omni Financial Corp. ("WOFCO"), the sole parent of
ALFI, have entered into that certain Limited Partnership Agreement dated as of
June 1, 1994, as amended and restated by that certain Amended and Restated
Limited Partnership Agreement dated as of July 1, 1994, pursuant to which the
Grantor was created and ALFI contributed to the Grantor all of its right, title
and interest in and to the Trust both as Initial Grantor and as the Initial
Beneficiary thereof.
B. On September 23, 1998, ALFI was merged with and into Auto Lease Finance,
LLC ("ALF LLC"), a Delaware single member limited liability company the sole
member of which is WOFCO, pursuant to that certain Assignment of General
Partnership Interest and Amendment to Amended and Restated Limited Partnership
Agreement of Auto Lease Finance L.P. dated as of September 23, 1998 among the
WOFCO, ALFI and ALF LLC and that certain Certificate of Merger dated September
23, 1998 filed by WOFCO with the Secretary of State for the State of Delaware
whereby ALF LLC succeeded to all of the rights and obligations of ALFI,
including but not limited to those as general partner of ALF LP, as reflected in
the Amended and Restated Certificate of Limited Partnership of ALF LP filed with
the Delaware Secretary of State as of September 23, 1998.
C. The Trustee, on behalf of the Trust, and WOFCO (in its capacity as
servicer, the "Servicer") also have entered into that certain Second Amended and
Restated Servicing Agreement dated as of July 1, 1994, as amended by that
certain Amendment No. 1 to Second Amended and Restated Servicing Agreement dated
as of September 23, 1998, among the same parties (as the same has been amended
and may be further amended, supplemented or modified, the "Servicing
Agreement"), amending and restating that certain original Servicing Agreement
dated as of November 1, 1993, and that certain Amended and Restated Servicing
Agreement dated as of June 1, 1994, which provides, among other things, for the
servicing of the Trust Assets by the Servicer.
1
<PAGE>
D. The Trust Agreement contemplates that, from time to time the Trustee, on
behalf of the Trust and at the direction of the Beneficiary, will identify and
allocate on the Trust's books and records certain Trust Assets within a separate
SUBI Portfolio (as defined in the Trust Agreement) and create and issue to the
Beneficiary a separate special unit of beneficial interest in the Trust or
"SUBI" (as defined in the Trust Agreement), whose beneficiaries generally will
be entitled to the net cash flow arising from, but only from, the related SUBI
Portfolio (as defined in the Trust Agreement), all as set forth in the Trust
Agreement.
E. The parties hereto desire to supplement the terms of the Trust Agreement
to cause the Trustee to identify and allocate such a SUBI Portfolio (the "1998-A
SUBI Portfolio") and to create and issue to the Beneficiary a SUBI Certificate
(as defined in the Trust Agreement) (such SUBI Certificate, together with any
replacements thereof, the "1998-A SUBI Certificate") that evidences a 100%
beneficial interest in the related SUBI (the "1998-A SUBI"), and to set forth
the terms and conditions thereof.
F. Concurrently herewith, the Beneficiary and World Omni Lease
Securitization L.P. (the "Transferor") are entering into that certain SUBI
Certificate Purchase and Sale Agreement dated as of October 1, 1998 (as it may
be amended, modified or supplemented from time to time, the "SUBI Certificate
Agreement"), pursuant to which the Beneficiary will sell to the Transferor,
without recourse, all of the Beneficiary's right, title and interest in and to
the 1998-A SUBI and the 1998-A SUBI Certificate, all moneys due thereon and paid
thereon or in respect thereof and the right to realize on any property that may
be deemed to secure the 1998-A SUBI, and all proceeds thereof, all in
consideration of the cash payment to the Beneficiary of an amount equal to the
Aggregate Net Investment Value (as defined in the Securitization Trust
Agreement, as defined below) of the 1998-A SUBI Portfolio as of the Initial
Cutoff Date (as defined below).
G. Also concurrently herewith, and as contemplated by the Servicing
Agreement and the Trust Agreement, the Transferor, PNC Bank, Delaware, as owner
trustee (the "Owner Trustee") and The Bank of New York, as indenture trustee
(the "Indenture Trustee") are entering into that certain Securitization Trust
Agreement dated as of October 1, 1998 (as it may be amended, modified or
supplemented from time to time, the "Securitization Trust Agreement"), pursuant
to which the 1998-A SUBI Certificate representing a 100% beneficial interest in
the 1998-A SUBI will be transferred by the Transferor to the Owner Trustee, in
that capacity, in connection with a Securitized Financing (as defined in the
Trust Agreement).
H. Also concurrently herewith, the Indenture Trustee and the Owner Trustee,
on behalf of the Securitization Trust, are entering into that certain Indenture
dated as of October 1, 1998 (the "Indenture") pursuant to which, among other
things, the Securitization Trust will issue the Notes (as defined in the
Indenture) and the Securitization Trust will grant a security interest to the
Indenture Trustee with respect to all of the assets held by the Securitization
Trust, including the 1998-A SUBI Certificate.
I. Also concurrently herewith, the Trustee, on behalf of the Trust, and the
Servicer also are entering into that certain Supplement 1998-A to Servicing
Agreement dated as of October 1, 1998 (the "Servicing Supplement") pursuant to
which, among other things, the terms of the Servicing Agreement will be
supplemented insofar as they apply to the 1998-A SUBI Portfolio, providing for
further specific servicing obligations that will benefit the holder of the
1998-A SUBI Certificate and the parties to the Securitized Financing (as defined
in the Trust Agreement) contemplated by the Securitization Trust Agreement.
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein contained and in the Trust Agreement, the parties hereto agree to the
following supplemental obligations and provisions with regard to the 1998-A SUBI
Portfolio:
2
<PAGE>
PART X. DEFINITIONS
Section 10.01. Definitions.
For all purposes of this Supplement, except as otherwise expressly provided
or unless the context otherwise requires, (a) unless otherwise defined herein,
all capitalized terms used herein shall have the meanings attributed to them by
the Trust Agreement, (b) the capitalized terms expressly defined in this
Supplement have the meanings assigned to them in this Supplement and include (i)
all genders and (ii) the plural as well as the singular, (c) all references to
words such as "herein", "hereof" and the like shall refer to this Supplement as
a whole and not to any particular article or section within this Supplement, (d)
the term "include" and all variations thereon shall mean "include without
limitation", and (e) the term "or" shall include "and/or".
"Accountant" means a Person qualified to pass upon accounting questions,
whether or not (unless herein required to be Independent) such person shall be
an officer or employee of the Grantor, the Trust or the Transferor or of an
Affiliate thereof.
"Additional Loss Amount" means, with respect to any Collection Period, all
payments (including any indemnification or reimbursement of the Trustee or any
Trust Agent) with respect to Claims by Persons other than the Trustee, the Trust
Agent, the Servicer, the Indenture Trustee, the Owner Trustee, the
Certificateholder, and any other beneficiary of the Trust against or with
respect to the 1998-A SUBI Assets paid during that Collection Period, including
reasonable fees and expenses of attorneys incurred in defending or settling such
Claims, all as allocated by the Trustee pursuant to Section 7.01(c) of the Trust
Agreement, and the amount of reserves for future possible such payments that the
Servicer, on behalf of the Trustee, deems advisable (after consultation with
Independent Accountants) to retain in the 1998-A SUBI Collection Account out of
moneys that otherwise would constitute Collections for that Collection Period.
"Administrative Expense" means any reasonable administrative cost or
expense associated with the Trust, including reasonable fees and expenses of
attorneys and accountants (other than such fees and expenses as constitute an
Additional Loss Amount).
"Advance" means those advances required or permitted to be made by the
Servicer pursuant to Section 9.04 of the Servicing Supplement.
"ALFI" has the meaning set forth in Recital A.
"ALF LLC" has the meaning set forth in Recital B.
"ALF LP" has the meaning set forth in the Preamble.
"Amortization Period" has the meaning set forth in the Securitization Trust
Agreement.
"Backup Security Agreement" means that certain Backup Security Agreement
dated as of October 1, 1998, among WOFCO, the Grantor, the Trustee on behalf of
the Trust, the Transferor and the Securitization Trustee on behalf of the
Securitization Trust, as it may be amended, supplemented or modified from time
to time.
"Bankrupt Lease" means a Lease as to which a voluntary or involuntary case
has commenced against the related Obligor under the federal bankruptcy laws, as
now or hereafter in effect, or under another present or future federal or State
bankruptcy, insolvency or similar laws, after the date of origination of the
related Lease.
3
<PAGE>
"Beneficiary" has the meaning set forth in the Preamble.
"Capped Contingent and Excess Liability Premiums" means, as of any Deposit
Date, an amount sufficient to pay the premiums then due on the portion of any
Contingent and Excess Liability Insurance Policies allocable to the 1998-A SUBI
Portfolio, provided, however, that to the extent that the portion of such amount
allocable to the 1998-A SUBI Certificate, together with all such portions since
the beginning of the calendar year, exceeds $[___], such portion shall not
constitute a Capped Contingent and Excess Liability Premium but instead shall
constitute an "Uncapped Administrative Expense" (as defined in the
Securitization Trust Agreement).
"Capped Origination Trust Administrative Expenses" means, as of any Deposit
Date, Administrative Expenses with respect to the Trust due on or before such
Deposit Date as are allocable to the 1998-A SUBI Portfolio, but specifically not
including any premiums on any portion of the Contingent and Excess Liability
Insurance Policies allocable to the 1998-A SUBI Portfolio; provided, however,
that to the extent the portion of such Administrative Expenses allocable to the
1998-A SUBI Certificate, together with all such portions since the beginning of
the calendar year, exceeds $100,000, such portion shall not constitute a Capped
Origination Trust Administrative Expense but instead shall constitute an
"Uncapped Administrative Expense" (as defined in the Securitization Trust
Agreement).
"Certificateholder" has the meaning set forth in the Securitization Trust
Agreement.
"Certificate" has the meaning set forth in the Securitization Trust
Agreement.
"Charged-off Lease" means a Lease (a) with respect to which the related
Leased Vehicle has been repossessed and sold or otherwise disposed of, or (b)
the Lease has been written off by the Servicer in accordance with its normal
policies for writing off lease contracts other than with respect to
repossessions and Early Termination Leases.
"Closing Date" means November [ ], 1998.
"Collection Period" means, with respect to any Distribution Date, the
period from and including the first day of the calendar month immediately
preceding the calendar month in which such Distribution Date occurs (or, with
respect to the first Distribution Date, from and including the Initial Cutoff
Date) to and including the last day of the calendar month immediately preceding
the calendar month in which the Distribution Date occurs.
"Collections" means, with respect to any Collection Period, all collections
received on or in respect of the 1998-A Leases and 1998-A Leased Vehicles in
respect of that Collection Period, including the following, but subject to any
limitations set forth therein: (i) Monthly Lease Payments (including amounts
that previously were Payments Ahead but which became due during that Collection
Period, Prepayments, Extension Fees, and any other payment by an Obligor under a
1998-A Lease); (ii) Net Matured Leased Vehicle Proceeds, Net Repossessed Vehicle
Proceeds, and all other Net Liquidation Proceeds; (iii) any Net Insurance
Proceeds not included in Net Liquidation Proceeds; (iv) Advances; and (v) any
Undistributed Transferor Excess Collections with respect to the Distribution
Date occurring during that Collection Period; provided, however, that
Collections (A) shall in no event include proceeds of claims made under the
Residual Value Insurance Policy, and (B) shall in no event include, and shall be
net of, the following, which shall be retained in the 1998-A SUBI Collection
Account or paid to the appropriate party: (1) any portion of any of the
foregoing that represents late payment charges, or collections allocable to
payments to be made by Obligors for payment of insurance premiums, excise taxes
or similar items; (2) Payments Ahead; (3) the amount of all Advances, Matured
Leased Vehicle Expenses, Repossessed Vehicle Expenses and other Liquidation
Expenses, and Insurance Expenses reimbursed pursuant to Section 9.02(g) of the
Servicing Supplement; (4) Additional Loss Amounts; and
4
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(5) any amounts required to be retained in the 1998-A SUBI Collection Account in
order to maintain that account in good standing.
"Contingent and Excess Liability Insurance Policy" means that certain
policy numbered [___] issued to the Servicer and the Trustee, on behalf of the
Trust, by [___] and that certain policy numbered [___] issued to the Servicer
and the Trustee on behalf of the Trust by [___] and that certain policy numbered
[___] issued to J.M. Family Enterprises, Inc. by [___] with the Origination
Trustee named as an additional insured or loss payee, plus all excess or
umbrella policies from time to time issued with the Origination Trustee named as
an additional insured or loss payee, in each case to the extent applicable to
any 1998-A Lease or 1998-A Leased Vehicle.
"Contract Rights" means all of the Trustee's right, title, and interest in,
to, and under any 1998-A Leases and the proceeds therefrom, which right, title,
and interest include without limitation: the Lease Documents; all Monthly Lease
Payments received on or due on or after the related Cutoff Date; Security
Deposits paid by any Obligor to secure the obligations of such Obligor to the
Obligee in the amount and to the extent provided in the related 1998-A Lease;
partial prepayments and Prepayments (regardless of whether made by the related
Obligor or by any other Person) received on or after the related Cutoff Date and
Matured Leased Vehicle Proceeds, Repossessed Vehicle Proceeds and other
Liquidation Proceeds and Insurance Proceeds received on or after the related
Cutoff Date; subject, however, to the limitations set forth in Section 11.01(a).
"Credit and Collection Policy" means those lease origination and credit and
collection policies and practices of the Servicer as applied by the Servicer
with respect to Leases and Leased Vehicles.
"Cutoff Date" means the Initial Cutoff Date or a Subsequent Cutoff Date, as
the context may require.
"Defaulted Lease" means a Lease (a) as to which any Monthly Lease Payment
or part thereof in excess of $40.00, remains unpaid for more than 90 days from
the original due date for such payment, or (b) that is a Charged-off Lease.
"Delinquent Lease" means, with respect to any Lease as of any Due Date, a
Lease as to which all or any part of a Monthly Lease Payment in excess of $40.00
is unpaid (including without limitation because of a check being returned for
insufficient funds) 61 days or more after its Due Date (other than a Defaulted
Lease or a Lease as to which an extension has been granted with respect to such
Due Date by the Servicer pursuant to clause (ii) of Section 2.02(b) of the
Servicing Agreement) (and, if applicable, Section 9.02(a) of the Servicing
Supplement).
"Deposit Date" means, with respect to a Collection Period, the Business Day
preceding the related Distribution Date.
"Discount Rate" means 7.75% per annum.
"Discounted Lease" means a 1998-A Lease with a Lease Rate of less than
7.75%.
"Discounted Principal Balance" means (i) with respect to any 1998-A Lease
that is a Discounted Lease, an amount equal to the present value of the sum of
all remaining Monthly Lease Payments on such Lease paid on a timely basis, plus
the Booked Residual Value of the related 1998-A Leased Vehicle, calculated by
discounting such Monthly Lease Payments and Booked Residual Value by the
Discount Rate, and (ii) with respect to any other 1998-A Lease, its Outstanding
Principal Balance at such time.
"Distribution Date" has the meaning set forth in the Securitization Trust
Agreement.
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"Due Date" means, as to any Monthly Lease Payment, the date during each
month upon which such payment is due, which date is specified in the related
1998-A Lease.
"Early Termination Lease" means a 1998-A Lease which is terminated prior to
its Maturity Date by agreement between the Servicer and the Obligor in
connection with the payment (excluding payments in the form of non-cash items)
of less than 100% of the Outstanding Principal Balance of a 1998-A Lease;
provided, however, that such a 1998-A Lease will not constitute an Early
Termination Lease if such deficit is less than $200.00.
"Eligible Account" means either (a) an account that is maintained with a
depository institution or trust company organized under the laws of the United
States or of any State, the commercial paper or other short-term unsecured debt
obligations of which have credit ratings from Moody's at least equal to "P-1"
(so long as Moody's is a Rating Agency), from Standard & Poor's at least equal
to "A-1" (so long as Standard & Poor's is a Rating Agency) and if such
commercial paper or short term unsecured debt obligations are rated by Fitch,
credit ratings from Fitch at least equal to "F-1" (so long as Fitch is a Rating
Agency); or (b) a segregated trust account bearing a designation clearly
indicating that funds deposited therein are held in trust for the benefit of the
Noteholders, the holders of the 1998-A SUBI Certificate or the
Certificateholder, as the case may be, maintained in the corporate trust
department of a depositary institution or trust company organized under the laws
of the United States or of any State and having corporate trust powers, which
institution or trust company has a rating from Moody's for its long term
deposits of at least Baa3 (so long as Moody's is a Rating Agency).
"Eligible Lease" means a Lease as to which the following are true as of the
Closing Date or Transfer Date, as applicable (unless otherwise specified below):
(a) that was originated by a Dealer (i) in the ordinary course of its
business, (ii) on a form of Lease attached as Exhibit C, (iii) pursuant to
a form of Dealer Agreement which provides for recourse to the Dealer in the
event of certain defects in the Lease but not for default by the Obligor,
and (iv) in compliance with the Credit and Collection Policy;
(b) which Lease and the related Leased Vehicle are owned by the
Trustee, on behalf of the Trust, free of all Liens (including tax liens,
mechanics' liens and liens that arise by operation of law, but other than
any lien on the title of such Vehicle noted solely to provide for delivery
of title documentation to the Trustee or its designee);
(c) that was originated in compliance with, and complies with, all
material applicable legal requirements, including, to the extent
applicable, the Federal Consumer Credit Protection Act, as amended,
Regulations M and Z of the Board of Governors of the Federal Reserve
System, as amended, all state leasing and consumer protection laws and all
state and federal usury laws;
(d) as to which all material consents, licenses, approvals or
authorizations of, or registrations or declarations with, any governmental
authority required to be obtained, effected or given by the originator of
such Lease in connection with (i) the origination of such Lease, (ii) the
execution, delivery and performance by such originator of such Lease, and
(iii) the acquisition by the Trustee, on behalf of the Trust, of such Lease
and the related Leased Vehicle, have been duly obtained, effected or given
and are in full force and effect as of such date of creation or
acquisition;
(e) that is the legal, valid and binding full-recourse payment
obligation of the Obligor thereunder, enforceable against such Obligor in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws, now or hereafter in effect, affecting the enforcement of
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creditors' rights in general and except as such enforceability may be
limited by general principles of equity (whether considered in a suit at
law or in equity);
(f) that, to the knowledge of the Servicer, is not subject to any
right of rescission, setoff, counterclaim or any other defense (including
defenses arising out of violations of usury laws) of the Obligor thereof to
payment of the amounts due thereunder, and no such right of rescission,
setoff, counterclaim or other defense has been asserted or threatened;
(g) as to which each of the originator of such Lease, the Servicer and
the Trustee, on behalf of the Trust, have each satisfied all obligations
required to be fulfilled on its part with respect to such Lease and the
related Leased Vehicle;
(h) that is payable solely in United States dollars in the United
States;
(i) the Obligor of which is a Person located in one or more of the 50
states of the United States, the District of Columbia or a territory of the
United States and is not (i) ALF LLC (or its predecessor), the Grantor,
World Omni Lease Securitization, LLC (or its predecessor) or the
Transferor, or an Affiliate thereof or (ii) the United States of America or
any state or local government or any agency or political subdivision
thereof;
(j) that requires the Obligor thereunder to maintain insurance against
loss or damage to the related Leased Vehicle under an insurance policy that
names the Trustee, on behalf of the Trust, as loss payee, and the related
Leased Vehicle is covered by the Residual Value Insurance Policy;
(k) the related Leased Vehicle of which is titled in the name of the
Trustee on behalf of the Trust (or properly completed applications for such
title have been submitted to the appropriate titling authority) and all
transfer and similar taxes imposed in connection therewith have been paid;
(l) that arises under a closed-end Lease that (i) requires equal
monthly payments to be made within a fixed time period from the date of
origination of such Lease, such time period to be at least 24 months and no
more than 60 months, and (ii) requires such payments to be made by the
Obligor thereof within 30 days after the billing date for such payment;
(m) that is fully assignable and that does not require the consent of
the Obligor thereunder as a condition to any transfer, sale or assignment
of the rights of the originator under such Lease;
(n) as to which the Booked Residual Value of the related Vehicle does
not exceed the lesser of (i) $60,000, and (ii) the amount reasonably
established by the Servicer consistent with its policies and practices
regarding the setting of residual values as applied with respect to
closed-end retail automobile and light duty truck leases;
(o) that, as of the related Cutoff Date, has not been extended by more
than five months in the aggregate or been otherwise compromised, adjusted
or modified except in accordance with the Credit and Collection Policy;
(p) as to which the Obligor thereof has not made a claim under the
Soldiers' and Sailors' Relief Act of 1940;
(q) that satisfies all applicable requirements of the Credit and
Collection Policy;
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(r) that is not allocated to any other SUBI Portfolio other than the
1998-A SUBI Portfolio;
(s) that, as of the related Cutoff Date, is not a Delinquent Lease, a
Defaulted Lease or a Bankrupt Lease;
(t) that is a finance lease for purposes of generally accepted
accounting principles, consistently applied;
(u) that is a "true lease", as opposed to a lease intended as
security, under the laws of the State in which it was originated;
(v) as to which the Servicer has not exercised any right of set off
against the originating Dealer as contemplated by Section 2.01(b)(ii)(A) of
the Servicing Agreement;
(w) the related Leased Vehicle of which was produced by the original
manufacturer to U.S. specifications and standards, as evidenced by the
vehicle identification number which is within the approved series for the
make and model at the time of origination of the Lease;
(x) the related Leased Vehicle of which has not been used commercially
as a taxi cab, public omnibus, livery, sightseeing conveyance or for any
carrying of goods or passengers for hire; and
(y) which Lease, as of the related Cutoff Date, (i) is written with
respect to a Leased Vehicle that was, at the time of origination of the
Lease, a new vehicle, a dealer demonstrator vehicle driven fewer than 6,000
miles, or a manufacturer's program vehicle; (ii) was originated in the
United States after November 1, 1993 (in the case of Leases allocated to
the 1998-A SUBI Portfolio as of the Initial Cutoff Date) or on or before
[___] (in the case of Leased Vehicles allocated to the 1998-A SUBI
Portfolio as of a Subsequent Cutoff Date); (iii) has a Maturity Date on or
after [___] and no later than [___] (in the case of Leases allocated to the
1998-A SUBI Portfolio as of the Initial Cutoff Date) or no later than [___]
(in the case of Leases allocated to the 1998-A SUBI Portfolio as of a
Subsequent Cutoff Date); and (iv) fully amortizes to an amount equal to the
Booked Residual Value of the related Leased Vehicle based on a fixed Lease
Rate calculated on a constant yield basis and provides for level payments
over its term (except for payment of such Booked Residual Value).
"Extension Fee" means, with respect to any 1998-A Lease that has had its
Maturity Date extended pursuant to the Servicing Agreement and the Servicing
Supplement, any payment required to be made with respect to such 1998-A Lease by
the Obligor in exchange for the extension.
"Grantor" has the meaning set forth in the Preamble.
"Indenture" has the meaning set forth in Recital H.
"Indenture Trustee" has the meaning set forth in Recital G.
"Independent" means, when used with respect to any specified Person, such a
Person who (a) is in fact independent of the Grantor, the Trustee, the
Transferor and any of their respective Affiliates; (b) does not have any direct
financial interest or any material indirect financial interest in the Grantor,
the Trust, the Transferor or any of their respective Affiliates; and (c) is not
connected with the Grantor, the Trust, the Transferor or any of their respective
Affiliates as an officer, employee, promoter, underwriter, trustee, partner,
director or Person performing similar functions. "Independent" when used with
respect to any Accountant means such an Accountant, who may also be the
Accountant who audits the books
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of the Grantor, the Trust, the Transferor or any of their respective Affiliates,
who is Independent with respect to the Grantor, the Trustee, the Transferor, and
their respective Affiliates as contemplated by Rule 101 of the Code of
Professional Conduct of the American Institute of Certified Public Accountants.
Whenever it is herein provided that any Independent Person's opinion or
certificate shall be furnished to the Trustee, such Person shall be acceptable
to the Trustee if such opinion or certificate shall state that the signer has
read this direction and that the signer is independent within the meaning
thereof.
"Initial Beneficiary" and "Initial Grantor" shall have the meanings set
forth in the Preamble.
"Initial Cutoff Date" means August 31, 1998.
"Insurance Expenses" means any amount of Insurance Proceeds (a) applied to
the repair of the related 1998-A Leased Vehicle, (b) released to an Obligor in
accordance with the normal servicing procedures of the Servicer, or (c)
representing other related expenses incurred by the Servicer not otherwise
included in Liquidation Expenses and recoverable under the Servicing Agreement
or the Servicing Supplement.
"Insurance Policy" means, with respect to a 1998-A Lease, 1998-A Leased
Vehicle or Obligor, any policy of comprehensive, collision, public liability,
physical damage, personal liability, credit health or accident, credit life or
employment insurance, or any other form of insurance.
"Insurance Proceeds" means, with respect to any 1998-A Lease, 1998-A Leased
Vehicle or Obligor, proceeds paid to the Servicer or the Trustee, on behalf of
the Trust, pursuant to an Insurance Policy and amounts paid to the Trustee, on
behalf of the Trust, or the Servicer under any other insurance policy related to
such 1998-A Lease, 1998-A Leased Vehicle or Obligor (including but not limited
to any contingent and excess liability insurance policy maintained by or on
behalf of the Trustee, on behalf of the Trust, but not including the Residual
Value Insurance Policy).
"Interest Collections" means, with respect to any Collection Period, all
Collections received during or allocable to such Collection Period other than
Principal Collections, less the following, which shall be paid to the
appropriate parties or retained in the 1998-A SUBI Collection Account, as
appropriate, in the following order and priority for so long as WOFCO is the
Servicer: (a) Capped Contingent and Excess Liability Premiums, but with regard
to the Investor Percentage (as defined in the Securitization Trust Agreement) of
Interest Collections allocable to the 1998-A SUBI Certificate, only to the
extent such deduction and payment would have the same effect as if it followed
item (iv) of Section 3.03(b) of the Securitization Trust Agreement; (b) Capped
Origination Trust Administrative Expenses, but with regard to the Investor
Percentage of Interest Collections allocable to the 1998-A SUBI Certificate,
only to the extent that such deduction and payment would have the same effect as
if it followed item (iv) of Section 3.03(b) of the Securitization Trust
Agreement and then followed the deduction and payment set forth in clause (a)
above; and (c) the Servicing Fee and any unpaid Servicing Fee with respect to
one or more prior Collection Periods, but with regard to the Investor Percentage
of Interest Collections allocable to the 1998-A SUBI Certificate, only to the
extent that such deduction and payment would be made with the same effect as if
it followed item (xii) of Section 3.03(b) of the Securitization Trust Agreement
and the deductions and payments in clauses (a) and (b) have been made as
indicated. If WOFCO is not the Servicer, the deduction and payment in clause (c)
shall instead be made only to the extent that it would have with the same effect
as if it followed item (v) of Section 3.03(b) of the Securitization Trust
Agreement and the deductions and payments in clauses (a) and (b) of the
preceding sentence have been made as indicated. Without limiting the generality
of the foregoing, Interest Collections with respect to any Collection Period
shall include any excess of Net Matured Leased Vehicle Proceeds for that
Collection Period over the sum of the Booked Residual Values of all Matured
Vehicles sold or otherwise disposed of from Matured Leased Vehicle Inventory
during the Collection Period.
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"Lease Documents" means, with respect to each 1998-A Lease, the fully
executed 1998-A Lease and any agreement(s) modifying such 1998-A Lease
(including, without limitation, any extension agreement(s) relating to extended
1998-A Lease(s)).
"Lease Rate" means, with respect to each Lease, the implicit rate,
calculated on the basis of an annual percentage rate, included in the
calculation of the Monthly Lease Payment due with respect to such Lease.
"Lien" means any security interest, lien, charge, pledge, equity or
encumbrance of any kind other than tax liens, mechanics' liens and any liens
that attach to the 1998-A SUBI Interest or any other property, as the context
may require, by operation of law.
"Liquidation Expenses" means Matured Leased Vehicle Expenses, Repossessed
Vehicle Expenses, and all other reasonable out-of-pocket expenses incurred by
the Servicer in connection with the attempted realization of the full amounts
due or to become due under any 1998-A Lease, including expenses incurred in
connection with any collection effort (whether or not resulting in a lawsuit
against the Obligor under such 1998-A Lease) or an application or request for
Insurance Proceeds.
"Liquidation Proceeds" means Matured Leased Vehicle Proceeds, Repossessed
Vehicle Proceeds, and all other gross amounts received by the Servicer or the
Trustee, on behalf of the Trust (before reimbursement for Liquidation Expenses)
in connection with the realization of the full amounts due or to become due
under any 1998-A Lease, whether from the proceeds of any collection effort
(whether or not resulting in a lawsuit against the Obligor under such Lease),
receipt of Insurance Proceeds, or collection of amounts due under the Servicing
Agreement (including but not limited to the application of Security Deposits
pursuant to Section 2.04 thereof), the Servicing Supplement (including but not
limited to any amount required to be deposited by the Servicer into the 1998-A
SUBI Collection Account pursuant to Section 8.03 thereof) or otherwise.
"Matured Lease" means any 1998-A Lease that has reached its scheduled
Maturity Date and as to which all scheduled Monthly Lease Payments and other
payments due thereunder have been made.
"Matured Leased Vehicle Expenses" means reasonable out-of-pocket expenses
incurred by the Servicer in connection with the sale or other disposition of a
1998-A Leased Vehicle included in Matured Leased Vehicle Inventory.
"Matured Leased Vehicle Inventory" as of any date means all Matured
Vehicles that first became Matured Vehicles within the three immediately
preceding Collection Periods (or during the months of August, September and
October 1998 in respect of any date during the November 1998 Collection Period,
the months of September and October 1998 and the November 1998 Collection Period
in respect of any date during the December 1998 Collection Period, and the month
of October 1998 and the November and December 1998 Collection Periods in respect
of any date during the January 1999 Collection Period), and that, as of the last
day of the most recent Collection Period have remained unsold and not otherwise
disposed of by the Servicer for no more than two full calendar months and/or
Collection Periods, as applicable.
"Matured Leased Vehicle Proceeds" means gross amounts received by the
Servicer or the Trustee, on behalf of the Trust (before reimbursement for
Matured Leased Vehicle Expenses) in connection with the sale or other
disposition of a 1998-A Leased Vehicle included in Matured Leased Vehicle
Inventory (including any charges for excess mileage and excess wear and use).
"Matured Vehicle" as of any date means any 1998-A Leased Vehicle the
related 1998-A Lease of which has reached its Maturity Date and as to which all
scheduled Monthly Lease Payments and other payments due thereunder have been
made, and which Leased Vehicle has been returned to the Servicer
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on behalf of the Origination Trustee, on behalf of the Origination Trust,
regardless of the status of the disposition of such 1998-A Leased Vehicle as of
such date.
"Maturity Date" means, with respect to any 1998-A Lease, the date on which
the last scheduled Monthly Lease Payment shall be due and payable, as such date
may be extended pursuant to Section 2.02(b) of the Servicing Agreement and
Section 9.02(a) of the Servicing Supplement.
"Monthly Lease Payment" means, with respect to any Lease, the amount of
each fixed monthly payment payable to the Obligee of such Lease in accordance
with the terms thereof, net of any portion of such monthly payment that
represents late payment charges, Extension Fees or collections allocable to
payments to be made by Obligors for payment of insurance premiums, excise taxes
or similar items.
"Net Insurance Proceeds" means Insurance Proceeds less Insurance Expenses.
"Net Liquidation Proceeds" means Liquidation Proceeds less Liquidation
Expenses.
"Net Matured Leased Vehicle Proceeds" means Matured Leased Vehicle Proceeds
less Matured Leased Vehicle Expenses.
"Net Repossessed Vehicle Proceeds" means Repossessed Vehicle Proceeds less
Repossessed Vehicle Expenses.
"1998-A Lease" has the meaning set forth in Section 11.01(a).
"1998-A Leased Vehicle" has the meaning set forth in Section 11.01(a).
"1998-A SUBI" has the meaning set forth in Recital E.
"1998-A SUBI Asset" has the meaning set forth in Section 11.01(a).
"1998-A SUBI Certificate" has the meaning set forth in Recital E.
"1998-A SUBI Collection Account" means the separate account established and
maintained by the Indenture Trustee as the initial repository of all proceeds
received with respect to all 1998-A SUBI Assets, pursuant to Section 12.01(a).
"1998-A SUBI Lease Account" has the meaning set forth in Section 12.02(a).
"1998-A SUBI Portfolio" has the meaning set forth in Recital E.
"1998-A SUBI Certificate" has the meaning set forth in Recital G.
"Noteholders" has the meaning set forth in the Indenture.
"Notes" has the meaning set forth in the Indenture.
"Obligee" means each Person who is the lessor under a 1998-A Lease or the
assignee thereof, including the Trustee on behalf of the Trust.
"Obligor" means each Person who is the lessee under a Lease.
"Outstanding Principal Balance" means, with respect to any 1998-A Lease as
of any date, an amount equal to (a) the sum of all Monthly Lease Payments
remaining to be made (provided, however,
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that Payments Ahead received but not yet applied are deemed to be Monthly Lease
Payments remaining to be made), less any unearned finance or other charges
relating to the period beginning after the next succeeding Due Date on such
1998-A Lease (determined in accordance with the actuarial method as applied to
the Lease Rate for such 1998-A Lease in accordance with the Servicer's usual
practices), plus (b) the Booked Residual Value of the related Leased Vehicle.
"Owner Trustee" has the meaning set forth in Recital G.
"Payment Ahead" means any payment of one or more Monthly Lease Payments
(other than in connection with a Prepayment) remitted by an Obligor with respect
to a 1998-A Lease in excess of the Monthly Lease Payment due during such
Collection Period with respect to such 1998-A Lease, which sums the Obligor has
instructed the Servicer to apply to Monthly Lease Payments due in one or more
immediately subsequent Collection Periods.
"Permitted Investments" has the meaning set forth in the Securitization
Trust Agreement.
"Person" means any legal person, including any individual, corporation,
partnership, joint venture, limited liability company, association, joint stock
company, trust, bank, trust company, estate (including any beneficiaries
thereof), unincorporated organization or government or any agency or political
subdivision thereof.
"Prepayment" means: (a) payment to the Servicer of 100% of the Outstanding
Principal Balance of a 1998-A Lease (exclusive of any 1998-A Lease referred to
in the definition of the term "Charged-off Lease") or such lesser amount as may
be provided for in such 1998-A Lease, including any related payment of interest,
or (b) payment by the Servicer to the Trustee, on behalf of the Trust, of any
amount required to be deposited by the Servicer into the 1998-A SUBI Collection
Account pursuant to Section 8.03 of the Servicing Supplement.
"Principal Collections" means, with respect to any Collection Period, all
Collections received during or allocable to such Collection Period allocable to
the principal component of any 1998-A Lease (including any payment in respect of
the Booked Residual Value of the related 1998-A Leased Vehicle, but expressly
not including Collections with regard to which a Loss Amount (as defined in the
Securitization Trust Agreement) has already accrued); provided, however, that,
solely for purposes of calculating Principal Collections, the principal portion
of Monthly Lease Payments included in such Collections arising from a Discounted
Lease will be discounted on a present value basis at the Discount Rate.
"Repossessed Vehicle Expenses" means reasonable out-of-pocket expenses
incurred by the Servicer in connection with the sale or other disposition of a
1998-A Leased Vehicle that has been repossessed by the Servicer or has been
returned to the Servicer for sale or other disposition, other than for inclusion
in Matured Leased Vehicle Inventory.
"Repossessed Vehicle Proceeds" means gross amounts received by the Servicer
or the Trustee, on behalf of the Trust (before reimbursement for Repossessed
Vehicle Expenses) in connection with the sale or other disposition of a 1998-A
Leased Vehicle that has been repossessed by the Servicer or has been returned to
the Servicer for sale or other disposition in connection with a Prepayment of
the related 1998-A Lease.
"Revolving Period" means the period from the Initial Cutoff Date to but not
including the earlier of December 1, 1999 and the day on which an Early
Amortization Event (as defined in the Securitization Trust Agreement) occurs.
"Securitization Trust Agreement" has the meaning set forth in Recital G.
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"Securitization Trust Documents" means and includes the Trust Agreement,
the Servicing Agreement, this Supplement, the Servicing Supplement, the SUBI
Certificate Agreement, the Securitization Trust Agreement, the Indenture, the
Backup Security Agreement, the 1998-A SUBI Certificate, the Notes and the
Certificates, as the same may be amended, supplemented or modified from time to
time, and each to the extent that it relates to the 1998-A SUBI (but
specifically not including any such amendment, supplement or modification that
relates only to the UTI or to one or more SUBIs other than the 1998-A SUBI).
"Security Deposit" means, with respect to any 1998-A Lease, the refundable
security deposit specified in such 1998-A Lease.
"Servicer" has the meaning set forth in Recital C.
"Servicer Reimbursement" has the meaning set forth in the Servicing
Supplement.
"Servicing Agreement" has the meaning set forth in Recital C.
"Servicing Fee" has the meaning set forth in the Servicing Agreement, as
modified or waived pursuant to Section 9.06 of the Servicing Supplement.
"Servicing Supplement" has the meaning set forth in Recital I.
"SUBI Certificate Agreement" has the meaning set forth in Recital F.
"Subsequent Cutoff Date" means, with respect to any Lease and Leased
Vehicle allocated to the 1998-A SUBI Portfolio on a Transfer Date, the last day
of the preceding calendar month.
"Transfer Date" means any Business Day in any calendar month following a
Collection Period in the Revolving Period, on or prior to the fifteenth calendar
day of that calendar month (beginning December 1998) specified as such by the
Servicer in its notice and certificate pursuant to Section 8.02(b) of the
Servicing Supplement.
"Transferor" has the meaning set forth in Recital F.
"Trust" has the meaning set forth in Recital A.
"Trust Agreement" has the meaning set forth in Recital A.
"Trustee" has the meaning set forth in the Preamble.
"Unallocated Principal Collections" has the meaning set forth in Section
11.02(d).
"Undistributed Transferor Excess Collections" has the meaning set forth in
the Securitization Trust Agreement.
"U.S. Bank" has the meaning set forth in the Preamble.
"WOFCO" has the meaning set forth in the Recital A.
Section 10.02. Rights in Respect of 1998-A SUBI.
Each holder of a 1998-A SUBI Certificate (including the Owner Trustee) and
each pledgee of a 1998-A SUBI Certificate (including the Indenture Trustee, on
behalf of the Noteholders) is a third-party
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beneficiary of the Trust Agreement and this Supplement, insofar as they apply to
the 1998-A SUBI and the holders or pledgees of the 1998-A SUBI Certificate.
Therefore, to that extent, references in the Trust Agreement to the ability of
any "holder of a SUBI Certificate", "assignee of a SUBI Certificate" or the like
to take any action shall be deemed to refer to the Owner Trustee acting with the
consent or upon the instruction of the Indenture Trustee acting at its own
instigation or upon the instruction of Noteholders representing more than 50% of
the aggregate Percentage Interests (acting as a single class) during such time
as any Note shall remain outstanding and, if no Notes remain outstanding, shall
be deemed to refer to the Owner Trustee acting at its own instigation or upon
the instruction of the Transferor.
PART XI. CREATION OF 1998-A SUBI
Section 11.01. Initial Creation of 1998-A SUBI Portfolio and 1998-A SUBI.
(a) Pursuant to Section 4.02(a) of the Trust Agreement, the Beneficiary
hereby directs the Trustee to identify and allocate or cause to be identified
and allocated on the books and records of the Trust an initial separate
portfolio of SUBI Assets consisting of Leases, related Leased Vehicles and other
associated Trust Assets to be accounted for and held in trust independently from
all other Trust Assets within the Trust, all of which Trust Assets shall consist
of: (i) Leases that are Eligible Leases as of the Initial Cutoff Date, including
the related Contract Rights and the related Leased Vehicles, with an Aggregate
Net Investment Value (as defined in the Securitization Trust Agreement) as of
the Initial Cutoff Date of $ [___] ; (ii) all other Trust Assets related to the
foregoing, including (A) the 1998-A SUBI Collection Account, including all cash
and Permitted Investments therein and all income from the investment of funds
therein; (B) the Residual Value Insurance Policy and all Contingent and Excess
Liability Insurance Policies to the extent applicable to such Leases and Leased
Vehicles; (C) the right to proceeds from physical damage, credit life and
disability insurance policies, if any, covering such Leases, Leased Vehicles or
Obligors with respect thereto, as the case may be; (D) the right to receive the
proceeds of all Dealer repurchase obligations, if any, relating to any such
Lease or Leased Vehicle; and (E) all proceeds from the conversion, voluntary or
involuntary, of any of the foregoing into cash or other property. Based upon
their identification and allocation by the Servicer pursuant to the Servicing
Supplement, the Trustee hereby identifies and allocates as SUBI Assets the
portfolio of Leases and Leased Vehicles more particularly described on Exhibit A
hereto, and the related Trust Assets described above, each such SUBI Asset to be
identified on the books and accounts of the Trust as belonging to the 1998-A
SUBI Portfolio (such Leases and Leased Vehicles, together with those additional
Leases and Leased Vehicles allocated to the 1998-A SUBI Portfolio during the
Revolving Period, the "1998-A Leases" and the "1998-A Leased Vehicles",
respectively, and, together with those other Trust Assets so allocated either
initially or during the Revolving Period pursuant to Section 2.02 hereof, the
"1998-A SUBI Assets"). In addition to the conveyance of such 1998-A SUBI Assets
to the Trust pursuant to Section 2.01 of the Trust Agreement, the Grantor does
hereby grant to the Trustee a security interest therein, and the Trustee shall
have all of the rights, powers and privileges of a secured party under the UCC.
(b) Also pursuant to Section 4.02(a) of the Trust Agreement, the Trustee
hereby creates a SUBI which shall be known as the "1998-A SUBI". The 1998-A SUBI
shall represent a specific divided beneficial interest solely in the 1998-A SUBI
Portfolio and the 1998-A SUBI Assets.
(c) As required by Section 4.02(d) of the Trust Agreement, the Beneficiary
will certify to the Trustee as of the date of execution and delivery hereof that
(i) the sole pledgee of the Undivided Trust Interest has received prior notice
of the creation of the 1998-A SUBI Portfolio and of the terms and provisions of
(x) this Supplement and (y) the Securitized Financing contemplated by the 1998-A
Securitization Trust Agreement and (ii) after giving effect to the creation of
the 1998-A SUBI, the transfer to the Beneficiary of both the 1998-A SUBI
Certificate and the application by the Beneficiary of the proceeds of that
Securitized Financing, no event of default (matured or unmatured) shall exist
under any Securitized Financing involving a UTI Pledge.
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Section 11.02. Subsequent Additions to 1998-A SUBI Portfolio.
(a) The Beneficiary hereby directs the Trustee, as of each Transfer Date,
to cause to be (i) identified on the books and records of the Trust from among
all those Leases, Leased Vehicles and other associated Trust Assets then owned
by the Trustee on behalf of the Trust and not allocated to, or reserved for
allocation to, any SUBI (or, in the circumstances contemplated in Section 7.03
of the Trust Agreement or Section 11.02(e) below, acquired by the Trustee on
behalf of the Trust but not yet allocated to, or reserved for allocation to, any
specific Portfolio) and (ii) allocated to the 1998-A SUBI Portfolio effective as
of the relevant Subsequent Cutoff Date as additional 1998-A Leases, 1998-A
Leased Vehicles and 1998-A SUBI Assets, such further Eligible Leases, related
Leased Vehicles and other associated Trust Assets (as described in clauses (i)
and (ii) of the first sentence of Section 11.01(a)) as shall have an aggregate
Discounted Principal Balance of not more than the aggregate amount of all
Principal Collections (and amounts treated as Principal Collections pursuant to
the last sentence of Section 3.03(b)) received from the Initial Cutoff Date
through the end of the most recent Collection Period that have not yet been so
reinvested in additional 1998-A Leases, 1998-A Leased Vehicles and related
1998-A SUBI Assets (as provided in Section 11.08 herein); provided, however,
that (y) after giving effect to such reallocation, no event of default (matured
or unmatured) shall exist under any Securitized Financing involving a UTI
Pledge, and (z) prior to such reallocation, the Servicer shall have provided the
Officer's Certificate required by Section 8.02(b) of the Servicing Supplement.
(b) Pursuant to subsection (a) above, the Trustee agrees, as of each
Transfer Date, to cause the Servicer to identify such further Eligible Leases,
related Leased Vehicles and other associated Trust Assets as described in
Section 11.02(a) and thereafter to allocate them to the 1998-A SUBI Portfolio.
(c) Except in the circumstances set forth in Section 7.03 of the Trust
Agreement or Section 12.02 below, the Trustee shall direct the Servicer,
pursuant to Section 8.02(c) of the Servicing Supplement, effective as of each
Transfer Date, to transfer or cause to be transferred from the 1998-A SUBI
Collection Account to the Lease Funding Account an amount equal to the aggregate
Discounted Principal Balance as of the related Subsequent Cutoff Date of the
1998-A Leases then being added to the 1998-A SUBI Portfolio pursuant to Section
11.02(a) hereof.
(d) To the extent that, for any reason, the additional 1998-A Leases
allocated to the 1998-A SUBI Portfolio on any Transfer Date shall have an
aggregate Discounted Principal Balance, measured as of the Subsequent Cutoff
Date, that is less than the aggregate amount of all Principal Collections (and
amounts treated as Principal Collections pursuant to the last sentence of
Section 3.03(b) of the Securitization Trust Agreement) received since the
Initial Cutoff Date and prior to the termination of the Revolving Period which
have not yet been reinvested in additional 1998-A Leases, 1998-A Leased Vehicles
and related 1998-A SUBI Assets, the balance of such Principal Collections and
other amounts ("Unallocated Principal Collections") shall continue to be
invested and reinvested in Permitted Investments as part of the 1998-A SUBI
Portfolio until the earlier of (i) the reinvestment of such unallocated
Principal Collections on a subsequent Transfer Date and (ii) the start of the
Amortization Period, at which time such funds shall be treated as Principal
Collections collected during the Amortization Period.
(e) In the circumstances set forth in Section 7.03 of the Trust Agreement
or Section 12.02 of this Supplement, the Trustee shall direct the Servicer,
pursuant to Section 8.02(d) of the Servicing Supplement, effective as of each
Transfer Date, to transfer from the 1998-A SUBI Collection Account to the 1998-A
SUBI Lease Account those Principal Collections (and amounts treated as Principal
Collections pursuant to the last sentence of Section 3.03(b) of the
Securitization Trust Agreement) received since the Initial Cutoff Date that have
not yet been reinvested in additional 1998-A Leases, 1998-A Leased Vehicles and
related 1998-A SUBI Assets, to be applied in accordance with Section 7.03 of the
Trust Agreement.
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(f) Neither any interest in the 1998-A SUBI nor the 1998-A SUBI Certificate
may be transferred or assigned by the Beneficiary, and any such purported
transfer or assignment shall be deemed null, void and of no effect herewith,
provided, however, that (i) the 1998-A SUBI and the 1998-A SUBI Certificate may
be sold to the Transferor pursuant to the SUBI Certificate Agreement, and (ii)
the 1998-A SUBI Certificate and the interest in the 1998-A SUBI represented
thereby may be assigned by the Transferor absolutely or a security interest
therein granted in connection with a Securitized Financing, in each case in the
circumstances contemplated in Section 4.02(c) of the Trust Agreement. Such a
transfer is registrable upon surrender of the relevant 1998-A SUBI Certificate
for registration of transfer at the corporate trust office of the Trustee (or
the Trust Agent, if applicable) or by any successor Trustee, accompanied by a
written instrument of transfer in form satisfactory to the Trustee duly executed
by the holder thereof or such holder's attorney duly authorized in writing, and
thereupon one or more new 1998-A SUBI Certificates of a like aggregate
fractional undivided interest will be issued to the designated permitted
transferee.
Section 11.03. Issuance and Form of the 1998-A SUBI Certificate.
(a) The 1998-A SUBI shall be represented by the 1998-A SUBI Certificate
representing a 100% beneficial interest in the 1998-A SUBI and the 1998-A SUBI
Portfolio, as further set forth herein. The 1998-A SUBI Certificate shall be
substantially in the form of Exhibit B attached hereto, with such appropriate
insertions, omissions, substitutions and other variations as are required by
this Supplement and may have such letters, numbers or other marks of
identification and such legends and endorsements placed thereon as may,
consistently herewith and with the Trust Agreement, be directed by the
Beneficiary. Any portion of the 1998-A SUBI Certificate may be set forth on the
reverse thereof, in which case the following reference to the portion of the
text on the reverse shall be inserted on the face thereof, in relative proximity
to and prior to the signature of the Trustee executing such certificate:
"Reference is hereby made to the further provisions of this
SUBI Certificate set forth on the reverse hereof, which
provisions shall for all purposes have the same effect as if
set forth at this place."
The 1998-A SUBI Certificate shall be printed, lithographed, typewritten,
mimeographed, photocopied or otherwise produced or may be produced in any other
manner as may, consistently herewith and with the Trust Agreement, be determined
by the Beneficiary.
(b) As required by Section 4.02(b) of the Trust Agreement, the 1998-A SUBI
Certificate shall contain an express written waiver of any claim by any holder
thereof or owner of a beneficial interest or security interest therein to any
proceeds or assets of the Trustee and to all of the Trust Assets other than
those from time to time included within the 1998-A SUBI Portfolio as 1998-A SUBI
Assets and those proceeds or assets derived from or earned by such 1998-A SUBI
Assets.
(c) It is the intention of the parties to this Agreement that the 1998-A
SUBI Certificate be governed by Article 8 of the Uniform Commercial Code as in
effect in any relevant jurisdiction.
Section 11.04. Actions and Filings.
The Beneficiary hereby directs the Trustee to enter into the Backup
Security Agreement as a protective device. The Grantor and the Trustee will
undertake all other and future actions and activities as may be deemed
reasonably necessary by the Servicer (pursuant to Section 8.04 of the Servicing
Supplement) to perfect (or evidence) and confirm the foregoing allocations of
Trust Assets to the 1998-A SUBI Portfolio and the backup security interest
therein of the Indenture Trustee, including without limitation filing or causing
to be filed UCC financing statements and executing and delivering all related
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filings, documents or writings as may be deemed reasonably necessary by the
Servicer hereunder or under any other Securitization Trust Documents (including
the Indenture and the Backup Security Agreement); provided, however, that in no
event will the Grantor or the Trustee be required to take any action to perfect
any security interest that may be held by the Owner Trustee or the Indenture
Trustee in any 1998-A Leased Vehicle. The Grantor hereby irrevocably makes and
appoints each of the Trustee and the Servicer, and any of their respective
officers, employees or agents, as the true and lawful attorney-in-fact of the
Grantor (which appointment is coupled with an interest and is irrevocable) with
power to sign on behalf of the Grantor any financing statements, continuation
statements, security agreements, mortgages, assignments, affidavits, letters of
authority, notices or similar documents necessary or appropriate to be executed
or filed pursuant to this Section.
Section 11.05. Termination of 1998-A SUBI.
In connection with any purchase by the Transferor of the corpus of the
Securitization Trust pursuant to Section 7.02 of the Securitization Trust
Agreement, and the succession of the Transferor to all of the interest in the
1998-A SUBI represented by the 1998-A SUBI Certificate, should all of the
interest in the 1998-A SUBI thereafter be transferred to the UTI Holder, whether
by sale or otherwise, then upon the direction of the UTI Holder the 1998-A SUBI
shall be terminated, the 1998-A SUBI Certificate shall be returned to the
Trustee and canceled thereby, and (pursuant to Section 12.01(a) of the Servicing
Supplement) the Servicer shall reallocate all 1998-A Leases, 1998-A Leased
Vehicles and related 1998-A SUBI Assets to the UTI Portfolio.
Section 11.06. Merger or Consolidation of Trustee.
The Trustee shall give notice to each Rating Agency (as defined in the
Securitization Trust Agreement) prior to effecting any merger, consolidation, or
other transaction set forth in Section 6.05 of the Trust Agreement.
Section 11.07. Representations and Warranties of Trustee.
The Trustee hereby makes the following representations and warranties on
which the Grantor and Beneficiary, each of their permitted assignees and
pledgees, and each pledgee or holder of a 1998-A SUBI Certificate (and
beneficial owner of any portion thereof in connection with a Securitized
Financing, including the Owner Trustee, the Indenture Trustee and the
Noteholders) may rely:
(a) Organization and Good Standing. The Trustee is a corporation, duly
organized, validly existing and in good standing under the law of the State of
Alabama and is qualified to do business as a foreign corporation and is in good
standing in each of Florida, Georgia, North Carolina and South Carolina;
(b) Power and Authority. The Trustee has full power, authority and
right to execute, deliver and (assuming that the filings set forth on Schedule A
to the Trust Agreement are sufficient to allow the Trustee to act as a trustee
with respect to the Trust Assets and otherwise perform this Supplement in each
of Alabama, Florida, Georgia, North Carolina, South Carolina, California,
Illinois, New Jersey, and Pennsylvania, and in all material respects in any
other jurisdiction) perform this Supplement (in all material respects outside of
the nine states set forth above) and has taken all necessary action to authorize
the execution, delivery and performance by it of this Supplement;
(c) Due Execution. This Supplement has been duly executed and
delivered by the Trustee, and is a legal, valid and binding instrument
enforceable against the Trustee in accordance with its terms;
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(d) No Conflict. Neither the execution and delivery of this Supplement
nor the consummation of the transactions herein contemplated, nor compliance
with the provisions hereof, will conflict with or result in a breach of, or
constitute a default (with notice or passage of time or both) under any
provision of any law, governmental rule, regulation, judgment, decree or order
binding on the Trustee or the articles of incorporation or bylaws of the Trustee
or any provision of any mortgage, indenture, contract, agreement or other
instrument to which the Trustee is a party or by which it is bound; and
(e) Single Purpose. The Trustee has not engaged, is not currently
engaged, and will not engage during the term of this Agreement in any other
activity other than serving as Trustee and in such ancillary activities as are
necessary and proper in order to act as Trustee in accordance with the Trust
Agreement and this Supplement.
Section 11.08. Other SUBIs.
The Trustee will not create any SUBI other than the 1998-A SUBI during the
Revolving Period unless the Trustee has received from the Servicer an Officer's
Certificate certifying that the creation of such other SUBI would not cause an
Early Amortization Event (as defined in the Securitization Trust Agreement). In
the event that the Trustee at any time during the Revolving Period also is
allocating Trust Assets to one or more other SUBIs pursuant to similar revolving
periods (from the Trust Assets generally, not from blocks of Trust Assets
reserved for allocation to particular SUBIs), the Trustee first shall allocate
available Trust Assets to SUBIs created prior to the 1998-A SUBI before
allocating Trust Assets to the 1998-A SUBI.
Section 11.09. Minimum Net Worth.
Notwithstanding anything to the contrary in Section 4.03 of the Trust
Agreement, the Grantor (or if Grantor is a partnership, the general partner of
Grantor) shall at all times maintain a minimum net worth of $10 million.
PART XII. SUBI ACCOUNTS
Section 12.01. 1998-A SUBI Collection Account.
(a) The Servicer on behalf of the Trustee shall establish and maintain with
respect to the 1998-A SUBI a "1998-A SUBI Collection Account" in the name of the
Indenture Trustee, for the benefit of the holders of the Notes and the holder of
1998-A SUBI Certificate, which account shall constitute a SUBI Collection
Account. The 1998-A SUBI Collection Account initially shall be established with
the Indenture Trustee, and at all times shall be an Eligible Account. In the
event that the Indenture Trustee no longer meets the requirements stated in the
definition of "Eligible Account", then the Servicer shall, with the Trustee's
assistance as necessary, cause the 1998-A SUBI Collection Account to be moved to
a bank or trust company that satisfies those requirements. The 1998-A SUBI
Collection Account shall relate solely to the 1998-A SUBI and the 1998-A SUBI
Portfolio, and funds therein shall not be commingled with any other moneys,
except as otherwise provided for or contemplated in the Trust Agreement as
supplemented by this Supplement or in the Servicing Agreement as supplemented by
the Servicing Supplement. All amounts held in the 1998-A SUBI Collection Account
shall be invested in Permitted Investments in accordance with Section 7.01(d) of
the Trust Agreement, Section 11.02(d) hereof and Section 8.03 of the Indenture
until distributed or otherwise applied in accordance with the Trust Agreement or
this Supplement. The Trustee hereby grants a security interest in the 1998-A
SUBI Collection Account, and all Permitted Investments therein and all proceeds
of the foregoing, to the Indenture Trustee for the benefit of the holders of the
Notes.
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(b) On each Deposit Date the Indenture Trustee shall transfer or cause the
transfer of all Principal Collections and Interest Collections in the 1998-A
SUBI Collection Account with respect to the related Collection Period to the
holder of the 1998-A SUBI Certificate (and more particularly, to the
Distribution Account); provided, however, that on each Deposit Date related to a
Collection Period in the Revolving Period, the Indenture Trustee shall withhold
from any such transfers all Principal Collections, all of which shall be applied
solely as provided for in Section 11.02 hereof. After the last Deposit Date
related to a Collection Period in the Revolving Period, Principal Collections
shall be included in calculating and making any such transfers.
(c) The Trustee shall provide in the Servicing Supplement that the Servicer
shall prepare all such calculations and provide for all such transfers as are
provided for in this Section 12.01.
(d) Any transfer to the holder of the 1998-A SUBI Certificate shall be made
as directed pursuant to the Securitization Trust Documents.
(e) Notwithstanding Section 7.01(b) of the Trust Agreement and Section 2.02
of the Servicing Agreement, the Trustee may provide in the Servicing Supplement
that, in the event the Servicer provides to the Beneficiary, the Transferor, the
Trustee, the Owner Trustee and the Indenture Trustee a letter from each Rating
Agency to the effect that the utilization by the Servicer of an alternative
remittance schedule with respect to collections arising out of the 1998-A SUBI
Portfolio to be deposited in the 1998-A SUBI Collection Account pursuant to
Section 2.02(c) or (d) of the Servicing Agreement (including but not limited to
the use of an alternative remittance schedule pursuant to which the obligations
of the Servicer to make such remittances are secured by a Servicer Letter of
Credit (as defined in such Servicing Supplement) satisfactory to each such
Rating Agency (as defined in the Securitization Trust Agreement)) will not
result in a qualification, downgrading or withdrawal of the then-current rating
assigned to the Rated Securities (as defined in the Securitization Trust
Agreement) by such Rating Agency, (i) the Servicing Supplement may be so
modified without the consent of any Noteholders pursuant to Section 12.02
thereof and (ii) the Servicer may remit such collections to the 1998-A SUBI
Collection Account in accordance with that alternative remittance schedule.
(f) Notwithstanding Section 5.05 or 7.01(c) or any other provision of the
Trust Agreement, the rights of the Trustee to be indemnified or reimbursed for
Administrative Expenses of the Trust incurred in connection with or allocated to
the 1998-A SUBI shall be limited to those Capped Origination Trust
Administrative Expenses as may be deducted from Collections in accordance with
the definition of "Interest Collections", any reimbursement of Uncapped
Administrative Expenses (as defined in the Securitization Trust Agreement) as
may be available pursuant to Section 3.03(b) of the Securitization Trust
Agreement, any advance of Administrative Expenses as may be available pursuant
to Section 9.05(a) of the Servicing Supplement, and any indemnity as may be
available pursuant to Section 2.07(g) of the Servicing Agreement.
Section 12.02. 1998-A SUBI Lease Account.
(a) In the circumstances set forth in Section 7.03 of the Trust Agreement,
the Trustee shall establish and maintain with respect to the 1998-A SUBI a
"1998-A SUBI Lease Account" in the name of the Indenture Trustee, for the
benefit of the holders of the Notes and the holder of the 1998-A SUBI
Certificate, which account shall constitute a SUBI Lease Account. Any 1998-A
SUBI Lease Account initially shall be established with the Indenture Trustee and
at all times shall be an Eligible Account. In the event that the Indenture
Trustee no longer meets the requirements stated in the definition of "Eligible
Account", then the Servicer shall, with the Indenture Trustee's assistance as
necessary, cause the 1998-A SUBI Lease Account to be moved to a bank or trust
company that satisfies those requirements. The 1998-A SUBI Lease Account shall
relate solely to the 1998-A SUBI and the 1998-A SUBI Portfolio, and funds
therein shall not be commingled with any other moneys, except as otherwise
provided for or contemplated in the Trust Agreement as supplemented by this
Supplement
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or in the Servicing Agreement as supplemented by the Servicing Supplement. All
amounts held in the 1998-A SUBI Lease Account shall be invested in Permitted
Investments in accordance with Section 7.01(d) of the Trust Agreement, Section
11.02(d) hereof and Section 8.03 of the Indenture until distributed or otherwise
applied in accordance with the Trust Agreement or this Supplement. The Trustee
hereby grants a security interest in any 1998-A SUBI Lease Account, and all
Permitted Investments therein and all proceeds of the foregoing, to the
Indenture Trustee for the benefit of the holders of the Notes.
(b) All transfers of funds into and out of the 1998-A SUBI Lease Account
shall be made in accordance with Section 7.03 of the Trust Agreement.
Section 12.03. Servicer Calculations.
Neither the Trustee nor the Indenture Trustee shall be under any obligation
to recalculate or reverify any calculations made by the Servicer with respect to
any amounts to be transferred by the Indenture Trustee pursuant to this Part
XII.
PART XIII. MISCELLANEOUS PROVISIONS
Section 13.01. Amendment, Etc.
(a) Notwithstanding Section 9.01 of the Trust Agreement, the Trust
Agreement, as supplemented by this Supplement, to the extent that it deals
solely with the 1998-A SUBI and the 1998-A SUBI Portfolio, may be amended from
time to time only in a writing signed by the Trustee and the Beneficiary (and by
U.S. Bank to the extent that any such amendment affects it as Trust Agent), with
the prior written consent of the Indenture Trustee and the Owner Trustee (which
shall be given only in the circumstances contemplated by Section 9.01 of the
Securitization Trust Agreement).
(b) ALF LP shall provide each Rating Agency (as defined in the
Securitization Trust Agreement) prior notice of the content of any proposed
amendment to the Trust Agreement, whether or not such amendment relates to the
1998-A SUBI or requires approval by any Rating Agency.
(c) No resignation or removal of the Trustee pursuant to Section 6.03 of
the Trust Agreement shall be effective unless and until each Rating Agency has
confirmed, in writing, that such resignation or removal would not cause it to
downgrade, withdraw, or otherwise adversely modify its then-current rating of
the Rated Notes.
(d) The holder from time to time of the Trustee Stock pursuant to Section
6.10 of the Trust Agreement shall at all times be a corporation, trust company
or bank organized and doing business under the laws of such State or the United
States; authorized under such laws to exercise corporate trust powers; having a
combined capital and surplus of at least $50,000,000 and subject to supervision
or examination by federal or state authorities; and having a long-term deposit
rating no lower than Baa3 by Moody's, so long as Moody's is a Rating Agency or
be otherwise acceptable to each Rating Agency, as evidenced by a letter to such
effect from each of them. If such holder shall publish reports of condition at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purpose of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. In case at any time such holder shall cease to be eligible in
accordance with the provisions of this subsection (d), it will immediately so
notify the Beneficiary in the manner and with the effect specified in Section
6.10(b) of the Trust Agreement.
Section 13.02. Governing Law.
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THIS SUPPLEMENT SHALL BE CREATED UNDER AND GOVERNED BY AND CONSTRUED UNDER
THE INTERNAL LAWS OF THE STATE OF ALABAMA, WITHOUT REGARD TO ANY OTHERWISE
APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS.
Section 13.03. Notices.
The notice provisions of Section 9.03 of the Trust Agreement shall apply
equally to this Supplement, provided, that any notice to the Indenture Trustee
shall be addressed as follows:
The Bank of New York
1 Wall Street
New York, New York 10286
Attention: Corporate Trust Office
and any notice to the Owner Trustee shall be addressed as follows:
PNC Bank, Delaware
222 Delaware Avenue
17th Floor
Wilmington, DE 19801-1600
Attention: Mr. Michael McCarthy, Corporate Trust Department
A copy of each notice or other writing required to be delivered to the
Trustee pursuant to the Trust Agreement or this Supplement also shall be
delivered to the Owner Trustee and the Indenture Trustee.
Section 13.04. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Supplement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Supplement and
shall in no way affect the validity or enforceability of the other provisions of
this Supplement or of the 1998-A SUBI Certificate or the rights of the holder
thereof. To the extent permitted by law, the parties hereto waive any provision
of law that renders any provision of this Supplement invalid or unenforceable in
any respect.
Section 13.05. Effect of Supplement on Trust Agreement.
(a) Except as otherwise specifically provided herein: (i) the parties shall
continue to be bound by all provisions of the Trust Agreement; and (ii) the
provisions set forth herein shall operate either as additions to or
modifications of the already-extant obligations of the parties under the Trust
Agreement, as the context may require. In the event of any conflict between the
provisions of this Supplement and the Trust Agreement with respect to the 1998-A
SUBI, the provisions of this Supplement shall prevail.
(b) For purposes of determining the parties' obligations under this
Supplement with respect to the 1998-A SUBI, general references in the Trust
Agreement to: (i) a SUBI Account shall be deemed to refer more specifically to
the 1998-A SUBI Account; (ii) a SUBI Asset shall be deemed to refer more
specifically to a 1998-A SUBI Asset; (iii) an appropriate or applicable SUBI
Collection Account shall be deemed to refer more specifically to the 1998-A SUBI
Collection Account; (iv) an appropriate or applicable SUBI Lease Account shall
be deemed to refer more specifically to a 1998-A SUBI Lease Account; (v) a SUBI
Portfolio shall be deemed to refer more specifically to the 1998-A SUBI
Portfolio;
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(vi) a SUBI Supplement shall be deemed to refer more specifically to this
Supplement; and (vii) a SUBI Servicing Agreement Supplement shall be deemed to
refer more specifically to the Servicing Supplement.
Section 13.06. Successors and Assigns.
The Trust Agreement and this Supplement, insofar as they relate to the
1998-A SUBI Portfolio, shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, the
Trustee on behalf of the Trust, and the Securitization Trustee. Further, all
references herein to Persons or entities other than parties hereto shall be
deemed to refer to the successors and permitted assigns of such persons, to the
extent that such construction is reasonably possible; to the extent that such
construction is not reasonably possible, the parties hereto shall amend this
Supplement so as to effect the original intent of the parties as closely as
possible in an acceptable manner.
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IN WITNESS WHEREOF, the Grantor, the Trustee, and (solely for the limited
purposes set forth in Sections 5.03(e), 6.10 and 9.03 of the Trust Agreement)
U.S. Bank, have caused this Supplement to be duly executed by their respective
officers as of the day and year first above written.
AUTO LEASE FINANCE, L.P., Grantor and Beneficiary
By: Auto Lease Finance LLC, its general partner
By:___________________________
Patrick C. Ossenbeck
Assistant Treasurer
VT INC., as Trustee
By:___________________________
Name:______________________
Title:_____________________
U.S. BANK NATIONAL ASSOCIATION, as Trust Agent
By:___________________________
Name:______________________
Title:_____________________
THE BANK OF NEW YORK, as Indenture Trustee
By:___________________________
Name:______________________
Title:_____________________
WORLD OMNI LEASE SECURITIZATION L.P., assignee
of Beneficiary (solely to acknowledge the
provisions hereof)
By: World Omni Lease Securitization LLC, its
general partner
By:___________________________
Patrick C. Ossenbeck
Assistant Treasurer
23
<PAGE>
COUNTY OF [ ] )
)
STATE OF [ ] )
I, the undersigned, a Notary Public in and for said County, in said State,
hereby certify that Patrick C. Ossenbeck, whose name as Assistant Treasurer of
Auto Lease Finance LLC, a Delaware limited liability company, in its capacity as
the general partner of Auto Lease Finance, L.P., a Delaware limited partnership,
is signed to the foregoing instrument, and who is known to me, acknowledged
before me on this day, that, being informed of the contents thereof, he, as such
officer and with full authority, executed the same voluntarily for and as the
act of said corporation, acting in its capacity as general partner as aforesaid.
Given under my hand and official seal, this the ___ day of __________,
1998.
(SEAL) NOTARY PUBLIC
My Commission Expires: __________
24
<PAGE>
COUNTY OF [ ] )
)
STATE OF [ ] )
I, the undersigned, a Notary Public in and for said County, in said State,
hereby certify that Patrick C. Ossenbeck, whose name as Assistant Treasurer of
World Omni Lease Securitization LLC, a Delaware limited liability company, in
its capacity as the general partner of World Omni Lease Securitization, L.P., a
Delaware limited partnership, is signed to the foregoing instrument, and who is
known to me, acknowledged before me on this day, that, being informed of the
contents thereof, he, as such officer and with full authority, executed the same
voluntarily for and as the act of said corporation, acting in its capacity as
general partner as aforesaid.
Given under my hand and official seal, this the ___ day of __________,
1998.
(SEAL) NOTARY PUBLIC
My Commission Expires: __________
25
<PAGE>
COUNTY OF [ ] )
)
STATE OF [ ] )
I, the undersigned, a Notary Public in and for said County, in said State,
hereby certify that _________________________, whose name as
_________________________ of VT Inc., an Alabama corporation, is signed to the
foregoing instrument, and who is known to me, acknowledged before me on this
day, that, being informed of the contents thereof, he, as such officer and with
full authority, executed the same voluntarily for and as the act of said
corporation.
Given under my hand and official seal, this the ___ day of __________,
1998.
(SEAL) NOTARY PUBLIC
My Commission Expires: __________
26
<PAGE>
COUNTY OF [ ] )
)
STATE OF [ ] )
I, the undersigned, a Notary Public in and for said County, in said State,
hereby certify that _________________________, whose name as
_________________________ of U.S. Bank National Association, a national banking
association, is signed to the foregoing instrument, and who is known to me,
acknowledged before me on this day, that, being informed of the contents
thereof, he, as such officer and with full authority, executed the same
voluntarily for and as the act of said national banking association.
Given under my hand and official seal, this the ___ day of __________,
1998.
(SEAL) NOTARY PUBLIC
My Commission Expires: __________
27
<PAGE>
COUNTY OF [ ] )
)
STATE OF ILLINOIS )
I, the undersigned, a Notary Public in and for said County, in said State,
hereby certify that _________________________, whose name as
_________________________ of The Bank of New York, is signed to the foregoing
instrument, and who is known to me, acknowledged before me on this day, that,
being informed of the contents thereof, he, as such officer and with full
authority, executed the same voluntarily for and as the act of said national
banking association.
Given under my hand and official seal, this the ___ day of __________,
1998.
(SEAL) NOTARY PUBLIC
My Commission Expires: __________
28
<PAGE>
EXHIBIT A
SCHEDULE OF 1998-A LEASES AND
1998-A LEASED VEHICLES AS OF THE INITIAL CUTOFF DATE
[Omitted. Copies on file with the Servicer, the Trustee, the Indenture
Trustee and the Owner Trustee.]
A-1
<PAGE>
EXHIBIT B
FORM OF 1998-A SUBI CERTIFICATE
WORLD OMNI LT
SPECIAL UNIT OF BENEFICIAL INTEREST 1998-A CERTIFICATE
evidencing an undivided 100% interest in all 1998-A SUBI Assets (as defined
below).
(This 1998-A SUBI Certificate does not represent an obligation of, or an
interest in, World Omni Financial Corp., Auto Lease Finance LLC, Auto Lease
Finance L.P. or any of their respective affiliates.)
Number 1998-A SUBI-_______________
THIS CERTIFIES THAT __________________________________ is the registered
owner of a nonassessable, fully-paid, undivided interest in the 1998-A SUBI
Assets (such interest, a "1998-A SUBI Interest"), of World Omni LT, an Alabama
business trust (the "Trust") formed by Auto Lease Finance L.P., a Delaware
limited partnership, as grantor ("ALF LP" or, in its capacity as grantor
thereunder, and, together with any successor or assign, the "Grantor"), and VT
Inc., an Alabama corporation, as trustee (the "Trustee"). The Trust was created
pursuant to a Trust Agreement dated and effective as of November 1, 1993, as
amended and restated pursuant to an Amended and Restated Trust Agreement dated
and effective as of June 1, 1994, as further amended and restated pursuant to a
Second Amended and Restated Trust Agreement dated and effective as of July 1,
1994, as further amended by that certain Amendment No. 1 to Second Amended and
Restated Trust Agreement dated as of November 1, 1994, and as further amended by
that certain Amendment No. 2 to Second Amended and Restated Trust Agreement
dated as of September 23, 1998 (as so amended and restated, the "Trust
Agreement"), among the Grantor, ALF LP as the sole initial beneficiary (in such
capacity, and, together with any successor or permitted assign, the
"Beneficiary"), the Trustee, and, for certain limited purposes set forth
therein, U.S. Bank National Association, a national banking association
(formerly known as First Bank National Association and successor to Bank of
America Illinois, an Illinois banking corporation) ("U.S. Bank"), as
supplemented by that certain 1998-A Supplement to Trust Agreement dated and
effective as of October 1, 1998 among the Grantor, the Beneficiary, the Trustee,
U.S. Bank, The Bank of New York and World Omni Lease Securitization L.P (the
"Transferor") (the Trust Agreement, as so supplemented, the "Agreement"). A
summary of certain of the pertinent portions of the Agreement is set forth
below. To the extent not otherwise defined herein, the capitalized terms herein
have the meanings set forth in the Agreement.
This 1998-A SUBI Certificate is the duly authorized certificate issued
under the Agreement and designated as "World Omni LT Special Unit of Beneficial
Interest 1998-A Certificate" (the "1998-A SUBI Certificate"). This 1998-A SUBI
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the holder of this 1998-A SUBI
Certificate by virtue of the acceptance hereof assents and by which such holder
is bound. Also to be issued under the Agreement are various other series of SUBI
and UTI Certificates, the first designated as "World Omni LT Undivided Trust
Interest Certificates" (the "Undivided Trust Interest Certificates"), and the
others each designated as "World Omni LT Special Unit of Beneficial Interest
Certificates" (together with the 1998-A SUBI Certificate, the "SUBI
Certificates" and, together with the Undivided Trust Interest Certificates, the
"SUBI & UTI Certificates"). The Undivided Trust Interest Certificates, taken
together, evidence an exclusive, undivided interest in the Trust Assets, other
than SUBI Assets (each as defined below); each other series of SUBI
Certificates, taken together, will evidence an exclusive undivided interest in a
separate SUBI Portfolio (as defined below) other than the 1998-A SUBI Portfolio.
B-1
<PAGE>
The property of the Trust includes, or will include, among other things:
cash capital; certain fixed rate retail closed-end lease contracts (the
"Leases") of automobile and light-duty trucks (the "Leased Vehicles") originated
on or after November 1, 1993 by vehicle dealers ("Dealers") located within the
United States (to the extent permitted by law applicable to the Trustee or
otherwise) pursuant to dealer agreements entered into with the initial Grantor's
parent company, World Omni Financial Corp. ("WOFCO") (or, in certain
circumstances, by dealers or other Persons unaffiliated with WOFCO), and the
proceeds thereof; the Leased Vehicles and the proceeds thereof, including the
residual values thereof and the titles thereto; the right to proceeds of any
Dealer repurchase obligations relating to any Lease or Leased Vehicle; and
certain insurance policies or proceeds therefrom covering any Lease, Leased
Vehicles or a lessee under a Lease (such assets, together with any other assets
of the Trust, the "Trust Assets"). The Agreement provides that, from time to
time, certain of the Trust Assets will be identified and allocated on the
records of the Trust into one or more separate portfolios of Trust Assets (such
assets, "SUBI Assets" and each such portfolio, a "SUBI Portfolio"). The
beneficial interest in each such SUBI Portfolio will constitute a separate
"special unit of beneficial interest" ("SUBI") in the Trust. Pursuant to the
1998-A SUBI Supplement, various SUBI Assets (the "1998-A SUBI Assets") were
identified and allocated on the records of the Trust into a separate SUBI
Portfolio (the "1998-A SUBI Portfolio"), and the beneficial interest in the
1998-A SUBI Portfolio was designated as a separate SUBI known as the "1998-A
SUBI". The rights of the holder of this 1998-A SUBI Certificate to certain of
the proceeds of the 1998-A SUBI Assets are and will be further set forth in the
Agreement.
The SUBI & UTI Certificates do not represent an obligation of, or an
interest in, the Grantor, WOFCO or any of their respective Affiliates. The
1998-A SUBI Certificate is limited in right of payment to certain collections
and recoveries respecting the Leases (and the related Obligors) and the Leased
Vehicles allocated to the 1998-A SUBI Portfolio, all to the extent and as more
specifically set forth in the Agreement. A copy of the Agreement may be examined
during normal business hours at the principal office of the Trustee, and at such
other places, if any, designated by the Trustee, by the holder hereof upon
request.
By accepting this 1998-A SUBI Certificate, the holder hereof and all owners
of beneficial interests herein waives any claim to any proceeds or assets of the
Trustee and to all of the Trust Assets other than those from time to time
included within the 1998-A SUBI Portfolio as 1998-A SUBI Assets and those
proceeds or assets derived from or earned by such 1998-A SUBI Assets.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
parties thereto with respect to the 1998-A SUBI Assets, the 1998-A SUBI
Portfolio and the 1998-A SUBI and the rights of the holder of the 1998-A SUBI
Certificate at any time by the Beneficiary and the Trustee, only with the
consent of The Bank of New York, as trustee (the "Indenture Trustee") under that
certain Indenture dated as of October 1, 1998 between PNC Bank, Delaware, as
trustee (the "Owner Trustee") of the World Omni 1998-A Automobile Lease
Securitization Trust, and the Indenture Trustee, as set forth in that certain
Securitization Trust Agreement dated as of October 1, 1998 (the "Securitization
Trust Agreement"), among the Transferor, the Indenture Trustee and the Owner
Trustee, and with the consent of the Owner Trustee. The Securitization Trust
Agreement further provides that, in certain limited circumstances, such consent
may be given only with the consent of the Holders of Notes evidencing more than
50% of the aggregate Percentage Interests (as all such terms are defined in the
Securitization Trust Agreement), voting together as a single class. If approval
of any holder of this 1998-A SUBI Certificate is required, any such consent
shall be conclusive and binding on such holder and on all future holders hereof
and of any 1998-A SUBI Certificate issued upon the permitted transfer hereof or
in exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this 1998-A SUBI Certificate.
As provided in the Agreement, this 1998-A SUBI Certificate and the
underlying interests represented hereby may not be transferred or assigned, and
any such purported transfer or assignment shall be null, void, and of no effect,
except in connection with an absolute assignment or the grant of a
B-2
<PAGE>
security interest pledge by the Transferor in connection with (i) a sale by the
Beneficiary to the Transferor, or (ii) a Securitized Financing. Such a transfer
of this 1998-A SUBI Certificate is registrable upon surrender of this 1998-A
SUBI Certificate for registration of transfer at the corporate trust office of
the Trustee (or the Trust Agent, if applicable) or by any successor Trustee,
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by the holder hereof or such holder's attorney duly
authorized in writing, and thereupon a new 1998-A SUBI Certificate of a like
undivided interest will be issued to the designated permitted transferee.
Prior to due presentation of this 1998-A SUBI Certificate for registration
of a permitted transfer, the Trustee, the certificate registrar and any of their
respective agents may treat the person or entity in whose name this 1998-A SUBI
Certificate is registered as the owner hereof for the purpose of receiving
distributions and for all other purposes, and, except as provided for in the
Agreement, neither the Trustee, the certificate registrar nor any such agent
shall be affected by any notice to the contrary.
Unless this 1998-A SUBI Certificate shall have been executed by an
authorized officer of the Trustee, by manual signature, this 1998-A SUBI
Certificate shall not entitle the holder hereof to any benefit under the
Agreement or be valid for any purpose.
B-3
<PAGE>
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this 1998-A SUBI Certificate to be duly executed.
Dated: WORLD OMNI LT
By: VT INC., as Trustee
(SEAL) ____________________________
Authorized Officer
ATTEST:
_____________________________
B-4
<PAGE>
EXHIBIT C
FORMS OF 1998-A LEASE
C-1
Exhibit 10.6
AMENDMENT NO. 1
TO
SECOND AMENDED AND RESTATED
SERVICING AGREEMENT
AMENDMENT NO. 1 TO SECOND AMENDED AND RESTATED SERVICING AGREEMENT,
dated as of September 23, 1998 (the "Amendment"), between VT INC., as trustee
(together with its successors and permitted assigns, the "Origination Trustee")
of WORLD OMNI LT, an Alabama trust (the "Origination Trust"), and WORLD OMNI
FINANCIAL CORP., a Florida corporation (together with its successors and
permitted assigns, the "Company" or, in its capacity as servicer, the
"Servicer").
RECITALS
A. The undersigned are parties to the Second Amended and Restated
Servicing Agreement dated as of July 1, 1994 (the "Original Agreement").
B. The undersigned desire to amend the Original Agreement to make
certain changes related to the merger of ALFI, the former general partner of
ALFI LP (as each is defined in the Original Agreement), with and into Auto Lease
Finance LLC, a Delaware limited liability company.
NOW, THEREFORE, in consideration of the foregoing and for other
consideration, the receipt and sufficiency of which are acknowledged, the
parties agree as follows:
Section 1. Definitions.
For all purposes of this Amendment, except as otherwise expressly
provided for or unless the context otherwise requires, (a) unless otherwise
defined herein, all capitalized terms used herein shall have the meanings
attributed to them by the Original Agreement, (b) all terms used in this
Amendment include (i) all genders and (ii) the plural as well as the singular,
(c) all references to words such as "herein", "hereof" and the like shall refer
to this Amendment as a whole and not to any particular article or sections
within this Amendment, (d) the term "include" and all variations thereon shall
mean "include without limitation", and (e) the term "or" shall include "and/or".
Section 2. Amendment of Section 1.01.
The following defined term is hereby added between "ALFI" and ALFI LP"
in Section 1.01:
"ALFI LLC" means Auto Lease Finance LLC, a Delaware limited
liability company, the successor to Auto Lease Finance, Inc.
<PAGE>
Section 3. Amendment of Section 2.01.
Clause (A) of Section 2.01(b)(ii)(B)(1)(ii) is hereby amended and
restated in its entirety as follows:
(A) the Servicer, either (x) as the sole stockholder of ALFI prior to
June 1, 1994, (y) as the owner of a 99% limited partnership
interest in ALFI LP and as the sole stockholder of the general
partner and the owner of the 1% general partnership interest in
ALFI LP from June 1, 1994 until the date hereof, and (z) as the
owner of a 99.9% limited partnership interest in ALFI LP and as
the sole member of ALFI LLC, the general partner and the owner of
the 0.1% general partnership interest in ALFI LP, from and after
the date hereof, has made a capital contribution to the UTI Holder
("Servicer Capital Contribution") during the period since the last
Servicer reimbursement pursuant to this Section 2.01(b)(ii)(B)(1)
equal to the aggregate reserve or overcollateralization
requirement with respect to any borrowings made during such period
by the UTI Holder pursuant to any Securitized Financing secured by
a UTI Pledge (as reflected in the most recent borrowing base
certificate with respect thereto), and
Section 4. Amendment of Section 5.14.
Section 5.14 is hereby amended and restated in its entirety as follows:
The Servicer covenants and agrees that prior to the date which
is one year and one day after the date upon which all obligations under
each Securitized Financing have been paid in full, it will not
institute against, or join any other Person in instituting against, (i)
ALFI, ALFI LP, World Omni Lease Securitization L.P. or any other
Special Purpose Affiliate, (ii) ALFI LLC, World Omni Lease
Securitization LLC or any other general partner of a Special Purpose
Affiliate that is a partnership, (iii) any manager (other than World
Omni Financial Corp.) of a limited liability company that is a general
partner of a Special Purpose Affiliate that is a partnership or that
itself is a Special Purpose Affiliate, or (iv) the Origination Trustee
or the Origination Trust, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceeding or other proceedings under any
federal or state bankruptcy or similar law. This Section shall survive
the termination of this Agreement or the resignation or removal of the
Servicer under this Agreement.
Section 5. Amendment of Section 5.07.
Section 5.07 is hereby amended and restated in its entirety as follows:
This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and permitted
assigns, and all such provisions also shall inure to the benefit of the
Origination Trustee, on behalf of the Origination Trust. Further, all
references herein to Persons or entities other than parties hereto
shall be deemed to refer to the successors and permitted assigns of
such persons, to the extent that such construction is reasonably
possible; to the extent that such construction is not reasonably
possible, the parties hereto shall amend this Agreement so as to effect
the original intent of the parties as closely as possible in an
acceptable manner.
- 2 -
<PAGE>
Section 6. Effect of Amendment.
Other than as specifically amended by this Amendment, the
Original Agreement remains in full force and effect and is hereby reaffirmed in
all respects. Further, all references therein to the "Agreement" shall be deemed
to refer to the Original Agreement, as amended by this Amendment.
Section 7. Governing Law.
THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO ANY
OTHERWISE APPLICABLE PRINCIPLES OF CONFLICT OF LAWS.
Section 8. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or
terms of this Amendment shall be for any reason whatsoever held invalid, then
such covenants, agreements, provisions or terms shall be deemed severable from
the remaining covenants, agreements, provision or terms of this Amendment and
shall in no way affect the validity or enforceability of the other provisions of
this Amendment. To the extent permitted by law, the parties hereto waive any
provision of law that renders any provision of this Amendment invalid or
unenforceable in any respect.
- 3 -
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Amendment to be
executed as of the date first set forth above.
WORLD OMNI FINANCIAL CORP.
By: /s/ Patrick C. Ossenbeck
--------------------------
Name: Patrick C. Ossenbeck
Title: Assistant Treasurer
VT INC., as trustee of World Omni LT
By: /s/ David S. Vick
--------------------------
Name: David S. Vick
Title: President
AUTO LEASE FINANCE L.P., solely for purposes of
Section 2.14 of the Original Agreement
By: Auto Lease Finance LLC, its general partner
By: World Omni Financial Corp., as managing member
By: /s/ Patrick C. Ossenbeck
--------------------------
Name: Patrick C. Ossenbeck
Title: Assistant Treasurer
- 4 -
Exhibit 10.7
- ------------------------------------------------------------------------------
VT INC.,
AS TRUSTEE OF
WORLD OMNI LT
AND
WORLD OMNI FINANCIAL CORP.
SUPPLEMENT 1998-A TO
SERVICING AGREEMENT
DATED AS OF OCTOBER 1, 1998
- ------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
RECITALS.......................................................................1
ARTICLE SIX....................................................................3
Section 6.01. Definitions...................................................3
ARTICLE SEVEN..................................................................5
Section 7.01. Organization and Standing.....................................5
Section 7.02. Authorization, Execution and Delivery; No Conflicts...........5
Section 7.03. Approvals.....................................................5
Section 7.04. Enforceability................................................6
Section 7.05. Litigation....................................................6
Section 7.06. Representations to the RV Insurer.............................6
ARTICLE EIGHT..................................................................6
Section 8.01. Initial Creation of 1998-A SUBI Portfolio.....................6
Section 8.02. Subsequent Additions to 1998-A SUBI Portfolio.................7
Section 8.03. Servicer Payment in Respect of Certain........................8
Section 8.04. Filings.......................................................8
ARTICLE NINE...................................................................9
Section 9.01. Servicer Bound by Servicing Agreement.........................9
Section 9.02. Collection of Monthly Lease Payments and Remittances;
Application of Proceeds; Accounts.............................9
Section 9.03. Records......................................................12
Section 9.04. Advances.....................................................13
Section 9.05. Payment of Certain Fees and Expenses; No Offset..............13
Section 9.06. Servicing Compensation.......................................13
Section 9.07. Repossession and Sale of Leased Vehicles.....................14
Section 9.08. Indemnification by Servicer..................................14
Section 9.09. Third Party Claims...........................................15
Section 9.10. Insurance Policies...........................................15
Section 9.11. Servicer Not to Resign; Assignment...........................16
Section 9.12. Obligor Insurance Coverage in Respect of.....................16
Section 9.13. Corporate Existence; Status; Merger..........................16
Section 9.14. Mobile Leased Premises.......................................17
Section 9.15. Servicer Administrative Duties under the
Transaction Documents........................................17
ARTICLE TEN...................................................................17
Section 10.01. Reporting by the Servicer....................................17
Section 10.02. Annual Accountants' Reports..................................18
Section 10.03. Other Certificates and Notices from Servicer.................18
Section 10.04. Tax Returns..................................................18
ARTICLE ELEVEN................................................................19
Section 11.01. Events of Default; Termination of............................19
Section 11.02. No Effect on Other Parties...................................21
ARTICLE TWELVE................................................................22
i
<PAGE>
Section 12.01. Termination of Agreement.....................................22
Section 12.02. Amendment....................................................22
Section 12.03. Governing Law................................................22
Section 12.04. Notices......................................................22
Section 12.05. Severability.................................................23
Section 12.06. Inspection and Audit Rights..................................23
Section 12.07. Binding Effect...............................................23
Section 12.08. Article and Section Headings.................................23
Section 12.09. Execution in Counterparts....................................23
Section 12.10. Rights Cumulative............................................23
Section 12.11. Further Assurances...........................................24
Section 12.12. Third-Party Beneficiaries....................................24
EXHIBITS
EXHIBIT A - Schedule of 1998-A Leases and 1998-A Leased Vehicles
as of the Initial Cutoff Date....................................A-1
EXHIBIT B - Form of Servicer's Certificate...................................B-1
ii
<PAGE>
SUPPLEMENT 1998-A TO
SERVICING AGREEMENT
SUPPLEMENT 1998-A TO SERVICING AGREEMENT (the "Supplement"), dated as of
October 1, 1998, between VT INC., an Alabama corporation, as trustee
(hereinafter, together with its successors and assigns, the "Origination
Trustee") of WORLD OMNI LT, an Alabama business trust (the "Origination Trust"),
and WORLD OMNI FINANCIAL CORP., a Florida corporation (the "Servicer").
RECITALS
A. Auto Lease Finance L.P. ("ALF LP"), the Origination Trustee and, for
certain limited purposes set forth therein, U.S. Bank National Association
(formerly known as First Bank National Association and successor trustee to Bank
of America Illinois, an Illinois banking corporation) (together with its
successors, "U.S. Bank" and, in its capacity as Trust Agent as defined in the
Servicing Agreement (as defined herein), the "Trust Agent") have entered into
that certain Second Amended and Restated Trust Agreement dated as of July 1,
1994 (amending and restating that certain original Trust Agreement dated as of
November 1, 1993, among Auto Lease Finance, Inc. ("ALFI"), the Origination
Trustee and U.S. Bank, and that certain Amended and Restated Trust Agreement
dated as of June 1, 1994 among ALFI, ALF LP, the Origination Trustee and U.S.
Bank) as amended by that certain Amendment No. 1 to Second Amended and Restated
Trust Agreement dated as of November 1, 1994, among the same parties and as
amended by that certain Amendment No. 2 to Second Amended and Restated Trust
Agreement dated as of September 23, 1998, among the same parties (as so amended
and restated, and as it may be further amended, supplemented or modified, the
"Origination Trust Agreement"), pursuant to which ALFI and the Origination
Trustee formed the Origination Trust for the purpose of taking assignments and
conveyances of, holding in trust and dealing in, various Trust Assets (as
defined in the Origination Trust Agreement) in accordance with the Origination
Trust Agreement. ALFI and the Servicer have entered into that certain Limited
Partnership Agreement dated as of June 1, 1994, as amended and restated by that
certain First Amended and Restated Limited Partnership Agreement dated as of
July 1, 1994, pursuant to which ALF LP was formed and ALFI contributed to ALF LP
all of its right, title and interest in and to the Origination Trust.
B. On September 23, 1998, ALFI was merged with and into Auto Lease Finance,
LLC ("ALF LLC"), a Delaware single member limited liability company the sole
member of which is WOFCO, pursuant to that certain Assignment of General
Partnership Interest and Amendment to Amended and Restated Limited Partnership
Agreement of Auto Lease Finance L.P. dated as of September 23, 1998 among the
Servicer, ALFI and ALF LLC and that certain Certificate of Merger dated
September 23, 1998 filed by WOFCO with the Secretary of State for the State of
Delaware whereby ALF LLC succeeded to all of the rights and obligations of ALFI,
including but not limited to those as general partner of ALF LP, as reflected in
the Amended and Restated Certificate of Limited Partnership of ALF LP filed with
the Delaware Secretary of State as of September 23, 1998.
C. The parties hereto also have entered into that certain Second Amended
and Restated Servicing Agreement dated as of July 1, 1994 as amended by that
certain Amendment No. 1 to Second and Amended Restated Servicing Agreement dated
as of September 23, 1998, among the same parties (as the same has been
supplemented, is supplemented hereby and may be further amended, supplemented or
modified, the "Servicing Agreement"), amending and restating that certain
original Servicing Agreement dated as of November 1, 1993, and that certain
Amended and Restated Servicing Agreement dated as of June 1, 1994, which
provides for, among other things, the servicing of the Trust Assets by the
Servicer.
1
<PAGE>
D. Concurrently herewith, and as contemplated by the Servicing Agreement
and the Origination Trust Agreement, ALF LP, the Origination Trustee, U.S. Bank
and World Omni Lease Securitization L.P. (the "Transferor") are entering into
that certain Supplement 1998-A to Trust Agreement dated as of October 1, 1998
(the "1998-A SUBI Supplement"), pursuant to which the Origination Trustee, on
behalf of the Origination Trust and at the direction of ALF LP, which also will
be at that time a beneficiary of the Origination Trust, will create and issue to
ALF LP a special unit of beneficial interest in the Origination Trust, or SUBI
(as defined in the Origination Trust Agreement) (such SUBI, the "1998-A SUBI"),
whose beneficiaries generally will be entitled to the net cash flow arising
from, but only from, the related SUBI Portfolio (as defined in the Origination
Trust Agreement) (such SUBI Portfolio, the "1998-A SUBI Portfolio"), a SUBI
Certificate (as defined in the Origination Trust Agreement) representing a 100%
beneficial interest in the 1998-A SUBI (such SUBI Certificate, the "1998-A SUBI
Certificate"), all as set forth in the Origination Trust Agreement and the
1998-A SUBI Supplement.
E. Also concurrently herewith, ALF LP and the Transferor are entering into
that certain SUBI Certificate Purchase and Sale Agreement dated as of October 1,
1998, pursuant to which ALF LP is selling to the Transferor, without recourse,
all of ALF LP's right, title and interest in and to the 1998-A SUBI and the
1998-A SUBI Certificate, all moneys due thereon and paid thereon or in respect
thereof and the right to realize on any property that may be deemed to secure
the 1998-A SUBI, and all proceeds thereof, all in consideration of the cash
payment to ALF LP of an amount equal to the Aggregate Net Investment Value (as
defined in the Securitization Trust Agreement) of the 1998-A SUBI Portfolio as
of the Initial Cutoff Date (as defined in the 1998-A SUBI Supplement).
F. Also concurrently herewith, and as contemplated by the Servicing
Agreement and the Origination Trust Agreement, the Transferor, PNC Bank,
Delaware, as owner trustee (the "Owner Trustee") and The Bank of New York, as
indenture trustee (the "Indenture Trustee") are entering into that certain
Securitization Trust Agreement dated as of October 1, 1998 (the "Securitization
Trust Agreement") pursuant to which the 1998-A SUBI Certificate will be
transferred to the Owner Trustee, in that capacity and then pledged to the
Indenture Trustee, in that capacity, in connection with a Securitized Financing
(as defined in the Origination Trust Agreement) by the Transferor.
G. Also concurrently herewith, the Indenture Trustee and the Owner Trustee
are entering into that certain Indenture dated as of October 1, 1998 (the
"Indenture") pursuant to which, among other things, the Securitization Trust
will issue the Notes (as defined below) and the Securitization Trust will grant
a security interest to the Indenture Trustee with respect to all of the Trust
Estate.
H. The parties desire to supplement the terms of the Servicing Agreement
insofar as they apply to the 1998-A SUBI, the 1998-A SUBI Portfolio, and the
1998-A SUBI Certificate to provide for further specific servicing obligations
that will benefit the holders of the 1998-A SUBI Certificate and the parties to
and the beneficiaries of the Securitized Financing contemplated by the
Securitization Trust Agreement, all as generally contemplated by the Servicing
Agreement.
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein contained and in the Servicing Agreement, the parties hereto agree to the
following supplemental obligations with regard to the 1998-A SUBI Portfolio:
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ARTICLE SIX
DEFINITIONS
Section 6.01. Definitions.
For all purposes of this Supplement, except as otherwise expressly provided
or unless the context otherwise requires, (a) unless otherwise defined herein,
all capitalized terms used herein shall have the meanings attributed to them by
Section 1.01 of the Servicing Agreement, by Section 0.01 of the Origination
Trust Agreement, by Section 13.01 of the 1998-A SUBI Supplement, or by Section
1.01 of the Securitization Trust Agreement, as applicable, (b) the capitalized
terms defined in this Supplement have the meanings assigned to them in this
Supplement and include (i) all genders and (ii) the plural as well as the
singular, (c) all references to words such as "herein", "hereof" and the like
shall refer to this Supplement as a whole and not to any particular article or
section within this Supplement, (d) the term "include" and all variations
thereon shall mean "include without limitation", (e) the term "or" shall include
"and/or", and (f) any reference herein to the "Origination Trustee, acting on
behalf of the Origination Trust," or words of similar import, shall be deemed to
mean the Origination Trustee, acting on behalf of the Origination Trust and all
beneficiaries thereof.
"Advance" means, (i) with respect to all Delinquent Leases included in the
1998-A SUBI Portfolio during a Collection Period, an aggregate advance required
to be made with respect to such Delinquent Leases, the amount of which shall
equal the sum of all Monthly Lease Payments due but not received during such
Collection Period; provided, however, that for purposes of this definition, the
term "Delinquent Lease" shall have the meaning set forth in the 1998-A SUBI
Supplement, except that it shall refer to 1998-A Leases that are 31 days or more
past due, not 61 days or more past due; and (ii) with respect to Leases that are
included in the 1998-A SUBI Portfolio during a Collection Period but which are
not Delinquent Leases, an aggregate advance permitted (but not required) to be
made with respect to any Monthly Lease Payments under such Leases that are one
or more days, but less than 31 days, past due.
"ALFI" and "ALF LP " have the respective meanings set forth in Recital A.
"ALF LLC" has the meaning set forth in Recital B.
"Code" means the Internal Revenue Code of 1986, as amended.
"Current Liability" means, with respect to any Plan, the present value of
the accrued benefits under the Plan, as set forth in the most recent audited
consolidated financial statements of JM Family Enterprises, Inc. and its
subsidiaries.
"Eligible Servicer" means the Trust Agent or an entity that is currently
servicing a portfolio of automobile and/or light truck retail installment lease
contracts, that is legally qualified and has the capacity to service the 1998-A
Leases and that has demonstrated the ability to service a portfolio of similar
lease contracts professionally and competently in accordance with high standards
of skill and care.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute of similar import, together
with the regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA shall be construed to refer also to any
successor sections.
"ERISA Affiliate" means each person (as defined in Section 3(9) of ERISA)
which, together with the identified person, would be deemed to be a member of
the same "controlled group" within the meaning of Section 414(b), (c), (m) and
(o) of the Code or Section 4001 of ERISA.
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"Indenture" has the meaning set forth in Recital G.
"Indenture Trustee" has the meaning set forth in Recital F.
"1998-A SUBI" has the meaning set forth in Recital D.
"1998-A SUBI Account" means any SUBI Account related to the 1998-A SUBI.
"1998-A Servicer Event of Default" means any of the acts, events or
occurrences set forth in Section 11.01.
"1998-A SUBI Portfolio" has the meaning set forth in Recital D.
"1998-A SUBI Supplement" has the meaning set forth in Recital D.
"Nonrecoverable Advance" means any Advance that, in the Servicer's
reasonable judgment, may not be ultimately recoverable by the Servicer from
Matured Leased Vehicle Proceeds, Repossessed Vehicle Proceeds or other
Liquidation Proceeds or Insurance Proceeds, any Residual Value Insurance Policy
or otherwise.
"Origination Trust" has the meaning set forth in the Preamble.
"Origination Trust Agreement" has the meaning set forth in Recital A.
"Origination Trust Expenses" has the meaning set forth in Section 9.02(f).
"Origination Trustee" has the meaning set forth in the Preamble.
"Owner Trustee" has the meaning set forth in Recital F.
"Plan" means an "employee benefit plan," as such term is defined in Section
3(3) of ERISA.
"Prospectus" means that certain prospectus dated November [ ], 1998
relating to the public offering of the Class A Notes issued by the
Securitization Trust.
"Residual Value Loss Determination Date" means, with respect to a
Collection Period, the tenth day of the following month, or if that day is not a
Business Day, the next Business Day, or (with respect to the first Residual
Value Loss Determination Date) December 10, 1998.
"Securitization Trust" means the trust created by the Securitization Trust
Agreement.
"Securitization Trust Agreement" has the meaning set forth in Recital F.
"Servicer Letter of Credit" means a letter of credit, surety bond or
insurance policy under which demands for payment may be made to secure timely
remittance by the Servicer of monthly collections received in respect of the
1998-A SUBI Assets to the 1998-A SUBI Collection Account.
"Servicer Reimbursement" has the meaning set forth in Section 9.02(g).
"Servicer's Certificate" has the meaning set forth in Section 10.01(b).
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"Servicing Agreement" has the meaning set forth in Recital C.
"Supplement" has the meaning set forth in the Preamble.
"Transferor" has the meaning set forth in Recital D.
"Trust Agent" has the meaning set forth in Recital A.
"Unfunded Current Liability" of any Plan means the amount, if any, by which
the present value of the accrued benefits under the Plan as of the close of its
most recent Plan year exceeds the value of the Plan's assets, which value shall
be determined as set forth in the most recent audited consolidated financial
statements of JM Family Enterprises, Inc. and its subsidiaries.
"U.S. Bank" has the meaning set forth in Recital A.
ARTICLE SEVEN
REPRESENTATIONS AND WARRANTIES OF SERVICER
The Servicer represents and warrants to the Owner Trustee and Indenture
Trustee as follows:
Section 7.01. Organization and Standing.
The Servicer: (i) is a corporation validly organized and existing and in
good standing under the laws of the State of Florida; (ii) has qualified to do
business as a foreign corporation and is in good standing in the State of
Alabama and any other jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify would not have a material
adverse effect on the ability of the Servicer to carry out its obligations as
Servicer under the Servicing Agreement or this Supplement; (iii) has full power,
authority and legal right to own its property, to carry on its business as
presently conducted, and to enter into and perform its obligations under the
Servicing Agreement and this Supplement; and (iv) holds all requisite licenses
and permits, the absence of which would have a material adverse effect on its
ability to carry on its business as presently conducted.
Section 7.02. Authorization, Execution and Delivery; No Conflicts.
The execution and delivery by the Servicer of this Supplement are within
the corporate power of the Servicer and have been duly authorized by all
necessary corporate action on the part of the Servicer. Neither the execution
and delivery of this Supplement, nor the consummation of the transactions herein
contemplated, nor compliance with the provisions hereof, will conflict with or
result in a breach of, or constitute a default (with notice or passage of time
or both) under any provision of any law, governmental rule, regulation,
judgment, decree or order binding on the Servicer or its properties or the
articles of incorporation or bylaws of the Servicer, or any provision of any
indenture, mortgage, contract or other instrument to which the Servicer is a
party or by which it is bound, or result in the acceleration of any obligation
under, or the creation or imposition of any Lien upon, any of its property
pursuant to the terms of any such indenture, mortgage, contract or other
instrument.
Section 7.03. Approvals.
The Servicer has obtained or made all necessary licenses, consents,
approvals, waivers and notifications of creditors, lessors and other
nongovernmental persons, in each case in connection with the execution and
delivery of this Supplement and the consummation of all the
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transactions herein contemplated, and the Servicer is not required to obtain the
consent of any other party or the consent, license, approval, waiver or
authorization from, or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery,
performance, validity or enforceability of this Supplement.
Section 7.04. Enforceability.
This Supplement constitutes a legal, valid and binding instrument
enforceable against the Servicer in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent conveyance, and other similar laws relating
to the enforcement of creditors' rights generally and to general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
Section 7.05. Litigation.
There are no actions, suits or proceedings pending or, to the knowledge of
the Servicer, threatened against or affecting the Servicer or any Affiliate
thereof, before or by any court, administrative agency, arbitrator or
governmental body with respect to any of the transactions contemplated by this
Supplement, or which will, if determined adversely to the Servicer or any such
Affiliate, materially and adversely affect the Servicer's ability to perform its
obligations hereunder. The Servicer is not in default with respect to any order
of any court, administrative agency, arbitrator or governmental body so as
materially and adversely to affect the transactions contemplated by this
Supplement.
Section 7.06. Representations to the RV Insurer.
The Servicer has made no material misrepresentations to the RV Insurer
regarding any matter in the process of arranging for and negotiating the terms
of the Residual Value Insurance Policy.
ARTICLE EIGHT
CREATION OF 1998-A SUBI
Section 8.01. Initial Creation of 1998-A SUBI Portfolio.
(a) Pursuant to Section 4.02 of the Origination Trust Agreement and Section
11.01 of the 1998-A SUBI Supplement, the Origination Trustee has been directed
to cause to be identified and allocated on the books and records of the
Origination Trust an initial separate portfolio of SUBI Assets consisting of
Leases, related Leased Vehicles and other associated Trust Assets, which Trust
Assets shall meet the criteria specified therein. Pursuant to Section 2.02(f) of
the Servicing Agreement, the Origination Trustee, on behalf of the Origination
Trust, hereby directs that the Servicer so identify and allocate such a separate
portfolio of SUBI Assets consisting of Leases, related Leased Vehicles and other
associated Trust Assets from among all those Leases, related Leased Vehicles and
other associated Trust Assets owned by the Origination Trustee, on behalf of the
Origination Trust, and currently accounted for as part of the Undivided Trust
Interest.
(b) Pursuant to subsection (a) above and Section 2.02(f) of the Servicing
Agreement, the Servicer hereby identifies and allocates the portfolio of Leases,
related Leased Vehicles and other associated Trust Assets (as described in
clauses (i) through (ii) of the first sentence of Section 11.01(a) of the 1998-A
SUBI Supplement) more particularly described on Exhibit A hereto (which is in
substantially the form of a Schedule of Leases and Leased Vehicles), in order to
create the initial 1998-A SUBI Portfolio.
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(c) The Servicer hereby represents and warrants to the Origination Trustee,
on behalf of the Origination Trust, to the Owner Trustee, on behalf of the
Certificateholder, and to the Indenture Trustee, on behalf of the Noteholders,
that (i) all 1998-A Leases as of the Initial Cutoff Date were Eligible Leases as
of the Initial Cutoff Date, (ii) no adverse selection procedures were employed
in selecting such 1998-A Leases, and (iii) it is not aware of any bias in the
selection of such 1998-A Leases that would cause the delinquencies or losses
therein to be worse than those of other Leases.
Section 8.02. Subsequent Additions to 1998-A SUBI Portfolio.
(a) Pursuant to Section 11.02 of the 1998-A SUBI Supplement, the
Origination Trustee has been directed to cause to be identified and allocated on
the books and records of the Origination Trust on or before each Transfer Date
certain additional Eligible Leases, related Leased Vehicles and other associated
Trust Assets not then allocated, or reserved for allocation to, any SUBI
Portfolio, with an aggregate Discounted Principal Balance determined as provided
for in such Section. Pursuant to Section 2.02(f) of the Servicing Agreement, the
Origination Trustee, on behalf of the Origination Trust, hereby directs that the
Servicer identify such additional Eligible Leases, related Leased Vehicles and
other associated Trust Assets (as described in clauses (i) and (ii) of the first
sentence of Section 11.01(a) of the 1998-A SUBI Supplement and as meet the other
requirements set forth in Section 11.02 thereof) on or before each Transfer
Date, and cause such Leases and Leased Vehicles to be specifically identified on
the revised Schedule of Leases and Leased Vehicles to be delivered pursuant to
Section 10.01(b) hereof. On each such Transfer Date, but effective as of the
related Subsequent Cutoff Date, such additional Eligible Leases, Leased Vehicles
and other associated Trust Assets shall be added to the 1998-A SUBI Portfolio as
additional 1998-A SUBI Assets.
(b) The Servicer shall give one Business Day's prior notice to the
Indenture Trustee of each Transfer Date. On each Transfer Date, prior to the
reallocation described in the last sentence of subparagraph (a), the Servicer
also shall provide to the Origination Trustee, on behalf of the Origination
Trust, and the Indenture Trustee, on behalf of the Noteholders, an Officer's
Certificate certifying that (i) all 1998-A Leases added to the 1998-A SUBI
Portfolio on that date were Eligible Leases as of the relevant Subsequent Cutoff
Date, (ii) no adverse selection procedures were employed in selecting such
1998-A Leases, (iii) it is not aware of any bias in the selection of such 1998-A
Leases that would cause the delinquencies or losses thereof to be worse than
other Leases, other than the fact that such 1998-A Leases were selected from all
Eligible Leases not then allocated to any SUBI Portfolio or reserved for
allocation to another SUBI Portfolio (as provided in Section 11.08 of the 1998-A
SUBI Supplement) and (iv) unless the Indenture Trustee receives confirmation
(written or oral) from each Rating Agency to the effect that the use of
different criteria would not result in the qualification, reduction or
withdrawal of its then current rating on any Rated Notes, after giving effect to
such reallocation (A) each such 1998-A Lease will be allocated to the 1998-A
SUBI Portfolio based upon its Discounted Principal Balance as of the relevant
Subsequent Cutoff Date, (B) the weighted average remaining term of all 1998-A
Leases will be not greater than [38] months, and (C) the weighted average Booked
Residual Value of all 1998-A Leases, as a percentage of the aggregate
Outstanding Principal Balance of the 1998-A Leases, will be not greater than
[67]%, based on the characteristics of each 1998-A Lease as of its date of
origination.
(c) Except in the circumstances set forth in Section 11.02(e) of the 1998-A
SUBI Supplement, on each Transfer Date, the Servicer shall transfer from the
1998-A SUBI Collection Account to the Lease Funding Account an amount equal to
the aggregate Discounted Principal Balance as of the relevant Subsequent Cutoff
Date of the 1998-A Leases then being added to the 1998-A SUBI Portfolio pursuant
to Section 11.02(a) of the 1998-A SUBI Supplement.
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(d) In the circumstances set forth in Section 11.02(e) of the 1998-A SUBI
Supplement, the Servicer shall transfer from the 1998-A SUBI Collection Account
to the 1998-A SUBI Lease Account the amounts specified in such Section.
Section 8.03. Servicer Payment in Respect of Certain
Leases and Leased Vehicles.
(a) The representation and warranty of the Servicer set forth in Section
8.01(c), and the certifications of the Servicer pursuant to Section 8.02(b)(i),
with respect to each 1998-A Lease shall survive delivery of the related Lease
Documents to the Servicer and shall continue so long as such 1998-A Lease
remains outstanding, or until the termination of the Securitization Trust
Agreement pursuant to Section 7.01 thereof, whichever occurs earlier. Upon
discovery by the Origination Trustee, the Owner Trustee, the Indenture Trustee
or the Servicer that any such representation or warranty was incorrect as of the
time effective and materially and adversely affects such 1998-A Lease, the party
discovering such incorrectness shall give prompt written notice to the others.
Within 60 days of its discovery of such incorrectness or notice to such effect
to the Servicer, the Servicer shall cure in all material respects the
circumstances or condition in respect of which the representation or warranty
was incorrect as of the time effective. If the Servicer is unable or unwilling
to do so timely, it shall, as the sole remedy for such breach, promptly (i)
deposit (or cause to be deposited) into the 1998-A SUBI Collection Account an
amount equal to the then Discounted Principal Balance of such Lease as of the
Deposit Date related to the Collection Period in which the 60-day cure period
ended, plus an amount equal to the imputed interest, or lease charge, portion of
any Monthly Lease Payments with respect thereto at the related Lease Rate that
was delinquent as of that Collection Period, (ii) reallocate such Lease and the
related Leased Vehicle from the 1998-A SUBI Portfolio to the UTI Portfolio, and
(iii) indemnify, defend and hold harmless the holders of any 1998-A SUBI
Certificate (including without limitation the Owner Trustee on behalf of the
Certificateholder and the Indenture Trustee on behalf of the Noteholders) and
any subsequent servicer (if other than the current Servicer) from and against,
any and all loss or liability with respect to or resulting from any such Lease
or Leased Vehicle (including without limitation the reasonable fees and expenses
of counsel). Notwithstanding the foregoing, if any reallocation described in
clause (ii) would cause the Transferor Interest to be equal to or less than
zero, the Servicer also shall deposit promptly into the 1998-A SUBI Collection
Account an amount so that the Transferor Interest will not be reduced to less
than zero, and the reallocation will not be made until such deposit has been
made.
(b) In the event that the Servicer receives funds from a Dealer required
pursuant to such Dealer's obligation under a Dealer Agreement with the Servicer
to repurchase a misrepresented Lease or Leased Vehicle included in the 1998-A
SUBI Portfolio, the Servicer shall, within two Business Days of receipt thereof,
deposit such funds into the 1998-A SUBI Collection Account, which deposit shall
satisfy the Servicer's obligations pursuant to Section 8.03(a)(i), and return to
the repurchasing Dealer the Certificate of Title and Lease with respect to such
Leased Vehicle.
(c) The obligations of the Servicer pursuant to this Section 8.03 shall
survive any termination of the Servicer with respect to the 1998-A SUBI
Portfolio under this Supplement or the Servicing Agreement.
Section 8.04. Filings.
The Servicer will undertake all other and future actions and activities as
may be reasonably necessary to perfect (or evidence) and confirm the foregoing
allocations of Trust Assets to the 1998-A SUBI Portfolio and the backup security
interest therein of the Indenture Trustee including without limitation filing or
causing to be filed UCC financing statements and executing
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and delivering all related filings, documents or writings as may be reasonably
necessary hereunder or under any other Securitization Trust Documents (including
the Indenture and the Backup Security Agreement), whether on its own behalf or
pursuant to the power of attorney granted by the Grantor pursuant to Section
11.04 of the 1998-A SUBI Supplement; provided, however, that in no event shall
the Servicer be required to take any action to perfect a security interest that
may be held by the Owner Trustee or the Indenture Trustee in any 1998-A Leased
Vehicle.
ARTICLE NINE
SPECIFIC REQUIREMENTS FOR
ADMINISTRATION AND SERVICING OF LEASES
IN 1998-A SUBI PORTFOLIO
Section 9.01. Servicer Bound by Servicing Agreement.
(a) Except as otherwise specifically provided herein: (i) the Servicer
shall continue to be bound by all provisions of the Servicing Agreement with
respect to the Leases, Leased Vehicles and other associated Trust Assets in the
1998-A SUBI Portfolio, including without limitation the provisions of Article
Two thereof relating to the administration and servicing of Leases; and (ii) the
provisions set forth herein shall operate either as additions to or
modifications of the already-extant obligations of the Servicer under the
Servicing Agreement, as the context may require. In the event of any conflict
between the provisions of this Supplement and the Servicing Agreement with
respect to the 1998-A SUBI, the provisions of this Supplement shall prevail.
(b) For purposes of determining the Servicer's obligations with respect to
the servicing of the 1998-A SUBI Portfolio under this Supplement (including
without limitation pursuant to Article Two thereof), general references in the
Servicing Agreement to: (i) a SUBI Account shall be deemed to refer more
specifically to the 1998-A SUBI Account; (ii) a SUBI Asset shall be deemed to
refer more specifically to a 1998-A SUBI Asset; (iii) an appropriate or
applicable SUBI Collection Account shall be deemed to refer more specifically to
the 1998-A SUBI Collection Account; (iv) an appropriate or applicable SUBI Lease
Account shall be deemed to refer more specifically to a 1998-A SUBI Lease
Account; (v) a SUBI Portfolio shall be deemed to refer more specifically to the
1998-A SUBI Portfolio; (vi) a SUBI Servicing Agreement Supplement shall be
deemed to refer more specifically to this Supplement; and (vii) a SUBI
Supplement shall be deemed to refer more specifically to the 1998-A SUBI
Supplement.
(c) Coincident with the execution and delivery of this Supplement, the
Servicer shall furnish the Indenture Trustee, on behalf of the Noteholders with
an Officer's Certificate listing the officers of the Servicer currently involved
in, or responsible for, the administration and servicing of the Leases in the
1998-A SUBI Portfolio, which list shall from time to time be updated by the
Servicer.
Section 9.02. Collection of Monthly Lease Payments and Remittances;
Application of Proceeds; Accounts.
(a) With reference to Section 2.02(b) of the Servicing Agreement:
i) the Servicer shall transfer into the 1998-A SUBI Collection Account
any Extension Fee that it may receive in connection with the extension of a
1998-A Lease;
ii) except as provided in clause (iii) below, the extended Maturity
Date of any 1998-A Lease may not occur later than the last day of the Collection
Period related to the Final Scheduled Distribution Date; and
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iii) if the Servicer does extend the Maturity Date of a Lease included
in the 1998-A SUBI Portfolio by more than a total of five times or by more than
five months in the aggregate as described in Section 2.02(b) of the Servicing
Agreement, or extends the Maturity Date so that the extended Maturity Date will
occur later than the last day of the Collection Period relating to the Final
Scheduled Maturity Date, then, as the sole remedy therefor, the Servicer shall,
on the Deposit Date related to the Collection Period in which such extension was
granted or on the Deposit Date relating to the Collection Period in which the
Servicer discovers or is notified that an improper extension was granted, (y)
deposit into the 1998-A SUBI Collection Account an amount equal to the then
Discounted Principal Balance of such Lease plus an amount equal to the interest,
or lease charge, portion of any Monthly Lease Payments with respect thereto at
the related Lease Rate that were delinquent as of the end of that Collection
Period, and (z) reallocate such Lease and the related Leased Vehicle from the
1998-A SUBI Portfolio to the UTI Portfolio. The obligations of the Servicer
pursuant to this Section 9.02(a) shall survive any termination of the Servicer's
obligations with respect to the 1998-A SUBI Portfolio under this Supplement or
the Servicing Agreement.
(b) With reference to Section 2.02(c) of the Servicing Agreement, the
Servicer shall, within one (1) Business Day after receipt, deposit all proceeds
of claims made under the Residual Value Insurance Policy (as described in
Section 9.10(b)) (i) for Insured Residual Value Loss Amounts with respect to the
Revolving Period, into the 1998-A SUBI Collection Account for reinvestment in
additional Eligible Leases, related Leased Vehicles and other associated Trust
Assets as provided in Section 8.02, and (ii) for Insured Residual Value Loss
Amounts with respect to the Amortization Period, into the Distribution Account
for distribution as provided in clause (ii) of Section 3.03(e) of the
Securitization Trust Agreement.
(c) With reference to Section 2.02(d) of the Servicing Agreement, the
Servicer shall treat all Repossessed Vehicle Proceeds and Matured Leased Vehicle
Proceeds in the manner provided for other Liquidation Proceeds; provided,
however, as set forth in Section 9.07, that the Servicer may be reimbursed for
related unreimbursed Repossessed Vehicle Expenses, Matured Leased Vehicle
Expenses, other Liquidation Expenses and Insurance Expenses as provided in
subsection (g).
(d) With reference to Section 2.04 of the Servicing Agreement, the Servicer
shall deposit into the 1998-A SUBI Collection Account on or before each Deposit
Date each Security Deposit that became Liquidation Proceeds during the related
Collection Period.
(e) The Servicer, on behalf of the Origination Trustee, shall establish and
maintain in the name of the Indenture Trustee the 1998-A SUBI Collection Account
as set forth in Section 12.01(a) of the 1998-A SUBI Supplement. The Servicer, on
behalf of the Owner Trustee, shall establish and maintain the Distribution
Account, in the name of the Indenture Trustee, as set forth in Section 3.01 of
the Securitization Trust Agreement. The Servicer, on behalf of the Owner
Trustee, shall establish and maintain the Reserve Fund, in the name of the
Indenture Trustee, as set forth in Section 3.04(a) of the Securitization Trust
Agreement.
(f) On each Determination Date the Servicer shall make the calculations
necessary to allow the distribution by the Indenture Trustee to the holder of
the 1998-A SUBI Certificate on the related Distribution Date in accordance with
Section 12.01(c) of the 1998-A SUBI Supplement. In connection therewith, the
Servicer shall determine the amount of Origination Trust expenses and
liabilities ("Origination Trust Expenses") incurred or suffered during the
preceding Collection Period and shall calculate the allocations of such
Origination Trust Expenses among the various Portfolios, including the 1998-A
SUBI Portfolio, in good faith and so as not to disproportionately affect any
Portfolio, generally as provided for in Section 7.01(c) of the Origination Trust
Agreement. On each Determination Date, the Servicer also shall make the
calculations
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necessary to allow the distributions to Noteholders and others on the related
Distribution Date in accordance with Section 3.03 of the Securitization Trust
Agreement.
(g) On each Deposit Date, the Servicer shall cause the transfer from the
1998-A SUBI Collection Account in respect of the 1998-A SUBI Certificate to
the Distribution Account at the direction of the Transferor, as provided in
Section 3.02(a) of the Securitization Trust Agreement and Section 12.01(c) of
the 1998-A SUBI Supplement. On each Distribution Date, the Servicer shall make
the distributions from the Distribution Account and the Reserve Fund in
respect of the Notes, as provided in Section 3.03 of the Securitization Trust
Agreement, including without limitation any redeposit of Undistributed
Transferor Excess Collections into the 1998-A SUBI Collection Account upon
receipt of appropriate instructions from the Transferor pursuant to Section
3.03(c) of the Securitization Trust Agreement.
(h) To the extent that during any Collection Period: (i) the Servicer has
incurred Matured Leased Vehicle Expenses; (ii) the Servicer has incurred any
Repossessed Vehicle Expenses or other Liquidation Expenses or Insurance
Expenses; (iii) any Monthly Lease Payments arising from a Lease allocated to the
1998-A SUBI Portfolio are received by the Origination Trustee or the Servicer
with respect to any prior Collection Period as to which the Servicer has
outstanding an unreimbursed Advance; or (iv) any amount of unreimbursed Advances
are reasonably determined by the Servicer to be Nonrecoverable Advances, then,
on the related Deposit Date, (1) the Servicer shall provide to the Origination
Trustee and the Indenture Trustee an Officer's Certificate setting forth the
basis for its determination of any such amount and (2) the Indenture Trustee
shall promptly transfer an amount equal to the aggregate of such amounts from
the 1998-A SUBI Collection Account to the Lease Funding Account. Thereafter, the
Origination Trustee shall remit to the Servicer from the Lease Funding Account
the total of such amounts set forth in the first sentence above and clauses (i)
through (iv) of the second sentence above, without interest (the "Servicer
Reimbursement"). In lieu of causing the Indenture Trustee to transfer to the
Lease Funding Account and then remit to the Servicer all or part of any such
Servicer Reimbursement, upon providing an Officer's Certificate, the Servicer
may deduct from deposits otherwise to be made into the 1998-A SUBI Collection
Account, as applicable, an amount up to but not exceeding the total of such
amounts as are due and owing to the Servicer.
(i) The Servicer shall account to the Origination Trustee, the Indenture
Trustee and the Owner Trustee with respect to the 1998-A SUBI Portfolio
separately from any other Portfolio.
(j) The Servicer shall direct the Indenture Trustee's investments from time
to time of funds in the 1998-A SUBI Accounts, the Distribution Account and the
Reserve Fund, all as provided for in (and subject to the limitations of) the
other Transaction Documents. The maximum permissible maturities of any such
investments pursuant to this clause on any date shall be not later than the
Business Day immediately preceding the Deposit Date (with regard to investment
of funds in 1998-A SUBI Accounts) or the Business Day immediately preceding the
Distribution Date (with regard to investment of funds in the Distribution
Account and the Reserve Fund) next succeeding the date of such investment,
except for (i) investments on which the Indenture Trustee is the obligor
(including repurchase agreements on which it, in its commercial capacity, is
liable as principal), which may mature on the Deposit Date or Distribution Date,
respectively, and (ii) investments during the Revolving Period of Principal
Collections on deposit in the 1998-A SUBI Collection Account, which may mature
on such dates as specified by the Indenture Trustee at the Servicer's direction
so as to maintain the availability of sufficient cash to make the payments
described in Sections 8.02(c) and (d) hereof.
(k) In the event the Servicer obtains confirmation (written or oral) from
each Rating Agency, and provides evidence of such confirmation to the UTI
Holder, the Origination
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Trustee and the Indenture Trustee, to the effect that the utilization by the
Servicer of an alternative remittance schedule with respect to collections
arising out of the 1998-A SUBI Portfolio to be deposited in the 1998-A SUBI
Collection Account pursuant to Section 2.02(c) or (d) of the Servicing Agreement
(including but not limited to the use of an alternative remittance schedule
pursuant to which the obligations of the Servicer to make such remittances are
secured by a Servicer Letter of Credit satisfactory to each such Rating Agency)
will not result in a qualification, downgrading or withdrawal of the
then-current rating assigned to the Rated Notes by such Rating Agency, (i) this
Supplement may be so modified without the consent of any Noteholders pursuant to
Section 12.02 of this Agreement and 9.01 of the Securitization Trust Agreement
and (ii) the Servicer may remit such collections to the 1998-A SUBI Collection
Account in accordance with that alternative remittance schedule.
(l) The Servicer may make remittances to the Distribution Account net of
certain other amounts, as and to the extent set forth in Section 3.05 of the
Securitization Trust Agreement.
(m) The parties hereto acknowledge that the Origination Trustee, on behalf
of the Origination Trust, has made a complete transfer to the Owner Trustee of
the initial proceeds of the 1998-A SUBI Certificate contained in the
Distribution Account and the Reserve Fund and, except as provided in this
Supplement, the 1998-A SUBI Supplement and the Securitization Trust Agreement,
neither the Origination Trustee nor the Servicer has any right to direct such
funds to a third party or to receive such funds.
(n) In the event of a sale, disposition or other liquidation of the 1998-A
SUBI Certificate and the other property of the Securitization Trust pursuant to
Section 5.17 of the Indenture, the Servicer shall allocate the net proceeds
thereof between Principal Collections and Interest Collections as set forth in
Section 5.08 of the Indenture.
Section 9.03. Records.
Upon the occurrence and during the continuance of a 1998-A Servicer Event
of Default hereunder, the Servicer shall, on demand of the Origination Trustee,
on behalf of the Origination Trust (either at the request of the Indenture
Trustee or, as provided in Section 11.01(b) hereof, upon demand of Noteholders
representing more than 50% of the aggregate Percentage Interests (acting as a
single Class)), deliver to the Origination Trustee all such data, operating
software and appropriate documentation necessary for the servicing of the 1998-A
Leases, including but not limited to the related Lease Documents and Title
Documents, all moneys collected by it and required to be deposited in any 1998-A
SUBI Account on behalf of the Origination Trust, or in the Distribution Account
or the Reserve Fund on behalf of the Securitization Trust, all Security Deposits
with respect to 1998-A Leases, and any 1998-A Leased Vehicle in the possession
of the Servicer that has been repossessed or is part of Matured Leased Vehicle
Inventory and in either case has not yet been sold or otherwise disposed of
pursuant to Section 2.06 of the Servicing Agreement. Without limitation of the
foregoing, if the rights of the Servicer with respect to the 1998-A SUBI
Portfolio shall have been terminated in accordance with Section 4.01(b) of the
Servicing Agreement and Section 11.01(b) hereof or if this Supplement shall have
been terminated pursuant to Section 12.01 hereof, the Servicer shall, upon
demand of the Origination Trustee, on behalf of the Origination Trust (either at
the request of the Indenture Trustee, the Noteholders representing more than 50%
of the aggregate Percentage Interests (acting as a single Class), or otherwise),
deliver to the Origination Trustee all such data, operating software and
appropriate documentation necessary for the servicing of the 1998-A Leases and
all moneys collected by it and required to be deposited, as appropriate, in any
1998-A SUBI Account or the Distribution Account or the Reserve Fund. In addition
to delivering such data, operating software and appropriate documentation and
moneys, the Servicer shall use its commercially reasonable efforts to effect the
orderly and efficient transfer of
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the servicing of the 1998-A Leases to the party that will be assuming
responsibility for such servicing, including, without limitation, directing
Obligors to remit payments in respect of those Leases to an account or address
designated by the Origination Trustee or such new servicer.
Section 9.04. Advances.
(a) On or prior to each Deposit Date, the Servicer shall make any Advance
required by clause (i) of the definition thereof, and may make any Advance
permitted by clause (ii) of the definition thereof which the Servicer chooses to
make, into the 1998-A SUBI Collection Account.
(b) Notwithstanding any other provision of this Supplement, the Servicer
shall not be obligated to make any Advance if and to the extent that the
Servicer shall have reasonably determined that any such Advance, if made, would
constitute a Nonrecoverable Advance. Any such determination shall be evidenced
by an Officer's Certificate of the Servicer furnished to the UTI Holder, the
Origination Trustee and the Indenture Trustee setting out the basis for such
determination, which determination shall be conclusive and binding absent
manifest error.
Section 9.05. Payment of Certain Fees and Expenses; No Offset.
(a) As part of its obligations hereunder, to the extent that cash flows
arising from the 1998-A SUBI Portfolio, as set forth in Section 3.03(b) of the
Securitization Trust Agreement, are insufficient to provide for the payment of
all fees and expenses due to the Origination Trustee, the Owner Trustee or the
Indenture Trustee as Capped Origination Trust Administrative Expenses, Capped
Owner Trustee Administrative Expenses, Capped Indenture Trustee Administrative
Expenses or Uncapped Administrative Expenses, the Servicer shall advance an
amount equal to such excess fees and expenses as they become payable from time
to time and agrees to indemnify the Origination Trustee, the Owner Trustee and
the Indenture Trustee and their respective agents for such amounts. The Servicer
shall be entitled to reimbursement of such advances as set forth in Section
3.03(b) of the Securitization Trust Agreement. The obligations of the Servicer
pursuant to this Section 9.05(a) shall survive any termination of the Servicer's
rights and obligations with respect to the 1998-A SUBI Portfolio under this
Supplement or the Servicing Agreement.
(b) Prior to the termination of the Servicer's rights and obligations with
respect to the 1998-A SUBI Portfolio and thereafter if such termination results
from a 1998-A Servicer Event of Default, the obligations of the Servicer with
respect to the 1998-A SUBI Portfolio shall not be subject to any defense,
counterclaim or right of offset that the Servicer has or may have against any
UTI Holder, the Origination Trustee on behalf of the Origination Trust, any
Special Purpose Affiliate, the Owner Trustee or the Indenture Trustee, whether
in respect of this Supplement, the 1998-A SUBI Supplement, the Servicing
Agreement, any Securitization Trust Document, any 1998-A Lease, any related
Lease Document, any 1998-A Leased Vehicle or otherwise.
Section 9.06. Servicing Compensation.
(a) Notwithstanding anything to the contrary in Section 2.05 of the
Servicing Agreement, (a) the Servicing Rate Portion with regard to the 1998-A
SUBI Portfolio shall be calculated and (unless waived in accordance with Section
9.06(b) hereof) paid on each Distribution Date based upon the Aggregate Net
Investment Value as of the first day of the related Collection Period, rather
than based upon the allocable portion of the Pool Balance, (b) the portion of
the Servicing Fee allocable to the 1998-A SUBI Portfolio shall be paid out of
cash flows arising from the 1998-A SUBI Portfolio as and to the extent set forth
in Section 12.01(c) of the 1998-A SUBI Supplement and the definition of the term
"Collections" set forth in Section 10.01 thereof, (c) no Extension Fee with
respect to a Lease included in the 1998-A SUBI Portfolio shall constitute part
of
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the Servicing Fee, and (d) the Servicer may be reimbursed for advancing certain
Administrative Expenses as provided in Section 9.05(a). Further, as additional
servicing compensation with regard to the 1998-A SUBI Portfolio, the Servicer
also shall receive income on investment of funds in the Reserve Fund if and to
the extent that the balance therein is greater than the Reserve Fund Cash
Requirement (and so long as all Excess Collections are not required to be
retained in the Reserve Fund pursuant to Section 3.03(c) of the Securitization
Trust Agreement) as and to the extent provided in Section 3.04(b) of the
Securitization Trust Agreement.
(b) So long as World Omni Financial Corp. is the Servicer, the Servicer
may, by notice to the Origination Trustee and the Indenture Trustee on or prior
to any Determination Date, waive its Servicing Fee with respect to the related
Collection Period, so long as the Servicer believes that sufficient collections
will be available from Interest Collections on one or more future Distribution
Dates (other than from amounts on deposit in the Reserve Fund) to pay such
waived Servicing Fee, without interest. If the Servicer so waives such Servicing
Fee, the Servicing Fee with respect to such Collection Period shall be deemed to
be zero for all purposes, provided, however, that for purposes of clause (c) of
the definition of "Interest Collections" in the 1998-A SUBI Supplement and
Section 3.03 of the Securitization Trust Agreement, any such waived Servicing
Fee thereafter shall be treated as an unpaid Servicing Fee with respect to a
prior Collection Period (unless the Servicer continues to waive such Servicing
Fee).
Section 9.07. Repossession and Sale of Leased Vehicles.
Notwithstanding Section 2.06 of the Servicing Agreement, the Servicer need
not deduct from Repossessed Vehicle Proceeds, Matured Leased Vehicle Proceeds or
other Liquidation Proceeds or Insurance Proceeds with respect to any particular
1998-A Leased Vehicle all related unreimbursed Repossessed Vehicle Expenses,
Matured Leased Vehicle Expenses or other Liquidation Expenses or Insurance
Expenses prior to transferring such funds out of its operating account. Such
expenses may instead be reimbursed as provided in Section 9.02(g).
Section 9.08. Indemnification by Servicer.
The Servicer agrees to indemnify, defend and hold harmless the Owner
Trustee, the Indenture Trustee and their respective agents for any and all
liabilities, losses, damages and expenses (including without limitation
reasonable fees and expenses of counsel) that may be incurred by the Owner
Trustee, the Indenture Trustee or their respective agents as a result of any act
or omission by the Servicer in connection with its maintenance and custody of
the Lease Documents, Title Documents, and Lease Records with respect to 1998-A
Leases and 1998-A Leased Vehicles, the servicing of the 1998-A Leases, the
Servicer's undertakings in clause (e) of Section 2.07 of the Servicing Agreement
or any other activity undertaken or omitted by the Servicer with respect to any
Trust Asset included in the 1998-A SUBI Portfolio. The obligations set forth in
this Section 9.08 shall survive the termination of this Supplement or the
resignation or removal of the Servicer (generally or with respect to the 1998-A
SUBI Portfolio), the Origination Trustee, the Owner Trustee or the Indenture
Trustee.
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Section 9.09. Third Party Claims.
The Servicer shall immediately notify the Owner Trustee and the Indenture
Trustee and any other holder of any 1998-A SUBI Certificate upon its learning
that a claim of whatever kind that would have a material adverse impact on any
UTI Holder, the Transferor, the Origination Trust, the Securitization Trust, the
Owner Trustee, the Indenture Trustee, any 1998-A SUBI Asset or the Servicer is
being made by a third party with respect to any Lease or Leased Vehicle (whether
or not included in the 1998-A SUBI Portfolio) or the servicing thereof or with
respect to any other Trust Asset (whether or not constituting a 1998-A SUBI
Asset).
Section 9.10. Insurance Policies.
(a) So long as any 1998-A SUBI Certificate are outstanding, the Servicer
will maintain and pay when due all premiums with respect to, and the Servicer
may not terminate or cause the termination of, or permit any other insured party
to terminate or cause the termination of the following: (i) each Contingent and
Excess Liability Insurance Policy, all premiums with respect to which shall
constitute Administrative Expenses, unless (A) a replacement insurance policy or
policies is obtained providing coverage against third party claims that may be
raised against the Origination Trustee, on behalf of the Origination Trust, with
respect to any Leased Vehicle included in the 1998-A SUBI Portfolio in an amount
at least equal to $10 million per claim, not subject, to this extent, to any
annual or aggregate cap (which policy or policies may be a blanket insurance
policy or policies covering the Servicer and one or more of its Affiliates), and
(B) either each Rating Agency has confirmed (orally or in writing) to the
Indenture Trustee to the effect that the obtaining of any such replacement
insurance policy or policies, in and of itself, will not cause its then-current
rating of any of the Rated Notes to be qualified, reduced or withdrawn, or
alternatively (with respect to Moody's only, so long as Moody's is a Rating
Agency) such replacement policy is issued by a carrier with a claims paying
ability rating of A-2 or better; or (ii) the Residual Value Insurance Policy,
all premiums with respect to which shall be an expense of the Servicer, except
in the case of compliance with clause (ii) or (iii) of Section 8.01(m) of the
Securitization Trust Agreement. Further, the Servicer shall provide each Rating
Agency prior notice of the content of any proposed amendment, modification or
waiver of the terms of the Residual Value Insurance Policy, whether or not such
action requires the approval of any Rating Agency. On or before December 31 of
each year, the Servicer shall provide to the Origination Trustee one or more
insurance certificates certifying that each of the particular policies it is
required to maintain pursuant to this Section 9.10 remains in full force and
effect. The obligations of the Servicer pursuant to this Section 9.10 shall
survive any termination of the Servicer's obligations with respect to the 1998-A
SUBI Portfolio under this Supplement or the Servicing Agreement.
(b) On or prior to each Residual Value Loss Determination Date, the
Servicer shall determine the Insured Residual Value Loss Amount for the related
Collection Period, if any, and shall make a claim under the Residual Value
Insurance Policy for any such Insured Residual Value Loss Amount. The proceeds
of such claim shall be deposited as set forth in Section 2.02(c) hereof for
application as set forth in clause (ii) of Section 3.03(e) of the Securitization
Trust Agreement.
(c) Once established, the Servicer shall not change the insured residual
value of any 1998-A Leased Vehicle under the Residual Value Insurance Policy
except (i) in accordance with its customary and usual procedures and (ii) in a
manner as will not result in such 1998-A Leased Vehicle not being covered by the
Residual Value Insurance Policy.
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Section 9.11. Servicer Not to Resign; Assignment.
(a) If the Servicer resigns in the circumstances contemplated by Section
2.10(a) of the Servicing Agreement, in addition to the requirements set forth
therein, the Opinion of Counsel required thereby also shall be reasonably
satisfactory to the Indenture Trustee. Any servicing agreement entered into by a
new servicer pursuant to that Section 2.10(a) also must contain substantially
the same provisions as this Supplement. The Indenture Trustee shall not
unreasonably fail to consent to a servicing agreement with a new servicer that
proposes to enter into a servicing agreement that meets the standards required
by Section 2.10 of the Servicing Agreement and this Supplement. No such
resignation shall affect the obligation of the Servicer to remit moneys to the
1998-A SUBI Collection Account (in lieu of unrecoverable insurance proceeds) as
set forth in Section 2.11 of the Servicing Agreement and Section 9.11 hereof, or
the obligations of the Servicer pursuant to Section 8.03(c) hereof, Section
2.07(g) of the Servicing Agreement or Section 9.07 hereof, Section 9.02(a)
hereof (as to any 1998-A Lease the Maturity Date of which has been extended
beyond the specified limit by the Servicer), Section 9.05(a) hereof, or Section
9.09 hereof; no successor Servicer shall be required to undertake any of the
foregoing, other than the obligation set forth in Section 9.05(a) (which shall
remain a joint and several obligation of the initial Servicer and any successor
Servicer). The Origination Trustee shall give prompt notice to each Rating
Agency of any such resignation of the Servicer, and the Origination Trustee and
Indenture Trustee must obtain from each Rating Agency a letter approving each
substitute servicer.
(b) The Servicer may not assign this Supplement or any of its rights,
powers, duties or obligations hereunder except in connection with an assignment
of the Servicing Agreement as permitted thereby.
(c) Except as provided in paragraphs (a) and (b) above, the duties and
obligations of the Servicer under this Supplement shall continue until they
shall have been terminated as provided in Section 12.01 hereof or in the
Servicing Agreement and shall survive the exercise by the Origination Trustee,
on behalf of the Origination Trust, of any right or remedy under this Supplement
or the Servicing Agreement or the enforcement by the Origination Trustee, on
behalf of the Origination Trust, of any provision of the Origination Trust
Documents.
Section 9.12. Obligor Insurance Coverage in Respect of Leased Vehicles
With reference to Section 2.11 of the Servicing Agreement, except as
provided in Section 9.02 hereof, the required deposits of insurance proceeds
with respect to 1998-A Leased Vehicles into the 1998-A SUBI Collection Account
shall be made within two Business Days after receipt thereof.
Section 9.13. Corporate Existence; Status; Merger.
(a) With reference to Section 2.13(a) of the Servicing Agreement, the
Servicer also will obtain and preserve its qualification to do business as a
foreign corporation in each jurisdiction in which such qualification is or shall
be necessary to protect the validity and enforceability of, or to permit the
Servicer to perform its obligations under, this Supplement, the Servicing
Agreement and the Securitization Trust Agreement.
(b) With reference to Section 2.13(b) of the Servicing Agreement, whenever
the consent of the Origination Trustee is required, so also shall the consent of
the Indenture Trustee be required, and whenever a successor to the Servicer by
merger or consolidation is required to execute and deliver to the Origination
Trustee an agreement in form and substance reasonably satisfactory to the
Origination Trustee as to the assumption by the successor of the Servicer's
obligations under
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the Servicing Agreement and the other Origination Trust Documents, such
agreement also must be reasonably satisfactory to the Indenture Trustee and must
contain a similar assumption of the Servicer's obligations under this
Supplement.
Section 9.14. Mobile Leased Premises.
The Servicer as "Lessor," hereby leases to the Transferor and its general
partner, World Omni Lease Securitization LLC, each as "Lessee," and Lessee
hereby hires and takes as tenant, for a rental of $100 per year for Lessee,
certain premises located at 6150 Omni Park Drive, Mobile, Alabama of the minimum
dimensions of five (5) feet by eleven (11) feet and surrounded on at least three
(3) sides by walls or moveable partitions (the "Mobile Leased Premises"), to be
used as the Alabama office of Lessee. The lease of the Mobile Leased Premises to
the Lessee pursuant to this Section 9.14 shall continue throughout the term of
this Supplement, except in the case of a change in the Servicer's principal
Alabama offices, in which case the lease of functionally equivalent premises in
the new location from time to time shall continue throughout such term.
Section 9.15. Servicer Administrative Duties under the
Transaction Documents.
The Servicer shall be obligated to perform on behalf of the Securitization
Trust all administrative duties required to be performed by the Securitization
Trust pursuant to any of the Transaction Documents (including without limitation
the preparation, delivery and filing of any and all certificates, reports,
filings, and other documents required by law or the Transaction Documents)
within the time period specified by and otherwise in compliance with the
requirements of such Transaction Documents; provided that nothing in this
Section will be deemed to cause the Servicer to be obligated to make payments on
the Notes, or to be an obligor or guarantor with respect to the Notes. Without
limiting the generality of the foregoing, the Servicer shall, on behalf of the
Securitization Trust, perform any and all of the actions required by Section
7.04 of the Indenture.
ARTICLE TEN
STATEMENTS AND REPORTS
Section 10.01. Reporting by the Servicer.
(a) The Servicer shall deliver to the Indenture Trustee all reports and
other documents required to be delivered to the Origination Trustee pursuant to
the Servicing Agreement (including Section 3.01 thereof) concurrently with their
delivery to the Origination Trustee.
(b) On or prior to each Determination Date and each Transfer Date, the
Servicer shall cause to be delivered to the Origination Trustee and the
Indenture Trustee a revised Schedule of Leases and Leased Vehicles, containing
data as of the last day of the prior Collection Period (in the case of each
Determination Date) or as of the related Subsequent Cutoff Date (in the case of
each Transfer Date), and which shall contain in addition to the data required by
the definition of the term "Schedule of Leases and Leased Vehicles" an
identification of all Leases and Leased Vehicles that are 1998-A Leases and
1998-A Leased Vehicles, the Discounted Principal Balance of each 1998-A Lease
and the related Cutoff Date for each 1998-A Lease, and on or prior to each
Determination Date, shall cause to be delivered to the Origination Trustee, the
Indenture Trustee and each Rating Agency a certificate in respect of such
Collection Period (the "Servicer's Certificate") substantially in the form
attached as Exhibit B (and setting forth such additional information as
requested by each Rating Agency from time to time which information the Servicer
is able to reasonably provide), containing all information necessary to make the
distributions required by Sections 9.02(f) hereof, 12.01(c) of the 1998-A SUBI
Supplement, 3.03 of the Securitization Trust Agreement and Section 8.02(b) of
the Indenture in respect of the Collection Period immediately preceding such
Determination Date. On or prior to each Deposit Date, the Servicer shall cause
to be delivered to the Indenture Trustee the
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statement required by Section 3.06(a) of the Securitization Trust Agreement.
Within the time required by Section 3.06(b) of the Securitization Trust
Agreement, the Servicer shall cause to be delivered to the Indenture Trustee the
statements required by that Section. Any Noteholder or Note Owner may obtain a
copy of a Servicer's Certificate upon written request.
Section 10.02. Annual Accountants' Reports.
The annual report of the Independent Accountants of the Servicer required
by Section 3.02 of the Servicing Agreement, to the extent that it refers to the
Servicing Agreement, shall also specifically refer to the Servicing Agreement as
supplemented by this Supplement, and shall additionally be delivered to the
Indenture Trustee and each Rating Agency.
Section 10.03. Other Certificates and Notices from Servicer.
(a) The annual Officer's Certificate of the Servicer required by Section
3.03 of the Servicing Agreement, to the extent that it refers to the Servicing
Agreement, shall also specifically refer to the Servicing Agreement as
supplemented by this Supplement, and shall additionally be delivered to the
Indenture Trustee and each Rating Agency.
(b) The Servicer shall deliver to the Indenture Trustee, the Origination
Trustee and each Rating Agency, promptly after having obtained knowledge
thereof, but in no event later than five Business Days thereafter, an Officer's
Certificate specifying the nature and status of any event which with the giving
of notice or lapse of time, or both, would become a 1998-A Servicer Event of
Default.
(c) On or prior to each Determination Date, the Servicer shall cause to be
delivered to the Indenture Trustee and each Rating Agency an Officer's
Certificate stating that neither the Trust nor any of its ERISA Affiliates: (i)
maintains a Plan, which, as of its last valuation date, has Unfunded Current
Liability; (ii) anticipates that the value of the assets of any Plan it
maintains would not be sufficient to cover any Current Liability; or (iii) is
contemplating benefit improvements with respect to any Plan then maintained by
any such entity or the establishment of any new Plan, either of which would
cause any such entity to maintain a Plan with Unfunded Current Liability.
Section 10.04. Tax Returns.
As contemplated by Section 6.12 of the Securitization Trust Agreement, the
Servicer shall direct the Owner Trustee to prepare or cause to be prepared, on
behalf of the Transferor, any required federal tax information returns (in a
manner consistent with the treatment of the Notes as indebtedness). Also as
contemplated by Section 6.12 of the Securitization Trust Agreement, if and to
the extent the Trust is treated as a partnership for federal income tax
purposes, the Servicer shall prepare or cause to be prepared any federal and
state income tax returns that may be required with respect to the Securitization
Trust or the assets thereof and shall deliver any such returns to the Owner
Trustee for signature by the Transferor at least five days prior to the date
such returns are required by law to be filed.
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ARTICLE ELEVEN
SERVICER DEFAULT
Section 11.01. Events of Default; Termination of Servicer
as to 1998-A SUBI Portfolio.
(a) Any of the following acts or occurrences shall constitute a 1998-A
Servicer Event of Default under the Servicing Agreement, as supplemented by this
Supplement:
i) The Servicer shall have failed to deliver to the Origination
Trustee for distribution to or for the account of the holders of 1998-A SUBI
Certificate or to the Indenture Trustee for distribution to the Noteholders any
amounts required to be so distributed pursuant to the Servicing Agreement or
this Supplement, which failure continues for five Business Days after discovery
of such failure by an officer of the Servicer or receipt by the Servicer of
written notice thereof from the Origination Trustee, the Indenture Trustee or
Noteholders representing not less than 25% of the aggregate Percentage
Interests;
ii) The Origination Trustee or the Indenture Trustee shall not have
received any report relating to the 1998-A SUBI Portfolio and required to be
delivered to it pursuant to the Servicing Agreement or this Supplement within
ten Business Days after the date any such report is due;
(iii) The Servicer shall default in the due performance and observance
of any other provision of the Servicing Agreement or this Supplement with regard
to the 1998-A SUBI Portfolio, which default materially and adversely affects the
rights of the holder of the 1998-A SUBI Certificate, the Certificate or the
Noteholders, and such default shall have continued for a period of 60 days after
written notice thereof shall have been given to the Servicer by the Origination
Trustee, the Indenture Trustee or by Noteholders representing not less than 25%
of the aggregate Percentage Interests;
(iv) The Event of Default set forth in Section 4.01(a)(iv) of the
Servicing Agreement;
(v) The Event of Default set forth in Section 4.01(a)(v) of the
Servicing Agreement;
(vi) Any representation, warranty or statement of the Servicer made in
the Servicing Agreement or this Supplement relating to the 1998-A SUBI Portfolio
or any certificate, report or other writing delivered pursuant hereto or thereto
relating to the 1998-A SUBI Portfolio shall prove to be incorrect in any
material respect as of the time when the same shall have been made and, within
30 days after written notice thereof shall have been given to the Servicer by
the Origination Trustee, the Indenture Trustee or Noteholders representing not
less than 25% of the aggregate Percentage Interests, the circumstance or
condition in respect of which such representation, warranty or statement was
incorrect shall not have been eliminated or otherwise cured;
(vii) The Servicer shall have failed to make an Advance (other than
any Nonrecoverable Advance) at the time and in the amount required by Section
9.04(a) hereof, which failure continues for five Business Days after discovery
of such failure by an officer of the Servicer or receipt by the Servicer of
written notice thereof from the Origination Trustee, the Indenture Trustee or
Noteholders representing not less than 25% of the aggregate Percentage
Interests;
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(viii) The Servicer shall have failed to pay promptly any Insurance
Proceeds pursuant to Section 9.12 hereof and Section 2.11 of the Servicing
Agreement at the time such moneys would otherwise be recoverable under the
comprehensive, collision, public liability and property damage policy required
to be maintained by an Obligor under the related Lease, which failure continues
for five Business Days after discovery of such failure by an officer of the
Servicer or receipt by the Servicer of written notice thereof from the
Origination Trustee, the Indenture Trustee or Noteholders representing not less
than 25% of the aggregate Percentage Interests;
(ix) The Servicer shall have failed to perform its obligations under
Section 9.10(a) hereof with respect to the Contingent and Excess Liability
Insurance Policies or the Residual Value Insurance Policy; or
(x) The Transferor shall have failed to timely perform its obligations
under the fourth sentence of Section 3.04(b) of the Securitization Trust
Agreement with regard to the deposit into the Reserve Fund of an amount equal to
the RV Insurer Reserve Fund Supplemental Requirement in the event of an RV
Insurer Trigger Event.
Notwithstanding the foregoing, a delay or failure in the performance
referred to under clause (i), (vii) or (viii) above for a period of ten
Business Days, or referred to in clause (ii) above for a period of 20 Business
Days, or referred to in clause (iii) for a period of 90 days, or referred to
in clause (vi) for a period of 60 days, shall not constitute a 1998-A Servicer
Event of Default if arising from a Force Majeure. Upon the occurrence of a
Force Majeure, the Servicer shall not be relieved from using all commercially
reasonable efforts to perform its obligations in a timely manner, and the
Servicer shall provide to the Indenture Trustee, the Origination Trustee, the
Transferor and the Noteholders prompt notice of such failure or delay,
together with a description of its efforts to perform its obligations.
(b) Notwithstanding anything to the contrary in the Servicing
Agreement, the rights and powers of the Servicer may not be terminated with
regard to the 1998-A SUBI Portfolio absent a 1998-A Servicer Event of Default,
as further set forth below. The consequences of a 1998-A Servicer Event of
Default shall be as set forth in Section 4.01(b) of the Servicing Agreement
with respect to an Event of Default, as modified by this Section 11.01(b). For
those purposes, references in Section 4.01(b) of the Servicing Agreement, to
an Event of Default shall mean a 1998-A Servicer Event of Default. Further, in
the case of the 1998-A SUBI, references to "the holder of the requisite
percentage of any SUBI" shall refer either to the Indenture Trustee, or to
Noteholders representing more than 50% of the aggregate Percentage Interests
(acting as a single Class). If a 1998-A Servicer Event of Default shall have
occurred and be continuing, the Origination Trustee, on behalf of the
Origination Trust, upon the direction of the Indenture Trustee or Noteholders
representing more than 50% of the aggregate Percentage Interests (acting as a
single class), shall, by notice given to the Servicer, terminate the portion
of the rights and powers of the Servicer under the Servicing Agreement, as
supplemented by this Supplement, with respect to the 1998-A SUBI Portfolio.
Upon the giving of any such notice described in the preceding sentence or in
Section 4.01(b) of the Servicing Agreement, all rights, powers, duties and
responsibilities of the Servicer under the Servicing Agreement, as
supplemented by this Supplement with respect to the 1998-A SUBI Portfolio,
whether with respect to the related Lease Documents, the related Title
Documents or Lease Records, the 1998-A SUBI Collection Account, the
Distribution Account, any 1998-A Lease Funding Account, the Reserve Fund, the
Servicing Fee or otherwise, but excluding the obligations set forth below as
being retained by the Servicer, shall vest in and be assumed by the Trust
Agent or, if the Trust Agent declines to act as successor servicer as
permitted below, a new servicer as provided in Section 4.01(b) of the
Servicing Agreement, and each of the Trust Agent and the Origination Trustee
is each hereby irrevocably authorized and empowered to execute and deliver, on
behalf of the Servicer, as attorney-in-fact or otherwise, all documents and
other instruments (including any notices to Obligors deemed necessary or
advisable by the Trust Agent or Origination
20
<PAGE>
Trustee), and to do or accomplish all other acts or things necessary or
appropriate to effect such vesting and assumption, including, without
limitation, directing the Obligors to remit Monthly Contract Payments,
Prepayments and all other payments on or in respect of the 1998-A Leases and the
1998-A Leased Vehicles to an account or address designated by the Trust Agent or
such new servicer. Further, in such event, the Servicer shall use commercially
reasonable efforts to effect the orderly and efficient transfer of the servicing
of the 1998-A Leases to the Trust Agent or new servicer, and as promptly as
practicable, the Servicer shall provide to the Trust Agent or new servicer, as
the case may be, a current computer tape containing all information from the
Lease Records required for the proper servicing of the 1998-A Leases, together
with documentation containing any and all information necessary for use of the
tape. The Trust Agent may resign or decline to serve as the Servicer of the
1998-A SUBI Portfolio by giving written notice of such resignation or
declination to the Origination Trustee and the Indenture Trustee and in such
event will be released from such duties and obligations, such resignation or
declination and such release not to be effective until the date a new servicer
enters into a servicing agreement with the Origination Trustee as provided in
Section 4.01(b) of the Servicing Agreement and the Origination Trustee and
Indenture Trustee receive from each Rating Agency a letter approving such
substitute servicer. Upon delivery of any such notice to the Origination
Trustee, the Origination Trustee shall use its commercially reasonable efforts,
upon not less than 30 days' prior written notice to the Indenture Trustee and
the Noteholders, to obtain a new servicer for the 1998-A SUBI Portfolio, which
shall be an Eligible Servicer, and which shall enter into a servicing agreement
with the Origination Trustee as provided in Section 4.01(b) of the Servicing
Agreement. If, within 30 days after the delivery of the notice to the
Origination Trustee and the Indenture Trustee referred to above, the Origination
Trustee shall not have obtained such a new servicer for the 1998-A SUBI
Portfolio, the Indenture Trustee may appoint, or may petition a court of
competent jurisdiction to appoint, a successor servicer to service the 1998-A
Leases.
No termination of the Servicer as to the 1998-A SUBI Portfolio shall affect
the obligations of the Servicer pursuant to Section 2.01(b)(i) of the Servicing
Agreement, Section 2.11 of the Servicing Agreement or Section 9.10 hereof,
Section 2.07(g) of the Servicing Agreement or Section 9.08 hereof, Section 8.03
hereof, Section 9.02(a) hereof (as to any 1998-A Lease the Maturity Date of
which has been extended beyond the specified limit by the Servicer), or Section
9.01(a) hereof.
The Origination Trustee shall give prompt notice to each Rating Agency of
any termination of the Servicer affecting the 1998-A SUBI Portfolio pursuant to
this Section 11.01(b) or pursuant to Section 4.01(b) of the Servicing Agreement.
Section 11.02. No Effect on Other Parties.
Upon any termination of the rights and powers of the Servicer with respect
to the 1998-A SUBI Portfolio from time to time pursuant to Section 11.01 hereof
or Section 4.01 of the Servicing Agreement, or upon any appointment of a
successor to the Servicer with respect to the 1998-A SUBI Portfolio, all the
rights, powers, duties and obligations of the Origination Trustee, the Indenture
Trustee, the Owner Trustee, the UTI Holder and the Transferor under this
Agreement, the Securitization Trust Agreement, the Indenture, the 1998-A SUBI
Supplement, or any other Origination Trust Document shall remain unaffected by
such termination or appointment and shall remain in full force and effect
thereafter, except as otherwise expressly provided herein or therein.
21
<PAGE>
ARTICLE TWELVE
MISCELLANEOUS
Section 12.01. Termination of Agreement.
In connection with any purchase by the Transferor of the corpus of the
Securitization Trust pursuant to Section 7.02 of the Securitization Trust
Agreement, and the Transferor's then succeeding to all of the interest in the
1998-A SUBI represented by the 1998-A SUBI Certificate, and if the UTI Holder
shall thereafter succeed to such interest in the 1998-A SUBI, the Servicer, upon
the direction of the UTI Holder as provided in Section 11.05 of the 1998-A SUBI
Supplement, shall reallocate all 1998-A Leases, 1998-A Leased Vehicles and
related 1998-A SUBI Assets to the UTI Portfolio.
(c) Except as provided in this Section 12.01, the respective duties and
obligations of the Servicer and the Origination Trustee with respect to the
1998-A SUBI Portfolio created by the Servicing Agreement and this Supplement
shall terminate upon the termination of the Securitization Trust Agreement
pursuant to Section 7.01 thereof or upon the earlier termination of the
Servicing Agreement pursuant to Section 5.01 thereof. Upon such a termination,
the Servicer shall pay over to the Origination Trustee or any other Person
entitled thereto all moneys held by the Servicer with respect to the 1998-A SUBI
Portfolio pursuant to the Servicing Agreement and this Supplement.
Section 12.02. Amendment.
(a) Notwithstanding Section 5.02(a) of the Servicing Agreement, the
Servicing Agreement, as supplemented by this Supplement, to the extent that it
deals with the 1998-A SUBI Portfolio, may be amended from time to time in a
writing signed by the Origination Trustee, on behalf of the Origination Trust,
the Trust Agent (but only to the extent that such amendment deals with Section
11.01(b)) and the Servicer, with the prior written consent of the Indenture
Trustee, which shall be given only in the circumstances contemplated by Section
9.01 of the Securitization Trust Agreement.
(b) The Servicer shall provide each Rating Agency prior notice of the
content of any proposed amendment to the Servicing Agreement, whether or not
such amendment relates to the 1998-A SUBI or requires approval of any Rating
Agency.
Section 12.03. Governing Law.
THIS SUPPLEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO ANY OTHERWISE
APPLICABLE PRINCIPLES OF CONFLICT OF LAWS.
Section 12.04. Notices.
The notice provisions of Section 5.04 of the Servicing Agreement shall
apply equally to this Supplement, provided that any notice to the Indenture
Trustee shall be addressed as follows:
The Bank of New York
1 Wall Street
New York, New York 10286
Attention: Corporate Trust Office
and any notice to the Owner Trustee shall be addressed as follows:
22
<PAGE>
PNC Bank, Delaware
222 Delaware Avenue
17th Floor
Wilmington, DE 19801-1600
Attention: Mr. Michael McCarthy,
Corporate Trust Office
Section 12.05. Severability.
If one or more of the provisions of this Supplement shall be for any reason
whatever held invalid or unenforceable, such provisions shall be deemed
severable from the remaining covenants, agreements and provisions of this
Supplement, and such invalidity or unenforceability shall in no way affect the
validity or enforceability of such remaining covenants, agreements and
provisions, or the rights of any parties hereto. To the extent permitted by law,
the parties hereto waive any provision of law that renders any provision of this
Supplement invalid or unenforceable in any respect.
Section 12.06. Inspection and Audit Rights.
The Servicer agrees to afford the same inspection and audit rights to any
representative or designee of the Owner Trustee or Indenture Trustee as granted
to any representative or designee of the Origination Trustee pursuant to Section
5.06 of the Servicing Agreement, but only with respect to the books of account,
records, reports and other papers of the Servicer relating to the 1998-A SUBI
Portfolio.
Section 12.07. Binding Effect.
The provisions of the Servicing Agreement and this Supplement, insofar as
they relate to the 1998-A SUBI Portfolio, shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns, and all such provisions also shall inure to the benefit of the
Origination Trustee, on behalf of the Origination Trust, and the Securitization
Trustee. Further, all references herein to Persons or entities other than
parties hereto shall be deemed to refer to the successors and permitted assigns
of such persons, to the extent that such construction is reasonably possible; to
the extent that such construction is not reasonably possible, the parties hereto
shall amend this Supplement to as to effect the original intent of the parties
as closely as possible in an acceptable manner.
Section 12.08. Article and Section Headings.
The article and section headings herein are for convenience of reference
only, and shall not limit or otherwise affect the meaning hereof.
Section 12.09. Execution in Counterparts.
This Supplement may be executed in any number of counterparts, each of
which so executed and delivered shall be deemed to be an original, but all of
which counterparts shall together constitute but one and the same instrument.
Section 12.10. Rights Cumulative.
All rights and remedies from time to time conferred upon or reserved to the
Origination Trustee, on behalf of the Origination Trust, the Servicer, the Owner
Trustee or the Indenture Trustee or to any or all of the foregoing are
cumulative, and none is intended to be
23
<PAGE>
exclusive of another. No delay or omission in insisting upon the strict
observance or performance of any provision of this Agreement, or in exercising
any right or remedy, shall be construed as a waiver or relinquishment of such
provision, nor shall it impair such right or remedy. Every right and remedy may
be exercised from time to time and as often as deemed expedient.
Section 12.11. Further Assurances.
Each party will do such acts, and execute and deliver to any other party
such additional documents or instruments as may be reasonably requested in order
to effect the purposes of this Supplement and to better assure and confirm unto
the requesting party its rights, powers and remedies hereunder.
Section 12.12. Third-Party Beneficiaries.
The Servicing Agreement and this Supplement, insofar as they relate to the
1998-A SUBI Portfolio, will inure to the benefit of and be binding upon the
parties hereto, and each of the holders of any legal or beneficial interest in
the 1998-A SUBI Certificate (including without limitation the Indenture Trustee,
the Owner Trustee, the Certificateholder and the Noteholders), who shall be
considered to be third-party beneficiaries hereof. Except as otherwise provided
in this Agreement, no other Person will have any right or obligation hereunder.
[SIGNATURES ON NEXT PAGE]
24
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers duly authorized as of the day and
year first above written.
WORLD OMNI FINANCIAL CORP.
By: _________________________________
Patrick C. Ossenbeck
Assistant Treasurer
VT INC., as trustee of World Omni LT
By: _________________________________
Name:____________________________
Title:___________________________
WORLD OMNI LEASE SECURITIZATION L.P.
(solely for purposes of Section 9.14)
By: WORLD OMNI LEASE SECURITIZATION,
LLC, its general partner
By: _________________________________
Patrick C. Ossenbeck
Assistant Treasurer
U.S. BANK NATIONAL ASSOCIATION, as Trust
Agent (solely for purposes of Section 11.01(b))
By: _________________________________
Name:____________________________
Title:___________________________
25
<PAGE>
Acknowledged and Agreed:
The Bank of New York, as Indenture Trustee
By:_______________________________________
Name:__________________________________
Title:_________________________________
PNC Bank, Delaware, as Owner Trustee
By:_______________________________________
Name:__________________________________
Title:_________________________________
26
<PAGE>
EXHIBIT A
SCHEDULE OF 1998-A LEASES AND
1998-A LEASED VEHICLES AS OF THE INITIAL CUTOFF DATE
[Omitted. Copies on file with the Servicer, the Origination Trustee, the Owner
Trustee and the Indenture Trustee.]
3
<PAGE>
EXHIBIT B
FORM OF SERVICER'S CERTIFICATE
Exhibit 10.14
AMENDMENT NO. 4 TO
SUPPORT AGREEMENT
AMENDMENT NO. 4 TO SUPPORT AGREEMENT dated as of October 1,
1997 (the "Amendment") made by World Omni Financial Corp., a Florida corporation
("World Omni") having its principal place of business at 120 N.W. 12th Avenue,
Deerfield Beach, FL 33442, and World Omni Lease Securitization L.P., a Delaware
limited partnership ("WOLS LP").
World Omni is the sole limited partner of WOLS LP. The sole
general partner of WOLS LP is World Omni Lease Securitization, Inc., a Delaware
corporation ("WOLSI") and a wholly owned subsidiary of World Omni. In order to
better assure WOLS LP that it will be able to meet its financial obligations as
and when they become due and payable, and therefore to assist WOLS LP in
inducing third parties to enter into financial arrangements with it as it deems
desirable, the undersigned have entered into a Support Agreement dated as of
October 1, 1995, as amended by Amendment No. 1 to Support Agreement dated as of
May 1, 1996, Amendment No. 2 to Support Agreement dated as of October 1, 1996,
and Amendment No. 3 to Support Agreement dated as of May 1, 1997 (as so amended,
the "Support Agreement") to provide support to WOLS LP in maintaining a
favorable financial condition, and desires to amend the Support Agreement to
provide additional support to WOLS LP.
For the foregoing reasons, and for other good and valuable
consideration, receipt of which is hereby acknowledged, World Omni, having a
financial interest in WOLS LP, and WOLS LP, intending to be legally bound,
hereby agree as follows:
Section 1. Definitions.
For all purposes of this Amendment, except as otherwise
expressly provided for or unless the context otherwise requires, (a) unless
otherwise defined herein, all capitalized terms used herein shall have the
meanings attributed to them by the Second Amended and Restated Assignment
Agreement, (b) all terms used in this Amendment include (i) all genders and (ii)
the plural as well as the singular, (c) all references to words such as
"herein", "hereof" and the like shall refer to this Amendment as a whole and not
to any particular article or sections within this Amendment, (d) the term
"include" and all variations thereon shall mean "include without limitation",
and (e) the term "or" shall include "and/or".
1
<PAGE>
Section 2. Amendment of Section 3
Section 3 of the Support Agreement is hereby amended by
deleting the proviso contained at the end of the second full sentence thereof
that reads "provided that such obligations of World Omni under this Support
Agreement shall not exceed $60 million in the aggregate" and inserting in its
place "provided that such obligations of World Omni under this Support Agreement
shall not exceed $90 million in the aggregate."
Section 3. Effect of Amendment.
Other than as specifically amended in this Amendment, the
Support Agreement remains in full force and effect and is hereby reaffirmed in
all respects, and all references therein to the "Agreement" shall be deemed to
refer to the Support Agreement, as amended by this Amendment.
Section 4. Governing Law.
THIS AMENDMENT SHALL BE CREATED UNDER THE LAWS AND GOVERNED BY
AND CONSTRUED UNDER THE INTERNAL LAWS OF THE STATE OF FLORIDA, WITHOUT REGARD TO
ANY OTHERWISE APPLICABLE PRINCIPLES OF CONFLICT OF LAWS.
Section 5. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or
terms of this Amendment shall be for any reason whatsoever held invalid, then
such covenants, agreements, provisions or terms shall be deemed severable from
the remaining covenants, agreements, provision or terms of this Amendment and
shall in no way affect the validity or enforceability of the other provisions of
this Amendment. To the extent permitted by law, the parties hereto waive any
provision of law that renders any provision of this Amendment invalid or
unenforceable in any respect.
[SIGNATURES ON FOLLOWING PAGE]
2
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Amendment No. 4 to
Support Agreement to be duly executed as of the date first set forth above.
WORLD OMNI FINANCIAL CORP.
By: /s/ Patrick C. Ossenbeck
--------------------------------
Patrick C. Ossenbeck
Assistant Treasurer
WORLD OMNI LEASE SECURITIZATION L.P.
By: World Omni Lease Securitization,
Inc., its general partner
By: /s/ Patrick C. Ossenbeck
--------------------------------
Patrick C. Ossenbeck
Assistant Treasurer
3
Exhibit 10.15
AMENDMENT NO. 5
TO
SUPPORT AGREEMENT
AMENDMENT NO. 5 TO SUPPORT AGREEMENT, dated as of September
23, 1998 (the "Amendment"), made by WORLD OMNI FINANCIAL CORP., a Florida
corporation ("World Omni") having its principal place of business at 120 N.W.
12th Avenue, Deerfield Beach, FL 33442, and WORLD OMNI LEASE SECURITIZATION
L.P., a Delaware limited partnership ("WOLS LP").
RECITALS
A. World Omni is the sole limited partner of WOLS LP. The sole
general partner of WOLS LP was World Omni Lease Securitization, Inc., a Delaware
corporation ("WOLSI") and a wholly owned subsidiary of World Omni. As of
September __, 1998, the sole general partner of WOLS LP is World Omni Lease
Securitization, LLC, a Delaware limited liability company ("WOLS LLC") and a
wholly owned subsidiary of World Omni into which WOLSI was merged. In order to
better assure WOLS LP that it will be able to meet its financial obligations as
and when they become due and payable, and therefore to assist WOLS LP in
inducing third parties to enter into financial arrangements with it as it deems
desirable, the undersigned have entered into a Support Agreement dated as of
October 1, 1995, as amended by Amendment No. 1 to Support Agreement dated as of
May 1, 1996, Amendment No. 2 to Support Agreement dated as of October 1, 1996,
Amendment No. 3 to Support Agreement dated as of May 1, 1997, and Amendment No.
4 to Support Agreement dated as of October 1, 1997 (as so amended, the "Support
Agreement") to provide support to WOLS LP in maintaining a favorable financial
condition, and desires to amend the Support Agreement to provide additional
support to WOLS LP.
B. For the foregoing reasons, and for other good and valuable
consideration, receipt of which is hereby acknowledged, World Omni, having a
financial interest in WOLS LP, and WOLS LP, intending to be legally bound,
hereby agree as follows:
Section 1. Definitions.
For all purposes of this Amendment, except as otherwise
expressly provided for or unless the context otherwise requires, (a) unless
otherwise defined herein, all capitalized terms used herein shall have the
meanings attributed to them by the Second Amended and Restated Assignment
Agreement, (b) all terms used in this Amendment include (i) all genders and (ii)
the plural as well as the singular, (c) all references to words such as
"herein", "hereof" and the like shall refer to this Amendment as a whole and not
to any particular article or sections within this Amendment, (d) the term
"include" and all variations thereon shall mean "include without limitation",
and (e) the term "or" shall include "and/or".
<PAGE>
Section 2. Amendment of Section 1.
Section 1 of the Support Agreement is hereby amended by
deleting the term "WOLSI" in the second line thereof and inserting in its place
the term "WOLS LLC" and by deleting the statement beginning on the third line
thereof that reads "and World Omni owns all capital stock of WOLSI" and
inserting in its place "and World Omni owns all membership interests in WOLS
LLC".
Section 3. Amendment of Section 2.
Section 2 of the Support Agreement is hereby amended by
deleting the statement beginning on the third line thereof that reads "100% of
the capital stock of WOLSI" and inserting in its place "100% of the membership
units of WOLS LLC" and by deleting the term "WOLSI" in the fourth line thereof
and inserting in its place the term "WOLS LLC".
Section 4. Amendment of Section 5.
Section 5 of the Support Agreement is hereby amended by
deleting the term "WOLSI" in the second line thereof and inserting in its place
the term "WOLS LLC".
Section 5. Effect of Amendment.
Other than as specifically amended in this Amendment, the
Support Agreement remains in full force and effect and is hereby reaffirmed in
all respects, and all references therein to the "Agreement" shall be deemed to
refer to the Support Agreement, as amended by this Amendment.
Section 6. Governing Law.
THIS AMENDMENT SHALL BE CREATED UNDER THE LAWS AND GOVERNED BY
AND CONSTRUED UNDER THE INTERNAL LAWS OF THE STATE OF FLORIDA, WITHOUT REGARD TO
ANY OTHERWISE APPLICABLE PRINCIPLES OF CONFLICT OF LAWS.
Section 7. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or
terms of this Amendment shall be for any reason whatsoever held invalid, then
such covenants, agreements, provisions or terms shall be deemed severable from
the remaining covenants, agreements, provision or terms of this Amendment and
shall in no way affect the validity or enforceability of the other provisions of
this Amendment. To the extent permitted by law, the parties hereto waive any
provision of law that renders any provision of this Amendment invalid or
unenforceable in any respect.
[SIGNATURES ON FOLLOWING PAGE]
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Amendment
No. 5 to Support Agreement to be duly executed as of the date first set forth
above.
WORLD OMNI FINANCIAL CORP.
By: /s/ Patrick C. Ossenbeck
------------------------------------
Patrick C. Ossenbeck
Assistant Treasurer
WORLD OMNI LEASE SECURITIZATION L.P.
By: World Omni Lease Securitization,
LLC, its general partner
By: World Omni Financial Corp., as managing
member
By: /s/ Patrick C. Ossenbeck
------------------------------------
Patrick C. Ossenbeck
Assistant Treasurer
Exhibit 10.16
FORM OF
AMENDMENT NO. 6
TO
SUPPORT AGREEMENT
AMENDMENT NO. 5 TO SUPPORT AGREEMENT, dated as of November __, 1998
(the "Amendment"), made by WORLD OMNI FINANCIAL CORP., a Florida corporation
("World Omni") having its principal place of business at 120 N.W. 12th Avenue,
Deerfield Beach, FL 33442, and WORLD OMNI LEASE SECURITIZATION L.P., a Delaware
limited partnership ("WOLS LP").
RECITALS
A. World Omni is the sole limited partner of WOLS LP. The sole general
partner of WOLS LP was World Omni Lease Securitization, Inc., a Delaware
corporation ("WOLSI") and a wholly owned subsidiary of World Omni. As of
September __, 1998, the sole general partner of WOLS LP is World Omni Lease
Securitization, LLC, a Delaware limited liability company ("WOLS LLC") and a
wholly owned subsidiary of World Omni into which WOLSI was merged. In order to
better assure WOLS LP that it will be able to meet its financial obligations as
and when they become due and payable, and therefore to assist WOLS LP in
inducing third parties to enter into financial arrangements with it as it deems
desirable, the undersigned have entered into a Support Agreement dated as of
October 1, 1995, as amended by Amendment No. 1 to Support Agreement dated as of
May 1, 1996, Amendment No. 2 to Support Agreement dated as of October 1, 1996,
Amendment No. 3 to Support Agreement dated as of May 1, 1997, Amendment No. 4 to
Support Agreement dated as of October 1, 1997 and Amendment No. 5 to Support
Agreement dated as of September 23, 1998 (as so amended, the "Support
Agreement") to provide support to WOLS LP in maintaining a favorable financial
condition, and desires to amend the Support Agreement to provide additional
support to WOLS LP.
B. For the foregoing reasons, and for other good and valuable
consideration, receipt of which is hereby acknowledged, World Omni, having a
financial interest in WOLS LP, and WOLS LP, intending to be legally bound,
hereby agree as follows:
Section 1. Definitions.
For all purposes of this Amendment, except as otherwise expressly
provided for or unless the context otherwise requires, (a) unless otherwise
defined herein, all capitalized terms used herein shall have the meanings
attributed to them by the Second Amended and Restated Assignment Agreement, (b)
all terms used in this Amendment include (i) all genders and (ii) the plural as
well as the singular, (c) all references to words such as "herein", "hereof" and
the like shall refer to this Amendment as a whole and not to any particular
article or sections within this Amendment, (d) the term "include" and all
variations thereon shall mean "include without limitation", and (e) the term
"or" shall include "and/or".
Section 2. Amendment of Section 3.
Section 3 of the Support Agreement is hereby amended by deleting the
proviso contained at the end of the second full sentence thereof that reads
"provided that such obligations of World Omni under this Support Agreement shall
not exceed $90 million in the aggregate" and inserting in its place term
"provided that such obligations of World Omni under this Support Agreement shall
not exceed $[ ] million in the aggregate."
<PAGE>
Section 3. Effect of Amendment.
Other than as specifically amended in this Amendment, the Support
Agreement remains in full force and effect and is hereby reaffirmed in all
respects, and all references therein to the "Agreement" shall be deemed to refer
to the Support Agreement, as amended by this Amendment.
Section 6. Governing Law.
THIS AMENDMENT SHALL BE CREATED UNDER THE LAWS AND GOVERNED BY AND
CONSTRUED UNDER THE INTERNAL LAWS OF THE STATE OF FLORIDA, WITHOUT REGARD TO ANY
OTHERWISE APPLICABLE PRINCIPLES OF CONFLICT OF LAWS.
Section 7. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Amendment shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provision or terms of this Amendment and shall
in no way affect the validity or enforceability of the other provisions of this
Amendment. To the extent permitted by law, the parties hereto waive any
provision of law that renders any provision of this Amendment invalid or
unenforceable in any respect.
[SIGNATURES ON FOLLOWING PAGE]
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Amendment No. 6 to
Support Agreement to be duly executed as of the date first set forth above.
WORLD OMNI FINANCIAL CORP.
By:
-----------------------------------
Patrick C. Ossenbeck
Assistant Treasurer
WORLD OMNI LEASE SECURITIZATION L.P.
By: World Omni Lease Securitization,
LLC, its general partner
By: World Omni Financial Corp., as managing
member
By:
-----------------------------------
Patrick C. Ossenbeck
Assistant Treasurer
Exhibit 23.4
WILLIAMS & CONNOLLY
725 TWELFTH STREET, N.W.
WASHINGTON, D.C. 20005
CONSENT OF WILLIAMS & CONNOLLY
We hereby consent to the use of our name under the headings "Legal
Matters" and "Risk Factors - Risks in the Event of an Insolvency of World Omni;
Substantive Consolidation with World Omni" in the Prospectus included in the
Registration Statement on Form S-1 (No. 333-63367) filed by World Omni 1998-A
Automobile Lease Securitization Trust, World Omni Lease Securitization L.P.,
World Omni LT and Auto Lease Finance L.P. with the Securities and Exchange
Commission (the "SEC") on September 14, 1998, as it may be further amended and
declared effective by the SEC.
Date: November 3, 1998 WILLIAMS & CONNOLLY
By: /s/ Jerry Shulman
------------------------
Jerry Shulman, a partner
Exhibit 23.5
November 3, 1998
CONSENT OF HAND ARENDALL, L.L.C.
We hereby consent to the use of our name under the headings "Legal
Matters" in the Prospectus included in the Registration Statement on Form S-1
(No. 333-63367) filed by World Omni 1998-A Automobile Lease Securitization
Trust, World Omni Lease Securitization L.P., World Omni LT and Auto Lease
Finance L.P. with the Securities and Exchange Commission (the "SEC") on
September 14, 1998, as it may be further amended and declared effective by the
SEC.
Date: November 3, 1998 HAND ARENDALL, L.L.C.
By: /s/ T. Bruce McGowin
---------------------------
T. Bruce McGowin, a member
Exhibit 23.6
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated February 20, 1998, with respect to the statutory-basis
financial statements of Federal Insurance Company included in Amendement No. 1
to the Registration Statement (Form S-1 No. 333-63367) and related Prospectus of
World Omni 1998-A Automobile Lease Securitization Trust for the registration of
its Automobile Lease Asset Backed Notes.
ERNST & YOUNG LLP
New York, New York
November 3, 1998
Exhibit 25.1
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) [ ]
------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
|----------------------------------------------|------------------------------|
|New York | 13-5160382 |
|(State of incorporation | (I.R.S. employer |
|if not a U.S. national bank) | identification no.) |
|----------------------------------------------|------------------------------|
|One Wall Street, New York, N.Y. | 10286 |
|(Address of principal executive offices) | (Zip code) |
|----------------------------------------------|------------------------------|
World Omni Lease Securitization L.P.
(Exact name of obligor as specified in its charter)
|-------------------------------------------------|---------------------------|
|Delaware | 63-1120743 |
|(State or other jurisdiction of | (I.R.S. employer |
|incorporation or organization) | identification no.) |
|-------------------------------------------------|---------------------------|
|6150 Omni Park Drive, Mobile, Alabama | 36609 |
|(Address of principal executive offices) | (Zip code) |
|-------------------------------------------------|---------------------------|
------------------
Asset Backed Securities
(Title of the indenture securities)
<PAGE>
1. General information. Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Name Address
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of New York 2 Rector Street, New York, N.Y. 10006, and Albany,
N.Y. 12203
- -----------------------------------------------------------------------------------------------------------------
Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045
- -----------------------------------------------------------------------------------------------------------------
Federal Deposit Insurance Corporation Washington, D.C. 20429
- -----------------------------------------------------------------------------------------------------------------
New York Clearing House Association New York, New York 10005
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with the obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission
are incorporated herein by reference as an exhibit hereto, pursuant to
Rule 7a-29 under the Trust Indenture Act of 1939 (the "Act") and 17
C.F.R. 229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which
contains the authority to commence business and a grant of
powers to exercise corporate trust powers. (Exhibit 1 to
Amendment No. 1 to Form T-1 filed with Registration Statement
No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with
Registration Statement No. 33-21672 and Exhibit 1 to Form T-1
filed with Registration Statement No.
33-29637.)
2. A copy of the existing By-laws of the Trustee. (Exhibit 4 to
Form T-1 filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the
Act. (Exhibit 6 to Form T-1 filed with Registration Statement
No. 33-44051.)
7. A copy of the latest report of conditions of the Trustee
published pursuant to law or to the requirements of its
supervising or examining authority. (see attached)
<PAGE>
SIGNATURE
Pursuant to the requirements of the act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 29th day of October, 1998.
THE BANK OF NEW YORK
By: /S/ CHERYL L. LASER
------------------------------
Name: Cheryl L. Laser
Title: Assistant Vice President
<PAGE>
Exhibit 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries.
a member of the Federal Reserve System, at the close of business June 30, 1998,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from
depository institutions:
Noninterest-bearing balances
and currency and coin...................................$7,301,241
Interest-bearing balances....................................1,385,944
Securities:
Held-to-maturity securities..............................1,000,737
Available-for-sale securities............................4,240,655
Federal funds sold and Securities purchased under
agreements to resell.......................................971,453
Loans and lease financing receivables:
Loans and leases, net of unearned income...38,788,269
LESS: Allowance for loan and lease losses.....632,875
LESS: Allocated transfer risk reserve...............0
Loans and leases, net of unearned income,
allowance, and reserve.............................38,155,394
Assets held in trading accounts..............................1,307,562
Premises and fixed assets (including capitalized leases).......670,445
Other real estate owned.........................................13,598
Investments in unconsolidated subsidiaries and
associated companies.......................................215,024
Customers' liability to this ban
on acceptances outstanding.................................974,237
Intangible assets............................................1,102,625
Other assets.............................................. 1,944,777
-----------
Total assets...............................................$59,283,692
===========
LIABILITIES
Deposits:
in domestic offices........................................$26,930,258
Noninterest-bearing............................11,579,390
Interest-bearing...............................15,350,868
in foreign offices, Edge and Agreement
subsidiaries, and IBFs..................................16,117,854
Noninterest-bearing...............................187,464
Interest-bearing...............................15,930,390
Federal funds purchased and Securities sold
under agreement to repurchase............................2,170,238
Demand notes issued to the U.S. Treasury.......................300,000
Trading liabilities..........................................1,310,867
Other borrowed money:
With remaining maturity of one year or less..................2,549,479
With remaining maturity of more than
one year through three years.....................................0
With remaining maturity of
more than three years.......................................46,654
Bank's liability on acceptances
executed and outstanding...................................983,398
Subordinated notes and
debentures...............................................1,314,000
Other liabilities............................................2,295,520
-----------
Total liabilities...........................................54,018,268
===========
EQUITY CAPITAL
Common stock.................................................1,135,284
Surplus........................................................731,319
Undivided profits and capital reserves.......................3,385,227
Net unrealized holding gains (losses) on available
for-sale securities.........................................51,233
Cumulative foreign currency
translation adjustments...................................(37,639)
Total equity capital.........................................5,265,424
Total liabilities and equity capital.......................$59,283,692
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
<PAGE>
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
J. Carter Bacot
Thomas A. Renyl Directors
Alan R. Griffith
-------------------
