As filed with the Securities and Exchange Commission on January 21, 1999+
REGISTRATION STATEMENT NO. 333-65271
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------------
MELLON AUTO RECEIVABLES CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE APPLICATION PENDING
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
ONE MELLON BANK CENTER
FOURTH FLOOR
PITTSBURGH, PENNSYLVANIA 15758
(412) 234 -7142
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive office)
----------------------------
STEPHEN COBAIN
MELLON AUTO RECEIVABLES CORPORATION
ONE MELLON BANK CENTER
FOURTH FLOOR
PITTSBURGH, PENNSYLVANIA 15758
(412) 234 -7142
(Address, including zip code, and telephone number,
including area code, of agent for service)
----------------------------
Copies to:
Robert T. Morris, Esq. Robert C. Wipperman, Esq.
REED SMITH SHAW & MCCLAY STROOCK & STROOCK & LAVAN LLP
435 Sixth Avenue 180 Maiden Lane
Pittsburgh, Pennsylvania 15219 New York, New York 10038
----------------------------
Approximate date of commencement of proposed sale to public:
From time to time after this Registration Statement becomes effective.
---------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /x/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / ___________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / __________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE(1)
==================================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(2) PRICE(2) REGISTRATION
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Asset Backed Notes................. $500,000 100% $500,000 $147.50
Asset Backed $500,000 100% $500,000 $147.50
Certificates....................... $1,000,000 $1,000,000 $295.00
Total..............................
- ----------------------------------------------------------------------------------------------------------------------------------
(1) This Registration Statement also registers an undeterminable amount of
securities to be sold by Mellon Financial Markets, Inc. in market-making
transactions where required.
(2) Estimated solely for the purpose of calculating the registration fee.
(3) Previously paid.
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT.
A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE
SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE
ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN
OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN
ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE
WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION
UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
EXPLANATORY NOTE
This Registration Statement contains: (i) a form of prospectus supplement
relating to a hypothetical Series of Asset Backed Notes and Asset Backed
Certificates, (ii) a form of prospectus supplement relating to a hypothetical
Series of Asset Backed Certificates, (iii) a prospectus relating to the public
offering of up to $500,000 aggregate original principal balance of Asset Backed
Notes and $500,000 aggregate original principal balance of Asset Backed
Certificates, issuable from time to time in Series, and (iv) immediately
following such prospectus, alternate pages to a form of supplement to the
prospectus supplement and prospectus to be used in connection with offers and
sales relating to market-making transactions in the Notes and/or Certificates of
one or more Series by an affiliate of the Registrant. All other pages of the
prospectus and applicable prospectus supplement are also to be used in the
market-making prospectus supplement.
<PAGE>
THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT IS NOT COMPLETE AND MAY BE
CHANGED. MELLON AUTO RECEIVABLES CORPORATION MAY NOT SELL THE SECURITIES THAT
ARE DESCRIBED IN THIS PROSPECTUS SUPPLEMENT UNTIL THE REGISTRATION STATEMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS
SUPPLEMENT IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT A REQUEST FOR ANY
OFFERS TO BUY THESE SECURITIES IN ANY STATE WHERE THE LAWS IN THAT STATE DO NOT
PERMIT THE DEPOSITOR TO OFFER OR SELL THESE SECURITIES.
Prospectus Supplement [Form 1]
(To Prospectus dated ___________)
$------------
MELLON AUTO TRUST 199_-_
ISSUER
$___ ____% ASSET BACKED NOTES
$__ ___% ASSET BACKED CERTIFICATES
MELLON AUTO RECEIVABLES CORPORATION
DEPOSITOR
MELLON BANK, N.A.
SERVICER
The depositor will form Mellon Auto Trust 199_-_ , and the trust will issue
$ aggregate principal amount of % Asset Backed Notes and $__________ aggregate
principal amount of ___% Asset Backed Certificates. The notes and the
certificates are sometimes called the "securities."
The assets of the trust consist of receivables due under a pool of motor
vehicle retail installment sale contracts and other motor vehicle installment
chattel paper secured by new and used automobiles, including passenger cars,
minivans, sport utility vehicles and light trucks.
The securities are obligations only of the trust. Neither the securities
nor the receivables are insured or guaranteed by any person. The securities are
NOT bank deposits and are NOT insured by the Federal Deposit Insurance
Corporation.
- -------------------------------------------------------------------------------
The certificates will involve more risks than the notes because
distributions on the certificates will be made only after payments are made on
the notes. The notes and the certificates involve significant risks. You should
review the information under the caption "Risk Factors" beginning on page S-__
in this prospectus supplement and on page __ of the attached prospectus before
making a decision to invest in the securities.
- -------------------------------------------------------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus supplement or the attached prospectus is accurate or complete. Making
any contrary representation is a criminal offense.
Subject to the satisfaction of certain conditions, the underwriter named
below is offering the notes and certificates at the price to public shown. The
securities will be delivered in book entry form only on or about ____________,
199_.
<PAGE>
<TABLE>
<CAPTION>
Underwriting Proceeds
Price to Discounts and to the
Public Commissions Depositor(1)
-------- ------------- -----------
<S> <C> <C> <C>
Per Note......................... _____% _____% ______%
Per Certificate.................. _____% _____% ______%
Total............................ $______ $_____ $______
- ------------------------
(1) Before deducting expenses, estimated to be $__________.
</TABLE>
[Underwriter]
The date of this prospectus supplement is ____ __, 199_.
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
We provide information to you about the securities in two separate
documents that provide progressively more detail:
- the accompanying prospectus, which provides general information,
some of which may not apply to your series of securities; and
- this prospectus supplement, which describes the specific terms of
your series of securities.
YOU SHOULD RELY PRIMARILY ON THE DESCRIPTION OF YOUR SECURITIES IN THIS
PROSPECTUS SUPPLEMENT.
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
CAPTION PAGE
- ------- -----
Summary of Terms............................S-
Risk Factors................................S-
Formation of the Trust......................S-
The Trust Property..........................S-
The Receivables Pool........................S-
The Servicer................................S-
Weighted Average Life of the Securities.....S-
Use of Proceeds.............................S-
Description of the Notes....................S-
Description of the Certificates.............S-
Description of the Transfer and
Servicing Agreements.......................S-
Federal Income Tax Consequences.............S-
State and Local Tax Consequences............S-
ERISA Considerations........................S-
Underwriting................................S-
Legal Matters...............................S-
<PAGE>
PROSPECTUS
CAPTION PAGE
- ------- -----
Risk Factors...................................
Incorporation of Certain Documents
by Reference................................
The Trusts.....................................
The Portfolio of Motor Vehicle Loans...........
The Receivables Pools..........................
Maturity and Prepayment Assumptions............
Pool Factors and Trading Information...........
Use of Proceeds................................
The Depositor..................................
The Servicer...................................
Description of the Notes.......................
Description of the Certificates................
Certain Information Regarding
the Securities..............................
Description of the Transfer and
Servicing Agreements........................
Certain Legal Aspects of the Receivables.......
Federal Income Tax Consequences................
State and Local Tax Consequences...............
ERISA Considerations...........................
Ratings........................................
Method of Distribution.........................
Legal Opinions.................................
Index of Terms.................................
Annex I........................................
<PAGE>
SUMMARY OF TERMS
THIS SECTION GIVES A BRIEF SUMMARY OF THE INFORMATION CONTAINED IN THIS
PROSPECTUS SUPPLEMENT. THE SUMMARY DOES NOT INCLUDE ALL OF THE IMPORTANT
INFORMATION ABOUT THE SECURITIES. YOU SHOULD REVIEW CAREFULLY THE MORE DETAILED
INFORMATION IN THIS PROSPECTUS SUPPLEMENT AND IN THE ATTACHED PROSPECTUS.
ISSUER......................................Mellon Auto Trust 199_-_.
DEPOSITOR...................................Mellon Auto Receivables Corporation.
See "The Depositor" in the attached
prospectus
SERVICER....................................Mellon Bank, N.A. See "The
Servicer" in this prospectus
supplement and in the prospectus.
SELLER......................................Mellon Bank, N.A.
OWNER TRUSTEE...............................__________________, as trustee under
the trust agreement.
INDENTURE TRUSTEE...........................___________________, as trustee
under the indenture.
CLOSING DATE................................On or about ________, 199_.
CUTOFF DATE.................................The [close] [opening] of business on
_____, 199__.
THE NOTES
GENERAL............................The trust will issue $________
original principal amount of its __%
Asset Backed Notes.
DISTRIBUTION DATES................._______ day of each month or,
if the ___ day is not a business
day, the first business day after
the ___, beginning in _________,
199_.
RECORD DATE........................The last day of the calendar month
prior to the calendar month that
includes the applicable distribution
date.
MINIMUM DENOMINATIONS...............$25,000 and integral multiples of
$1,000 in excess thereof.
REGISTRATION........................The notes will be issued in book
entry form. Investors in the notes
will hold beneficial interests in
the notes through the Depository
Trust Company in the United States
or Cedel Bank, societe anonyme or
the Euroclear System in Europe. See
"Certain Information Regarding the
Securities" in the prospectus.
INTEREST RATE........................_____% per annum.
INTEREST PERIOD......................The period beginning on (and
including) the prior distribution
date (or in the case of the first
distribution date, beginning on (and
including) the closing date) and
ending on (and including) the day
before the applicable Distribution
Date.
INTEREST CALCULATIONS.................Interest on a distribution date will
consist of:
- 1/12 x interest rate x principal
amount of notes
PLUS
- any unpaid interest from
prior distribution dates
PLUS
- 1/12 x interest rate x any unpaid
interest from prior distribution
dates.
PRINCIPAL..............................Principal payments on the notes
will be made on each distribution
date in an amount equal to the
lesser of:
- the principal amount of the
notes on the day before the
applicable distribution date
or
- the amount in the collection
account after payment of the
total servicing fee to the
servicer, interest on the notes
and interest on the
certificates.
FINAL SCHEDULED
MATURITY DATE.......................The distribution date in _______,
____________.
THE CERTIFICATES
GENERAL................................The trust will issue $________
original principal amount of its __%
Asset Backed Certificates.
DISTRIBUTION DATES....................._____ day of each month or, if the
____ day is not a business day, the
first business day after the
________, beginning in __________,
199_.
RECORD DATE.............................The last day of the calendar month
prior to the calendar month that
includes the applicable distribution
date.
MINIMUM DENOMINATIONS...................$25,000 and integral multiples of
$1,000 in excess thereof.
REGISTRATION.............................The certificates will be issued
in book entry form. Investors in the
certificates will hold beneficial
interests in the certificates
through the Depository Trust
Company. The certificates may not be
held by persons who are not US
persons for tax purposes.
PASS-THROUGH RATE........................_____% per annum.
INTEREST PERIOD..........................The period beginning on (and
including) the prior distribution
date (or in the case of the first
distribution date, beginning on (and
including) the closing date) and
ending on (and including) the day
before the applicable distribution
date.
INTEREST CALCULATIONS....................Interest due on a distribution
date will consist of:
- 1/12 x interest rate x principal
amount of certificates
PLUS
- any unpaid interest from prior
distribution dates
PLUS
- 1/12 x interest rate x any unpaid
interest from prior distribution
date.
PRINCIPAL................................No distributions of principal of the
certificates will be made until the
notes have been paid in full.
Principal payments on the
certificates will be made on each
distribution date after the Notes
have been paid in full in an amount
equal to the lesser of:
- the principal amount of the
certificates on the day before the
applicable distribution date
or
- the amount in the collection
account after payment of the total
servicing fee to the servicer and
interest on the certificates.
FINAL SCHEDULED
DISTRIBUTION DATE....................The distribution date in
__________, ____.
THE TRUST...................................The trust is a business trust to be
established under the laws of
Delaware. The activities of the
trust are limited to purchasing,
owning and managing the receivables
and other activities related
thereto.
The property of the trust includes
- the receivables
- all amounts received under the
receivables after _______, 1999
- the collection account, the note
distribution account, the
certificate distribution account
and the payahead account
- security interests in the motor
vehicles that secure the
receivables
- the rights of the seller to
receive proceeds from claims
under certain insurance policies
and refunds of premiums from
other insurance policies
- the rights of the seller under
agreements with the dealers that
sold the financed vehicles
- rights with respect to any
repossessed financed vehicles
- any and all proceeds of the
foregoing
THE RECEIVABLES.............................The receivables are amounts owed by
individuals under retail installment
sale contracts to purchase or
refinance new or used automobiles,
including passenger cars, minivans,
sport utility vehicles and light
trucks, purchased from motor vehicle
dealers.
The depositor expects that the
receivables will have the following
characteristics as of ________,
1999. As of the closing date, no
more than 5% of the receivables will
have characteristics that differ
from those described in this
prospectus supplement as of _______,
1999.
<TABLE>
<CAPTION>
<S> <C>
Number of contracts __________
Principal Amount $__________
Annual Percentage Rates (APR) _____% to _____%
Weighted Average APR _____%
Original term (months) _____ to _____
Weighted Average
original term (months) _____
Remaining term (months) _____ to _____
Weighted Average
remaining term (months) _____
New ( %) _____
Used (%) _____
States (%)
PA _____
NJ _____
Balloon Loans (%) _____
</TABLE>
SERVICING
GENERAL............................Mellon Bank, N.A. will be
responsible for servicing, managing,
maintaining custody of and making
collections on the receivables.
The trust will pay the servicer a
monthly fee for servicing the
receivables equal to 1/12 TIMES __%
TIMES the aggregate principal
balance of the receivables pool. The
servicer also will receive certain
late fees, prepayment charges and
other administrative fees or similar
charges.
ADVANCES...........................The servicer will advance scheduled
payments of interest and principal
under each receivable which are not
timely made to the extent that the
servicer, in its sole discretion,
expects to recoup such advance from
subsequent payments on or with
respect to that receivable. The
servicer will be entitled to
reimbursement of advances from
subsequent payments on or with
respect to the receivables.
RESERVE ACCOUNT.............................On the closing date, the depositor
will deposit $____ into a reserve
account maintained with the
indenture trustee. On each
distribution date amounts remaining
after distribution of the total
servicing fee and amounts to be paid
to the noteholders and
certificateholders will be deposited
in the reserve account until the
amount equals a specified amount. On
each distribution date, the
indenture trustee will withdraw
funds from the reserve account and
deposit them in the collection
account if the amounts in the
collection account are not
sufficient to pay the total
servicing fee and to make required
payments on the notes and
distributions on the certificates.
OPTIONAL TERMINATION
SERVICER PURCHASE..................The servicer may purchase the
receivables when the principal
amount of the receivables is 5% or
less than it was on the cutoff date.
AUCTION SALE......................If the servicer does not exercise
its option, the indenture trustee
will auction off (subject to a
required minimum bid) the remaining
receivables when the principal
amount is 5% or less than it was on
the cutoff date.
DISTRIBUTIONS......................In either case, securityholders will
receive the unpaid principal amount
of their securities plus all accrued
but unpaid interest.
TAX STATUS.................................Stroock & Stroock & Lavan LLP,
special federal tax counsel to the
trust, is of the opinion that, for
federal income tax purposes: (1) the
notes will constitute indebtedness;
and (2) the certificates will
constitute interests in a trust fund
that will not be treated as an
association taxable as a corporation
or publicly traded partnership
taxable as a corporation. Each
noteholder, by acceptance of a note,
will agree to treat the notes as
indebtedness, and each
certificateholder, by the acceptance
of a certificate, will agree to
treat the trust as a partnership in
which the certificateholders are
partners for federal income tax
purposes. See "Federal Income Tax
Consequences" in this prospectus
supplement and in the prospectus.
ERISA CONSIDERATIONS........................Subject to the conditions and
considerations discussed under
"ERISA Considerations--The Notes" in
this prospectus supplement and in
the prospectus, the notes are
eligible for purchase by pension,
profit-sharing or other employee
benefit plans as well as individual
retirement accounts and certain
types of Keogh Plans. The
certificates may not be acquired
(directly or indirectly) by or on
behalf of any such plan or any
entity (including an insurance
company general account) whose
underlying assets include plan
assets of such a plan by reason of a
plan's investment in the entity. See
"ERISA Considerations--The
Certificates" in this prospectus
supplement and in the prospectus.
RATINGS.....................................The securities will not be issued
unless the notes are rated
_______________ and the certificates
are rated _____ by at least two
nationally recognized rating
agencies. See "Risk
Factors--Withdrawal or Downgrading
of Initial Ratings Will Affect
Prices for Securities" in this
prospectus supplement.
<PAGE>
RISK FACTORS
AN INVESTMENT IN THE SECURITIES INVOLVES SIGNIFICANT RISKS. BEFORE YOU
DECIDE TO INVEST, YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS AND
THE RISK FACTORS SPECIFIED UNDER THE HEADING "RISK FACTORS" BEGINNING ON PAGE __
OF THE PROSPECTUS.
YOU MAY HAVE DIFFICULTY SELLING YOUR SECURITIES
The securities will not be listed on any securities exchange. As a result,
if you want to sell your securities you must locate a purchaser that is willing
to purchase those securities. The underwriter intends to make a secondary market
for the securities. The underwriter will do so by offering to buy the securities
from investors that wish to sell. However, the underwriter will not be obligated
to make offers to buy the securities and may stop making offers at any time. In
addition, the prices offered, if any, may not reflect prices that other
potential purchasers, were they to be given the opportunity, would be willing to
pay. There have been times in the past where there have been very few buyers of
asset backed securities (i.e., there has been a lack of liquidity), and there
may be such times in the future. As a result, you may not be able to sell your
securities when you want to do so or you may not be able to obtain the price
that you wish to receive.
CERTAIN FEATURES OF THE RECEIVABLES POOL CREATE SPECIAL RISKS
There are a number of features of the receivables in the pool that create
risks that may not be present with other pools, including the following:
- CERTAIN OBLIGORS HAVE LITTLE EQUITY IN THEIR FINANCED VEHICLES. For
approximately __% of the receivables (based on principal
amounts), the original principal amount of the loan exceeded the
cost of the related vehicle. Although each such obligor was
required to make a downpayment from the obligor's own funds,
those obligors have no equity in their vehicles. While those
borrowers had excellent credit histories at the time, the lack of
any equity in the vehicle may make it more likely that those
obligors will default if their personal financial conditions
change. In addition, if such an obligor defaults and the vehicle
is repossessed, the trust is likely to suffer a loss.
- GEOGRAPHIC CONCENTRATION INCREASES RISKS. Economic conditions in
the states where obligors reside may affect the delinquency, loan
loss and repossession experience of the trust with respect to the
receivables. As of the cutoff date, the billing addresses of the
obligors with respect to approximately %, _____%, and -----
_____% of the receivables (based on principal amounts) were
located in __________, __________ and ________, respectively.
Economic conditions in any state or region may decline over time
and from time to time. Because of the concentration of the
obligors in certain states, any adverse economic conditions in
those states may have a greater effect on the performance of the
securities than if the concentration did not exist. o NEWLY
ORIGINATED LOANS MAY DEFAULT. Defaults on automobile loans tend
to occur at higher rates during the early years of the automobile
loans. Substantially all of the automobile loans will have been
originated within 12 months prior to the sale to the trust. As a
result, the trust may experience higher rates of default than if
the automobile loans had been outstanding for a longer period of
time.
- BALLOON LOANS MAY HAVE A HIGHER RATES OF DEFAULT. A balloon loan has
monthly payments that will not fully pay off the loan balance by
the maturity date. As a result the borrower usually will have to
refinance the balloon loan in order to pay the amount due. The
borrower may not be able to refinance the balloon loan for any
number of reasons, including the level of available interest
rates, the age or condition of the vehicle, or the borrower's
payment or credit history. The trust will not have any funds to
refinance a balloon loan, and the seller is not obligated to do
so.
CERTIFICATES INVOLVE MORE RISKS THAN NOTES
The certificateholders will not receive any distribution of interest until
the full amount of interest on the notes has been deposited in the note
distribution account on each distribution date. The certificateholders will not
receive any distributions of principal until the notes have been repaid in full.
In addition, the trust does not have, nor is it permitted or expected to have,
any significant assets or sources of funds other than the receivables and the
reserve account. Consequently, holders of the certificates must rely for
repayment upon payments on the receivables, and, if and to the extent available,
amounts on deposit in the reserve account. If funds in the reserve account are
exhausted, the trust will depend solely on current distributions on the
receivables to make payments on the securities. In addition, in such event,
delinquent payments on the receivables may result in a shortfall in the
distributions on the certificates on any distribution date due to the priority
of payments on the notes. Although on each distribution date distributions of
interest on the certificates ranks senior to payments of principal of the notes,
following the occurrence and during the continuation of certain events of
default or an acceleration of the notes, the principal amount of the notes must
be paid in full prior to the distribution of any amounts on the certificates.
THE RETURN ON INVESTMENT WILL CHANGE OVER TIME
Your pre-tax return on your investment will change from time to time for a
number of reasons including the following:
- THE RATE OF RETURN OF PRINCIPAL IS UNCERTAIN. The amount of
distributions of principal of the securities and the time when
you receive those distributions depends on the amount and the
times at which borrowers make principal payments on the
receivables. Those principal payments may be regularly scheduled
payments or unscheduled payments resulting from prepayments or
defaults of the receivables.
- YOU BEAR REINVESTMENT RISK. Asset backed securities, like the
securities, usually produce more returns of principal to
investors when market interest rates fall below the interest
rates on the receivables and produce less returns of principal
when market interest rates are above the interest rates on the
receivables. As a result, you are likely to receive more money to
reinvest at a time when other investments generally are producing
a lower yield than that on the securities, and are likely to
receive less money to reinvest when other investments generally
are producing a higher yield than that on the securities. You
will bear the risk that the timing and amount of distributions on
your securities will prevent you from attaining your desired
yield.
- AN EARLY TERMINATION MAY AFFECT THE YIELD. Your investment in the
securities may be ended before you desire if the optional
termination or auction call is exercised. See "Description of the
Transfer and Servicing Agreements- Termination" in the
prospectus.
WITHDRAWAL OR DOWNGRADING OF INITIAL RATINGS WILL AFFECT THE PRICES FOR
SECURITIES
A security rating is not a recommendation to buy, sell or hold securities.
Similar ratings on different types of securities do not necessarily mean the
same thing. You are encouraged to analyze the significance of each rating
independently from any other rating. Any rating agency may change its rating of
the securities after those securities are issued if that rating agency believes
that circumstances have changed. Any subsequent change in rating will likely
affect the price that a subsequent purchaser will be willing to pay for the
securities.
COMPUTER PROBLEMS IN THE YEAR 2000 MAY RESULT IN LOSSES
Many computers and computer chips were not programmed to recognize more
than two digits in a year of a date. As a result, in the year 2000 (year '00 to
the computer), those computers will not know whether the '00 refers to the year
1900 or the year 2000. Mellon Bank Corporation, the parent corporation of the
servicer, has taken actions as described under "The Servicer" in this prospectus
supplement with a goal of addressing and correcting this problem. To the extent
that such systems of the servicer continue to have such problems in the year
2000 and later, the amount and timing of distributions to securityholders could
be adversely affected.
THE SECURITIES ARE NOT SUITABLE INVESTMENTS FOR ALL INVESTORS
The securities are not a suitable investment for any investor that requires
a regular or predictable schedule of payments or payment on any specific date.
The securities are complex investments that should be considered only by
investors who, either alone or with their financial, tax and legal advisors,
have the expertise to analyze the prepayment, reinvestment, default and market
risk, the tax consequences of an investment, and the interaction of these
factors.
FORMATION OF THE TRUST
THE TRUST
Mellon Auto Trust 199_-_ is a business trust to be formed by the Depositor
under the laws of the State of Delaware pursuant to the Trust Agreement for the
transactions described in this Prospectus. After its formation, the Trust will
not engage in any activity other than (i) acquiring, holding and managing the
Receivables and the other assets of the Trust and proceeds therefrom, (ii)
issuing the Certificates and the Notes, (iii) making payments on the
Certificates and the Notes and (iv) engaging in other activities that are
necessary, suitable or convenient to accomplish the foregoing or are incidental
thereto or connected therewith.
The Trust will initially be capitalized with equity of $ , excluding
amounts deposited in the Reserve Account, representing the initial principal
balance of the Certificates. The Notes and Certificates will be transferred by
the Trust to the Depositor in exchange for the Receivables. The Certificates and
the Notes will be sold to the Underwriter for cash. The Servicer will initially
service the Receivables pursuant to a sale and servicing agreement, to be dated
as of _______, 199__ (the "Sale and Servicing Agreement"), among the Seller, the
Depositor, the Trust and the Servicer, and will be compensated for acting as the
Servicer. See "Description of the Transfer and Servicing Agreements--Servicing
Compensation" herein and "--Servicing Compensation and Payment of Expenses" in
the Prospectus. To facilitate servicing and to minimize administrative burden
and expense, the Servicer will be appointed custodian for the Receivables by the
Trust, but will not stamp the Receivables to reflect the sale and assignment of
the Receivables to the Trust, nor amend the certificates of title of the
Financed Vehicles.
If the protection provided to the investment of the Securityholders in the
Trust by the Reserve Account is insufficient, the Trust will look to the
Obligors on the Receivables, and the proceeds from the repossession and sale of
Financed Vehicles which secure defaulted Receivables. In such event, there may
not be sufficient funds to make distributions with respect to the Securities.
The Trust's principal offices are in __________, in care of _____________,
as Owner Trustee, at the address listed below under "--The Owner Trustee."
CAPITALIZATION OF THE TRUST
The following table illustrates the capitalization of the Trust as of the
Cutoff Date, as if the issuance and sale of the Notes and the Certificates had
taken place on such date:
Notes ..............................$______
Certificates........................$______
Total.........................$______
<PAGE>
The Owner Trustee
_________________ is the Owner Trustee under the Trust Agreement.
_________________ is a __________________ and its principal offices are located
at __________, ___________________. The Owner Trustee will perform limited
administrative functions under the Trust Agreement, including making
distributions from the Certificate Distribution Account. The Owner Trustee's
liability in connection with the issuance and sale of the Certificates and the
Notes is limited solely to the express obligations of the Owner Trustee set
forth in the Trust Agreement.
THE TRUST PROPERTY
The Notes will be collateralized by the Trust Property (other than the
Certificate Distribution Account). Each Certificate represents a fractional
undivided interest in the Trust. The "Trust Property" will include the
Receivables, which were originated indirectly by Dealers and purchased
indirectly by the Seller pursuant to agreements with Dealers ("Dealer
Agreements"). On the Closing Date, the Depositor will buy the Receivables from
the Seller and the Depositor will sell the Receivables to the Trust. The
Servicer will, directly or through subservicers, service the Receivables. The
Trust Property also includes (i) all monies received under the Receivables on
and after the Cutoff Date and, with respect to Receivables which are Actuarial
Receivables, monies received thereunder prior to the Cutoff Date that are due on
or after the Cutoff Date, (ii) such amounts as from time to time may be held in
the Collection Account, the Reserve Account, the Payahead Account, the Note
Distribution Account and the Certificate Distribution Account, established and
maintained by the Servicer pursuant to the Sale and Servicing Agreement as
described below, (iii) security interests in the Financed Vehicles, (iv) the
rights of the Seller to receive proceeds from claims under certain insurance
policies, (v) the rights of the Trust under the Sale and Servicing Agreement;
(vi) the rights of the Seller to refunds for the costs of extended service
contracts and to refunds of unearned premiums with respect to credit life and
credit accident and health insurance policies covering the Financed Vehicles or
the retail purchasers of, or other persons owing payments on, the Financed
Vehicles (the "Obligors"), (vii) all right, title and interest of the Seller
(other than with respect to any Dealer commission) with respect to the
Receivables under the related Dealer Agreements, (viii) rights with respect to
any repossessed Financed Vehicles, and (ix) all proceeds (within the meaning of
the UCC) of the foregoing. The Reserve Account will be maintained in the name of
the Indenture Trustee for the benefit of the Noteholders and the
Certificateholders.
THE RECEIVABLES POOL
POOL COMPOSITION
The Receivables were selected from the Seller's portfolio by several
criteria, including, as of the Cutoff Date, the following: each Receivable has a
scheduled maturity of not later than the Final Scheduled Maturity Date; each
Receivable was originated in the United States of America; each Receivable has
an original term to maturity of not more than ___ months and a remaining term to
maturity of __ months or less as of the Cutoff Date; approximately __% of the
Initial Pool Balance was secured by new Financed Vehicles, and approximately __%
of the Initial Pool Balance was secured by used Financed Vehicles; each
Receivable provides for level monthly payments which fully amortize the amount
financed (except, in the case of Simple Interest Receivables, for the last
payment, which may be different from the level payment); each Receivable is not
more than ___ days contractually past due as of the Cutoff Date and is not more
than _______ months paid ahead; each Receivable has an outstanding principal
balance between $_____ and $____; and each Receivable has an APR of no less than
_____%. As of the Cutoff Date, no Obligor on any Receivable was noted in the
related records of the Servicer as being the subject of any pending bankruptcy
or insolvency proceeding. The latest scheduled maturity of any Receivable is not
later than _____. No selection procedures believed by the Depositor to be
adverse to Certificateholders or the Noteholders were used in selecting the
Receivables.
The composition, distribution by remaining term, distribution by APR,
geographic distribution and distribution by remaining principal of the
Receivables, in each case, as of the Cutoff Date are set forth in the tables
below. The percentages in the following tables may not add to 100% due to
rounding.
<TABLE>
<CAPTION>
COMPOSITION OF THE RECEIVABLES AS OF THE CUTOFF DATE
NEW FINANCED USED FINANCED TOTAL
VEHICLES VEHICLES
<S> <C> <C> <C>
Aggregate Principal $ $ $
Balance...................................
Number of Receivables.....................
Average Principal Balance $ $ $
Average Original Balance $ $ $
Weighted Average Contract ___% ___% ___%
Rate......................................
Contract Rate (Range)..................... ___%- ___% ____%- ___% ____%- ___%
Weighted Average Original months months months
Term......................................
Original Term (Range)..................... to months to months to months
Weighted Average months months months
Remaining Term............................
Remaining Term (Range).................... to months to months to months
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DISTRIBUTION BY REMAINING TERM OF THE RECEIVABLES AS OF THE CUTOFF DATE
REMAINING TERM NUMBER OF AGGREGATE PRINCIPAL PERCENTAGE OF ORIGINAL
(RANGE) RECEIVABLES BALANCE POOL BALANCE
- -------------- ----------- ------------------- -----------------------
<S> <C> <C> <C>
Less than 30 months........................... $ %
30 to 35 months...............................
36 to 41 months...............................
42 to 47 months...............................
48 to 53 months...............................
54 to 59 months...............................
60 to 65 months...............................
66 to 71 months...............................
72 to 77 months...............................
78 t o 89 months..............................-------------- --------------- ----------%
Total.............................. $ 100%
============= =============== ===========
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION BY ANNUAL PERCENTAGE RATE OF THE RECEIVABLES AS OF
THE CUTOFF DATE
ANNUAL PERCENTAGE NUMBER OF AGGREGATE PERCENTAGE OF ORIGINAL
RATE RANGE RECEIVABLES PRINCIPAL BALANCE POOL BALANCE
- ----------------- ------------ ----------------- -----------------------
<S> <C> <C> <C>
8.00% to below................................ $ %
8.00% to 8.99%................................
9.00% to 9.99%................................
10.00% to 10.99%..............................
11.00% to 11.99%..............................
12.00% to 12.99%..............................
13.00% to 13.99%..............................
14.00% to 14.99%..............................
15.00% to 15.99%..............................
16.00% to 16.99%..............................
17.00% to 17.99%..............................
18.00% to 18.99%..............................
19.00% to 19.99%..............................
20.00% to 20.99%..............................
21.00% to 21.99%..............................
22.00% and above..............................
Total......................................... ------------ ----------- --------
$ 100.00%
------------ ============ ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES AS OF THE CUTOFF DATE
NUMBER OF AGGREGATE PERCENTAGE OF
STATE(1) RECEIVABLES PRINCIPAL BALANCE ORIGINAL POOL BALANCE
- --------- ------------ ------------------ ---------------------
<S> <C> <C> <C>
- ------------...................... $ %
------------................
------------................
------------................
------------................
------------................
------------................
------------................
Others (2).................. -------------- ------------------ --------------
Total........................ 100%
=============== $================= --------------
- ----------------
(1) Based on billing addresses of the Obligors as of the Cutoff Date, which
may differ from the state of origination of the Receivable.
(2) Includes __ other states and ____________. (none of which have a
concentration of Receivables in excess of ____% of the aggregate
principal balance).
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION BY REMAINING PRINCIPAL BALANCE OF THE RECEIVABLES
AS OF THE CUTOFF DATE
REMAINING PRINCIPAL NUMBER OF AGGREGATE PERCENTAGE OF
BALANCE (RANGE) RECEIVABLES PRINCIPAL BALANCE ORIGINAL BALANCE
- ------------------- ------------ ------------------ -----------------
<S> <C> <C> <C>
$ 2,500 to $ 4,999..................... $ %
$ 5,000 to $ 7,499.....................
$ 7,500 to $ 9,999.....................
$10,000 to $12,499.....................
$12,500 to $14,999.....................
$15,000 to $17,499.....................
$17,500 to $19,999.....................
$20,000 to $22,499.....................
$22,500 to $24,999.....................
$25,000 to $27,499.....................
$27,500 to $29,999.....................
$30,000 to $32,499.....................
$32,500 to $34,999.....................
$35,000 to $37,499.....................
$37,500 to $39,999.....................
$40,000 to $41,499.....................
$42,500 to $44,999.....................
$45,000 to $47,499.....................
$47,500 to $49,999.....................
$50,000 to $52,499.....................
$52,500 to $54,999..................... ----------------- -------------- ------------
Total.................................. $ 100.00%
================== =============== ============
</TABLE>
<PAGE>
As of the Cutoff Date, approximately __% of the aggregate principal
balance of the Receivables, constituting __% of the number of Receivables, were
between 1 payment and __ payments paid-ahead.
As of the Cutoff Date, approximately ___% of the aggregate principal
balance of the Receivables, constituting __% of the number of Receivables, are
Actuarial Receivables. "Actuarial Receivables" are receivables that provide for
amortization of the amount financed over a series of fixed, level-payment
monthly installments. Each monthly installment, including the monthly
installment representing the final payment on the Receivable, consists of an
amount of interest equal to 1/12 of the Annual Percentage Rate ("APR") of the
amount financed multiplied by the unpaid principal balance of the amount
financed, and an amount of principal equal to the remainder of the monthly
payment.
As of the Cutoff Date, approximately ___% of the aggregate principal
balance of the Receivables, constituting ___% of the number of Receivables, are
Simple Interest Receivables. "Simple Interest Receivables" are receivables that
provide for the amortization of the amount financed under the receivable over a
series of fixed level monthly payments. However, unlike the monthly payment
under an Actuarial Receivable, each monthly payment includes an installment of
interest which is calculated on the basis of the outstanding principal balance
of the receivable multiplied by the stated APR and further multiplied by the
period elapsed (as a fraction of a calendar year) since the preceding payment of
interest was made. As payments are received under a Simple Interest Receivable,
the amount received is applied first to interest accrued to the date of payment
and the balance is applied to reduce the unpaid principal balance. Accordingly,
if an Obligor pays a fixed monthly installment before its scheduled due date,
the portion of the payment allocable to interest for the period since the
preceding payment was made will be less than it would have been had the payment
been made as scheduled, and the portion of the payment applied to reduce the
unpaid principal balance will be correspondingly greater. Conversely, if an
Obligor pays a fixed monthly installment after its scheduled due date, the
portion of the payment allocable to interest for the period since the preceding
payment was made will be greater than it would have been had the payment been
made as scheduled, and the portion of the payment applied to reduce the unpaid
principal balance will be correspondingly less. In either case, the Obligor pays
a fixed monthly installment until the final scheduled payment date, at which
time the amount of the final installment is increased or decreased as necessary
to repay the then outstanding principal balance.
If an Actuarial Receivable is prepaid in full, with minor variations
based upon state law, under the terms of the motor vehicle retail installment
sale contract or loan agreement, as the case may be, a "refund" or "rebate" will
be made to the borrower of the portion of the total amount of payments then due
and payable under such contract or agreement allocable to "unearned" interest,
calculated on the basis of a constant interest rate. If a Simple Interest
Receivable is prepaid, rather than receive a rebate, the borrower is required to
pay interest only to the date of prepayment. The amount of a rebate under an
Actuarial Receivable generally will be less than the remaining scheduled
payments of interest that would have been due under a Simple Interest Receivable
for which all payments were made on schedule.
The Servicer may accede to an Obligor's request to pay scheduled
payments in advance, in which event the Obligor will not be required to make
another regularly scheduled payment until the time a scheduled payment not paid
in advance is due. The amount of any payment (which are not amounts representing
Payaheads) made in advance will be treated as a principal prepayment and will be
distributed as part of the Principal Distribution Amount in the month following
the Collection Period in which the prepayment was made. See "Maturity and
Prepayment Considerations" in the Prospectus.
THE SERVICER
GENERAL
As of December 31, 1998, the Servicer serviced approximately 30,253
retail installments sale contracts, consisting primarily of new and used
automobile (including passenger car, minivan, sport/utility vehicles and light
truck) receivables, representing an outstanding balance of approximately 352
million. As of December 31, 1998, the Servicer serviced approximately [_____]
automobile leases equaling approximately $_____ billion of automobile lease
receivables. See "The Servicer" in the Prospectus.
DELINQUENCIES AND LOSS
Set forth below is certain information concerning the historical
delinquency and loss experience of Mellon Bank, N.A. and its subsidiaries
pertaining to new and used automobile (including passenger car, minivan,
sport/utility vehicle and light truck) receivables originated directly or
indirectly by Mellon Bank, N.A. and its subsidiaries. There can be no assurance
that the delinquency and loss experience on the Receivables will be comparable
to that set forth below.
<PAGE>
DELINQUENCY EXPERIENCE
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
At December 31,
--------------------------------------------------------------------------------------------------
_______________1998___________ ___________1997______________ ________ 1996______
---- ---- ----
NUMBER NUMBER NUMBER
OF OF OF
LOANS DOLLARS PERCENT LOANS DOLLARS PERCENT LOANS
----- ------- ------- ----- ------- ------- -----
<S> <C> <C> <C> <C> <C> <C>
Principal Amount
Outstanding (1) ........... 30,253 $ 352,174 100% 22,126 $ 195,593 100% 26,120
Delinquencies (2)...........
30-59 Days 306 2,793 0.79% 265 1,871 0.96% 388
60-89 Days 69 635 0.18% 53 384 0.20% 90
90-119 Days 24 231 0.07% 5 30 0.02% 9
over 120 days............. 1 11 0.00% 2 21 0.01% 2
Total
Delinquencies
as a Percentage
of the Total
Amount Outstanding.......... 400 $ 3,670 1.04% 325 $ 2,306 1.18% 489
====== ========= ====== ==== ======== ====== ===
At December 31,
-------------------------------------------------------------------------------------------------------
_____________1996___________ ___________1995______________ ____________ 1994_______________
---- ---- ----
NUMBER NUMBER
OF OF
DOLLARS PERCENT LOANS DOLLARS PERCENT LOANS DOLLARS PERCENT
------- ------- ------- ------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PRINCIPAL AMOUNT
Outstanding (1) ........... $211,947 100% 36,742 $263,577 100% 51,001 $346,963 100%
Delinquencies (2)...........
30-59 Days 2,509 1.18% 511 2,477 0.94% 737 3,639 1.05%
60-89 Days 465 0.22% 87 447 0.17% 131 519 0.15%
90-119 Days 22 0.01% 5 39 0.01% 17 74 0.02%
over 120 days............. 26 0.01% 2 17 0.01% 2 - 0.00%
Total
Delinquencies
as a Percentage
of the Total
Amount Outstanding.......... $ 3,022 1.43% 605 $ 2,980 1.13% 887 $ 4,232 1.22%
======= ======= ==== ========== ===== ==== ======== ======
______________
(1) Principal Amount Outstanding is the aggregate remaining principal
balance of all Receivables serviced, net of unearned interest.
(2) The period of delinquency is based on the number of days scheduled
payments are contractually past due. Includes repossessions on hand
which have not been charged-off. A receivable is 30 days contractually
past due if a scheduled payment has not been received by the
subsequent calendar month's scheduled payment date.
</TABLE>
<PAGE>
HISTORICAL LOSS EXPERIENCE
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
For Year Ended December 31,
1998 1997 1996 1995 1994
---------------- -------------- ---------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Period End Principal
Amount Outstanding(1)..... $ 352,174 $ 195,593 $ 211,947 $ 263,577 $ 346,963
Average Principal Amount
Outstanding(2).............. $ 250,063 $ 197,164 $ 223,459 $ 292,661 $ 403,395
Number of Loans Outstanding
(as of period end).......... 29,853 22,126 26,120 36,742 51,001
Average Number of Loans
Outstanding(2).............. 24,200 23,402 30,172 42,276 60,287
Number of Repossessions...... N/A N/A N/A N/A N/A
Gross Losses(3)............. $ 1,496 $ 1,265 $ 1,589 $ 2,115 $ 4,071
Recoveries (4).............. 876 1,232 1,646 2,434 3,693
------------ ------------ ------------ ------------ ------------
Net Losses(5)............... 621 33 (57) (319) 378
Net Losses (Gains) as a
Percent of
Principal Amount
Outstanding................ 0.18% 0.02% (0.03%) (0.12%) 0.11%
Net Losses
(Gains) as a
Percentage of Average
Principal Amount
Outstanding................. 0.25% 0.02% (0.03%) (0.11%) 0.09%
- ------------------------------
(1) Principal Amount Outstanding is the aggregate remaining principal
balance of all Receivables serviced, net of unearned interest.
(2) Average of the month-end balances for each of the twelve months in the
applicable calendar year.
(3) Gross Losses is the aggregate remaining principal balance.
(4) Recoveries is any proceeds from the liquidation of the related vehicle
and post-disposition monies received on previously charged-off
contracts including proceeds of liquidation of the related vehicle
after the related charge-off.
(5) Net Losses is equal to Gross Losses less Recoveries.
</TABLE>
As shown in the foregoing tables, the Servicer's portfolio of
automobile loans at December 31, 1998 was approximately 180% of the portfolio at
December 31, 1997. At the same time, the average amount of an automobile loan
increased to $11,796 at December 31, 1998 from $8,839 at December 31, 1997. The
Servicer believes that the decrease in Total Delinquencies as a Percentage of
the Total Amount Outstanding from 1.18% at December 31, 1997, to 1.04% at
December 31, 1998, is primarily attributable to the large increase in the size
of the portfolio. The Servicer believes that the Net Losses (Gains) as a Percent
of Principal Amount Outstanding in 1995 and 1996 reflect the fact that defaults
on automobile loans generally occur with greater frequency in the early months
after origination and gradually diminish over time. Since the Servicer's
portfolio was not being replenished during those years through the addition of
new originations, the positive net loss experience largely reflects the
diminishing frequency of defaults as the automobile loans in its portfolio
seasoned. Beginning in 1997, the Servicer adopted a securitization strategy
which allowed it to offer more competitive rates. As a result, it began to
increase its portfolio through the addition of new originations. The Net Losses
(Gains) as a Percent of Principal Amount Outstanding at December 31, 1998,
reflects the expected default experience for the new originations.
Delinquencies and Net Losses are affected by a number of social and
economic factors, including changes in interest rates and unemployment levels,
and there can be no assurance as to the level of future total delinquencies or
the severity of future net charge-offs. As a result, the delinquency and net
charge-off experience of the Receivables may differ from those shown in the
tables.
YEAR 2000 PROJECT
The Servicer is an indirect wholly-owned subsidiary of Mellon Bank
Corporation (the "Corporation"). The Corporation has publicly disclosed the
following information concerning its Year 2000 Project.
In early 1996, the Corporation formed a year 2000 project team to
identify information technology and non-information technology systems that
require modification for the year 2000. A project plan has been developed with
goals and target dates. The Corporation's business areas are in various stages
of this project plan. The Corporation currently expects to have substantially
completed programming changes and internal testing of internal mission critical
information technology systems by December 31, 1998, and to have begun
significant enterprise testing of mission critical information technology
systems in late 1998, which testing is expected to be substantially completed by
June 30, 1999. The Corporation currently expects to have substantially completed
remediation and testing of mission critical non-information technology systems
by June 30, 1999. The Corporation also currently expects to have substantially
completed remediation and testing of both information technology and
non-information systems that the Corporation has determined are of high business
value and priority (although not mission critical) by June 30, 1999.
The impact of year 2000 issues on the Corporation will depend not only
on corrective actions that the Corporation takes, but also on the way in which
the year 2000 issues are addressed by governmental agencies, business and other
third parties that provides services or data to, or receive services or data
from, the Corporation, or whose financial condition or operational capability is
important to the Corporation. To reduce this exposure, the Corporation has an
ongoing process of identifying and contacting mission critical third party
vendors and other significant third parties to determine their year 2000 plans
and target dates. Risks associated with any such third parties located outside
the United States may be higher insofar as it is generally believed that non-
U.S. business may not be addressing their year 2000 issues on as timely a basis
as U.S. businesses. Notwithstanding the Corporation's efforts, there can be no
assurance that mission critical third party vendors or other significant third
parties will adequately address their 2000 issues.
The Corporation is developing contingency plans for implementation in
the event the mission critical third party vendors or other significant third
parties fail to adequately address year 2000 issues. Such plans principally
involve internal remediation or identifying alternate vendors. The Corporation
also is enhancing its existing business resumption plans to reflect year 2000
issues and is developing plans designed to coordinate the efforts of its
personnel and resources in addressing any mission critical year 2000 problems
that become evident after December 31, 1999. There can be no assurance that any
such plans will fully mitigate any such failures or problems. Furthermore, there
may be certain mission critical third parties, such as utilities or
telecommunication companies, where alternative arrangements or sources are
unavailable or severely limited.
Until the year 2000 event actually occurs and for a period of time
thereafter, there can be no assurance that there will be no problems related to
year 2000. The year 2000 technology challenge is an unprecedented event. If year
2000 issues are not adequately addressed by the Corporation and third parties,
the Corporation could face, among other things, business disruptions,
operational problems, financial losses, legal liability and similar risks, and
the Corporation's business, results of operations and financial position could
be materially adversely affected.
The Corporation has indicated in its public disclosure that the
foregoing year 2000 discussion contains "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
statements, including without limitation, the dates by which the Corporation
expects to substantially complete programming changes, remediation and testing
of systems and the impact of the redeployment of existing staff, are based on
management's best current estimates, which were derived utilizing numerous
assumptions about future events, including the continued availability of certain
resources, representations received from third party service providers and other
factors. However, there can be no guarantee 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 identify and convert all relevant systems; results of year 2000
testing; adequate resolution of year 2000 issues by governmental agencies,
business or other third parties that are service providers, suppliers, borrowers
or customers of the Corporation; unanticipated systems costs; the need to
replace hardware; the adequacy of and ability to implement contingency plans;
and similar uncertainties. The forward-looking statements made in the foregoing
year 2000 discussion were made in the Corporation's Quarterly Report on Form
10-Q for the quarter ended September 30, 1998. The Corporation indicated that
such statements speak only as of the date on which the statements were made, and
the Corporation undertook no obligation to update any forward-looking statement
to reflect events or circumstances after the date on which such statement is
made or to reflect the occurrence of unanticipated events.
[WEIGHTED AVERAGE LIFE OF THE SECURITIES]
[Prepayments on automotive receivables can be measured relative to a
prepayment standard or model. The model used in this Prospectus, the Absolute
Prepayment Model ("ABS"), represents an assumed rate of prepayment each month
relative to the original number of receivables in a pool of receivables. ABS
further assumes that all the receivables are the same size and amortize at the
same rate and that each receivable in each month of its life will either be paid
as scheduled or be prepaid in full. For example, in a pool of receivables
originally containing 10,000 receivables, a 1% ABS rate means that 100
receivables prepay each month. ABS does not purport to be an historical
description of prepayment experience or a prediction of the anticipated rate of
prepayment of any pool of receivables, including the Receivables.
As the rate of payment of principal of the Notes and in respect of the
Certificate Balance will depend on the rate of payment (including prepayments)
of the principal balance of the Receivables, final payment of the Notes could
occur significantly earlier than the Final Scheduled Maturity Date for the
Notes. The final distribution in respect of the Certificates also could occur
prior to the Final Scheduled Distribution Date for the Certificates.
Reinvestment risk associated with early payment of the Notes and the
Certificates will be borne exclusively by the Noteholders and the
Certificateholders, respectively.
The table captioned "Percent of Initial Note Principal Balance or
Initial Certificate Balance at Various ABS Percentages" (the "ABS Table") has
been prepared on the basis of the characteristics of the Receivables. The ABS
Table assumes that (i) the Receivables prepay in full at the specified constant
percentage of ABS monthly, with no defaults, losses or repurchases, (ii) each
scheduled monthly payment on the Receivables is made on the last day of each
month and each month has 30 days, (iii) payments on the Notes and distributions
on the Certificates are made on each Distribution Date (and each such date is
assumed to be the ____ day of each applicable month), (iv) the balance in the
Reserve Account on each Distribution Date is equal to the Specified Reserve
Account Balance, and (v) the Servicer does not exercise its option to purchase
the Receivables. The first two pools have an assumed cutoff date of and the
remaining pools have an assumed cutoff date of . The ABS Table sets forth the
percent of the initial principal amount of the Notes and the percent of the
initial Certificate Balance that would be outstanding after each of the
Distribution Dates shown and the corresponding weighted average lives thereof at
various constant ABS percentages.
The ABS Table also assumes that the Receivables have been aggregated
into four hypothetical pools with all of the Receivables within each such pool
having the following characteristics and that the level scheduled monthly
payment for each of the four pools (which is based on its aggregate principal
balance, APR, original term to maturity as of the Cutoff Date) will be such that
each pool will fully amortize by the end of its remaining term to maturity.
<TABLE>
<CAPTION>
POOL
- -----
REMAINING WEIGHTED AVERAGE WEIGHTED AVERAGE
TERM AGGREGATE WEIGHTED ORIGINAL TERM REMAINING TERM TO
TO MATURITY PRINCIPAL AVERAGE CONTRACT TO MATURITY MATURITY
RANGE (IN MONTHS) BALANCE RATE (IN MONTHS) (IN MONTHS)
----------------- ---------- ---------------- ---------------- ------------------
<S> <C> <C>
1............................ $ %
2............................ $ %
3............................ $ %
4............................ $ %
</TABLE>
The actual characteristics and performance of the Receivables will
differ from the assumptions used in constructing the ABS Table. The assumptions
used are hypothetical and have been provided only to give a general sense of how
the principal cash flows might behave under varying prepayment scenarios. For
example, it is very unlikely that the Receivables will prepay at a constant
level of ABS until maturity or that all of the Receivables will prepay at the
same level of ABS. Moreover, the diverse terms of Receivables within each of the
four hypothetical pools could produce slower or faster principal distributions
than indicated in the ABS Table at the various constant percentages of ABS
specified, even if the original and remaining terms to maturity of the
Receivables are as assumed. Any difference between such assumptions and the
actual characteristics and performance of the Receivables, or actual prepayment
experience, will affect the percentages of initial balances outstanding over
time and the weighted average lives of the Notes and the Certificates.]
<TABLE>
<CAPTION>
PERCENT OF INITIAL NOTE PRINCIPAL BALANCE AT VARIOUS ABS PERCENTAGES
Notes
Assumed ABS Percentage(2)
DISTRIBUTION DATES ____% ____% ____% ____%
- ------------------ -------------- ---------------- ------------- -----------
<S> <C> <C> <C> <C>
Closing Date......................................... 100 100 100 100
- -----------------....................................
- -----------------....................................
- -----------------....................................
- -----------------....................................
Weighted Average Life (years)(1).....................
- ----------------------
(1) The weighted average life of a Note is determined by (i) multiplying
the amount of each principal payment of such Note by the number of
years from the date of the issuance of such Note to the Distribution
Date on which such principal payment is made, (ii) adding the results
and (iii) dividing the sum by the initial principal balance of such
Note.
(2) An asterisk "*" means a percent of initial Note principal balance of
more than zero and less than 0.5%.
</TABLE>
THE ABS TABLES HAVE BEEN PREPARED BASED ON THE ASSUMPTIONS DESCRIBED
ABOVE (INCLUDING THE ASSUMPTIONS REGARDING THE CHARACTERISTICS AND PERFORMANCE
OF THE RECEIVABLES WHICH WILL DIFFER FROM THE ACTUAL CHARACTERISTICS AND
PERFORMANCE THEREOF) AND SHOULD BE READ IN CONJUNCTION THEREWITH.
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF INITIAL CERTIFICATE BALANCE AT VARIOUS ABS PERCENTAGES
Certificates
Assumed ABS Percentage
DISTRIBUTION DATES ____% ____% ____% ____%
- ------------------ --------------- ----------------- -------------- -------------
<S> <C> <C> <C> <C>
Closing Date......................................... 100 100 100 100
- ---------------......................................
- ---------------......................................
- ---------------......................................
- ---------------......................................
</TABLE>
- ---------------------
THE ABS TABLES HAVE BEEN PREPARED BASED ON THE ASSUMPTIONS DESCRIBED
ABOVE (INCLUDING THE ASSUMPTIONS REGARDING THE CHARACTERISTICS AND PERFORMANCE
OF THE RECEIVABLES WHICH WILL DIFFER FROM THE ACTUAL CHARACTERISTICS AND
PERFORMANCE THEREOF) AND SHOULD BE READ IN CONJUNCTION THEREWITH.
<PAGE>
USE OF PROCEEDS
The net proceeds from the sale of the Securities will be applied by
the Depositor first, to deposit approximately $______ into the Reserve Account
and second, the balance to purchase the Receivables and the other Trust Property
from the Seller.
DESCRIPTION OF THE NOTES
GENERAL
The Notes will be issued pursuant to the terms of the Indenture,
substantially in the form filed as an exhibit to the Registration Statement. The
following information summarizes all material provisions of the Notes and the
Indenture. The following summary supplements the description of the general
terms and provisions of the Notes of any given Series and the related Indenture
set forth in the Prospectus, to which description reference is hereby made.
THE NOTES
PAYMENTS OF INTEREST. The Notes will constitute [Fixed Rate]
Securities, as such term is defined under "Certain Information Regarding the
Securities--Fixed Rate Securities" in the Prospectus. Interest on the
outstanding principal amount of the Notes will accrue at the Interest Rate and
will be payable to the Noteholders monthly on each Distribution Date, commencing
___________. Interest will accrue from and including the Closing Date (in the
case of the first Distribution Date), or from and including the most recent
Distribution Date on which interest has been paid to but excluding the following
Distribution Date (each representing an "Interest Period"). Interest on the
Notes will be calculated on the basis of a 360 day year consisting of twelve 30
day months. Interest payments on the Notes will generally be derived from the
Total Distribution Amount remaining after the payment of the Servicing Fee for
the related Collection Period and all accrued and unpaid Servicing Fees for
prior Collection Periods (the "Total Servicing Fee"). See "Description of the
Transfer and Servicing Agreements--Distributions" and "--Credit Enhancement-
- -Reserve Account" herein. Interest payments to the Noteholders will have the
same priority. Under certain circumstances, the amount available for interest
payments could be less than the amount of interest payable on the Notes on any
Distribution Date. Interest accrued as of any Distribution Date but not paid on
such Distribution Date will be due on the next Distribution Date, together with
interest on such amount at the Interest Rate.
PAYMENTS OF PRINCIPAL. Principal payments will be made to the
Noteholders on each Distribution Date in an amount equal to the Noteholders'
Percentage of the Principal Distribution Amount in respect of such Collection
Period, subject to certain limitations. Principal payments on the Notes will be
generally derived from the Total Distribution Amount remaining after the payment
of the Total Servicing Fee, the Noteholders' Interest Distributable Amount and
the Certificateholders' Interest Distributable Amount; provided, however, that
following the occurrence and during the continuation of certain Events of
Default or an acceleration of the Notes, the Noteholders will be entitled to be
paid in full before the distributions may be made on the Certificates. See
"Description of the Transfer and Servicing Agreements--Distributions" and "--
Credit Enhancement--Reserve Account" herein.
The principal balance of the Notes, to the extent not previously paid,
will be due on the Note Final Scheduled Distribution Date. The actual date on
which the aggregate outstanding principal amount of the Notes is paid may be
earlier than the Note Final Scheduled Distribution Date based on a variety of
factors.
OPTIONAL REDEMPTION. The Notes will be redeemed in whole, but not in
part, on any Distribution Date on which the Servicer exercises its option to
purchase the Receivables. The Servicer may purchase the Receivables when the
Pool Balance has declined to 5% or less of the Initial Pool Balance. The
redemption price will be equal to the unpaid principal amount of the Notes and
the Certificates plus accrued and unpaid interest thereon. See "Description of
the Transfer and Servicing Agreements--Termination" in the Prospectus.
AUCTION SALE. In the event of an Auction Sale, the Notes will be
redeemed in an amount equal to the unpaid principal amount of the then
outstanding Notes plus accrued and unpaid interest thereon at the Interest Rate.
See "Description of the Transfer and Servicing Agreements-- Termination" in the
Prospectus.
THE INDENTURE TRUSTEE. ___________________ will be the Indenture
Trustee under the Indenture. The Depositor maintains normal commercial banking
relations with the Indenture Trustee.
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the terms of the Trust
Agreement, substantially in the form filed as an exhibit to the Registration
Statement. The following information summarizes all material provisions of the
Certificates and the Trust Agreement. The summary is qualified in its entirety
by reference to the provisions of the Certificates and the Trust Agreement. The
following summary supplements the description of the general terms and
provisions of the Certificates of any given Series and the related Trust
Agreement set forth in the Prospectus, to which description reference is hereby
made.
THE CERTIFICATES
DISTRIBUTIONS OF INTEREST. Certificateholders will be entitled to
distributions of interest in an amount equal to accrued interest on the
Certificate Balance at the Pass-Through Rate. Such amounts will be distributable
monthly on each Distribution Date commencing ___________. [The Certificates will
constitute Fixed Rate Securities, as such term is defined under "Certain
Information Regarding the Securities--Fixed Rate Securities"] in the Prospectus.
That interest entitlement will accrue from and including the Closing Date (in
the case of the first such Distribution Date) or from the most recent
Distribution Date on which interest distributions have been made to but
excluding such Distribution Date and will be calculated on the basis of a
360-day year of twelve 30-day months. Interest distributions with respect to the
Certificates will be funded from the portion of the Total Distribution Amount
remaining after the distribution of the Total Servicing Fee and the Noteholders'
Interest Distributable Amount. On any Distribution Date, the Certificateholders'
Interest Distributable Amount will equal 30 days' interest at the Pass-Through
Rate on the Certificate Balance (or, in the case of the first Distribution Date,
interest accrued from and including the Closing Date to but excluding the first
Distribution Date) plus any amounts due but not paid on previous Distribution
Dates with interest thereon at the Pass-Through Rate. See "Description of the
Transfer and Servicing Agreements--Distributions" and "--Credit Enhancement-
- -Reserve Account" herein.
DISTRIBUTIONS OF PRINCIPAL PAYMENTS. Certificateholders will be
entitled to distributions of principal on each Distribution Date commencing on
the Distribution Date on which the Notes have been paid in full, in an amount
equal to the Certificateholders' Percentage of the Principal Distribution Amount
in respect of the related Collection Period, subject to certain limitations.
Distributions with respect to principal payments will generally be funded from
the portion of the Total Distribution Amount remaining after the distribution of
the Total Servicing Fee, the Noteholders' Distributable Amount, if any, and the
Certificateholders' Interest Distributable Amount. See "Description of the
Transfer and Servicing Agreement--Distributions" and "--Credit
Enhancement--Reserve Account" herein.
On and after any Distribution Date on which the Notes have been paid
in full, funds in the Reserve Account will be applied to reduce the Certificate
Balance to zero if, after giving effect to all distributions to the Servicer,
the Noteholders and the Certificateholders on such Distribution Date, the amount
on deposit in the Reserve Account is equal to or greater than the Certificate
Balance.
SUBORDINATION OF CERTIFICATES. The rights of Certificateholders to
receive distributions of interest are subordinated to the rights of Noteholders
to receive payments of interest. In addition, the Certificateholders have no
right to receive distributions of principal until the principal amount of the
Notes has been paid in full. Consequently, funds on deposit in the Collection
Account (including amounts deposited therein from the Reserve Account) will be
applied to the payment of interest on the Notes before distributions of interest
on the Certificates and will be applied to the payment of principal on the Notes
before distributions of principal on the Certificates. In addition, following
the occurrence of certain Events of Default or an acceleration of the Notes, the
Noteholders will be entitled to be paid in full before the Certificateholders
are entitled to any distributions.
OPTIONAL PREPAYMENT. If the Servicer exercises its option to purchase
the Receivables when the Pool Balance declines to 5% or less of the Initial Pool
Balance, Certificateholders will receive an amount in respect of the
Certificates equal to the Certificate Balance together with accrued and unpaid
interest thereon, which distribution will effect early retirement of the
Certificates. See "Description of the Transfer and Servicing
Agreements--Termination" in the Prospectus.
AUCTION SALE. In the event of an Auction Sale, the Certificates will
be prepaid at a price equal to the Certificate Balance plus accrued and unpaid
interest thereon at the Pass-Through Rate. See "Description of the Transfer and
Servicing Agreements--Termination" in the Prospectus.
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following information summarizes all material provisions of the
Sale and Servicing Agreement, substantially in the form filed as an exhibit to
the Registration Statement, pursuant to which the Trust is purchasing and the
Servicer is undertaking to service the Receivables and the Trust Agreement
pursuant to which the Trust will be created and the Certificates will be issued
(collectively the "Transfer and Servicing Agreements"). This summary is
qualified by reference to the provisions of the Transfer and Servicing
Agreements. The following summary supplements the description of the general
terms and provisions of the Transfer and Servicing Agreements set forth in the
Prospectus, to which description reference is hereby made.
SALE AND ASSIGNMENT OF RECEIVABLES
Certain information regarding the conveyance of the Receivables by the
Seller to the Depositor and by the Depositor to the Trust on the Closing Date
pursuant to the Sale and Servicing Agreement is set forth in the Prospectus
under "Description of the Transfer and Servicing Agreements--Sale and Assignment
of Receivables."
ACCOUNTS
[The assets of the Trust will not include a Pre-Funding Account.] All
other Accounts referred to under "Description of the Transfer and Servicing
Agreements--Accounts" in the Prospectus, as well as a Reserve Account, will be
established by the Servicer and maintained with the Indenture Trustee in the
name of the Indenture Trustee on behalf of the Noteholders and the
Certificateholders.
SERVICING COMPENSATION
The Servicer will be entitled to receive a fee (the "Servicing Fee")
for each Collection Period in an amount equal to the product of one-twelfth of
___% per annum for so long as Mellon Bank, N.A. or an affiliate thereof is the
Servicer, and ___% per annum if Mellon Bank, N.A. or an affiliate thereof is no
longer the Servicer (the "Servicing Fee Rate") and the Pool Balance as of the
first day of the Collection Period. The "Servicing Fee" will also include such
other amounts to be paid to the Servicer as described in the Prospectus. The
Servicing Fee, together with any portion of the Servicing Fee that remains
unpaid from prior Distribution Dates (the "Total Servicing Fee"), will be paid
from the Total Distribution Amount. The Total Servicing Fee will be paid prior
to the distribution of any portion of the Interest Distribution Amount to the
Noteholders or the Certificateholders. See "Description of the Transfer and
Servicing Agreement--Servicing Compensation and Payment of Expenses" in the
Prospectus.
DISTRIBUTIONS
DEPOSITS TO THE COLLECTION ACCOUNT. On or before the earlier of the
eighth Business Day of the month in which a Distribution Date occurs and the
fourth Business Day preceding such Distribution Date (the "Determination Date"),
the Servicer will calculate the Total Distribution Amount, the Interest
Distribution Amount, the Available Principal, the Principal Distribution Amount,
the Total Servicing Fee, the Noteholders' Interest Distributable Amount, the
Noteholders' Principal Distributable Amount, the Certificateholders' Interest
Distributable Amount, the Certificateholders' Principal Distributable Amount,
the Advances, if any, to be made by the Servicer of interest and principal due
on the Actuarial Receivables, the amount, if any, to be withdrawn from the
Payahead Account and deposited in the Collection Account, the amount, if any, to
be withdrawn from the Reserve Account and deposited in the Collection Account
and the amount, if any, to be withdrawn from the Reserve Account and paid to the
Depositor, in each case, with respect to such Distribution Date.
On or before each Distribution Date, the Servicer will cause the
Indenture Trustee to withdraw from the Payahead Account and (i) deposit into the
Collection Account in immediately available funds, the portion of Payaheads
constituting scheduled payments on Actuarial Receivables or that are to be
applied to prepay Actuarial Receivable in full and (ii) distribute to the
Depositor, in immediately available funds, all investment earnings on funds in
the Payahead Account with respect to the preceding Collection Period. On or
before each Distribution Date the Servicer will deposit any Advances for such
Distribution Date into the Collection Account. On or before the Business Day
preceding each Distribution Date, the Servicer will cause the Interest
Distribution Amount and the Available Principal for such Distribution Date to be
deposited into the Collection Account. On or before each Distribution Date, the
Servicer shall cause the Indenture Trustee to withdraw from the Reserve Account
and deposit in the Collection Account an amount (the "Reserve Account Transfer
Amount") equal to the lesser of (i) the amount of cash or other immediately
available funds in the Reserve Account on such Distribution Date (before giving
effect to any withdrawals therefrom relating to such Distribution Date) or (ii)
the amount, if any, by which (x) the sum of the Total Servicing Fee, the
Noteholders' Interest Distributable Amount, the Certificateholders' Interest
Distributable Amount, the Noteholders' Principal Distributable Amount and the
Certificateholders' Principal Distributable Amount for such Distribution Date
exceeds (y) the sum of the Interest Distribution Amount and the Available
Principal for such Distribution Date.
The "Interest Distribution Amount" for a Distribution Date will be the
sum of the following amounts with respect to any Distribution Date, computed,
with respect to Simple Interest Receivables, in accordance with the simple
interest method, and with respect to Actuarial Receivables, in accordance with
the actuarial method: (i) that portion of all collections on the Receivables
allocable to interest in respect of the preceding Collection Period (including,
with respect to Actuarial Receivables, amounts withdrawn from the Payahead
Account and allocable to interest and excluding amounts deposited into the
Payahead Account and allocable to interest, in each case, in respect of the
preceding Collection Period); (ii) all proceeds (other than any proceeds from
any Dealer commission) ("Liquidation Proceeds") of the liquidation of Liquidated
Receivables, net of expenses incurred by the Servicer in connection with such
liquidation and any amounts required by law to be remitted to the Obligor on
such Liquidated Receivables, to the extent attributable to interest due thereon,
which became Liquidated Receivables during such Collection Period in accordance
with the Servicer's customary servicing procedures; (iii) all Advances made by
the Servicer of interest due on the Actuarial Receivables in respect of the
preceding Collection Period; (iv) the Purchase Amount of each Receivable that
was repurchased by the Seller or purchased by the Servicer during the preceding
Collection Period to the extent attributable to accrued interest thereon; (v)
all monies collected, from whatever source (other than any proceeds from any
Dealer commission), in respect to Liquidated Receivables during any Collection
Period following the Collection Period in which such Receivable was written off,
net of the sum of any amounts expended by the Servicer for the account of the
Obligor and any amounts required by law to be remitted to the Obligor
("Recoveries"); and (vi) Investment Earnings for such Distribution Date;
provided, however, that in calculating the Interest Distribution Amount, all
payments and proceeds (including Liquidation Proceeds) of any Receivables (i)
repurchased by the Seller or purchased by the Servicer, the Purchase Amount of
which has been included in the Interest Distribution Amount on a prior
Distribution Date and (ii) received on Actuarial Receivables and distributed to
the Servicer, with respect to such Distribution Date, as reimbursement for any
unreimbursed Advances in accordance with the Sale and Servicing Agreement, will
all be excluded.
The "Available Principal" for a Distribution Date will be the sum of
the following amounts with respect to any Distribution Date, computed, with
respect to Simple Interest Receivables, in accordance with the simple interest
method, and, with respect to Actuarial Receivables, in accordance with the
actuarial method: (i) that portion of all collections on the Receivables
allocable to principal in respect of the preceding Collection Period (including,
with respect to Actuarial Receivables, amounts withdrawn from the Payahead
Account and allocable to principal and excluding amounts deposited into the
Payahead Account and allocable to principal, in each case, in respect of the
preceding Collection Period); (ii) Liquidation Proceeds attributable to the
principal amount of Receivables which became Liquidated Receivables during the
preceding Collection Period in accordance with the Servicer's customary
servicing procedures with respect to such Liquidated Receivables; (iii) all
Advances made by the Servicer of principal due on the Actuarial Receivables in
respect of the preceding Collection Period; (iv) to the extent attributable to
principal, the Purchase Amount of each Receivable repurchased by the Seller or
purchased by the Servicer during the preceding Collection Period; and (v)
partial prepayments on Receivables in respect of the preceding Collection Period
relating to refunds of extended service contracts, or of physical damage, credit
life, credit accident or health insurance premium, disability insurance policy
premiums, but only if such costs or premiums were financed by the respective
Obligor and only to the extent not included in clause (i) above; provided,
however, that in calculating the Available Principal, all payments and proceeds
(including Liquidation Proceeds) of any Receivables (i) repurchased by the
Seller or purchased by the Servicer the Purchase Amount of which has been
included in the Available Principal on a prior Distribution Date, and (ii)
received on Actuarial Receivables and distributed to the Servicer, with respect
to such Distribution Date, as reimbursement for any unreimbursed Advances in
accordance with the Sale and Servicing Agreement, shall all be excluded.
The "Principal Distribution Amount" for a Distribution Date will be
the sum of the following amounts with respect to the preceding Collection
Period: (i) (a) with respect to Simple Interest Receivables, that portion of all
collections on the Receivable allocable to principal in respect of the preceding
Collection Period and (b) with respect to Actuarial Receivables the sum of (x)
the amount of all scheduled payments allocable to principal due during the
preceding Collection Period and (y) the portion of all prepayments in full
allocable to principal received during the preceding Collection Period, in the
case of both (a) and (b) without regard to any extensions or modifications
thereof effected after the Cutoff Date, other than with respect to any
extensions or modifications in connection with Cram Down Losses during such
Collection Period; (ii) the principal balance of each Receivable that was
repurchased by the Seller or purchased by the Servicer in each case during the
preceding Collection Period (except to the extent included in (i) above); (iii)
the principal balance of each Liquidated Receivable which became such during the
preceding Collection Period (except to the extent included in (i) above); (iv)
partial prepayments on Receivables in respect of the preceding Collection Period
relating to refunds of extended service contracts, or of physical damage, credit
life, credit accident or health insurance premium, disability insurance policy
premiums, but only if such costs or premiums were financed by the respective
Obligor and only to the extent not included in clause (i) above; and (v) the
aggregate amount of Cram Down Losses during such Collection Period.
MONTHLY WITHDRAWALS FROM COLLECTION ACCOUNT. On each Distribution
Date, the Servicer shall instruct the Indenture Trustee to withdraw from the
Collection Account and deposit in the Payahead Account in immediately available
funds, the aggregate Payaheads collected during the preceding Collection Period.
On each Distribution Date, the Servicer shall instruct the Indenture Trustee to
make the following withdrawals, based upon the calculations set forth in
"Deposits to the Collection Account" above, deposits and distributions, in the
amounts and in the order of priority specified below, to the extent of the sum
of the Interest Distribution Amount and the Available Principal in respect of
such Distribution Date and the Reserve Account Transfer Amount in respect of
such Distribution Date (the "Total Distribution Amount"):
(i) from the Collection Account to the Servicer, from the
Total Distribution Amount, the Total Servicing Fee;
(ii) from the Collection Account to the Note Distribution
Account, from the Total Distribution Amount remaining after the
application of clause (i), the Noteholders' Interest Distributable
Amount;
(iii) from the Collection Account to the Certificate
Distribution Account, from the Total Distribution Amount remaining
after the application of clauses (i) and (ii), the Certificateholders'
Interest Distributable Amount;
(iv) from the Collection Account to the Note Distribution
Account, from the Total Distribution Amount remaining after the
application of clauses (i) through (iii), the Noteholders' Principal
Distributable Amount;
(v) from the Collection Account to the Certificate
Distribution Account, from the Total Distribution Amount remaining
after the application of clauses (i) through (iv), the
Certificateholders' Principal Distributable Amount; and
(vi) from the Collection Account to the Reserve Account, any
amounts remaining after the application of clauses (i) through (v).
Notwithstanding the foregoing, following the occurrence and during the
continuation of certain Events of Default or an acceleration of the Notes, the
Total Distribution Amount remaining after the application of clauses (i) and
(ii) above will be deposited in the Note Distribution Account to the extent
necessary to reduce the principal balance of the Notes to zero.
On each Distribution Date, all amounts on deposit in the Note
Distribution Account will be paid in the following order of priority:
(i) to the Noteholders, accrued and unpaid interest on the
outstanding principal balance of the Notes at the Interest Rate; and
(ii) to the Noteholders in reduction of principal until the
principal balance of the Notes has been reduced to zero;
On each Distribution Date, all amounts on deposit in the Certificate
Distribution Account will be distributed to the Certificateholders in the
following order of priority:
(i) to the Certificateholders, accrued and unpaid interest
on the Certificate Balance at the Pass-Through Rate; and
(ii) to the Certificateholders in reduction of principal
until the principal balance of the Certificates has been reduced to
zero.
RELATED DEFINITIONS
For purposes hereof, the following terms have the following meanings:
"Collection Period" means, with respect to a Distribution Date, (i) in
the case of the initial Distribution Date, the period from and including the
Cutoff Date through and including _______ ___, ________ and (ii) thereafter, the
calendar month preceding the related Distribution Date.
"Cram Down Loss" means, with respect to a Receivable if a court of
appropriate jurisdiction in a bankruptcy or insolvency proceeding shall have
issued an order reducing the amount owed on such Receivable or otherwise
modifying or restructuring the scheduled payments to be made on such Receivable,
an amount equal to (i) the excess of the principal balance of such Receivable
immediately prior to such order over the principal balance of such Receivable as
so reduced and/or (ii) if such court shall have issued an order reducing the
effective rate of interest on such Receivable, the net present value (using as
the discount rate the higher of the APR on such Receivable or the rate of
interest, if any, specified by the court in such order) of the scheduled
payments as so modified or restructured. A "Cram Down Loss" shall be deemed to
have occurred on the date of issuance of such order.
The "Pool Balance" at any time will represent the aggregate principal
balance of the Receivables at the end of the preceding Collection Period, after
giving effect to all payments (other than Payaheads) received from Obligors,
Purchase Amounts and Advances to be remitted by the Depositor, the Servicer and
the Seller, as the case may be, all for such Collection Period, all losses
realized on Receivables that became Liquidated Receivables during such
Collection Period and all Cram Down Losses for such Collection Period.
"Realized Losses" means the excess of the principal balance of a
Liquidated Receivable over Liquidation Proceeds to the extent allocable to
principal.
"Liquidated Receivables" means, Receivables (i) which have been
liquidated by the Servicer through the sale of the related Financed Vehicle,
(ii) as to which all or a portion representing 10% or more of a scheduled
payment due is [150] or more days delinquent or (iii) with respect to which
proceeds have been received which, in the Servicer's judgment, constitute the
final amounts recoverable in respect of such Receivable.
"Noteholders' Distributable Amount" means, with respect to any
Distribution Date, the sum of the Noteholders' Principal Distributable Amount
and the Noteholders' Interest Distributable Amount.
"Noteholders' Interest Distributable Amount" means, with respect to
any Distribution Date, the sum of the Noteholders' Monthly Interest
Distributable Amount for such Distribution Date and the Noteholders' Interest
Carryover Shortfall for such Distribution Date.
"Noteholders' Monthly Interest Distributable Amount" means, with
respect to any Distribution Date, the product of (i) one-twelfth of the Interest
Rate (or, in the case of the first Distribution Date, the Interest Rate
multiplied by a fraction, the numerator of which is the number of days elapsed
from and including the Closing Date to but excluding such Distribution Date and
the denominator of which is 360) and (ii) the outstanding principal balance of
the Notes on the immediately preceding Distribution Date, after giving effect to
all distributions of principal to the Noteholders on such Distribution Date (or,
in the case of the first Distribution Date, on the Closing Date).
"Noteholders' Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess of the Noteholders' Monthly Interest Distributable
Amount for the preceding Distribution Date and any outstanding Noteholders'
Interest Carryover Shortfall on such preceding Distribution Date over the amount
in respect of interest that is actually deposited in the Note Distribution
Account on such preceding Distribution Date, plus interest on the amount of
interest due but not paid to Noteholders on the preceding Distribution Date, to
the extent permitted by law, at the Interest Rate borne by the Notes from such
preceding Distribution Date through the current Distribution Date.
"Noteholders' Principal Distributable Amount" means, with respect to
any Distribution Date, the sum of the Noteholders' Monthly Principal
Distributable Amount for such Distribution Date and the Noteholders' Principal
Carryover Shortfall as of the close of the preceding Distribution Date;
provided, however, that the Noteholders' Principal Distributable Amount shall
not exceed the outstanding principal balance of the Notes. In addition, on the
Note Final Scheduled Distribution Date, the principal required to be deposited
in the Note Distribution Account will include the amount necessary (after giving
effect to the other amounts to be deposited in the Note Distribution Account on
such Distribution Date and allocable to principal) to reduce the outstanding
principal balance of the Notes to zero.
"Noteholders' Monthly Principal Distributable Amount" means, with
respect to any Distribution Date, the Noteholders' Percentage of the Principal
Distribution Amount.
"Noteholders' Percentage" means (i) for each Distribution Date until
the principal balance of the Notes is reduced to zero, 100%, and (ii) zero for
each Distribution Date thereafter.
"Noteholders' Principal Carryover Shortfall" means, as of the close of
any Distribution Date, the excess of the Noteholders' Monthly Principal
Distributable Amount and any outstanding Noteholders' Principal Carryover
Shortfall from the preceding Distribution Date over the amount in respect of
principal that is actually deposited in the Note Distribution Account.
"Certificateholders' Distributable Amount" means, with respect to any
Distribution Date, the sum of the Certificateholders' Principal Distributable
Amount and the Certificateholders' Interest Distributable Amount.
"Certificateholders' Interest Distributable Amount" means, with respect
to any Distribution Date, the sum of the Certificateholders' Monthly Interest
Distributable Amount for such Distribution Date and the Certificateholders'
Interest Carryover Shortfall for such Distribution Date.
"Certificateholders' Monthly Interest Distributable Amount" means,
with respect to any Distribution Date, the product of (i) one-twelfth of the
Pass-Through Rate (or, in the case of the first Distribution Date, the
Pass-Through Rate multiplied by a fraction, the numerator of which is the number
of days elapsed from and including the Closing Date to but excluding such
Distribution Date) and the denominator of which is 360) and (ii) the Certificate
Balance on the immediately preceding Distribution Date, after giving effect to
all payments of principal to the Certificateholders on or prior to such
Distribution Date (or, in the case of the first Distribution Date, on the
Closing Date).
"Certificateholders' Interest Carryover Shortfall" means, with respect
to any Distribution Date, the excess of the Certificateholders' Monthly Interest
Distributable Amount for the preceding Distribution Date and any outstanding
Certificateholders' Interest Carryover Shortfall on such preceding Distribution
Date, over the amount in respect of interest at the Pass-Through Rate that is
actually deposited in the Certificate Distribution Account on such preceding
Distribution Date, plus interest on such excess, to the extent permitted by law,
at the Pass-Through Rate from and including such preceding Distribution Date to
but excluding the current Distribution Date.
"Certificateholders' Principal Distributable Amount" means, with
respect to any Distribution Date, the sum of the Certificateholders' Monthly
Principal Distributable Amount for such Distribution Date and the
Certificateholders' Principal Carryover Shortfall as of the close of the
preceding Distribution Date; provided, however, that the Certificateholders'
Principal Distributable Amount shall not exceed the Certificate Balance. In
addition, on the Certificate Final Scheduled Distribution Date, the principal
required to be distributed to Certificateholders will include the lesser of (a)
any payments of principal due and remaining unpaid on each Receivable in the
Trust as of the Final Scheduled Maturity Date or (b) the portion of the amount
that is necessary (after giving effect to the other amounts to be deposited in
the Certificate Distribution Account on such Distribution Date and allocable to
principal) to reduce the Certificate Balance to zero, in either case after
giving effect to any required distribution of the Noteholders' Principal
Distributable Amount to the Note Distribution Account. In addition, on any
Distribution Date on which, after giving effect to all distributions to the
Servicer, the Noteholders and the Certificateholders on such Distribution Date,
(i) the outstanding principal balance of the Notes is zero and (ii) the amount
on deposit in the Reserve Account is equal to or greater than the Certificate
Balance, the Certificateholders' Principal Distributable Amount shall include an
amount equal to such Certificate Balance.
"Certificateholders' Monthly Principal Distributable Amount" means,
with respect to any Distribution Date, the Certificateholders' Percentage of the
Principal Distribution Amount or, with respect to any Distribution Date on or
after the Distribution Date on which the outstanding principal balance of the
Notes is reduced to zero, 100% of the Principal Distribution Amount (less any
amount required on the first such Distribution Date to reduce the outstanding
principal balance of the Notes to zero, which shall be deposited into the Note
Distribution Account).
"Certificateholders' Percentage" means 100% minus the Noteholders'
Percentage.
"Certificateholders' Principal Carryover Shortfall" means, as of the
close of any Distribution Date, the excess of the Certificateholders' Monthly
Principal Distributable Amount and any outstanding Certificateholders' Principal
Carryover Shortfall from the preceding Distribution Date, over the amount in
respect of principal that is actually deposited in the Certificate Distribution
Account on such Distribution Date.
"Certificate Balance" equals, initially, $_____________ and,
thereafter, equals the initial Certificate Balance, reduced by all amounts
allocable to principal previously distributed to Certificateholders.
"Pass-Through Rate" means, with respect to the Certificates, ____% per
annum.
CREDIT ENHANCEMENT
RESERVE ACCOUNT. Pursuant to the Sale and Servicing Agreement, the
Reserve Account will be initially funded by a deposit by the Depositor on the
Closing Date in the amount of $_______ (____% of aggregate initial principal
balance of the Notes plus the initial Certificate Balance) (the "Reserve Account
Initial Deposit"). The Reserve Account Initial Deposit will be augmented on each
Distribution Date by the deposit in the Reserve Account of amounts remaining
after distribution of the Total Servicing Fee and amounts to be paid to the
Noteholders and Certificateholders. If the amount on deposit in the Reserve
Account on any Distribution Date (after giving effect to all deposits or
withdrawals therefrom on such Distribution Date) is greater than the Specified
Reserve Account Balance for such Distribution Date, the Servicer will instruct
the Indenture Trustee to distribute the amount of the excess to the Depositor.
Upon any distribution to the Depositor of amounts from the Reserve Account,
neither the Noteholders nor the Certificateholders will have any rights in, or
claims to, such amounts. In certain circumstances, funds in the Reserve Account
will be used to reduce the Certificate Balance to zero.
"Specified Reserve Account Balance" with respect to any Distribution
Date generally means the greater of (a) % of the sum of the aggregate
outstanding principal amount of the Notes and the outstanding Certificate
Balance on such Distribution Date (after giving effect to all payments on the
Notes and distributions with respect to the Certificates to be made on such
Distribution Date) or (b) % of the aggregate initial principal balance of the
Notes plus the initial Certificate Balance. In no circumstances will the
Depositor be required to deposit any amounts in the Reserve Account other than
the Reserve Account Initial Deposit to be made on the Closing Date.
SUBORDINATION OF THE CERTIFICATES. The rights of the
Certificateholders to receive distributions will be subordinated to the rights
of the Noteholders following the occurrence of certain Events of Default or an
acceleration of the Notes. The subordination of the Certificates is intended to
enhance the likelihood of receipt by Noteholders of amounts due them and to
decrease the likelihood that the Noteholders will experience losses. In
addition, the Reserve Account is intended to enhance the likelihood of receipt
by Noteholders and Certificateholders of amounts due them and to decrease the
likelihood that the Noteholders and Certificateholders will experience losses.
However, in certain circumstances, the Reserve Account could be depleted. If the
amount required to be withdrawn from the Reserve Account to cover shortfalls in
collections on the Receivables exceeds the amount on deposit in the Reserve
Account a temporary shortfall in the amounts distributed to the Noteholders or
the Certificateholders could result. In addition, depletion of the Reserve
Account ultimately could result in losses to Noteholders and Certificateholders.
FEDERAL INCOME TAX CONSEQUENCES
Stroock & Stroock & Lavan LLP is of the opinion that, (x) based on the
terms of the Notes and the transactions relating to the Receivables as set forth
herein, the Notes will be treated as debt for federal income tax purposes and
(y) based on the applicable provisions of the Trust Agreement and Related
Documents, for federal income tax purposes, (i) the Trust will not be classified
as an association taxable as a corporation and (ii) the Trust will not be
treated as a publicly traded partnership taxable as a corporation. The Notes
will not be issued will original issue discount ("OID"). See "Federal Income Tax
Consequences" in the Prospectus.
STATE AND LOCAL TAX CONSEQUENCES
The discussion above does not address the tax consequences of
purchase, ownership or disposition of the Securities under any state or local
tax law. Investors are encouraged to consult their own tax advisors regarding
state and local tax consequences.
<PAGE>
ERISA CONSIDERATIONS
THE NOTES
A fiduciary of an employee benefit plan or other retirement
arrangement subject to Title I of ERISA, should consider the fiduciary standards
under ERISA in the context of the plan or arrangement's particular circumstances
before authorizing an investment of a portion of such plan or arrangement's
assets in the Notes. Accordingly, pursuant to Section 404 of ERISA, such
fiduciary should consider among other factors (i) whether the investment is for
the exclusive benefit of participants and their beneficiaries; (ii) whether the
investment satisfies the applicable diversification requirements; (iii) whether
the investment is in accordance with the documents and instruments governing the
plan or arrangement; and (iv) whether the investment is prudent, considering the
nature of the investment.
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and Section 4975 of the Code prohibit a pension,
profit-sharing or other employee benefit plan or retirement arrangements,
including individual retirement accounts and certain types of Keogh Plans, as
well as any entity whose underlying assets include plan assets by reason of a
plan or arrangement investing in such entity (including an insurance company
general account), (each a "Benefit Plan"), from engaging in certain transactions
with persons that are "parties in interest" under ERISA or "disqualified
persons" under the Code with respect to such Benefit Plan. A violation of these
"prohibited transaction" rules may result in an excise tax or other penalties
and liabilities under ERISA and the Code for such persons.
Certain transactions involving the purchase, holding or transfer of
the Notes might be deemed to constitute prohibited transactions under ERISA and
the Code with respect to a Benefit Plan that purchases Notes if assets of the
Trust were deemed to be assets of the Benefit Plan. Under a regulation issued by
the United States Department of Labor, 29 C.F.R. ' 2510.3-101 (the "Plan Assets
Regulation"), the assets of the Trust would be treated as plan assets of a
Benefit Plan for the purposes of ERISA and the Code only if the Benefit Plan
acquired an "equity interest" in the Trust and none of the exceptions contained
in the Plan Assets Regulation was applicable. An "equity interest" is defined
under the Plan Assets Regulation as an interest other than an instrument which
is treated as indebtedness under applicable local law and which has no
substantial equity features. Assuming that the Notes are treated as indebtedness
under applicable local law without substantial equity features for purposes of
the Plan Assets Regulation, then the Notes will be eligible for purchase by
Benefit Plans.
However, without regard to whether the Notes are treated as an equity
interest for such purposes, the acquisition or holding of Notes by or on behalf
of a Benefit Plan could be considered to give rise to a prohibited transaction
if the Trust, the owner of collateral, or any of their respective affiliates is
or becomes a party in interest or a disqualified person with respect to such
Benefit Plan. In such case, certain exemptions from the prohibited transaction
rules could be applicable depending on the type and circumstances of the plan
fiduciary making the decision to acquire a Note. Included among these exemptions
are: Prohibited Transaction Class Exemption ("PTCE") 90-1, regarding investments
by insurance company pooled separate accounts; PTCE 95-60, regarding investments
by insurance company general accounts; PTCE 91-38, regarding investments by bank
collective investment funds; PTCE 96-23, regarding transactions affected by
"in-house asset managers"; and PTCE 84-14, regarding transactions effected by
"qualified professional asset managers."
A Benefit Plan fiduciary considering the purchase of Notes should
consult its tax and/or legal advisors regarding whether the assets of the Trust
would be considered Plan assets, the possibility of exemptive relief from the
prohibited transaction rules and other issues and their potential consequences.
THE CERTIFICATES
The Certificates may not be acquired (directly or indirectly) by or on
behalf of any Benefit Plan or any entity (including an insurance company general
account) whose underlying assets include plan assets of the Benefit Plan by
reason of a plan's investment in the entity. By acceptance of a Certificate,
each Certificateholder will be deemed to have represented and warranted that it
is not a Benefit Plan.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
agreement relating to the Notes and the Certificates (the "Underwriting
Agreement"), the Depositor has agreed to sell to ____________________ (the
"Underwriter"), and the Underwriter has agreed to purchase, the Notes and the
Certificates, subject to the satisfaction of certain conditions precedent.
The Depositor has been advised by the Underwriter that the Underwriter
proposes to offer the Notes to the public initially at the public offering
prices set forth on the cover page of this Prospectus Supplement, and to certain
dealers at such prices less a concession of % per Note, that the Underwriter and
such dealers may allow a discount of ___% per Note on the sale to certain other
dealers; and that after the initial public offering of the Notes, the public
offering prices and the concessions and discounts to dealers may be changed by
the Underwriter.
The Depositor has been advised by the Underwriter that the Underwriter
proposes to offer the Certificates to the public initially at the public
offering price set forth on the cover page of this Prospectus Supplement, and to
certain dealers at such price less a concession of % per Certificate; that the
Underwriter and such dealers may allow a discount of % per Certificate on the
sale to certain other dealers; and that after the initial public offering of the
Certificates, the public offering price and the concession and discount to
dealers may be changed by the Underwriter.
Until the distribution of the Securities is completed, rules of the
Securities and Exchange Commission may limit the ability of the Underwriter and
certain selling group members to bid for and purchase the Securities. As an
exception to these rules, the Underwriter is permitted to engage in certain
transactions that stabilize the prices of the Securities. Such transactions
consist of bids or purchases for the purpose of pegging, fixing or maintaining
the price of such Securities.
In general, purchases of a security for the purpose of stabilization
or to reduce a short position could cause the price of the security to be higher
than it might be in the absence of such purchases.
Neither the Depositor nor the 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 Securities. In addition, neither
the Depositor nor the Underwriter makes any representation that the Underwriter
will engage in such transactions or that such transactions, once commenced, will
not be discontinued without notice.
The Depositor has agreed to indemnify the Underwriter against certain
liabilities, including civil liabilities under the Securities Act, or contribute
to payments which the Underwriter may be required to make in respect thereof. In
the opinion of the Commission, such indemnification is against public policy as
expressed in the Securities Act and, may, therefore, be unenforceable.
The Trust may, from time to time, invest the funds in the Trust
Accounts and the Certificate Distribution Account in Eligible Investments
acquired from the Underwriter.
The closing of the sale of the Notes is conditioned on the closing of
the sale of the Certificates, and the closing of the sale of the Certificates is
conditioned on the closing of the sale of the Notes.
LEGAL MATTERS
Certain legal matters with respect to the Notes and the Certificates
will be passed upon for the Depositor by Carl Krasik, Esq., Associate General
Counsel of Mellon Bank Corporation (the "Corporation"). Mr. Krasik is also a
shareholder of the Corporation and one of its subsidiaries and holds options to
purchase additional shares of the Corporation's Common Stock. Certain legal
matters with respect to the Notes and the Certificates will be passed upon for
the Underwriter by Stroock & Stroock & Lavan LLP, New York, New York. Stroock &
Stroock & Lavan LLP also will pass upon the material federal income tax
consequences related to the Notes and the Certificates.
<PAGE>
THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT IS NOT COMPLETE AND MAY BE
CHANGED. MELLON AUTO RECEIVABLES CORPORATION MAY NOT SELL THE SECURITIES THAT
ARE DESCRIBED IN THIS PROSPECTUS SUPPLEMENT UNTIL THE REGISTRATION STATEMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS
SUPPLEMENT IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT A REQUEST FOR ANY
OFFERS TO BUY THESE SECURITIES IN ANY STATE WHERE THE LAWS IN THAT STATE DO NOT
PERMIT THE DEPOSITOR TO OFFER OR SELL THESE SECURITIES.
Prospectus Supplement [Form 2]
(to Prospectus dated ___________)
$------------------
MELLON AUTO TRUST 199_-_
ISSUER
$_____________CLASS A ____% ASSET BACKED CERTIFICATES
$_____________CLASS B _____% ASSET BACKED CERTIFICATES
MELLON AUTO RECEIVABLES CORPORATION
DEPOSITOR
MELLON BANK, N.A.
SERVICER
The depositor will form Mellon Auto Trust 199_-_ and the trust will
issue $__________ aggregate principal balance of Class A ___% Asset Backed
Certificates and $ aggregate principal balance of Class B ___% Asset Backed
Certificates. The class A certificates and the class B certificates are
collectively called the "certificates."
The assets of the trust consist of a pool of motor vehicle retail
installment sale contracts and other motor vehicle installment chattel paper
secured by new and used automobiles, including passenger cars, minivans, sport
utility vehicles and light trucks.
The certificates are obligations only of the trust. Neither the
certificates nor the receivables are insured or guaranteed by any person. The
certificates are NOT bank deposits and are NOT insured by the Federal Deposit
Insurance Corporation.
The class B certificates will involve more risks than the class A
certificates because distributions on the class B certificates will be made only
after payments are made on the class A certificates. The Certificates involve
significant risks. You should review the information under the caption "Risk
Factors" beginning on page S-__ in this prospectus supplement and on page __ of
the attached prospectus before making a decision to invest in the Certificates.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved these securities or determined
if this prospectus supplement or the attached prospectus is accurate or
complete. Making any contrary representation is a criminal offense.
Subject to the satisfaction of certain conditions, the underwriter
named below is offering the class A Certificates and the class B certificates at
the price to public shown. The certificates will be delivered in book entry form
only on or about ____________, 199_.
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO THE
PUBLIC COMMISSIONS DEPOSITOR(1)
---------- -------------- ----------------
<S> <C> <C> <C>
Per Class A Certificate....................... _______% _____% ______%
Per Class B Certificate....................... _______% _____% ______%
Total......................................... $____________ $__________ $____________
- --------------------
(1) Before deducting expenses, estimated to be $_________.
</TABLE>
[Underwriter]
The date of this prospectus supplement is __________, 199_.
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
We provide information to you about the securities in two separate
documents that provide progressively more detail:
o the accompanying prospectus, which provides general
information, some of which may not apply to your series of
securities; and
o this prospectus supplement, which describes the specific
terms of your series of securities.
YOU SHOULD RELY PRIMARILY ON THE DESCRIPTION OF YOUR SECURITIES IN THIS
PROSPECTUS SUPPLEMENT.
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
CAPTION PAGE
- -------- -----
Summary of Terms.....................................S-
Risk Factors.........................................S-
Formation of the Trust...............................S-
The Trust Property...................................S-
The Receivables Pool.................................S-
The Servicer.........................................S-
Weighted Average Life of the
Securities...........................................S-
Use of Proceeds......................................S-
Description of the Notes.............................S-
Description of the
Certificates.........................................S-
Description of the Transfer and
Servicing Agreements................................S-
Federal Income Tax
Consequences.........................................S-
State and Local Tax
Consequences.........................................S-
ERISA Considerations.................................S-
Underwriting.........................................S-
Legal Matters........................................S-
PROSPECTUS
CAPTION PAGE
-------- -----
Risk Factors............................................
Incorporation of Certain Documents
by Reference.........................................
The Trusts..............................................
The Portfolio of Motor Vehicle
Loans...................................................
The Receivables Pools...................................
Maturity and Prepayment Assumptions.....................
Pool Factors and Trading
Information.............................................
Use of Proceeds.........................................
The Depositor...........................................
The Servicer............................................
Description of the Notes................................
Description of the Certificates.........................
Certain.Information.Regarding the
Securities..............................................
Description.of.the.Transfer and
Servicing Agreements...................................
Certain Legal Aspects of the
Receivables.............................................
Federal Income Tax Consequences.........................
State and Local Tax Consequences........................
ERISA Considerations....................................
Ratings.................................................
Method of Distribution..................................
Legal Opinions..........................................
Index of Terms..........................................
Annex I.................................................
<PAGE>
SUMMARY OF TERMS
THIS SECTION GIVES A BRIEF SUMMARY OF THE INFORMATION CONTAINED IN
THIS PROSPECTUS SUPPLEMENT. THE SUMMARY DOES NOT INCLUDE ALL OF THE IMPORTANT
INFORMATION ABOUT THE CERTIFICATES. YOU SHOULD REVIEW CAREFULLY THE MORE
DETAILED INFORMATION IN THIS PROSPECTUS SUPPLEMENT AND IN THE ATTACHED
PROSPECTUS.
ISSUER...................................... Mellon Auto Trust 199__-__.
DEPOSITOR................................... Mellon Auto Receivables
Corporation.
SERVICER.................................... Mellon Bank, N.A.
SELLER...................................... Mellon Bank, N.A.
TRUSTEE AND COLLATERAL AGENT................ ______________________.
CLOSING DATE................................ On or about ________, 199_.
CUTOFF DATE................................. The [close] [opening] of
business on _____, 199__.
THE CERTIFICATES..........................
GENERAL............................ The Trust will issue
class A certificates in an initial
aggregate principal amount of
$________ and class B certificates
in an initial aggregate principal
amount of $-----------------.
DISTRIBUTION DATES................. ___ day of each
month or, if the ___ day is not a
business day, the first business
day after the ___, beginning in
_________, 199_.
RECORD DATE........................ The last day of the
calendar month prior to the
calendar month that includes the
applicable distribution date.
MINIMUM DENOMINATIONS.............. $25,000 and integral multiples of
$1,000 in excess thereof.
REGISTRATION....................... The certificates will be issued in
book entry form. Investors in the
Certificates will hold beneficial
interests in the Certificates
through the Depository Trust
Company in the United States or
Cedel Bank, societe anonyme or the
Euroclear System in Europe. See
"Certain Information Regarding the
Securities" in the prospectus.
CLASS A PASS-THROUGH RATE.......... _____% per annum.
CLASS B PASS-THROUGH RATE.......... ____ % per annum.
PRIORITY OF DISTRIBUTIONS.......... On each distribution date,
distributions on the certificates
will be made in the following order
of priority:
* interest on the class A
certificates
* interest on the
class B certificates
* principal of
the class A certificates
* principal of the class B
certificates
Each payment of
interest and principal includes any
such amounts remaining unpaid from
prior distribution dates.
INTEREST PERIOD.................... The period beginning
on (and including) the prior
distribution date (or in the case
of the first distribution date,
beginning on (and including) the
closing date) and ending on (and
including) the day before the
applicable distribution date.
INTEREST CALCULATIONS.............. Interest due on each Class of
Certificates on a Distribution Date
will consist of:
* 1/12 x the applicable interest
rate x principal amount
of certificates
PLUS
* any unpaid interest from prior
distribution dates
PLUS
* 1/12 x the applicable interest
rate x any unpaid interest from
prior distribution dates.
PRINCIPAL.......................... Principal
distributions on the class A
certificates will be made on each
distribution date in an amount
equal to the following:
* the class A percentage of amounts
remaining in the collection account
after the payment of interest on
the class A certificates and the
class B certificates and the total
servicing fee
PLUS
* the class A percentage of certain
losses incurred after the
liquidation of any receivables
PLUS
* principal not paid on the class A
certificates on any preceding
distribution date.
Principal
distributions on the class B
certificates will be made on each
distribution date on and after
which the principal balance of the
class A certificates is reduced to
zero in an amount equal to the
following:
* the class B percentage of amounts
remaining in the collection account
after the payment of interest on
the class A certificates and the
class B certificates, principal of
the class A certificates and the
total servicing fee
PLUS
* the class B percentage of certain
losses incurred after the
liquidation of any receivables
PLUS
* principal not paid on the class B
certificates on any preceding
distribution date
FINAL SCHEDULED
DISTRIBUTION DATE............... The distribution
date in _______, _____ with respect
to the class A certificates and the
distribution date in ______,
_______ with respect to the class B
certificates.
TRUST PROPERTY..................... The property of the Trust consists
of:
* the receivables
* all amounts received under the
receivables after the cutoff date
* the collection account, the class A
distribution account, the class B
distribution account and the
payahead account
* security
interests in the motor vehicles
that secure the receivables
* the rights of the seller to receive
proceeds from claims under certain
insurance policies and refunds of
premiums from other insurance
policies
* the rights of the seller under
agreements with the dealers that
sold the financed vehicles
* rights with respect to any
repossessed financed vehicles
any and all proceeds of the
foregoing
THE RECEIVABLES............................. The receivables are
amounts owed by individuals under
retail installment sale contracts
to purchase or refinance new or
used automobiles, including
passenger cars, minivans, sport
utility vehicles and light trucks,
purchased from motor vehicle
dealers.
The depositor
expects that the receivables will
have the following characteristics
as of ________, 1999. As of the
closing date, no more than 5% of
the receivables will have
characteristics that differ from
those described in this prospectus
supplement as of _______,
Number of contracts ----------
Principal Amount $----------
Annual Percentage
Rates (APR) _____% to
_____%
Weighted Average APR -----%
Original term (months) _____ to
_____
Weighted Average
original term
Remaining term (months) _____ to
_____
Weighted Average
remaining term _____
New ( %) _____
Used (%) _____
States (%) _____
PA _____
NJ _____
Balloon Loans (%) _____
SERVICING
GENERAL ................................... Mellon Bank, N.A.
will be responsible for servicing,
managing, maintaining custody of
and making collections on the
receivables.
The trust will pay
the servicer a monthly fee for
servicing the receivables equal to
1/12 TIMES __% TIMES the aggregate
principal balance of the
receivables pool. The servicer also
will receive certain late fees,
prepayment charges and other
administrative fees or similar
charges.
ADVANCES ................................... The servicer will
advance scheduled payments of
interest and principal under each
receivable which are not timely
made to the extent that the
servicer, in its sole discretion,
expects to recoup such advance from
subsequent payments on or with
respect to that receivable. The
servicer will be entitled to
reimbursement of advances from
subsequent payments on or with
respect to the receivables.
RESERVE ACCOUNT............................. On the closing date,
the depositor will deposit $____
into a reserve account maintained
with the trustee. On each
distribution date amounts remaining
after distribution of the total
servicing fee and amounts to be
paid to the certificateholders will
be deposited in the reserve account
until the amount equals a specified
amount. On each distribution date,
the trustee will withdraw funds
from the reserve account and
deposit them in the collection
account if the amounts in the
collection account are not
sufficient to pay the total
servicing fee and to make required
distributions on the certificates.
OPTIONAL TERMINATION
SERVICER PURCHASE.................. The servicer may
purchase the receivables when the
principal amount of the receivables
is 5% or less than it was on the
cutoff date.
AUCTION SALE....................... If the servicer does
not exercise its option, the
trustee will auction off (subject
to a required minimum bid) the
remaining receivables when the
principal amount is 5% or less than
it was on the cutoff date.
DISTRIBUTIONS...................... In either case,
certificateholders will receive the
unpaid principal amount of their
certificates plus all accrued but
unpaid interest.
TAX STATUS.................................. Stroock & Stroock &
Lavan LLP, special federal tax
counsel to the trust, is of the
opinion that the trust will be
classified for federal income tax
purposes as a grantor trust and not
as an association taxable as a
corporation. Certificateholders
must report their respective
allocable shares of income earned
on trust assets (excluding certain
amounts retained by the depositor
as described herein) and, subject
to certain limitations applicable
to individuals, estates and trusts,
may deduct their respective
allocable shares of reasonable
servicing and other fees. See
"Federal Income Tax Consequences"
in this prospectus supplement and
in the prospectus.
ERISA CONSIDERATIONS....................... The class A
certificates may be purchased by or
on behalf of an employee benefit
plan or other retirement
arrangement that is subject to the
Employee Retirement Income Security
Act of 1974, as amended, or Section
4975 of the Internal Revenue Code
of 1986, as amended, as well as any
entity whose source of funds for
the purchase of class A
certificates includes plan assets
by reason of a plan or account
investing in such entity, subject
to the considerations described
herein. No class B certificate may
be purchased by or on behalf of
such a plan other than an
"insurance company general account"
which may be deemed to be holding
plan assets. See "ERISA
Considerations" in this prospectus
supplement and in the prospectus.
RATINGS..................................... The Certificates
will not be issued unless the class
A certificates are rated __________
and the class B certificates are
rated ________________ by at least
two nationally recognized rating
agencies. See "Risk Factors--
Withdrawal or Downgrading of
Initial Ratings Will Affect Prices
of Certificates" herein.
<PAGE>
RISK FACTORS
AN INVESTMENT IN THE CERTIFICATES INVOLVES SIGNIFICANT RISKS. BEFORE
YOU DECIDE TO INVEST, YOU SHOULD CONSIDER CAREFULLY THE FOLLOWING RISK FACTORS
AND THE RISK FACTORS SPECIFIED UNDER THE HEADING "RISK FACTORS" BEGINNING ON
PAGE __ OF THE PROSPECTUS.
YOU MAY HAVE DIFFICULTY SELLING YOUR CERTIFICATES
The certificates will not be listed on any securities exchange. As a
result, if you want to sell your certificates, you must locate a purchaser that
is willing to purchase those certificates. The underwriter intends to make a
secondary market for the certificates. The underwriter will do so by offering to
buy the certificates from investors that wish to sell. However, the underwriter
will not be obligated to make offers to buy the certificates and may stop making
offers at any time. In addition, the prices offered, if any, may not reflect
prices that other potential purchasers, were they to be given the opportunity,
would be willing to pay. There have been times in the past where there have been
very few buyers of asset backed securities (i.e., there has been a lack of
liquidity), and there may be such times in the future. As a result, you may not
be able to sell your certificates when you want to do so or you may not be able
to obtain the price that you wish to receive.
CERTAIN FEATURES OF THE RECEIVABLES POOL CREATE SPECIAL RISKS
There are a number of features of the receivables in the pool that
create risks that may not be present with other pools, including the following:
o CERTAIN OBLIGORS HAVE LITTLE EQUITY IN THEIR
FINANCED VEHICLES. For approximately __% of the
receivables (based on principal amounts), the
original principal amount of the loan exceeded the
cost of the related vehicle. Although each such
obligor was required to make a downpayment from
the obligor's own funds, those obligors have no
equity in their vehicles. While those borrowers
had excellent credit histories at the time, the
lack of any equity in the vehicle may make it more
likely that those obligors will default if their
personal financial conditions change. In addition,
if such an obligor defaults and the vehicle is
repossessed, the trust is likely to suffer a loss.
o GEOGRAPHIC CONCENTRATION INCREASES RISKS. Economic
conditions in the states where obligors reside may
affect the delinquency, loan loss and repossession
experience of the trust with respect to the
receivables. As of the cutoff date, the billing
addresses of the obligors with respect to
approximately %, _____%, and ----- _____% of the
receivables (based on principal amounts) were
located in __________, __________ and ________,
respectively. Economic conditions in any state or
region may decline over time and from time to
time. Because of the concentration of the obligors
in certain states, any adverse economic conditions
in those states may have a greater effect on the
performance of the securities than if the
concentration did not exist.
o NEWLY ORIGINATED LOANS MAY DEFAULT. Defaults on
automobile loans tend to occur at higher rates
during the early years of the automobile loans.
Substantially all of the automobile loans will
have been originated within 12 months prior to the
sale to the trust. As a result, the trust may
experience higher rates of default than if the
automobile loans had been outstanding for a longer
period of time.
o BALLOON LOANS MAY HAVE A HIGHER RATES OF DEFAULT.
A balloon loan has monthly payments that will not
fully pay off the loan balance by the maturity
date. As a result the borrower usually will have
to refinance the balloon loan in order to pay the
amount due. The borrower may not be able to
refinance the balloon loan for any number of
reasons, including the level of available interest
rates, the age or condition of the vehicle, or the
borrower's payment or credit history. The trust
will not have any funds to refinance a balloon
loan, and the seller is not obligated to do so.
CLASS B CERTIFICATES INVOLVE MORE RISKS THAN CLASS A CERTIFICATES
The class B certificateholders will not receive any distribution of
interest until the full amount of interest on the class A certificates has been
deposited in the class A distribution account on each distribution date. The
class B certificateholders will not receive any distributions of principal until
the full amount of principal of the class A certificates has been deposited in
the class A distribution account and the class A certificates have been paid in
full. In addition, the trust does not have, nor is it permitted or expected to
have, any significant assets or sources of funds other than the receivables and
the reserve fund. Consequently, holders of the certificates must rely for
repayment upon payments on the receivables, and, if and to the extent available,
amounts on deposit in the reserve fund. If funds in the reserve fund are
exhausted, the trust will depend solely on current distributions on the
receivables to make payments on the certificates. In addition, in such event,
delinquent payments on the receivables may result in a shortfall in the
distributions on the class B certificates on any distribution date due to the
priority of distributions on the class A certificates.
THE RETURN ON INVESTMENT WILL CHANGE OVER TIME
Your pre-tax return on your investment will change from time to time
for a number of reasons including the following:
o THE RATE OF RETURN OF PRINCIPAL IS UNCERTAIN. The
amount of distributions of principal of the
certificates and the time when you receive those
distributions depends on the amount and the times
at which borrowers make principal payments on the
receivables. Those principal payments may be
regularly scheduled payments or unscheduled
payments resulting from prepayments or defaults of
the receivables.
o YOU BEAR REINVESTMENT RISK. Asset backed
securities, like the certificates, usually produce
more returns of principal to investors when market
interest rates fall below the interest rates on
the receivables and produce less returns of
principal when market interest rates are above the
interest rates on the receivables. As a result,
you are likely to receive more money to reinvest
at a time when other investments generally are
producing a lower yield than that on the
certificates, and are likely to receive less money
to reinvest when other investments generally are
producing a higher yield than that on the
certificates. You will bear the risk that the
timing and amount of distributions on your
certificates will prevent you from attaining your
desired yield.
o AN EARLY TERMINATION MAY AFFECT THE YIELD. Your
investment in the certificates may be ended before
you desire if the optional termination or auction
call is exercised. See "Description of the
Transfer and Servicing Agreements- Termination" in
the prospectus.
WITHDRAWAL OR DOWNGRADING OF INITIAL RATINGS WILL AFFECT THE PRICES FOR
CERTIFICATES
A security rating is not a recommendation to buy, sell or hold
securities. Similar ratings on different types of securities do not necessarily
mean the same thing. You are encouraged to analyze the significance of each
rating independently from any other rating. Any rating agency may change its
rating of the certificates after those certificates are issued if that rating
agency believes that circumstances have changed. Any subsequent change in rating
will likely affect the price that a subsequent purchaser will be willing to pay
for the certificates.
COMPUTER PROBLEMS IN THE YEAR 2000 MAY RESULT IN LOSSES
Many computers and computer chips were not programmed to recognize
more than two digits in a year of a date. As a result, in the year 2000 (year
'00 to the computer), those computers will not know whether the '00 refers to
the year 1900 or the year 2000. Mellon Bank Corporation, the parent corporation
of the servicer, has taken actions as described under "The Servicer" in this
prospectus supplement with a goal of addressing and correcting this problem. To
the extent that such systems of the servicer continue to have such problems in
the year 2000 and later, the amount and timing of distributions to
certificateholders could be adversely affected.
FEDERAL INCOME TAXATION RISKS OF THE CLASS B CERTIFICATES
For federal income tax purposes, amounts otherwise payable to the
owners of the class B certificates that are paid to the owners of the class A
certificates will be deemed to have been received by the owners of the class B
certificates and then paid by them to the owners of the class A certificates
pursuant to a guaranty. Accordingly, the owners of the class B certificate could
be liable for taxes on amounts not actually received. See "Federal Income Tax
Consequences" in this prospectus supplement and "Federal Income Tax
Consequences--Trusts Treated as Grantor Trusts" in the prospectus.
THE SECURITIES ARE NOT SUITABLE INVESTMENTS FOR ALL INVESTORS
The certificates are not a suitable investment for any investor that
requires a regular or predictable schedule of payments or payment on any
specific date. The certificates are complex investments that should be
considered only by investors who, either alone or with their financial, tax and
legal advisors, have the expertise to analyze the prepayment, reinvestment,
default and market risk, the tax consequences of an investment, and the
interaction of these factors.
FORMATION OF THE TRUST
Pursuant to the Agreement, the Depositor will establish the Trust by
selling and assigning the Receivables and the other Trust Property to the Trust
in exchange for the Certificates. The Depositor will sell the Certificates to
the Underwriter in exchange for cash. All references herein to sales,
assignments and transfers to the Trust refer to sales, assignments and transfers
to the Trustee on behalf of the Trust for the benefit of the Certificateholders.
Prior to such sale and assignment, the Trust will have no assets or obligations
or any operating history. Upon formation, the Trust will not engage in any
business activities other than acquiring and holding the Receivables, issuing
the Certificates and distributing payments thereon.
The Servicer will, directly or through subservicers, hold the
Receivables and the certificates of title or ownership or other documents
evidencing the notation of the Seller's lien on the certificates of title or
ownership relating to the Financed Vehicles as custodian for the Trustee.
However, the Receivables will not be marked or stamped to indicate that they
have been sold to the Trust, and the certificates of title for the Financed
Vehicles will not be endorsed or otherwise amended to identify the Trustee as
the new secured party. Under the foregoing circumstances and in certain
jurisdictions, the Trust's interest in the Receivables and the Financed Vehicles
may be defeated. See "Risk Factors--Failure to Note Transfer on Title Documents
May Cause Losses" and "Certain Legal Aspects of the Receivables" in the
Prospectus.
The Trust will not acquire any contracts or assets other than the
Trust Property, and it is not anticipated that the Trust will have any need for
additional capital resources. Because the Trust will have no operating history
upon its establishment and will not engage in any business activity other than
acquiring and holding the Trust Property, issuing the Certificates and
distributing payments thereon, no historical or pro forma financial statements
or ratios of earnings to fixed charges with respect to the Trust have been
included herein.
THE TRUST PROPERTY
Each Certificate represents a fractional undivided interest in the
Trust. The Trust Property will include the Receivables, which were originated
indirectly by Dealers and purchased indirectly by the Seller pursuant to
agreements with Dealers ("Dealer Agreements"). On the Closing Date, the
Depositor will buy the Receivables from the Seller and the Depositor will sell
the Receivables to the Trust. The Servicer will, directly or through
subservicers, service the Receivables. The Trust Property also includes (i) all
monies received under the Receivables on and after the Cutoff Date and, with
respect to Receivables which are Actuarial Receivables, monies received
thereunder prior to the Cutoff Date that are due on or after the Cutoff Date,
(ii) such amounts as from time to time may be held in the Collection Account,
the Reserve Account, the Payahead Account, the Class A Distribution Account and
the Class B Distribution Account established and maintained by the Servicer
pursuant to the Agreement as described below, (iii) security interests in the
Financed Vehicles, (iv) the rights of the Seller to receive proceeds from claims
under certain insurance policies, (v) the rights of the Trust under the
Agreement, (vi) the rights of the Seller to refunds for the costs of extended
service contracts and to refunds of unearned premiums with respect to credit
life and credit accident and health insurance policies covering the Financed
Vehicles or the retail purchasers of, or other persons owing payments on, the
Financed Vehicles (the "Obligors"), (vii) all right, title and interest of the
Seller (other than with respect to any Dealer commission) with respect to the
Receivables under the related Dealer Agreements, and (viii) rights with respect
to any repossessed Financed Vehicles, and (ix) all proceeds (within the meaning
of the UCC) of the foregoing.
The Reserve Fund will be maintained in the name of the Trustee for the
benefit of the Certificateholders, but will not be part of the Trust.
THE RECEIVABLES POOL
POOL COMPOSITION
The Receivables were selected from the Seller's portfolio by several
criteria, including, as of the Cutoff Date, the following: each Receivable has a
scheduled maturity of not later than either Final Scheduled Distribution Date;
each Receivable was originated in the United States of America; each Receivable
has an original term to maturity of not more than __ months and a remaining term
to maturity of __ months or less as of the Cutoff Date; approximately ___% of
the Initial Pool Balance was secured by new Financed Vehicles, and approximately
___% of the Initial Pool Balance was secured by used Financed Vehicles; each
Receivable provides for level monthly payments which fully amortize the amount
financed (except, in the case of Simple Interest Receivables, for the last
payment, which may be different from the level payment); each Receivable is not
more than __ days contractually past due as of the Cutoff Date and is not more
than _______ months paid ahead; each Receivable has an outstanding principal
balance between $ and $ ; and each Receivable has an APR of no less than _____%.
As of the Cutoff Date, no Obligor on any Receivable was noted in the related
records of the Servicer as being the subject of any pending bankruptcy or
insolvency proceeding. The latest scheduled maturity of any Receivable is not
later than _____. No selection procedures believed by the Depositor to be
adverse to Certificateholders were used in selecting the Receivables.
The composition, distribution by remaining term, distribution by APR,
geographic distribution and distribution by remaining principal of the
Receivables as of the Cutoff Date are set forth in the tables below. The
percentages in the following tables may not add to 100% due to rounding.
<TABLE>
<CAPTION>
COMPOSITION OF THE RECEIVABLES AS OF THE CUTOFF DATE
NEW FINANCED USED FINANCED
VEHICLES VEHICLES TOTAL
-------------------- -------------------- ----------------
<S> <C> <C> <C>
Aggregate Principal Balance.................... $ $ $
Number of Receivables..........................
Average Principal Balance...................... $ $ $
Average Original Balance....................... $ $ $
Weighted Average Contract Rate................. % % %
Contract Rate (Range).......................... _____% - _____% _____% - _____% _____% - _____%
Weighted Average Original Term................. months months months
Original Term (Range).......................... months months months
Weighted Average Remaining Term................ months months months
Remaining Term (Range)......................... months months months
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DISTRIBUTION BY REMAINING TERM OF THE RECEIVABLES AS OF THE CUTOFF DATE
REMAINING NUMBER OF AGGREGATE PERCENTAGE OF ORIGINAL
TERM (RANGE) RECEIVABLES PRINCIPAL BALANCE POOL BALANCE
- ------------- ------------ ------------------ -----------------------
<S> <C> <C>
Less than 30 months......................... $ %
30 to 35 months.............................
36 to 41 months.............................
42 to 47 months.............................
48 to 53 months.............................
54 to 59 months.............................
60 to 65 months.............................
66 to 71 months.............................
72 to 77 months.............................
78 to 89 months.............................
------------- --------------- -----------
Total....................................... $ 100.00%
============ =============== ===========
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION BY ANNUAL PERCENTAGE RATE OF THE RECEIVABLES AS OF THE CUTOFF DATE
ANNUAL PERCENTAGE NUMBER OF AGGREGATE PERCENTAGE OF ORIGINAL
RATE RANGE RECEIVABLES PRINCIPAL BALANCE POOL BALANCE
- ------------------ ----------- ----------------- ----------------------
<S> <C> <C> <C>
8.00% to below.............................. $ %
8.00% to 8.99%..............................
9.00% to 9.99%..............................
10.00% to 10.99%............................
11.00% to 11.99%............................
12.00% to 12.99%............................
13.00% to 13.99%............................
14.00% to 14.99%............................
15.00% to 15.99%............................
16.00% to 16.99%............................
17.00% to 17.99%............................
18.00% to 18.99%............................
19.00% to 19.99%............................
20.00% to 20.99%............................
21.00% to 21.99%............................
22.00% and above............................
Total....................................... ------------ ----------------- -------------
$ 100.00%
============ ================= ==============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES AS OF THE CUTOFF DATE
NUMBER OF AGGREGATE PERCENTAGE OF
STATE(1) RECEIVABLES PRINCIPAL BALANCE ORIGINAL POOL BALANCE
<S> <C> <C> <C>
- ------------................................. $
%
- ------------.................................
- ------------.................................
- ------------.................................
- ------------.................................
- ------------.................................
- ------------.................................
- ------------.................................
Others (2)...................................
Total....................................... ------------ ----------------- -------------
$ 100.00%
============ ================= ==============
- -----------------
(1) Based on billing addresses of the Obligors as of the Cutoff Date, which may
differ from the state of origination of the Receivable.
(2) Includes __ other states and ___________ (none of which have a
concentration of Receivables in excess of _______% of the aggregate
principal balance).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DISTRIBUTION BY REMAINING PRINCIPAL BALANCE OF THE RECEIVABLES AS OF THE CUTOFF DATE
REMAINING PRINCIPAL NUMBER OF AGGREGATE PERCENTAGE OF
BALANCE (RANGE) RECEIVABLES PRINCIPAL BALANCE ORIGINAL POOL BALANCE
- -------------------- ------------- ------------------ ----------------------
<S> <C> <C> <C>
$ 2,500 to $ 4,999............................ $ %
$ 5,000 to $ 7,499............................
$ 7,500 to $ 9,999............................
$10,000 to $12,499............................
$12,500 to $14,999............................
$15,000 to $17,499............................
$17,500 to $19,999............................
$20,000 to $22,499............................
$22,500 to $24,999............................
$25,000 to $27,499............................
$27,500 to $29,999............................
$30,000 to $32,499............................
$32,500 to $34,999............................
$35,000 to $37,499............................
$37,500 to $39,999............................
$40,000 to $41,499............................
$42,500 to $44,999............................
$45,000 to $47,499............................
$47,500 to $49,999............................
$50,000 to $52,499............................
$52,500 to $54,999............................ ------------ ----------------- -------------
Total....................................... $ 100.00%
============ ================= ==============
</TABLE>
<PAGE>
As of the Cutoff Date, approximately __% of the aggregate principal
balance of the Receivables, constituting __% of the number of Receivables, were
between 1 payment and __ payments paid-ahead.
As of the Cutoff Date, approximately ___% of the aggregate principal
balance of the Receivables, constituting __% of the number of Receivables, are
Actuarial Receivables. "Actuarial Receivables" are receivables that provide for
amortization of the amount financed over a series of fixed, level-payment
monthly installments. Each monthly installment, including the monthly
installment representing the final payment on the Receivable, consists of an
amount of interest equal to 1/12 of the Annual Percentage Rate ("APR") of the
amount financed multiplied by the unpaid principal balance of the amount
financed, and an amount of principal equal to the remainder of the monthly
payment.
As of the Cutoff Date, approximately ___% of the aggregate principal
balance of the Receivables, constituting ___% of the number of Receivables, are
Simple Interest Receivables. "Simple Interest Receivables" are receivables that
provide for the amortization of the amount financed under the receivable over a
series of fixed level monthly payments. However, unlike the monthly payment
under an Actuarial Receivable, each monthly payment includes an installment of
interest which is calculated on the basis of the outstanding principal balance
of the receivable multiplied by the stated APR and further multiplied by the
period elapsed (as a fraction of a calendar year) since the preceding payment of
interest was made. As payments are received under a Simple Interest Receivable,
the amount received is applied first to interest accrued to the date of payment
and the balance is applied to reduce the unpaid principal balance. Accordingly,
if an Obligor pays a fixed monthly installment before its scheduled due date,
the portion of the payment allocable to interest for the period since the
preceding payment was made will be less than it would have been had the payment
been made as scheduled, and the portion of the payment applied to reduce the
unpaid principal balance will be correspondingly greater. Conversely, if an
Obligor pays a fixed monthly installment after its scheduled due date, the
portion of the payment allocable to interest for the period since the preceding
payment was made will be greater than it would have been had the payment been
made as scheduled, and the portion of the payment applied to reduce the unpaid
principal balance will be correspondingly less. In either case, the Obligor pays
a fixed monthly installment until the final scheduled payment date, at which
time the amount of the final installment is increased or decreased as necessary
to repay the then outstanding principal balance.
If an Actuarial Receivable is prepaid in full, with minor variations
based upon state law, under the terms of the motor vehicle retail installment
sale contract or loan agreement, as the case may be, a "refund" or "rebate" will
be made to the borrower of the portion of the total amount of payments then due
and payable under such contract or agreement allocable to "unearned" interest,
calculated on the basis of a constant interest rate. If a Simple Interest
Receivable is prepaid, rather than receive a rebate, the borrower is required to
pay interest only to the date of prepayment. The amount of a rebate under an
Actuarial Receivable generally will be less than the remaining scheduled
payments of interest that would have been due under a Simple Interest Receivable
for which all payments were made on schedule.
The Servicer may accede to an Obligor's request to pay scheduled
payments in advance, in which event the Obligor will not be required to make
another regularly scheduled payment until the time a scheduled payment not paid
in advance is due. The amount of any payment (which are not amounts representing
Payaheads) made in advance will be treated as a principal prepayment and will be
distributed as part of the Principal Distribution Amount in the month following
the Collection Period in which the prepayment was made. See "Maturity and
Prepayment Considerations" in the Prospectus.
THE SERVICER
GENERAL
As of December 31, 1998, the Servicer serviced approximately 30,253
retail installments sale contracts, consisting primarily of new and used
automobile (including passenger car, minivan, sport/utility vehicles and light
truck) receivables, representing an outstanding balance of approximately 352
million. As of December 31, 1998, the Servicer serviced approximately [_____]
automobile leases equaling approximately $_____ billion of automobile lease
receivables. See "The Servicer" in the Prospectus.
DELINQUENCIES AND LOSS
Set forth below is certain information concerning the historical
delinquency and loss experience of Mellon Bank, N.A. and its subsidiaries
pertaining to new and used automobile (including passenger car, minivan,
sport/utility vehicle and light truck) receivables originated directly or
indirectly by Mellon Bank, N.A. and its subsidiaries. There can be no assurance
that the delinquency and loss experience on the Receivables will be comparable
to that set forth below.
<PAGE>
<TABLE>
<CAPTION>
DELINQUENCY EXPERIENCE
(DOLLARS IN THOUSANDS)
At December 31,
--------------------------------------------------------------------------------------------------
_______________1998___________ ___________1997______________ ________ 1996______
---- ---- ----
NUMBER NUMBER NUMBER
OF OF OF
LOANS DOLLARS PERCENT LOANS DOLLARS PERCENT LOANS
----- ------- ------- ----- ------- ------- -----
<S> <C> <C> <C> <C> <C> <C>
Principal Amount
Outstanding (1) ........... 30,253 $ 352,174 100% 22,126 $ 195,593 100% 26,120
Delinquencies (2)...........
30-59 Days 306 2,793 0.79% 265 1,871 0.96% 388
60-89 Days 69 635 0.18% 53 384 0.20% 90
90-119 Days 24 231 0.07% 5 30 0.02% 9
over 120 days............. 1 11 0.00% 2 21 0.01% 2
Total
Delinquencies
as a Percentage
of the Total
Amount Outstanding.......... 400 $ 3,670 1.04% 325 $ 2,306 1.18% 489
====== ========= ====== ==== ======== ====== ===
At December 31,
-------------------------------------------------------------------------------------------------------
_____________1996___________ ___________1995______________ ____________ 1994_______________
---- ---- ----
NUMBER NUMBER
OF OF
DOLLARS PERCENT LOANS DOLLARS PERCENT LOANS DOLLARS PERCENT
------- ------- ------- ------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PRINCIPAL AMOUNT
Outstanding (1) ........... $211,947 100% 36,742 $263,577 100% 51,001 $346,963 100%
Delinquencies (2)...........
30-59 Days 2,509 1.18% 511 2,477 0.94% 737 3,639 1.05%
60-89 Days 465 0.22% 87 447 0.17% 131 519 0.15%
90-119 Days 22 0.01% 5 39 0.01% 17 74 0.02%
over 120 days............. 26 0.01% 2 17 0.01% 2 - 0.00%
Total
Delinquencies
as a Percentage
of the Total
Amount Outstanding.......... $ 3,022 1.43% 605 $ 2,980 1.13% 887 $ 4,232 1.22%
======= ======= ==== ========== ===== ==== ======== ======
(1) Principal Amount Outstanding is the aggregate remaining principal
balance of all Receivables serviced, net of unearned interest.
(2) The period of delinquency is based on the number of days scheduled
payments are contractually past due. Includes repossessions on hand
which have not been charged-off. A receivable is 30 days contractually
past due if a scheduled payment has not been received by the
subsequent calendar month's scheduled payment date.
</TABLE>
<PAGE>
HISTORICAL LOSS EXPERIENCE
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
For Year Ended December 31,
1998 1997 1996 1995 1994
---------------- -------------- ---------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Period End Principal
Amount Outstanding(1)..... $ 352,174 $ 195,593 $ 211,947 $ 263,577 $ 346,963
Average Principal Amount
Outstanding(2).............. $ 250,063 $ 197,164 $ 223,459 $ 292,661 $ 403,395
Number of Loans Outstanding
(as of period end).......... 29,853 22,126 26,120 36,742 51,001
Average Number of Loans
Outstanding(2).............. 24,200 23,402 30,172 42,276 60,287
Number of Repossessions...... N/A N/A N/A N/A N/A
Gross Losses(3)............. $ 1,496 $ 1,265 $ 1,589 $ 2,115 $ 4,071
Recoveries (4).............. 876 1,232 1,646 2,434 3,693
------------ ------------ ------------ ------------ ------------
Net Losses(5)............... 621 33 (57) (319) 378
Net Losses (Gains) as a
Percent of
Principal Amount
Outstanding................ 0.18% 0.02% (0.03%) (0.12%) 0.11%
Net Losses
(Gains) as a
Percentage of Average
Principal Amount
Outstanding................. 0.25% 0.02% (0.03%) (0.11%) 0.09%
- ------------------------------
(1) Principal Amount Outstanding is the aggregate remaining principal
balance of all Receivables serviced, net of unearned interest.
(2) Average of the month-end balances for each of the twelve months in the
applicable calendar year.
(3) Gross Losses is the aggregate remaining principal balance.
(4) Recoveries is any proceeds from the liquidation of the related vehicle
and post-disposition monies received on previously charged-off
contracts including proceeds of liquidation of the related vehicle
after the related charge-off.
(5) Net Losses is equal to Gross Losses less Recoveries.
</TABLE>
As shown in the foregoing tables, the Servicer's portfolio of
automobile loans at December 31, 1998 was approximately 180% of the portfolio at
December 31, 1997. At the same time the average amount of an automobile loan
increased to $11,796 at December 31, 1998 from $8,839 at December 31, 1997. The
Servicer believes that the decrease in total Delinquencies as a Percentage of
the Total Amount Outstanding from 1.18% at December 31, 1997, to 1.04% at
December 31, 1998, is primarily attributable to the large increase in the size
of the portfolio. The Servicer believes that the Net Losses (Gains) as a Percent
of Principal Amount Outstanding in 1995 and 1996 reflect the fact that defaults
on automobile loans generally occur with greater frequency in the early months
after origination and gradually diminish over time. Since the Servicer's
portfolio was not being replenished during those years through the addition of
new originations, the positive net loss experience largely reflects the
diminishing frequency of defaults as the automobile loans in its portfolio
seasoned. Beginning in 1997, the Servicer adopted a securitization strategy
which allowed it to offer more competitive rates. As a result, it began to
increase its portfolio through the addition of new originations. The Net Losses
(Gains) as a Percent of Principal Amount Outstanding at December 31, 1998,
reflects the expected default experience for the new originations.
Delinquencies and Net Losses are affected by a number of social and
economic factors, including changes in interest rates and unemployment levels,
and there can be no assurance as to the level of future total delinquencies or
the severity of future net charge-offs. As a result, the delinquency and net
charge-off experience of the Receivables may differ from those shown in the
tables.
YEAR 2000 PROJECT
The Servicer is an indirect wholly-owned subsidiary of Mellon Bank
Corporation (the "Corporation"). The Corporation has publicly disclosed the
following information concerning its Year 2000 Project.
In early 1996, the Corporation formed a year 2000 project team to
identify information technology and non-information technology systems that
require modification for the year 2000. A project plan has been developed with
goals and target dates. The Corporation's business areas are in various stages
of this project plan. The Corporation currently expects to have substantially
completed programming changes and internal testing of internal mission critical
information technology systems by December 31, 1998, and to have begun
significant enterprise testing of mission critical information technology
systems in late 1998, which testing is expected to be substantially completed by
June 30, 1999. The Corporation currently expects to have substantially completed
remediation and testing of mission critical non-information technology systems
by June 30, 1999. The Corporation also currently expects to have substantially
completed remediation and testing of both information technology and
non-information systems that the Corporation has determined are of high business
value and priority (although not mission critical) by June 30, 1999.
The impact of year 2000 issues on the Corporation will depend not only
on corrective actions that the Corporation takes, but also on the way in which
the year 2000 issues are addressed by governmental agencies, business and other
third parties that provides services or data to, or receive services or data
from, the Corporation, or whose financial condition or operational capability is
important to the Corporation. To reduce this exposure, the Corporation has an
ongoing process of identifying and contacting mission critical third party
vendors and other significant third parties to determine their year 2000 plans
and target dates. Risks associated with any such third parties located outside
the United States may be higher insofar as it is generally believed that non-
U.S. business may not be addressing their year 2000 issues on as timely a basis
as U.S. businesses. Notwithstanding the Corporation's efforts, there can be no
assurance that mission critical third party vendors or other significant third
parties will adequately address their 2000 issues.
The Corporation is developing contingency plans for implementation in
the event the mission critical third party vendors or other significant third
parties fail to adequately address year 2000 issues. Such plans principally
involve internal remediation or identifying alternate vendors. The Corporation
also is enhancing its existing business resumption plans to reflect year 2000
issues and is developing plans designed to coordinate the efforts of its
personnel and resources in addressing any mission critical year 2000 problems
that become evident after December 31, 1999. There can be no assurance that any
such plans will fully mitigate any such failures or problems. Furthermore, there
may be certain mission critical third parties, such as utilities or
telecommunication companies, where alternative arrangements or sources are
unavailable or severely limited.
Until the year 2000 event actually occurs and for a period of time
thereafter, there can be no assurance that there will be no problems related to
year 2000. The year 2000 technology challenge is an unprecedented event. If year
2000 issues are not adequately addressed by the Corporation and third parties,
the Corporation could face, among other things, business disruptions,
operational problems, financial losses, legal liability and similar risks, and
the Corporation's business, results of operations and financial position could
be materially adversely affected.
The Corporation has indicated in its public disclosure that the
foregoing year 2000 discussion contains "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
statements, including without limitation, the dates by which the Corporation
expects to substantially complete programming changes, remediation and testing
of systems and the impact of the redeployment of existing staff, are based on
management's best current estimates, which were derived utilizing numerous
assumptions about future events, including the continued availability of certain
resources, representations received from third party service providers and other
factors. However, there can be no guarantee 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 identify and convert all relevant systems; results of year 2000
testing; adequate resolution of year 2000 issues by governmental agencies,
business or other third parties that are service providers, suppliers, borrowers
or customers of the Corporation; unanticipated systems costs; the need to
replace hardware; the adequacy of and ability to implement contingency plans;
and similar uncertainties. The forward-looking statements made in the foregoing
year 2000 discussion were made in the Corporation's Quarterly Report on Form
10-Q for the quarter ended September 30, 1998. The Corporation indicated that
such statements speak only as of the date on which the statements were made, and
the Corporation undertook no obligation to update any forward-looking statement
to reflect events or circumstances after the date on which such statement is
made or to reflect the occurrence of unanticipated events.
[WEIGHTED AVERAGE LIFE OF THE CERTIFICATES]
[Prepayments on automotive receivables can be measured relative to a
prepayment standard or model. The model used in this Prospectus, the Absolute
Prepayment Model ("ABS"), represents an assumed rate of prepayment each month
relative to the original number of receivables in a pool of receivables. ABS
further assumes that all the receivables are the same size and amortize at the
same rate and that each receivable in each month of its life will either be paid
as scheduled or be prepaid in full. For example, in a pool of receivables
originally containing 10,000 receivables, a 1% ABS rate means that 100
receivables prepay each month. ABS does not purport to be an historical
description of prepayment experience or a prediction of the anticipated rate of
prepayment of any pool of receivables, including the Receivables.
As the rate of payment of principal of the Certificates will depend on
the rate of payment (including prepayments) of the principal balance of the
Receivables, the final distribution in respect of the Certificates could occur
significantly earlier than the Final Scheduled Distribution Date for the
Certificates. Reinvestment risk associated with early payment of the
Certificates will be borne exclusively by the Certificateholders.
The table captioned "Percent of Original Class A Principal Balance or
Original Class B Principal Balance at Various ABS Percentages" (the "ABS Table")
has been prepared on the basis of the characteristics of the Receivables. The
ABS Table assumes that (i) the Receivables prepay in full at the specified
constant percentage of ABS monthly, with no defaults, losses or repurchases,
(ii) each scheduled monthly payment on the Receivables is made on the last day
of each month and each month has 30 days, (iii) distributions on the
Certificates are made on each Distribution Date (and each such date is assumed
to be the ____ day of each applicable month), (iv) the balance in the Reserve on
each Distribution Date is equal to the Specified Reserve Balance, and (v) the
Servicer does not exercise its option to purchase the Receivables. The first two
pools have an assumed cutoff date of and the remaining pools have an assumed
cutoff date of . The ABS Table sets forth the percent of the Original Class A
Principal Balance and the percent of the Original Class B Principal Balance that
would be outstanding after each of the Distribution Dates shown and the
corresponding weighted average lives thereof at various constant ABS
percentages.
The ABS Table also assumes that the Receivables have been aggregated
into four hypothetical pools with all of the Receivables within each such pool
having the following characteristics and that the level scheduled monthly
payment for each of the four pools (which is based on its aggregate principal
balance, APR, original term to maturity as of the Cutoff Date) will be such that
each pool will fully amortize by the end of its remaining term to maturity.
<TABLE>
<CAPTION>
POOL
- -----
REMAINING WEIGHTED AVERAGE WEIGHTED AVERAGE
TERM AGGREGATE WEIGHTED ORIGINAL TERM REMAINING TERM TO
TO MATURITY PRINCIPAL AVERAGE CONTRACT TO MATURITY MATURITY
RANGE (IN MONTHS) BALANCE RATE (IN MONTHS) (IN MONTHS)
----------------- ---------- ---------------- ---------------- ------------------
<S> <C> <C> <C>
1............................ $ %
2............................ $ %
3............................ $ %
4............................ $ %
</TABLE>
The actual characteristics and performance of the Receivables will
differ from the assumptions used in constructing the ABS Table. The assumptions
used are hypothetical and have been provided only to give a general sense of how
the principal cash flows might behave under varying prepayment scenarios. For
example, it is very unlikely that the Receivables will prepay at a constant
level of ABS until maturity or that all of the Receivables will prepay at the
same level of ABS. Moreover, the diverse terms of Receivables within each of the
four hypothetical pools could produce slower or faster principal distributions
than indicated in the ABS Table at the various constant percentages of ABS
specified, even if the original and remaining terms to maturity of the
Receivables are as assumed. Any difference between such assumptions and the
actual characteristics and performance of the Receivables, or actual prepayment
experience, will affect the percentages of initial balances outstanding over
time and the weighted average lives of the Class A Certificates and the Class B
Certificates.]
<TABLE>
<CAPTION>
PERCENT OF INITIAL CERTIFICATE BALANCE AT VARIOUS ABS PERCENTAGES
Certificates
Assumed ABS Percentage
DISTRIBUTION DATES ____% ____% ____% ____%
- ------------------ --------------- ----------------- -------------- -------------
<S> <C> <C> <C> <C>
Closing Date......................................... 100 100 100 100
- ---------------......................................
- ---------------......................................
- ---------------......................................
- ---------------......................................
</TABLE>
- ---------------
THE ABS TABLES HAVE BEEN PREPARED BASED ON THE ASSUMPTIONS DESCRIBED
ABOVE (INCLUDING THE ASSUMPTIONS REGARDING THE CHARACTERISTICS AND PERFORMANCE
OF THE RECEIVABLES WHICH WILL DIFFER FROM THE ACTUAL CHARACTERISTICS AND
PERFORMANCE THEREOF) AND SHOULD BE READ IN CONJUNCTION THEREWITH.
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF INITIAL CERTIFICATE BALANCE AT VARIOUS ABS PERCENTAGES
CLASS B
CERTIFICATES
ASSUMED ABS PERCENTAGE
DISTRIBUTION DATES ____% ____% ____% ____%
- ------------------ --------------- ----------------- -------------- -------------
<S> <C> <C> <C> <C>
Closing Date......................................... 100 100 100 100
- ---------------......................................
- ---------------......................................
- ---------------......................................
- ---------------......................................
</TABLE>
- ---------------
The ABS Tables have been prepared based on the assumptions described
above (including the assumptions regarding the characteristics and performance
of the Receivables which will differ from the actual characteristics and
performance thereof) and should be read in conjunction therewith.
USE OF PROCEEDS
The net proceeds from the sale of the Certificates will be applied by
the Depositor first, to deposit approximately $______ into the Reserve Account
and second, the balance to purchase the Receivables and the other Trust Property
from the Seller.
DESCRIPTION OF THE CERTIFICATES
The Certificates will be issued pursuant to the Agreement,
substantially in the form filed as an exhibit to the Registration Statement. The
following information summarizes all material provisions of the Certificates and
the Agreement. The following summary supplements the description of the general
terms and provisions of the Certificates of any given Series and the related
Agreement set forth in the Prospectus, to which description reference is hereby
made.
GENERAL
The Certificates will evidence fractional undivided interests in the
assets of the Trust to be created pursuant to the Agreement. The Class A
Certificates will evidence in the aggregate an undivided ownership interest of
__% of the Trust and the Class B Certificates will evidence in the aggregate an
undivided ownership interest of __% of the Trust.
THE POOLING AND SERVICING AGREEMENT
SALE AND ASSIGNMENT OF THE RECEIVABLES
Certain information regarding the conveyance of the Receivables by the
Seller to the Depositor and by the Depositor to the Trust on the Closing Date
pursuant to the Agreement is set forth in the Prospectus under "Description of
the Transfer and Servicing Agreements--Sale and Assignment of Receivables."
ACCOUNTS
[The assets of the Trust will not include a Pre-Funding Account.] All
other Accounts referred to under "Description of the Transfer and Servicing
Agreements--Accounts" in the Prospectus, will be established by the Servicer and
maintained with the Trustee in the name of the Trustee on behalf of the
Certificateholders. The Reserve Fund will be established by the Servicer as a
segregated account with the Collateral Agent on behalf of the
Certificateholders.
SERVICING COMPENSATION
The Servicer will be entitled to receive a fee (the "Servicing Fee")
for each Collection Period in an amount equal to the product of one-twelfth of
___% per annum for as long as Mellon Bank, N.A. or an affiliate thereof is the
Servicer, and ___% per annum if Mellon Bank, N.A. or an affiliate thereof is no
longer the Servicer (the "Servicing Fee Rate") and the Pool Balance as of the
first day of the Collection Period. The "Servicing Fee" will also include
amounts to be paid to the Servicer as described in the Prospectus. The Servicing
Fee, together with any portion of the Servicing Fee that remains unpaid from
prior Distribution Dates (the "Total Servicing Fee"), will be paid from the
Total Distribution Amount. The Total Servicing Fee will be paid prior to the
distribution of any portion of the Interest Distribution Amount to the
Certificateholders. See "Description of the Transfer and Servicing
Agreements--Servicing Compensation and Payment of Expenses" in the Prospectus.
DISTRIBUTIONS ON CERTIFICATES
DEPOSITS TO COLLECTION ACCOUNT. On or before the earlier of the eighth
Business Day of the month in which a Distribution Date occurs and the fourth
Business Day preceding such Distribution Date (the "Determination Date"), the
Servicer will provide the Trustee with certain information with respect to the
preceding Collection Period, including the amount of aggregate Collections on
the Receivables, the aggregate amount of Liquidated Receivables, the Advances,
if any, to be made by the Servicer of interest and principal due on the
Actuarial Receivables, the amount, if any, to be withdrawn from the Payahead
Account and deposited in the Collection Account, the amount, if any, to be
withdrawn from the Reserve Fund and deposited in the Collection Account, the
amount, if any, to be withdrawn from the Reserve Fund and paid to the Depositor,
in each case, with respect to such Distribution Date and the aggregate Purchase
Amount of Receivables to be repurchased by the Seller or to be purchased by the
Servicer, in each case with respect to such Distribution Date.
On or before each Distribution Date, the Servicer will cause the
Trustee to withdraw from the Payahead Account and (i) deposit into the
Collection Account in immediately available funds, the portion of Payaheads
constituting scheduled payments on Actuarial Receivables or that are to be
applied to prepay Actuarial Receivables in full and (ii) distribute to the
Depositor, in immediately available funds, all investment earnings on funds in
the Payahead Account with respect to the preceding Collection Period. On or
before each Distribution Date the Servicer will deposit any Advances for such
Distribution Date into the Collection Account. On or before the Business Day
preceding each Distribution Date, the Servicer will cause the Interest
Collections and the Principal Collections for such Distribution Date to be
deposited into the Collection Account.
"Collections" for any Distribution Date will equal the sum of Interest
Collections and Principal Collections for the related Distribution Date.
"Interest Collections" for any Distribution Date will equal the sum of
the following amounts with respect to any Distribution Date, computed, with
respect to Simple Interest Receivables, in accordance with the simple interest
method, and with respect to Actuarial Receivables, in accordance with the
actuarial method: (i) that portion of all collections on the Receivables
allocable to interest in respect of the preceding Collection Period (including,
with respect to Actuarial Receivables, amounts withdrawn from (the Payahead
Account and allocable to interest and excluding amounts deposited into the
Payahead Account and allocable to interest, in each case, in respect of the
preceding Collection Period): (ii) all proceeds (other than any proceeds from
any Dealer commission) of the liquidation of Liquidated Receivables, net of
expenses incurred by the Servicer in connection with such liquidation and any
amounts required by law to be remitted to the Obligor on such Liquidated
Receivables ("Liquidation Proceeds"), to the extent attributable to interest due
thereon, which became Liquidated Receivables during such Collection Period in
accordance with the Servicer's customary servicing procedures, (iii) all
Advances made by the Servicer of interest due on the Actuarial Receivables in
respect of the preceding Collection Period; (iv) the Purchase Amount of each
Receivable that was repurchased by the Seller or purchased by the Servicer
during such Collection Period, to the extent attributable to accrued interest
thereon; (v) all monies collected, from whatever source (other than any proceeds
from any Dealer commission), in respect of Liquidated Receivables during any
Collection Period following the Collection Period in which such Receivable was
written off, net of the sum of any amounts expended by the Servicer for the
account of the Obligor and any amounts required by law to be remitted to the
Obligor ("Recoveries") and (vi) Investment Earnings for such Distribution Date;
provided, however, that in calculating the Interest Collections, all payments
and proceeds (including Liquidation Proceeds) of any Receivables (i) repurchased
by the Seller or purchased by the Servicer, the Purchase Amount of which has
been included in the Interest Collections on a prior Distribution Date and (ii)
received on Actuarial Receivables and distributed to the Servicer, with respect
to such Distribution Date, as reimbursement for any unreimbursed Advances in
accordance with the Agreement, shall all be excluded.
"Principal Collections" for any Distribution Date will equal the sum
of the following amounts with respect to any Distribution Date, computed, with
respect to Simple Interest Receivables, in accordance with the simple interest
method, and with respect to Actuarial Receivables, in accordance with the
actuarial method: (i) that portion of all collections on the Receivables
allocable to principal in respect of the preceding Collection Period (including,
with respect to Actuarial Receivables, amounts withdrawn from the Payahead
Account and allocable to interest and excluding amounts deposited into the
Payahead Account and allocable to interest, in each case, in respect of the
preceding Collection Period); (ii) Liquidation Proceeds attributable to the
principal amount of Receivables which became Liquidated Receivables during the
preceding Collection Period in accordance with the Servicer's customary
servicing procedures, with respect to such Liquidated Receivables; (iii) all
Advances made by the Servicer or interest due on the Actuarial Receivables in
respect to the preceding Collection Period; (iv) the Purchase Amount of each
Receivable repurchased by the Seller or purchased by the Servicer during such
Collection Period to the extent attributable to principal; and (v) partial
prepayments on Receivables in respect of such Collection Period relating to
refunds of extended service contracts, or of physical damage, credit life,
credit accident or health insurance premium, disability insurance policy
premium, but only if such costs or premiums were financed by the respective
Obligor and only to the extent not included in clause (i) above, but only if
such costs or premiums were financed by the respective Obligor and only to the
extent not included in clause (i) above; provided, however, that in calculating
the Principal Collections, all payments and proceeds (including Liquidation
Proceeds) of any Receivables (i) repurchased by the Seller or purchased by the
Servicer the Purchase Amount of which has been included in the Principal
Collections on a prior Distribution Date, and (ii) received on Actuarial
Receivables and distributed to the Servicer, with respect to such Distribution
Date, as reimbursement for any unreimbursed Advances in accordance with the
Agreement, shall all be excluded.
The "Principal Distribution Amount" for a Distribution Date shall be
the sum of the following amounts with respect to the preceding Collection
Period: (i) (a) with respect to Simple Interest Receivables, that portion of all
collections on the Receivable allocable to principal in respect of the preceding
Collection Period and (b) with respect to Actuarial Receivables the sum of (x)
the amount of all scheduled payments allocable to principal due during the
preceding Collection Period and (y) the portion of all prepayments in full
allocable to principal received during the preceding Collection Period, in the
case of both (a) and (b) without regard to any extensions or modifications
thereof effected alter the Cutoff Date, other than with respect to any
extensions or modifications in connection with Cram Down Losses during such
Collection Period; (ii) the principal balance of each Receivable that was
repurchased by the Seller or purchased by the Servicer in each case during the
preceding Collection Period (except to the extent included in (i) above); (iii)
the principal balance of each Liquidated Receivable which became such during the
preceding Collection Period (except to the extent included in (i) above); (iv)
partial prepayments on Receivables in respect of the preceding Collection Period
relating to refunds of extended service contracts, or of physical damage, credit
life, credit accident or health insurance premium, disability insurance policy
premiums, but only if such costs or premiums were financed by the respective
Obligor and only to the extent not included in clause (i) above; and (v) the
aggregate amount of Cram Down Losses during such Collection Period.
Interest Collections and Principal Collections on any Distribution
Date shall exclude all payments and proceeds (including Liquidation Proceeds) of
any Receivables the Purchase Amount of which has been included in Collections in
a prior Collection Period.
MONTHLY WITHDRAWALS FROM THE COLLECTION ACCOUNT. On each Distribution
Date, the Servicer shall instruct the Trustee to withdraw from the Collection
Account and deposit in the Payahead Account in immediately available funds, the
aggregate Payaheads collected during the preceding Collection Period. On each
Distribution Date, the Servicer shall instruct the Trustee to make the following
deposits and distributions, to the extent of Interest Collections (and, in the
case of shortfalls occurring under clause (ii) below in the Class A Interest
Distribution, the Class B Percentage of Principal Collections to the extent of
such shortfalls):
(i) to the Servicer, the Servicing Fee and all unpaid Servicing Fees
from prior Collection Periods (to the extent not retained by the
Servicer as described under "--Net Deposits" below);
(ii) to the Class A Distribution Account, after the application of
clause (i), the Class A Interest Distribution; and
(iii) to the Class B Distribution Account, after the application of
clauses (i) and (ii), the Class B Interest Distribution.
On each Distribution Date, the Servicer shall instruct the Trustee to
make the following deposits and distributions, to the extent of Principal
Collections and Interest Collections remaining after the application of clauses
(i), (ii) and (iii) above:
(iv) to the Class A Distribution Account, the Class A Principal
Distribution;
(v) to the Class B Distribution Account, after the application of
clause (iv), the Class B Principal Distribution; and
(vi) to the Reserve Fund, any amounts remaining after the application
of clauses (i) through (v).
To the extent necessary to satisfy the distributions described above,
the Servicer shall instruct the Trustee to withdraw from the Reserve Fund and
deposit in the Class A Distribution Account or the Class B Distribution Account
as described below in the following order of priority on each Distribution Date:
(i) an amount equal to the excess of the Class A Interest Distribution
over the sum of Interest Collections and the Class B Percentage of
Principal Collections will be deposited into the Class A Distribution
Account:
(ii) an amount equal to the excess of the Class B Interest Distribution
over the portion of Interest Collections remaining after the
distribution of the Class A Interest Distribution will be deposited
into the Class B Distribution Account;
(iii) an amount equal to the excess of the Class A Principal
Distribution over the portion of Principal Collections and Interest
Collections remaining after the distribution of the Class A Interest
Distribution and the Class B Interest Distribution will be deposited
into the Class A Distribution Account; and
(iv) an amount equal to the excess of the Class B Principal
Distribution over the portion of Principal Collections and Interest
Collections remaining after the distribution of the Class A Interest
Distribution, the Class B Interest Distribution and the Class A
Principal Distribution will be deposited into the Class B Distribution
Account.
On each Distribution Date, all amounts on deposit in the Class A
Distribution Account will be distributed to the Class A Certificateholders and
all amounts on deposit in the Class B Distribution Account will be distributed
to the Class B Certificateholders.
RELATED DEFINITIONS
For purposes hereof, the following terms have the following meanings:
"Collection Period" means, with respect to a Distribution Date, (i) in
the case of the initial Distribution Date, the period from and including the
Cutoff Date through and including _______ ___, ________ and (ii) thereafter, the
calendar month preceding the related Distribution Date.
"Cram Down Loss" means, with respect to a Receivable if a court of
appropriate jurisdiction in a bankruptcy or insolvency proceeding shall have
issued an order reducing the amount owed on such Receivable or otherwise
modifying or restructuring the scheduled payments to be made on such Receivable,
an amount equal to (i) the excess of the principal balance of such Receivable
immediately prior to such order over the principal balance of such Receivable as
so reduced and/or (ii) if such court shall have issued an order reducing the
effective rate of interest on such Receivable, the net present value (using as
the discount rate the higher of the APR on such Receivable or the rate of
interest, if any, specified by the court in such order) of the scheduled
payments as so modified or restructured. A "Cram Down Loss" shall be deemed to
have occurred on the date of issuance of such order.
"Class A Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess of Class A Monthly Interest for the preceding
Distribution Date and any outstanding Class A Interest Carryover Shortfall on
such preceding Distribution Date, over the amount in respect of interest that is
actually deposited in the Class A Distribution Account on such preceding
Distribution Date, plus 30 days of interest on such excess, to the extent
permitted by law, at the Class A Pass-Through Rate.
"Class A Interest Distribution" means, with respect to any
Distribution Date, the sum of Class A Monthly Interest for such Distribution
Date and the Class A Interest Carryover Shortfall for such Distribution Date.
"Class A Monthly Interest" means, with respect to any Distribution
Date, the product of (i) one-twelfth (or, in the case of the first Distribution
Date a fraction, the numerator of which is equal to __ and the denominator of
which is 360) of the Class A Pass-Through Rate and (ii) the Class A Principal
Balance as of the Distribution Date occurring in the preceding Collection Period
(after giving effect to any payments made on such Distribution Date) or, in the
case of the first Distribution Date, the Original Class A Principal Balance.
"Class A Monthly Principal" means, with respect to any Distribution
Date, the Class A Percentage of the Principal Distribution Amount for such
Distribution Date plus the Class A Percentage of Realized Losses with respect to
Receivables which became Liquidated Receivables during the related Collection
Period.
"Class A Principal Balance" equals the Original Class A Principal
Balance, as reduced by all amounts allocable to principal on the Class A
Certificates previously distributed to Class A Certificateholders.
"Class A Principal Carryover Shortfall" means, with respect to any
Distribution Date, the excess of Class A Monthly Principal for the preceding
Distribution Date and any outstanding Class A Principal Carryover Shortfall on
such preceding Distribution Date over the amount in respect of principal that is
actually deposited in the Class A Distribution Account on such preceding
Distribution Date.
"Class A Principal Distribution" means, with respect to any
Distribution Date, the sum of Class A Monthly Principal for such Distribution
Date and the Class A Principal Carryover Shortfall for such Distribution Date;
provided, however, that the Class A Principal Distribution shall not exceed the
Class A Principal Balance immediately prior to such Distribution Date. In
addition, on the Final Scheduled Distribution Date, the principal required to be
deposited in the Class A Distribution Account will include the lesser of (a) any
principal due and remaining unpaid on each Receivable in the Trust as of the
Final Scheduled Maturity Date or (b) the portion of the amount required to be
deposited under clause (a) above that is necessary (after giving effect to the
other amounts to be deposited in the Class A Distribution Account on such
Distribution Date and allocable to principal) to reduce the Class A Principal
Balance to zero.
"Class B Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess of Class B Monthly Interest for the preceding
Distribution Date and any outstanding Class B Interest Carryover Shortfall on
such preceding Distribution Date, over the amount in respect of interest that is
actually deposited in the Class B Distribution Account on such preceding
Distribution Date, plus 30 days of interest on such excess, to the extent
permitted by law, at the Class B Pass-Through Rate.
"Class B Interest Distribution" means, with respect to any
Distribution Date, the sum of Class B Monthly Interest for such Distribution
Date and the Class B Interest Carryover Shortfall for such Distribution Date.
"Class B Monthly Interest" means, with respect to any Distribution
Date, the product of (i) one-twelfth (or, in the case of the first Distribution
Date a fraction, the numerator of which is equal to __ and the denominator of
which is 360) of the Class B Pass-Through Rate and (ii) the Class B Principal
Balance as of the Distribution Date occurring in the preceding Collection Period
(after giving effect to any payments made on such Distribution Date) or, in the
case of the first Distribution Date, the Original Class B Principal Balance.
"Class B Monthly Principal" means, with respect to any Distribution
Date, the Class B Percentage of the Principal Distribution Amount for such
Distribution Date plus the Class B Percentage of Realized Losses with respect to
Receivables which became Liquidated Receivables during the related Collection
Period.
"Class B Principal Balance" equals the Original Class B Principal
Balance, as reduced by all amounts allocable to principal on the Class B
Certificates previously distributed to Class B Certificateholders.
"Class B Principal Carryover Shortfall" means, with respect to any
Distribution Date, the excess of Class B Monthly Principal for the preceding
Distribution Date and any outstanding Class B Principal Carryover Shortfall on
such preceding Distribution Date over the amount in respect of principal that is
actually deposited in the Class B Distribution Account on such preceding
Distribution Date.
"Class B Principal Distribution" means, with respect to any
Distribution Date, the sum of Class B Monthly Principal for such Distribution
Date and the Class B Principal Carryover Shortfall for such Distribution Date;
provided, however, that the Class B Principal Distribution shall not exceed the
Class B Principal Balance immediately prior to such Distribution Date. In
addition, on the Final Scheduled Distribution Date, the principal required to be
distributed to Class B Certificateholders will include the lesser of (a) any
principal due and remaining unpaid on each Receivable in the Trust as of the
Final Scheduled Maturity Date or (b) the portion of the amount required to be
deposited under clause (a) above that is necessary (after giving effect to the
other amounts to be deposited in the Class B Distribution Account on such
Distribution Date and allocable to principal) to reduce the Class B Principal
Balance to zero, and, in the case of clauses (a) and (b), remaining after any
required distribution of the amount described in clause (a) to the Class A
Distribution Account.
"Liquidated Receivables" means, Receivables (i) which have been
liquidated by the Servicer through the sale of the related Financed Vehicle,
(ii) as to which all or a portion representing 10% or more of a scheduled
payment due is 150 or more days delinquent or (iii) with respect to which
proceeds have been received which, in the Servicer's judgment, constitute the
final amounts recoverable in respect of such Receivable.
The "Pool Balance" at any time will represent the aggregate principal
balance of the Receivables at the end of the preceding Collection Period, after
giving effect to all payments (other than Payaheads) received from Obligors,
Purchase Amounts and Advances to be remitted by the Depositor, the Servicer and
the Seller, as the case may be, all for such Collection Period, all losses
realized on Receivables that became Liquidated Receivables during such
Collection Period and all Cram Down Losses for such Collection Period.
"Realized Losses" means, for any period, the excess of the principal
balance of a Liquidated Receivable over Liquidation Proceeds to the extent
allocable to principal.
CREDIT ENHANCEMENT
SUBORDINATION OF THE CLASS B CERTIFICATES. The rights of the Class B
Certificateholders to receive distributions with respect to the Receivables will
be subordinated to the rights of the Class A Certificateholders to the extent
described below. This subordination is intended to enhance the likelihood of
timely receipt by Class A Certificateholders of the full amount of interest and
principal required to be paid to them, and to afford such Class A
Certificateholders limited protection against losses in respect of the
Receivables.
No interest distribution will be made to the Class B
Certificateholders on any Distribution Date in respect of interest until the
full amount of interest on the Class A Certificates payable on such Distribution
Date has been distributed to the Class A Certificateholders. No principal
distribution will be made to the Class B Certificateholders on any Distribution
Date in respect of principal until the full amount of interest on and principal
of the Class A Certificates and interest on the Class B Certificates payable on
such Distribution Date has been distributed to the Class A Certificateholders
and the Class B Certificateholders, respectively. Distributions of interest on
the Class B Certificates, however, to the extent of collections on or in respect
of the Receivables allocable to interest and certain available amounts on
deposit in the Reserve Fund, will not be subordinated to the payment of
principal of the Class A Certificates.
RESERVE FUND. In the event of delinquencies or losses on the
Receivables, the protection afforded to the Class A Certificateholders will be
effected both by the preferential right of the Class A Certificateholders to
receive current distributions with respect to the Receivables, to the extent
described above under "--Subordination of the Class B Certificates," prior to
any distribution being made on a Distribution Date to the Class B
Certificateholders, and to receive amounts on deposit in the Reserve Fund.
Amounts on deposit in the Reserve Fund will also be generally available to cover
shortfalls in required distributions to the Class B Certificateholders, in
respect of interest, after payment of interest on the Class A Certificates and,
in respect of principal, after payment of interest on and principal of the Class
A Certificates and interest on the Class B Certificates. The Reserve Fund will
not be a part of or otherwise includible in the Trust and will be a segregated
trust account held by the Collateral Agent for the benefit of the
Certificateholders.
Pursuant to the Agreement, the Reserve Fund will be created with an
initial deposit by the Depositor on the Closing Date in the amount of $_______
(___% of the Initial Pool Balance) (the "Reserve Fund Initial Deposit"), and
will be augmented on each Distribution Date by deposit therein of Collections
remaining after distribution of the Servicing Fee and amounts to be paid to
Class A Certificateholders and Class B Certificateholders as described above
under "--Distributions on Certificates." Amounts on deposit in the Reserve Fund
will be released to the Depositor on each Distribution Date to the extent that
the amount on deposit in the Reserve Fund exceeds the Specified Reserve Balance.
Upon any such release to the Depositor of amounts from the Reserve Fund, neither
the Class A Certificateholders nor the Class B Certificateholders will have any
further rights in, or claims to, such amounts.
"Specified Reserve Balance" with respect to any Distribution Date
generally means the greater of (a) ___% of the sum of the Class A Principal
Balance and Class B Principal Balance on such Distribution Date (after giving
effect to all distributions with respect to the Certificates to be made on such
Distribution Date), or (b) ___% of the sum of the Original Class A Principal
Balance and Original Class B Principal Balance. In no circumstances will the
Depositor be required to deposit any amounts in the Reserve Fund other than the
Reserve Fund Initial Deposit to be made on the Closing Date.
Amounts held from time to time in the Reserve Fund will continue to be
held for the benefit of the Certificateholders and may be invested in Eligible
Investments. Any loss on such investment will be charged to the Reserve Fund.
Any investment earnings (net of losses) will be paid to the Depositor.
The time necessary for the Reserve Fund to reach and maintain the
Specified Reserve Balance at any time after the date of issuance of the
Certificates will be affected by the delinquency, credit loss and repossession
and prepayment experience of the Receivables and, therefore, cannot be
accurately predicted.
If on any Distribution Date the protection afforded the Class A
Certificates by the Class B Certificates and by the Reserve Fund is exhausted,
the Class A Certificateholders will directly bear the risks associated with
ownership of the Receivables. If on any Distribution Date amounts on deposit in
the Reserve Fund have been depleted, the protection afforded the Class B
Certificates by the Reserve Fund will be exhausted and the Class B
Certificateholders will directly bear the risks associated with ownership of the
Receivables.
None of the Class B Certificateholders, the Trustee, the Servicer, the
Seller or the Depositor will be required to refund any amounts properly
distributed or paid to them, whether or not there are sufficient funds on any
subsequent Distribution Date to make full distributions to the Class A
Certificateholders.
TERMINATION
The Servicer will be permitted, at its option, in the event that the
Pool Balance as of the first day of a Collection Period has declined to 5% or
less of the Initial Pool Balance, to purchase from the Trust, on any
Distribution Date occurring in a subsequent Collection Period, all remaining
Receivables in the Trust at a purchase price equal to the sum of the Class A
Principal Balance and the Class B Principal Balance plus accrued and unpaid
interest thereon at the applicable Pass- Through Rates. The exercise of this
right will effect an early retirement of the Certificates. See "Description of
the Transfer and Servicing Agreements--Termination" in the Prospectus.
AUCTION SALE
In the event of an Auction Sale, the Certificates will be redeemed at
a redemption price equal to the sum of the Class A Principal Balance and the
Class B Principal Balance plus accrued and unpaid interest thereon at the
applicable Pass-Through Rates. See "Description of the Transfer and Servicing
Agreements-Termination" in the Prospectus.
DUTIES OF THE TRUSTEE
The Trustee will make no representations as to the validity or
sufficiency of the Agreement, the Certificates (other than the execution and
authentication of the Certificates), the Receivables or any related documents,
and will not be accountable for the use or application by the Depositor or the
Servicer of any funds paid to the Depositor or the Servicer in respect of the
Certificates or the Receivables, or the investment of any monies by the Servicer
before such monies are deposited into the Collection Account. The Trustee will
not independently verify the Receivables. If no Event of Servicing Termination
has occurred and is continuing, the Trustee will be required to perform only
those duties specifically required of it under the Agreement. Generally, those
duties are limited to the receipt of the various certificates, reports or other
instruments required to be furnished to the Trustee under the Agreement, in
which case it will only be required to examine them to determine whether they
conform to the requirements of the Agreement. The Trustee will not be charged
with knowledge of a failure by the Servicer to perform its duties under the
Agreement which failure constitutes an Event of Servicing Termination unless a
responsible officer of the Trustee obtains actual knowledge of such failure as
specified in the Agreement.
The Trustee will be under no obligation to exercise any of the rights
or powers vested in it by the Agreement or to make any investigation of matters
arising thereunder or to institute, conduct or defend any litigation thereunder
or in relation thereto at the request, order or direction of any of the
Certificateholders, unless such Certificateholders have offered the Trustee
reasonable security or indemnity satisfactory to it against the costs, expenses
and liabilities which may be incurred therein or thereby. No Class A
Certificateholder or Class B Certificateholder will have any right under the
Agreement to institute any proceeding with respect to the Agreement, unless such
holder has given the Trustee written notice of default and unless, with respect
to the Class A Certificates, the holders of Class A Certificates evidencing not
less than a majority of the aggregate outstanding principal balance of the Class
A Certificates or, with respect to the Class B Certificates, the holders of
Class B Certificates evidencing not less than a majority of the aggregate
outstanding principal balance of the Class B Certificates, have made a written
request to the Trustee to institute such proceeding in its own name as Trustee
thereunder and have offered to the Trustee reasonable indemnity, and the Trustee
for 30 days has neglected or refused to institute any such proceedings.
THE TRUSTEE
___________________, a ___________________, will act as Trustee under
the Agreement. The Trustee, in its individual capacity or otherwise, and any of
its affiliates, may hold Certificates in their own names or as pledgee. In
addition, for the purpose of meeting the legal requirements of certain
jurisdictions, the Servicer and the Trustee, acting jointly (or in some
instances, the Trustee, acting alone), will have the power to appoint
co-trustees or separate trustees of all or any part of the Trust. In the event
of such appointment, all rights, powers, duties and obligations conferred or
imposed upon the Trustee by the Agreement will be conferred or imposed upon the
Trustee and such co-trustee or separate trustee jointly, or, in any jurisdiction
where the Trustee is incompetent or unqualified to perform certain acts, singly
upon such co-trustee or separate trustee who shall exercise and perform such
rights, powers, duties and obligations solely at the direction of the Trustee.
The Trustee may resign at any time, in which event the Servicer will
be obligated to appoint a successor trustee. The Servicer may also remove the
Trustee if the Trustee ceases to be eligible to serve, becomes legally unable to
act, is adjudged insolvent or is placed in receivership or similar proceedings.
In such circumstances, the Servicer will be obligated to appoint a successor
trustee. However, any such resignation or removal of the Trustee and appointment
of a successor trustee will not become effective until acceptance of the
appointment by the successor trustee.
The Agreement will provide that the Servicer will pay the Trustee's
fees. The Agreement will also provide that the Trustee will be entitled to
indemnification by the Depositor for, and will be held harmless against, any
loss, liability or expense incurred by the Trustee not resulting from the
Trustee's own willful misfeasance, bad faith or negligence. Indemnification will
be unavailable to the Trustee to the extent that any such loss, liability or
expense results from a breach of any of the Trustee's representations or
warranties set forth in the Agreement, and for any tax, other than those for
which the Depositor or the Servicer is required to indemnify the Trustee.
The Trustee's Corporate Trust Office is located at
_________________________. The Depositor, the Servicer, the Seller and their
respective affiliates may have other banking relationships with the Trustee and
its affiliates in the ordinary course of their business.
FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Stroock & Stroock & Lavan LLP, special tax counsel,
the Trust will be classified as a grantor trust and not as an association
taxable as a corporation for federal income tax purposes. Accordingly, each
Certificate Owner will be subject to federal income taxation as if it owned
directly its interest in each asset owned by the Trust and paid directly its
share of reasonable expenses paid by the Trust. Each Certificate Owner therefore
must report on its federal income tax return the gross income from the portion
of the assets of the Trust that is allocable to such Certificate and may deduct
the portion of the expenses incurred or accrued by the Trust that is allocable
to such Certificate, at the same time and to the same extent as such items would
be reported by such Certificate Owner if it had purchased and held directly an
interest in such assets and received or accrued directly its share of the
payments with respect to such assets and incurred or accrued directly its share
of expenses incurred or accrued by the Trust when those amounts are received,
incurred or accrued by the Trust.
If the Class B Certificate Owners receive distributions of less than
their share of the Trust's receipts of principal or interest (the "Shortfall
Amount") because of the subordination of their Certificates, such Class B
Certificate Owners would probably be treated for federal income tax purposes as
if they had (1) received as distributions their full share of such receipts, (2)
paid over to the Class A Certificate Owners an amount equal to such Shortfall
Amount, and (3) retained the right to reimbursement of such amounts from certain
funds in the Reserve Account. Under this treatment, Class B Certificate Owners
would be required to accrue as current income any interest, original issue
discount income, or (to the extent paid on the Trust's assets) accrued market
discount of the Trust that was a component of the Shortfall Amount, even though
such amount was in fact paid to the Class A Certificate Owners, (2) a loss would
only be allowed to the Class B Certificate Owners when their right to receive
reimbursement of such Shortfall Amount became worthless, and (3) reimbursement
of such Shortfall Amount prior to such a claim of worthlessness would not be
taxable income to a Class B Certificate Owner because such amount was previously
included in income. Those results should not significantly affect the inclusion
of income for Class B Certificate Owners on the accrual method of accounting,
but could accelerate inclusion of income to Class B Certificate Owners on the
cash method of accounting by, in effect, placing them on the accrual method. All
Class B Certificate Owners are encouraged to consult their tax advisors
regarding the character and timing of loss deductions.
Each Certificate Owner should see "Federal Income Tax Consequences" in
the Prospectus for a more detailed discussion of the material federal income tax
consequences of the purchase, ownership and disposition of the Certificates.
STATE AND LOCAL TAX CONSEQUENCES
The discussion above does not address the tax consequences of
purchase, ownership or disposition of the Certificates under any state or local
tax law. Investors are encouraged to consult their own tax advisors regarding
state and local tax consequences.
ERISA CONSIDERATIONS
A fiduciary of a pension, profit-sharing, retirement or other employee
benefit plan subject to Title I of ERISA, should consider the fiduciary
standards under ERISA in the context of the plan's particular circumstances
before authorizing an investment of a portion of such plan's assets in the
Certificates. Accordingly, pursuant to Section 404 of ERISA, such fiduciary
should consider among other factors: (i) whether the investment is for the
exclusive benefit of plan participants and their beneficiaries; (ii) whether the
investment satisfies the applicable diversification requirements; (iii) whether
the investment is in accordance with the documents and instruments governing the
plan; and (iv) whether the investment is prudent, considering the nature of the
investment. Fiduciaries of plans also should consider ERISA's prohibition on
improper delegation of control over, or responsibility for, plan assets.
In addition, benefit plans subject to ERISA, as well as individual
retirement accounts or certain types of Keogh plans not subject to ERISA but
subject to Section 4975 of the Code and any entity whose source of funds for the
purchase of Certificates includes plan assets by reason of a plan or account
investing in such entity (each, a "Plan"), are prohibited from engaging in a
broad range of transactions involving Plan assets and persons having certain
specified relationships to a Plan ("parties in interest" and "disqualified
persons"). Such transactions are treated as "prohibited transactions" under
Sections 406 and 407 of ERISA and excise taxes are imposed upon such persons by
Section 4975 of the Code.
An investment in Certificates by a Plan might result in the assets of
the Trust being deemed to constitute Plan assets, which in turn might mean that
certain aspects of such investment, including the operation of the Trust, might
be prohibited transactions under ERISA and the Code. Neither ERISA nor the Code
defines the term "plan assets." Under Section 2510.3-101 of the United States
Department of Labor ("DOL") regulations (the "Regulation"), a Plan's assets may
include an interest in the underlying assets of an entity (such as a trust) for
certain purposes, including the prohibited transaction provisions of ERISA and
the Code, if the Plan acquires an "equity interest" in such entity, unless
certain exceptions apply. The Depositor believes that the Certificates will give
Certificateholders an equity interest in the Trust for purposes of the
Regulation and can give no assurance that the Certificates will qualify for any
of the exceptions under the Regulation. As a result, the assets of the Trust may
be considered the assets of any Plan which acquires a Certificate.
The DOL has issued an individual exemption, Prohibited Transaction
Exemption ("PTE") ---------------------------------------------------------,
___________, Exemption Application No. D-_______________, to ___________ (the
"Exemption"). The Exemption generally exempts from the application of the
prohibited transaction provisions of Section 406 of ERISA and the excise taxes
imposed on such prohibited transactions pursuant to Section 4975(a) and (b) of
the Code and Section 502(i) of ERISA certain transactions relating to the
initial purchase, holding and subsequent resale by Plans of certificates in
pass-through trusts that consist of certain receivables, loans and other
obligations that meet the conditions and requirements set forth in the
Exemption. The receivables covered by the Exemption include motor vehicle
installment obligations such as the Receivables. The Depositor believes that the
Exemption will apply to the acquisition, holding and resale of the Class A
Certificates by a Plan and that all conditions of the Exemption other than those
within the control of the investors have been or will be met.
The Exemption sets forth six general conditions that must be satisfied
for a transaction involving the acquisition of the Class A Certificates by a
Plan to be eligible for the exemptive relief thereunder:
(1) the acquisition of the Class A Certificates by a Plan is
on terms (including the price for the Class A Certificates) that are
at least as favorable to the Plan as they would be in an arm's-length
transaction with an unrelated party;
(2) the rights and interests evidenced by the Class A
Certificates acquired by a Plan are not subordinated to the rights and
interest evidenced by other certificates of the Trust;
(3) the Class A Certificates acquired by the Plan have
received a rating at the time of such acquisition that is in one of
the three highest generic rating categories from any one of four
rating entities;
(4) the Trustee is not an affiliate of any other member of
the "Restricted Group", which consists of the Underwriters, the
Depositor, the Trustee, the Servicer, each subservicer, each insurer
and any Obligor with respect to the Receivables included in the Trust
constituting more than 5% of the aggregate unamortized principal
balance of the assets of the Trust as of the date of initial issuance
of the Class A Certificates, and any affiliate of such parties.
(5) the sum of all payments made to and retained by the
Underwriters in connection with the offering of the Class A
Certificates represents not more than reasonable compensation for
placing the Class A Certificates. The sum of all payments made to and
retained by the Servicer represents not more than the reasonable
compensation for the Servicer's services under the Agreement and
reimbursement of the Servicer's reasonable expenses in connection
therewith; and
(6) the Plan investing in the Class A Certificates must be
an "accredited investor" as defined in Rule 501(a)(1) of Regulation D
of the Securities and Exchange Commission (the "Commission") under the
Securities Act.
Because the rights and interests evidenced by the Class A Certificates
acquired by a Plan are not subordinated to the rights and interests evidenced by
other certificates of the Trust, the second general condition set forth above is
satisfied. It is a condition of the issuance of the Class A Certificates that
they be rated in the highest rating category by a nationally recognized rating
agency and thus the third general condition should be satisfied. The Depositor
and the Servicer expect that the fourth general condition set forth above will
be satisfied with respect to the Class A Certificates. A fiduciary of a Plan
contemplating purchasing a Class A certificate must make its own determination
that the first, fifth and sixth general conditions set forth above will be
satisfied with respect to the Class A Certificates.
If the general conditions of the Exemption are satisfied, the
Exemption may provide relief from the restrictions imposed by Sections 406(a)
and 407(a) of ERISA as well as the excise taxes imposed by Section 4975(a) and
(b) of the Code by reason of Section 4975(c)(1)(A) through (D) of the Code, in
connection with the direct or indirect sale, exchange, transfer or holding of
the Class A Certificates by a Plan. However, no exemption is provided from the
restrictions of Sections 406(a)(1)(E), 406(a)(2) and 407 of ERISA for the
acquisition or holding of a Class A Certificate on behalf of an "Excluded Plan"
by any person who has discretionary authority or renders investment advice with
respect to the assets of such Excluded Plan. For purposes of the Class A
Certificates an Excluded Plan is a Plan sponsored by any member of the
Restricted Group.
If certain specific conditions of the Exemption are also satisfied,
the Exemption may provide relief from the restrictions imposed by Sections
406(b)(l) and (b)(2) and 407(a) of ERISA and the taxes imposed by Section
4975(a) and (b) of the Code by reason of Section 4975(c)(1)(E) of the Code in
connection with the direct or indirect sale, exchange, transfer or holding of
Class A Certificates in the initial issuance of Class A Certificates between the
Depositor or the Underwriters and a Plan other than an Excluded Plan when the
person who has discretionary authority or renders investment advice with respect
to the investment of Plan assets in the Class A Certificates is (a) an Obligor
with respect to 5% or less of the fair market value of the Receivables or (b) an
affiliate of such person.
The Exemption also may provide relief from the restriction imposed by
Sections 406(a) and 407(a) of ERISA and the taxes imposed by Section
4975(c)(1)(A) through (D) of the Code if such restrictions are deemed to
otherwise apply merely because a person is deemed to be a party in interest or a
disqualified person with respect to an investing Plan by virtue of providing
services to a Plan (or by virtue of having certain specified relationships to
such a person) solely as a result of such Plan's ownership of Class A
Certificates.
Before purchasing a Class A Certificate, a fiduciary of a Plan should
itself confirm (a) that the Class A Certificates constitute "certificates" for
purposes of the Exemption and (b) that the specific conditions set forth in
Section II of the Exemption and the other requirements set forth in the
Exemption will be satisfied.
Any Plan fiduciary considering whether to purchase a Class A
Certificate on behalf of a Plan are encouraged to consult with its counsel
regarding the applicability of the fiduciary responsibility and prohibited
transaction provisions of ERISA and the Code to such investment.
Because the Class B Certificates are subordinate interests, the
Exemption will not be available for Class B Certificates. Accordingly, no Class
B Certificate may be purchased by or otherwise transferred to a Plan other than
an "insurance company general account" as defined in, and which complies with
the provisions of, PTE 95-60 which may be deemed to be holding Plan assets.
Furthermore, each purchaser of Class B Certificates will be deemed to have
represented that it is not acquiring Class B Certificates, directly or
indirectly, for or on behalf of a Plan other than an "insurance company general
account" as defined in, and which complies with the provisions of, PTE 95-60. If
Definitive Certificates are issued, each transferee of a Class B Certificate
will be required to deliver to the Trustee a certificate to such effect. Any
purchaser whose source of funds for the purchase of Class B Certificates
includes such assets of an insurance company general account should itself
confirm that all applicable requirements set forth in PTE 95-60 will be
satisfied, particularly the requirement (set forth in Section IV(c) of PTE
95-60) that neither the insurance company nor an affiliate thereof will be a
party in interest or disqualified person in connection with the purchase and
holding of Class B Certificates or the servicing, management and operation of
the Trust.
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting
agreement relating to the Certificates (the "Underwriting Agreement"), the
Depositor has agreed to sell to________ (the "Underwriter"), and the Underwriter
has agreed to purchase, the Certificates, subject to the satisfaction of certain
conditions precedent.
The Depositor has been advised by the Underwriter that it proposes to
offer the Certificates to the public initially at the public offering prices set
forth on the cover page of this Prospectus, and to certain dealers at such
prices less a concession of _____% per Class A Certificate and _____% per Class
B Certificate; that the Underwriter and such dealers may allow a discount of
_____% per Class A Certificate and _____% per Class B Certificate on the sale to
certain other dealers; and that after the initial public offering of the
Certificates, the public offering prices and the concessions and discounts to
dealers may be changed by the Underwriter.
Until the distribution of the Certificates is completed, rules of the
Securities and Exchange Commission may limit the ability of the Underwriter and
certain selling group members to bid for and purchase the Certificates. As an
exception to these rules, the Underwriter is permitted to engage in certain
transactions that stabilize the prices of the Certificates. Such transactions
consist of bids or purchases for the purpose of pegging, fixing or maintaining
the price of such Certificates.
In general, purchases of a security for the purpose of stabilization
or to reduce a short position could cause the price of the security to be higher
than it might be in the absence of such purchases.
Neither the Depositor nor the Underwriter makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the prices of the Certificates. In addition, neither
the Depositor nor the Underwriter makes any representation that the Underwriter
will engage in such transactions or that such transactions, once commenced, will
not be discontinued without notice.
The Depositor has agreed to indemnify the Underwriter against certain
liabilities, including civil liabilities under the Securities Act, or contribute
to payments which the Underwriter may be required to make in respect thereof. In
the opinion of the Commission, such indemnification is against public policy as
expressed in the Securities Act and, may, therefore, be unenforceable.
The Trustee or the Collateral Agent, as applicable, may, from time to
time, invest the funds in the Accounts in Eligible Investments acquired from the
Underwriter.
LEGAL MATTERS
Certain legal matters with respect to the Certificates will be passed
upon for the Depositor by Carl Krasik, Esq., Associate General Counsel of Mellon
Bank Corporation (the "Corporation"). Mr. Krasik is also a shareholder of the
Corporation and one of its subsidiaries and holds options to purchase additional
shares of the Corporation's Common Stock. Certain legal matters with respect to
the Certificates will be passed upon for the Underwriter by Stroock & Stroock &
Lavan LLP, New York, New York. Stroock & Stroock & Lavan LLP also will pass upon
the material federal income tax consequences related to the Certificates.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. MELLON
AUTO RECEIVABLES CORPORATION MAY NOT SELL THE SECURITIES THAT ARE DESCRIBED IN
THIS PROSPECTUS UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE
SECURITIES AND IS NOT A REQUEST FOR ANY OFFERS TO BUY THESE SECURITIES IN ANY
STATE WHERE THE LAWS IN THAT STATE DO NOT PERMIT THE DEPOSITOR TO OFFER OR SELL
THESE SECURITIES.
PROSPECTUS
$__________ ASSET BACKED NOTES
$_________ ASSET BACKED CERTIFICATES
------------
MELLON AUTO RECEIVABLES CORPORATION
DEPOSITOR
------------
MELLON BANK, N.A.
SERVICER
------------
From time to time, Mellon Auto Receivables Corporation may offer to sell
(1) Asset Backed Notes, (2) Asset Backed Certificates or (3) a combination of
both notes and certificates. The term "securities" means the notes and/or the
certificates, depending on which type of securities are being offered for sale
at the time. Each group of securities, whether they include only notes, only
certificates or both, is called a "series" of securities. The securities do not
exist now. Each series of securities will be created by a trust to be formed by
the depositor at the time those securities are sold. Each series of securities
will be described in a supplement to this prospectus.
Each trust will hold a group of motor vehicle retail installment contracts
entered into by individuals when they purchase new or used automobiles,
including passenger cars, minivans, sport utility vehicles and light trucks. The
only source of payments on the securities of any series will be payments made by
individuals on the receivables in the receivables pool held by the trust that
issues those securities. The securities will NOT be bank deposits and will NOT
be insured by the Federal Deposit Insurance Corporation or by any other
governmental agency.
- ------------------------------------------------------------------------------
An investment in the securities of any series involves significant risks.
You should review the information under the caption "Risk Factors" beginning on
page 3 in this prospectus before deciding whether or not to make an investment.
- ------------------------------------------------------------------------------
The securities of each series will not be listed on any trading exchange.
No secondary trading market for the securities of any series will exist at the
time those securities are issued, and there can be no assurance that a secondary
trading market for the securities of any series will develop. Even if a
secondary trading market does develop, it may not continue for the entire period
that the securities are outstanding and may not provide sufficient liquidity to
permit investors to sell their securities when they desire to do so.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS ACCURATE OR COMPLETE. MAKING ANY CONTRARY REPRESENTATION IS A
CRIMINAL OFFENSE.
The depositor may not use this prospectus to sell these securities unless a
prospectus supplement is also delivered. The depositor may offer securities
through underwriters or by other methods described under the caption "Method of
Distribution."
The date of this Prospectus is , 199__
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS
AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT
We provide information to you about the securities in two separate
documents that provide progressively more detail:
o this prospectus, which provides general information, some of which may
not apply to your series of securities; and
o the accompanying prospectus supplement, which describes the specific
terms of your series of securities.
YOU SHOULD RELY PRIMARILY ON THE DESCRIPTION OF YOUR SECURITIES IN THE
ACCOMPANYING PROSPECTUS SUPPLEMENT. THIS PROSPECTUS MAY NOT BE USED TO
CONSUMMATE SALES OF ANY OF THE SECURITIES UNLESS IT IS ACCOMPANIED BY A
PROSPECTUS SUPPLEMENT RELATING TO THE SECURITIES BEING SOLD.
TABLE OF CONTENTS
CAPTION PAGE
Risk Factors..............................................................3
Incorporation of Certain Documents by Reference...........................8
The Trusts...............................................................10
The Portfolio of Motor Vehicle Loans.....................................13
The Receivables Pools....................................................16
Maturity and Prepayment Assumptions......................................18
Pool Factors and Trading Information.....................................20
Use of Proceeds..........................................................21
The Depositor............................................................21
The Servicer.............................................................21
Description of the Notes.................................................22
Description of the Certificates..........................................28
Certain Information Regarding the Securities.............................30
Description of the Transfer and Servicing Agreements.....................45
Certain Legal Aspects of the Receivables.................................61
Federal Income Tax Consequences..........................................67
State and Local Tax Consequences.........................................86
ERISA Considerations.....................................................87
Ratings ................................................................91
Method of Distribution...................................................91
Legal Opinions...........................................................92
Index of Principal Defined Terms.........................................94
Annex I ................................................................97
RISK FACTORS
AN INVESTMENT IN THE SECURITIES OF ANY SERIES INVOLVES SIGNIFICANT RISKS.
BEFORE MAKING AN INVESTMENT DECISION, YOU SHOULD CAREFULLY REVIEW THE FOLLOWING
INFORMATION AND THE INFORMATION UNDER THE CAPTION "RISK FACTORS" IN THE
APPLICABLE PROSPECTUS SUPPLEMENT.
INVESTORS MAY HAVE DIFFICULTY SELLING SECURITIES
Asset backed securities generally are not, and the securities will not be,
listed on any securities exchange. As a result, if you wish to sell your
securities, you will have to locate a purchaser that is willing to purchase your
securities. The depositor expects that any underwriter through which the
securities of a series are offered will intend to make a secondary market for
those securities. Those underwriters will do so by offering to buy the
securities from investors that wish to sell. However, no underwriter will be
obligated to make offers to buy the securities and any underwriter may stop
making offers at any time. In addition, the prices offered, if any, may not
reflect prices that other potential purchasers, were they to be given the
opportunity, would be willing to pay. There have been times in the past where
there have been very few buyers of asset backed securities (i.e., there has been
a lack of liquidity), and there may be such times in the future. As a result,
you may not be able to sell your securities when you wish to do so or may not be
able to obtain the price you wish to receive.
TRUST ASSETS ARE THE ONLY SOURCE OF PAYMENTS ON THE SECURITIES
No trust will have any significant assets or sources of funds other than
the receivables and the credit enhancement identified in the related prospectus
supplement. The issuing trust will be the only person obligated to make payments
on the securities issued by that trust. Investors will not have any recourse
against the depositor, the seller, the servicer, the trustee, the indenture
trustee or any related company if the assets of a trust are not sufficient to
make the required payments on the securities issued by that trust. As a result,
you must depend on payments by the obligors on the receivables and any related
credit enhancement for required payments on your securities. Any credit
enhancement will not cover all contingencies, and losses in excess of the
coverage provided by that credit enhancement will be borne directly by the
affected securityholders.
CONTRACTS WILL NOT BE PHYSICALLY DELIVERED WHICH COULD CAUSE LOSSES
The sales by the seller to the depositor and by the depositor to a trust
will be perfected by filing statements as required by the Uniform Commercial
Code. However, the contracts creating the receivables in each receivables pool
will not be actually delivered to the trustee or indenture trustee. The
contracts will be held by the servicer, as custodian for the trust. In addition,
the contracts will not be segregated, stamped or otherwise marked to indicate
that they have been sold to the applicable trust. If, through inadvertence or
otherwise, another party purchases (or takes a security interest in) the related
receivables for new value in the ordinary course of business and takes
possession of the related contracts without actual knowledge of the applicable
trust's interest, the purchaser (or secured party) will acquire an interest in
the related receivables superior to the interest of that trust. In that event,
the applicable trust will not be able to realize any liquidation proceeds on the
related receivables and securityholders may suffer a loss.
TRANSFERS WILL NOT BE NOTED ON TITLE DOCUMENTS WHICH MAY CAUSE LOSSES
The seller will assign its security interests in the related financed
vehicles to the depositor and, the depositor will assign those security
interests to a trust. The servicer, as custodian for the related trust, will
hold the certificates of title or ownership or other documents evidencing the
notation of the seller's lien on the related financed vehicles. Due to the
administrative burden and expense, the certificates of title or ownership will
not be endorsed or otherwise amended to identify the trust as the new secured
party. In most states, in the absence of fraud or forgery by the vehicle owner
or of fraud, forgery, negligence or error by the seller, the servicer or the
depositor or administrative error by state or local agencies, the notation of
the seller's lien on the certificates of title or ownership and/or possession of
such certificates with such notation will be sufficient to protect the related
trust against the rights of subsequent purchasers of a financed vehicle or
subsequent lenders who take a security interest in a financed vehicle. However,
if the trust or the related indenture trustee is not identified as the new
secured party on the certificate of title, the security interest of the trust or
related indenture trustee may not be enforceable. If a trust has failed to
obtain or maintain a perfected security interest in a financed vehicle, its
security interest would be subordinate to, among others, a bankruptcy trustee of
the obligor, a subsequent purchaser of the financed vehicle or a holder of a
perfected security interest in the financed vehicle or a bankruptcy trustee of
such holder. If the trust elects to attempt to repossess the related financed
vehicles, it might not be able to realize any liquidation proceeds on those
financed vehicles and, as a result, securityholders may suffer a loss.
BANKRUPTCY OF DEPOSITOR MAY CAUSE LOSSES
The depositor intends that its sale of the receivables to each trust will
be a valid sale and assignment of the receivables to that trust. If the
depositor were to become a debtor in a bankruptcy case and a creditor or
trustee-in-bankruptcy of the depositor or the depositor itself were to take the
position that the sale of receivables by the depositor to a trust should instead
be treated as a pledge of the receivables to secure a borrowing of such debtor,
delays in payments of collections of receivables to the related securityholders
could occur. If a court ruled in favor of any such trustee, debtor or creditor,
reductions in the amounts of such payments could result. If the transfer of
receivables to a trust is treated as a pledge instead of a sale, a tax or
government lien on the property of the depositor arising before the transfer of
a receivable to the trust may have priority over that trust's interest in those
receivables. If the transactions contemplated herein are treated as a sale, the
receivables would not be part of the depositor's bankruptcy estate and would not
be available to the depositor's creditors.
SUBORDINATED SECURITIES INVOLVE MORE RISKS AND MAY INCUR LOSSES
A series of securities may provide that one or more classes of those
securities are subordinated in right of payment to one or more other classes of
that series. In general, securities that are subordinated to other securities
have a greater risk of loss because the subordinated securities will not receive
payments of interest, principal or both, until the more senior securities
receive the payments to which they are entitled. If the amount available for
payments to securityholders is less than the amount required, the holders of the
subordinated securities will not receive the payments that they would have
received if there had not been a shortfall in the amount available.
YOUR RETURN ON AN INVESTMENT IN THE SECURITIES IS UNCERTAIN
Your pre-tax return on an investment in the securities of any series will
depend on (1) the price you pay for those securities, (2) the rate at which
interest accrues on those securities and (3) the rate at which you receive a
return of the principal and, consequently, the length of time that your
securities are outstanding and accruing interest. The last factor is the biggest
uncertainty in an investment in the securities.
o THE RATE OF PRINCIPAL PAYMENTS IS UNPREDICTABLE. An obligor may prepay
a receivable in whole or in part, at any time. In addition, a
trust may receive other unscheduled payments from liquidations
due to default, including rebates of extended warranty contract
costs and insurance premiums, as well as receipts of proceeds
from physical damage, credit life, theft and disability insurance
policies and certain other receivables purchased or repurchased
pursuant to the terms of a sale and servicing agreement or
pooling and servicing agreement, as the case may be. The rate of
prepayments on the receivables may be influenced by a variety of
economic, social, competitive and other factors, including
changes in interest rates and the fact that an obligor generally
may not sell or transfer the related financed vehicle securing a
receivable without the consent of the secured party which
generally results in the repayment of the remaining principal
balance of the related receivable. Because a receivables pool
will include thousands of receivables that are payable by
obligors, it is impossible to predict the amount and timing of
payments that will be received and paid to securityholders in any
month or over the period of time that the securities of a series
remain outstanding.
o YOU BEAR REINVESTMENT RISK. Asset backed securities usually
produce more returns of principal to investors when market
interest rates fall below the interest rates on the receivables
and produce less returns of principal when market interest rates
are above the interest rates on the receivables. As a result, you
are likely to receive more money to reinvest at a time when other
investments generally are producing a lower yield than that on
the securities, and are likely to receive less money to reinvest
when other investments generally are producing a higher yield
than that on the securities. You will bear the risk that the
timing and amount of distributions on your securities will
prevent you from attaining your desired yield.
o AN OPTIONAL TERMINATION MAY AFFECT THE YIELD. Your investment in the
securities may be ended before you desire if an optional
termination of the applicable trust is exercised.
o CREDIT ENHANCEMENT WILL NOT COVER ALL LOSSES. An investment in the
securities also involves a risk that you may lose all or part of
your investment. Although every trust will include some form of
credit enhancement, that credit enhancement may not cover every
class of securities issued by a trust. In addition, every form of
credit enhancement will have certain limitations on, and
exclusions from, coverage. No securities will be guaranteed by
any governmental entity or agency or insured by the Federal
Deposit Insurance Corporation. As a result, there is always a
risk that you may not recover the full amount of your investment.
STRIP SECURITIES INVOLVE ADDITIONAL RISK
Strip notes or strip certificates involve greater uncertainty regarding the
return on investment. These types of securities are often called "interest only
securities" or "principal only securities". An interest only security is not
entitled to any principal payments. If the receivables in a receivables pool
prepay at rapid rates, it will reduce the amount of interest available to pay a
related interest only security and may cause an investor in that interest only
security to fail to recover the investor's initial investment.
A principal only security is not entitled to any interest payments, and is
usually sold at a price that is less than the face amount of the security. If an
investor in a principal only security receives payments on the security at a
slow rate, the return on the investment will be low (because, in part, there is
no interest payments to compensate the investor for the use of the investor's
money).
The prices offered by potential purchasers for interest only securities and
principal only securities vary significantly from time to time, and there may be
times when no potential purchaser is willing to buy an interest only security or
principal only security. As a result, an investment in strip notes and strip
certificates involves a high degree of risk.
IF THE SERVICER COMMINGLES FUNDS THERE IS ADDITIONAL RISK
So long as Mellon Bank, N.A. is the servicer, and provided that (i) there
is no servicer default and (ii) each other condition to making monthly deposits
as may be specified by the rating agencies and described in the related
prospectus supplement is satisfied, the servicer will not be required to deposit
amounts collected on the receivables into the collection account of a trust
until the business day preceding each distribution date. Pending deposit into a
collection account, the servicer may use the amounts collected for its own
businesses purposes. The servicer will be obligated to account for the monies
collected and to deposit the amount of those collections in the collection
account. However, if the servicer fails to deposit those amounts as required,
the applicable securityholders might incur a loss.
NOTEHOLDERS CONTROL THE EXERCISE OF REMEDIES UPON SERVICER DEFAULT
If a series of securities includes notes and a servicer default occurs, the
indenture trustee or the noteholders may remove the servicer without the consent
of the trustee or any of the certificateholders. Moreover, only the indenture
trustee or the noteholders, and not the certificateholders, with respect to the
applicable series will have the ability to remove the servicer if a servicer
default occurs. In addition, the noteholders of that series have the ability,
with certain specified exceptions, to waive defaults by the servicer, including
defaults that could materially and adversely affect the certificateholders of
that series.
REMEDIES UPON AN EVENT OF DEFAULT MAY NOT BE ADEQUATE PROTECTION
Although each trust will covenant to sell the related receivables if
directed to do so by the related indenture trustee following an acceleration of
the related notes upon an event of default, the market value of those
receivables may not be equal to or greater than the aggregate outstanding
principal of those notes. Thus, those noteholders may not have an effective
remedy because the sale of the related receivables might result in losses. In
addition, the amount of principal required to be distributed to noteholders
under the indenture is generally limited to amounts available to be deposited in
the applicable note distribution account. Therefore, the failure to pay
principal on a class of the notes of a series may not result in the occurrence
of an event of default until the final scheduled distribution date for that
class of notes.
THERE ARE UNCERTAINTIES REGARDING CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The securities are complex instruments, and there is little guidance as to
the federal income tax treatment of certain features. For example, special
federal tax counsel is unable to render an opinion as to the federal income tax
treatment of stripped bonds issued by a grantor trust or whether interest
payable on certificates treated as debt constitutes qualified stated interest.
Even where an opinion of counsel is rendered, that opinion will not be binding
on the Internal Revenue Service or the courts and will not guarantee a specific
result. You should consider an investment in the securities only after you and
your tax advisors have fully analyzed the federal, state and local income tax
consequences of the investment in light of your own tax situation.
SECURITIES ARE NOT SUITABLE INVESTMENTS FOR ALL INVESTORS
The securities are complex investments that are not appropriate for all
investors. The interaction of the factors described above are difficult to
analyze and may change from time to time while the securities of a series are
outstanding. It is impossible to predict with any certainty the amount or timing
of distributions on the securities of a series or the likely return on an
investment in those securities. As a result, only sophisticated investors with
the resources to analyze the potential risks and rewards of an investment in the
securities should consider such an investment.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Depositor, as creator of each Trust, has filed with the Securities and
Exchange Commission (the "Commission") a Registration Statement (the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Notes and the Certificates offered
pursuant to this Prospectus. The Registration Statement includes information
about the Securities which is not included in this Prospectus. Prospective
investors may read the Registration Statement and make copies of it at the
Commission's main office located at 450 Fifth Street, N.W., Washington, D.C.
20549 and at the Commission's regional offices located at Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and Seven World
Trade Center, New York, New York 10048. Prospective investors also may obtain a
copy of the Registration Statement by paying a fee set by the Commission and
requesting a copy from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Prospective
investors who have access to the Internet also may read the Registration
Statement at the Commission's site on the World Wide Web located at
http://www.sec.gov.
Each Trust will be required to file with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") (i) a Current Report on Form 8-K each month after the month
of formation of that Trust and prior to the expiration of the calendar year in
which such Trust was formed and (ii) an annual report on Form 10-K within 90
days after the end of the calendar year in which such Trust was formed. Each
Form 8-K will include as an exhibit the monthly statement to Securityholders of
the related Series. The Form 10-K will include certain summary information about
the Trust. Any reports and documents so filed by or on behalf of a Trust before
the termination of the offering of the Securities of that Trust will be
incorporated in this Prospectus. If the information incorporated in this
Prospectus modifies or changes the information in this Prospectus such modified
or changed information will control if any information incorporated by reference
in this Prospectus is itself modified or changed by subsequent information
incorporated by reference, such latter information will control. Any reports and
documents that are incorporated in this Prospectus will not be physically
included in this Prospectus or delivered with this Prospectus.
The Servicer will provide without charge to each person, including any
beneficial owner of Securities, to whom a copy of this Prospectus is delivered,
on the written or oral request of any such person, a copy of any or all of the
documents incorporated in this Prospectus or in any related Prospectus
Supplement (other than exhibits to such documents unless such exhibits are
specifically incorporated by reference in such documents). Written requests for
such copies should be directed to Mellon Bank, N.A. at Two Mellon Bank Center,
8th Floor, Pittsburgh, Pennsylvania Attention: Asset Backed Finance. Telephone
requests for such copies should be directed to the Servicer, at (412) 236-6559.
IN ORDER TO RECEIVE ANY REQUESTED INFORMATION IN A TIMELY FASHION, PROSPECTIVE
INVESTORS MUST MAKE THEIR REQUESTS NO LATER THAN FIVE BUSINESS DAYS BEFORE THEY
MUST MAKE THEIR INVESTMENT DECISIONS.
The Exchange Act and the rules and regulations of the Commission permit
each Trust to terminate its obligation to file reports and documents with the
Commission following the end of the calendar year in which that such Trust is
formed. The Depositor expects that each Trust will terminate its filing
obligation as soon as it is permitted to do so.
THE TRUSTS
With respect to each Series of Securities, the Depositor will cause a
separate Trust to be formed pursuant to the respective Trust Agreement or
Pooling and Servicing Agreement, as applicable, for the transactions described
herein and in the related Prospectus Supplement. The property of each Trust will
include a pool (a "Receivables Pool") of motor vehicle retail installment sales
contracts and other motor vehicle installment chattel paper which were or will
be originated by Dealers and purchased by a Seller pursuant to the Dealer
Agreements and all monies received thereunder on and after the Cutoff Date (as
such term is defined in the related Prospectus Supplement, a "Cutoff Date"),
and, with respect to Receivables which are Actuarial Receivables, monies
received thereunder prior to the Cutoff Date that are due on or after the Cutoff
Date.
"Actuarial Receivables" are receivables that provide for the amortization
of the amount financed over a series of fixed, level monthly installments. Each
monthly installment, including the monthly installment representing the final
payment on the Receivable, consists of an amount of interest equal to 1/12 of
the Annual Percentage Rate (the "APR") of the amount financed multiplied by the
unpaid principal balance of the amount financed, and an amount of principal
equal to the remainder of the monthly payment.
On or prior to the Closing Date, the Seller(s) will sell the Receivables of
the applicable Receivables Pool to the Depositor. On the applicable Closing
Date, the Depositor will sell the Initial Receivables of the applicable
Receivables Pool to the Trust. To the extent so provided in the related
Prospectus Supplement, Subsequent Receivables will be conveyed to the Trust as
frequently as daily during the Funding Period. Any Subsequent Receivables so
conveyed will also be assets of the applicable Trust, subject to the prior
rights of the related Indenture Trustee and the Noteholders, if any, therein.
The property of each Trust will also include (i) such amounts as from time to
time may be held in separate trust accounts established and maintained pursuant
to the related Sale and Servicing Agreement or Pooling and Servicing Agreement,
as described herein and in the related Prospectus Supplement; (ii) security
interests in the vehicles securing the Receivables (the "Financed Vehicles");
(iii) the rights of the Seller(s) to receive proceeds from claims under certain
insurance policies; (iv) the rights of the Trust under either a Sale and
Servicing Agreement or a Pooling and Servicing Agreement, as specified in the
related Prospectus Supplement; (v) the rights of the Seller(s) to refunds for
the costs of extended service contracts and to refunds of unearned premiums with
respect to credit life and credit accident and health insurance policies
covering the Financed Vehicles or the retail purchasers of, or other persons
owing payments on, the Financed Vehicles (the "Obligors"); (vi) all right, title
and interest of the Seller(s) (other than with respect to any Dealer commission)
with respect to the Receivables under the related Dealer Agreements; and (vii)
all proceeds (within the meaning of the UCC) of the foregoing. To the extent
specified in the related Prospectus Supplement, a Pre-Funding Account, a Reserve
Account or other form of credit enhancement may be a part of the property of any
given Trust or may be held by the Trustee or an Indenture Trustee for the
benefit of holders of the related Securities.
The Servicer will service the Receivables held by each Trust and will
receive fees for such services. See "Description of the Transfer and Servicing
Agreements--Servicing Compensation and Payment of Expenses" herein. To
facilitate the servicing of the Receivables, each Trustee will authorize the
Servicer to retain physical possession of the Receivables held by each Trust and
other documents relating thereto as custodian for each such Trust. Due to the
administrative burden and expense, the certificates of title to the Financed
Vehicles will not be amended to reflect the sale and assignment of the security
interest in the Financed Vehicles to each Trust. In the absence of such an
amendment, any Trust may not have a perfected security interest in the Financed
Vehicles in all states. See "Risk Factors -Failure to Note Transfer on Title
Documents May Cause Losses," "Certain Legal Aspects of the Receivables" and
"Description of the Transfer and Servicing Agreements--Sale and Assignment of
Receivables."
If the protection provided to any Noteholders of a given Series by the
subordination of the related Certificates and by the Reserve Account, if any, or
other credit enhancement for such Series or the protection provided to
Certificateholders by any such Reserve Account or other credit enhancement is
insufficient, such Noteholders or Certificateholders, as the case may be, would
have to look principally to the Obligors on the related Receivables, the
proceeds from the repossession and sale of Financed Vehicles which secure
defaulted Receivables and the proceeds from any recourse against Dealers with
respect to such Receivables. In such event, certain factors, such as the
applicable Trust's not having perfected security interests in the Financed
Vehicles in all states, may affect the Servicer's ability to repossess and sell
the collateral securing the Receivables, and thus may reduce the proceeds to be
distributed to the holders of the Securities of such Series. See "Description of
the Transfer and Servicing Agreements Distributions," "--Credit and Cash Flow
Enhancement" and "Certain Legal Aspects of the Receivables." The principal
offices of each Trust and the related Trustee will be specified in the
applicable Prospectus Supplement.
If so specified in the related Prospectus Supplement, a Trust may make an
election to be treated as a "financial asset securitization investment trust" (a
"FASIT"). The applicable Transfer and Servicing Agreement for such a Trust may
contain any such terms and provide for the issuance of Notes or Certificates of
such Series on such terms and conditions as are permitted to a FASIT and
described in the related Prospectus Supplement. See "Federal Income Tax
ConsequencesFASIT Legislation."
THE TRUSTEE
The Trustee for each Trust will be specified in the related Prospectus
Supplement. The Trustee's liability in connection with the issuance and sale of
the related Securities is limited solely to the expressed obligations of such
Trustee set forth in the related Trust Agreement or the related Pooling and
Servicing Agreement, as applicable. A Trustee may resign at any time, in which
event the Servicer, or its successor, will be obligated to appoint a successor
trustee. The Servicer may also remove the Trustee if the Trustee ceases to be
eligible to continue as Trustee under the related Trust Agreement or Pooling and
Servicing Agreement, as applicable, or if the Trustee becomes legally unable to
act, is judged insolvent or is placed in receivership or similar proceedings. In
such circumstances, the Servicer, will be obligated to appoint a successor
trustee. Any resignation or removal of a Trustee and appointment of a successor
trustee will not become effective until acceptance of the appointment by the
successor trustee.
THE PORTFOLIO OF MOTOR VEHICLE LOANS
DEALER AGREEMENTS
Mellon Bank, N.A. (the "Bank") purchases through Dealers motor vehicle
retail installment sales contracts and other installment chattel paper secured
by Financed Vehicles ("Motor Vehicle Loans") . The Bank purchases Motor Vehicle
Loans in accordance with its established underwriting procedures and subject to
the terms of the Dealer Agreements. A Dealer Agreement, among other things,
obligates a Dealer to repurchase any Receivable for its outstanding principal
balance (including accrued but unpaid interest) if the Dealer breaches the
representations and warranties contained therein. The representations and
warranties typically relate to the origination of the Receivable and the
security interest in the related Financed Vehicle and not to the collectibility
of the Receivable or the creditworthiness of the Obligor thereunder.
The Bank audits the Dealers with varying frequencies depending on
performance and stability. However, the Bank audits all transactions with new
Dealers. While the Bank does not have financial requirements for new Dealers,
most of the Dealers consist of manufacturer franchised dealerships and the
related manufacturers do have financial requirements. The Bank has the right to
audit the books and records of all Dealers.
The Bank also occasionally makes bulk purchases of Motor Vehicle Loans from
other financial institutions.
UNDERWRITING
MELLON BANK, N.A. All of the Motor Vehicle Loans purchased from Dealers
will be underwritten, and any Motor Vehicle Loans purchased in bulk will be
re-underwritten, to the Bank's underwriting standards. The underwriting
standards emphasize each prospective obligor's ability to pay and
creditworthiness, based on employment and residential stability, as well as the
asset value of the motor vehicle that secures the Motor Vehicle Loan. Although
the Bank does not have minimum policy requirements on the length of time an
applicant has been an employee of a particular employer or resident at a
particular address, generally, an applicant must be employed for not less than
one year with the same employer or have established comparable stability in a
particular field. Applications without employment and/or residential stability
may require greater levels of authority for approval.
The Bank's credit review process takes into account factors such as credit
bureau information, past analogous borrowing experience and income requirements.
Prior to the purchase of a Motor Vehicle Loan, the Bank reviews the credit
application from each applicant, including information about each obligor's
income, credit obligations, and other personal information. Upon receipt of an
application, the Bank obtains a credit report from an independent credit bureau,
which the Bank reviews to determine the applicant's current credit status and
past credit performance. Where necessary, the Bank may obtain more than one
credit report. The Bank considers the following information contained in the
credit report: length of time in file, number of trade lines, level of
obligations maintained, breadth of credit experience, previous automobile
financing experience and other credit. The Bank then compares the amount
requested to be financed in the application to the applicant's credit history.
Generally, the Bank requires an applicant to have a minimum of three years
history in the file and a minimum household income of $20,000.
The Bank utilizes credit scoring systems to assist in the processing of the
applications including the Fair, Isaac Auto Enhanced bureau score and a custom
built scorecard ("MDS") derived from the Fair, Isaac Auto Enhanced bureau score.
The credit scores are used to increase the productivity of the underwriters,
automatically approve and decline applications, recommend approve or reject
decisions and to route applications to more experienced underwriters.
Applications identified by score as less creditworthy may either be
automatically declined or routed to more experienced underwriters for their
concurrence before an approval is rendered. Conversely, applications identified
by score as creditworthy may either be automatically approved or routed to less
experienced underwriters for their concurrence before an acceptance is rendered.
Applications scoring below the established score guidelines, regardless of other
circumstances, require senior management concurrence/approval.
The Bank may also conduct an additional investigation, which may consist of
some or all of the following steps: requiring written proof of employment and
income, direct telephone verification of an applicant's employment, and
discussions with the originating Dealer to resolve concerns about the
applicant's creditworthiness. The Bank then analyzes the application under the
Bank's underwriting criteria, and, for those applications that are approved,
determines the amount and terms of the financing the Bank will offer.
The Bank's standards permit to a minimum loan of $2,500 and a maximum loan
of $100,000. The maximum advance rate for current year models is 120% of the
manufacturer's suggested retail price ("MSRP") plus 100% of dealer installed
options (at dealer costs) and tax and licensing fees. The maximum advance rate
for used vehicles is 120% of the wholesale value in the National Automobile
Dealers Association Guide on Retail and Wholesale Values ("NADA") plus tax and
licensing fees. A vehicle more than seven years old will be considered an
exception. All overrides are monitored for performance and reported to
management on a regular basis. The decision is communicated to the Dealer. In
the case of a declined application, the Bank's practice is to explain the reason
for the declination to the Dealer and send a declination letter to the
applicant.
The standard maximum term for a Motor Vehicle Loan depends, in part, on the
age of the Financed Vehicle, the MDS credit score and the purchase price. In any
case, the minimum term for a Motor Vehicle Loan is 12 months, the maximum term
for a new vehicle is 72 months and the maximum term for a vehicle that is five
or more years old is 36 months.
Exceptions to the above credit parameters are made at the discretion of the
credit underwriter and/or credit manager with the appropriate decision
authority. In considering any exception, the Bank looks for compensating factors
in the borrower's credit such as a higher credit score or lower advance rate
than would otherwise be required to approve such loan if the borrower had
otherwise satisfied each of the underwriting criteria. The Bank's' exceptions
policy is designed to ensure that the credit quality of the loan subject to any
such exception is consistent with the credit quality of the Bank's' other loans.
Underwriters are assigned specific dollar and decision (policy) authority based
on experience, performance results and position. The greater the deviation from
established policy, the higher the level of authority required. Caps are placed
on all policy rules where no one carries override authority except the senior
credit policy officer.
UNAFFILIATED SELLERS. If a Trust includes Receivables originated by an
entity that is not affiliated with the Depositor, the applicable Prospectus
Supplement will describe the underwriting standards of such entity.
CONTRACT MODIFICATION
The Servicer will follow specific procedures with respect to contract
extensions and modifications. Extensions may be granted to a current or
delinquent customer to cure a short term cash flow problem and an extension fee
may be charged. Extensions are granted on an individual basis and are reported
and monitored closely. Generally, the extension policy includes: (i) at least
six monthly payments must be made before an account is eligible for extension,
(ii) one extension is allowed for every 12 month period, (iii) extensions will
not be granted if the loan is deemed to be uncollectible and (iv) extensions
will not be granted if the Obligor has not made at least one payment in the last
30 days. Approval by the collection's supervisor must be obtained before any
extension is granted.
The Servicer may also change a payment date once during the term of the
Motor Vehicle Loan as an accommodation to the Obligor if the new payment date is
within 20 days of the original scheduled payment date. Such change of payment
date is not deemed to be an extension and no extension fee is charged.
Each Sale and Servicing Agreement generally will prohibit the Servicer,
except as provided or required under applicable law, from making modifications
to the Motor Vehicle Loans that (i) reduce the original rates of interest on the
Motor Vehicle Loans, (ii) reduce the amount of the regularly scheduled payments
on the Motor Vehicle Loans or (iii) extend the final payment dates on such Motor
Vehicle Loans beyond the Collection Period relating to the Certificate Final
Scheduled Distribution Date.
INSURANCE
Each Motor Vehicle Loan requires the Obligor to obtain physical damage
insurance covering loss or damage to the motor vehicle naming the Bank as loss
payee, with a maximum deductible amount of $500.00. As a prerequisite to
acquiring a Motor Vehicle Loan, the Obligor must provide the related Seller with
evidence of insurance acceptable to the Bank, in the form of either a
certificate of insurance, a binder or an agreement evidencing a commitment to
provide insurance to the obligor. The Servicer will not force place insurance.
However, in the event that an Obligor's insurance coverage lapses, the Servicer
may foreclose on the Motor Vehicle Loan.
SERVICING AND COLLECTION
The Servicer, either directly or through subservicers, will be responsible
for managing, administering, servicing and making collections on the Receivables
held by each Trust. Although a 10-day grace period is provided before the
assessment of a late charge, the Servicer considers a Motor Vehicle Loan
delinquent when the obligor fails to make a contractual payment by the due date.
The Servicer's policy is to begin collection activities with respect to
delinquent Motor Vehicle Loans on the sixth day following the due date, at which
time a system-generated notification prompts a collection representative to make
telephone contact with the Obligor to request payment whether a collector
attempts to contact the delinquent Obligor by telephone or by letter is
determined by the term of the delinquency and the history of the account. If
attempts to contact the delinquent Obligor have failed, the collection officer
may attempt to contact the Obligor's references. Repossession procedures begin
when all other collection efforts are exhausted.
The Servicer follows specific procedures with respect to repossessions and
uses unaffiliated independent contractors to perform repossessions. Once a motor
vehicle is repossessed, a notice of repossession is sent to the Obligor,
detailing the requirements that must be met for the Obligor to redeem the
financed vehicle. Motor vehicles that remain unredeemed beyond the required
state law notice period are remarketed through various channels, including
auction sales, consignment sales and direct sales to Dealers.
The current policy of the Servicer is to write-off a Motor Vehicle Loan on
or before the date on which the contract becomes 150 days delinquent. If the
motor vehicle securing the Motor Vehicle Loan is repossessed, the Servicer's
current policy is to write-off the contract amount upon the earlier of the sale
of the motor vehicle or before the date on which the contract becomes 150 days
delinquent. Any deficiencies remaining after the full write-off of the related
Motor Vehicle Loan or deficiencies remaining after repossession and sale of the
related motor vehicle are pursued by the Servicer, when practicable and legally
permitted. Collection officers generally continue to contact the Obligors to
establish repayment schedules or to repossess until a final resolution is
achieved.
THE RECEIVABLES POOLS
The Receivables to be held by each Trust will be selected from the Seller's
portfolio of Motor Vehicle Loans for inclusion in a Receivables Pool by several
criteria, including that, unless otherwise provided in the related Prospectus
Supplement, each Receivable (i) is secured by a new or used vehicle, (ii) was
originated in the United States, (iii) provides for level monthly payments which
fully amortize the amount financed (except for the last payment, which may be
different from the level payments), (iv) is an Actuarial Receivable or a Simple
Interest Receivable and (v) satisfies the other criteria, if any, set forth in
the related Prospectus Supplement. No selection procedures believed by the
Depositor to be adverse to the Securityholders of any Series were or will be
used in selecting the related Receivables.
"Simple Interest Receivables" are receivables that provide for the
amortization of the amount financed over a series of fixed level monthly
payments. However, unlike the monthly payment under a Actuarial Receivable, each
monthly payment consists of an installment of interest which is calculated on
the basis of the outstanding principal balance of the receivable multiplied by
the stated APR and further multiplied by the period elapsed (as a fraction of a
calendar year) since the preceding payment of interest was received. As payments
are received under a Simple Interest Receivable, the amount received is applied
first to interest accrued to the date of payment and the balance is applied to
reduce the unpaid principal balance. Accordingly, if an Obligor pays a fixed
monthly installment before its scheduled due date, the portion of the payment
allocable to interest for the period since the preceding payment was made will
be less than it would have been had the payment been made as scheduled, and the
portion of the payment applied reduce the unpaid principal balance will be
correspondingly greater. Conversely, if an Obligor pays a fixed monthly
installment after its scheduled due date, the portion of the payment allocable
to interest for the period since the preceding payment was made will be greater
than it would have been had the payment been made as scheduled, and the portion
of the payment applied to reduce the unpaid principal balance will be
correspondingly less. In either case, the Obligor pays a fixed monthly
installment until the final scheduled payment date, at which time the amount of
the final installment is increased or decreased as necessary to repay the then
outstanding principal balance.
In the event of the prepayment in full (voluntarily or by acceleration) of
an Actuarial Receivable, with minor variations based upon state law, the
Actuarial Receivable requires that a "rebate" will be made to the Obligor of the
portion of the total amount of payments then due and payable under the contract
allocable to "unearned" add-on interest, calculated on the basis of a constant
interest rate. If a Simple Interest Receivable is prepaid, rather than receive a
rebate, the Obligor is required to pay interest only to the date of prepayment.
The amount of a rebate on an Actuarial Receivable generally will be less than
the remaining scheduled payments of interest that would have been due under a
Simple Interest Receivable for which all payments were made on schedule.
The Servicer may accede to an Obligor's request to pay scheduled payments
in advance, in which event the Obligor will not be required to make another
regularly scheduled payment until the time a scheduled payment not paid in
advance is due. The amount of any payment (which are not amounts representing
Payaheads) made in advance will be treated as a principal prepayment and will be
distributed as part of the Principal Distribution Amount in the month following
the Collection Period in which the prepayment was made. See "Maturity and
Prepayment Assumptions."
Information with respect to each Receivables Pool will be set forth in
the related Prospectus Supplement, including, the composition, the distribution
by APR and by the states of origination, the portion of such Receivables Pool
consisting of Actuarial Receivables and of Simple Interest Receivables and the
portion of such Receivables Pool secured by new vehicles and by used vehicles.
MATURITY AND PREPAYMENT ASSUMPTIONS
GENERAL
The weighted average life of the Notes, if any, and the Certificates of any
Series will generally be influenced by the rate at which the principal balances
of the related Receivables are paid, which payment may be in the form of
scheduled amortization or prepayments. All of the Receivables are prepayable at
any time without penalty to the Obligor. For this purpose, the term
"prepayments" includes prepayments by Obligors in full or in part, certain
partial prepayments related to liquidations due to default, including rebates of
extended warranty contract costs and insurance premiums, as well as proceeds
received from physical damage, credit life, theft and disability insurance
policies and certain other Receivables, purchased or repurchased pursuant to the
terms of a Sale and Servicing Agreement or Pooling and Servicing Agreement, as
the case may be. The rate of prepayments on the related Receivables may be
influenced by a variety of economic, social and other factors, including changes
in interest rates and the fact that an Obligor generally may not sell or
transfer the Financed Vehicle securing a Receivable without the consent of the
secured party, which generally results in repayment of the remaining principal
balance of the related Receivable. In addition, under certain circumstances, the
Seller will be obligated to repurchase Receivables from a given Trust pursuant
to the related Sale and Servicing Agreement or Pooling and Servicing Agreement
as a result of breaches of representations and warranties and the Servicer will
be obligated to purchase Receivables from such Trust pursuant to such Sale and
Servicing Agreement or Pooling and Servicing Agreement as a result of breaches
of certain covenants. See "Description of the Transfer and Servicing
AgreementsSale and Assignment of Receivables" and "Servicing Procedures." See
also "Description of the Transfer and Servicing AgreementsTermination" regarding
the Servicer's option to purchase the Receivables from a given Trust or
regarding the Auction Sale of the Receivables by the Applicable Trustee if so
specified in the related Prospectus Supplement if satisfactory bids for the
purchase of Receivables are received.
There can be no assurance as to the amount of principal payments to be made
on the Notes, if any, or the Certificates of a given Series on each Payment Date
or Distribution Date, as applicable, since such amount will depend, in part, on
the amount of principal collected on the related Receivables Pool during the
applicable Collection Period. Any reinvestment risks resulting from a faster or
slower incidence of prepayment of Receivables will be borne entirely by the
Noteholders, if any, and the Certificateholders of a given Series. In addition,
the extent to which the yield to maturity of a class of Securities may vary from
the anticipated yield may depend upon the degree to which it is purchased at a
discount or premium, and the degree to which the timing of payments thereon is
sensitive to prepayments, liquidations and purchases of the Receivables.
Further, an investor should consider the risk that, in the case of any class of
Securities purchased at a discount, a slower than anticipated rate of principal
payments (including prepayments) on the Receivables could result in an actual
yield to such investor that is lower than the anticipated yield and, in the case
of a class of Securities purchased at a premium, a faster than anticipated rate
of principal payments on the Receivables could result in an actual yield to such
investor that is lower than the anticipated yield. See "Risk Factors-- The
Investment Return on the Securities is Uncertain."
PAID-AHEAD RECEIVABLES
If an Obligor on a Simple Interest Receivable pays more than one scheduled
payment at a time, the entire amount of the additional payment will be treated
as a principal prepayment and distributed as part of the principal collections
in the month following the month of receipt. The Bank does not generally require
the Obligor on a Simple Interest Receivable to make any scheduled payment in
respect of such Receivable (a "Paid-Ahead Receivable") for the number of due
dates corresponding to the number of such additional scheduled payments (the
"Paid-Ahead Period"). Although the terms of the retail installment contract
require the Obligor on a Simple Interest Receivable to make its next scheduled
payment, the Obligor's Receivable is not considered delinquent for purposes of
the related Sale and Servicing Agreement or Pooling and Servicing Agreement, as
the case may be, during the Paid-Ahead Period and, interest will continue to
accrue on the principal balance of the Receivable, as reduced by the application
of the early payment. When the Obligor on a Simple Interest Receivable pays the
next required payment, although such payment may be insufficient to cover the
interest that has accrued since the last payment by the Obligor on a Simple
Interest Receivable, the Obligor's Receivable would be considered to be current.
This situation will continue until the installments are once again sufficient to
cover all accrued interest and to reduce the principal balance of the Simple
Interest Receivable. Depending on the principal balance and the APR of the
related Simple Interest Receivable and on the number of installments that were
paid early, there may be extended periods of time during which Simple Interest
Receivables that are current are not amortizing. During such periods, no
distributions in respect of principal will be made to the Securityholders with
respect to such Receivables.
Paid-Ahead Receivables will affect the weighted average life of the Notes
and Certificates of any Series. The distribution of the paid-ahead amount on the
Distribution Date following the Collection Period in which such amount was
received will generally shorten the weighted average life of the Notes and
Certificates of any Series. However, depending on the length of time during
which a Paid-Ahead Receivable is not amortizing as described above, the weighted
average life of such Notes and Certificates may be extended.
The Bank's' portfolio of Motor Vehicle Loans has historically included
contracts which have been paid-ahead by one or more scheduled monthly payments.
There can be no assurance as to the number of Receivables which may become
Paid-Ahead Receivables or the number or the principal amount of the scheduled
payments which may be paid-ahead.
The related Prospectus Supplement may set forth certain additional
information with respect to the maturity and prepayment considerations
applicable to the particular Receivables Pool and the related series of
Securities.
BALLOON LOANS
Under certain of the Balloon Loans, the Obligor may be able to return the
related Financed Vehicle to the Bank in satisfaction of the Balloon Loan,
subject to certain charges. The ability of Obligors to make Balloon Payments, if
any, will normally depend on the Obligor's ability to obtain refinancing of
their Balloon Loans. The ability to obtain refinancing will depend on a number
of factors prevailing at the time refinancing is required, including, without
limitation, the value of the related motor vehicle, the Obligor's financial
situation, prevailing automobile loan interest rates and general economic
conditions. The Bank sometimes provides refinancing of Balloon Loans and in
certain limited circumstances must at the option of the Obligor refinance the
related Receivable. Delinquencies, if any, in the payment of Balloon Payments
may delay the date on which the principal balance of the Notes and the
Certificate Balance is reduced to zero, and may increase the weighted average
lives of such Notes and Certificates. Although a low interest rate environment
may facilitate the refinancing of a Balloon Loan, the receipt and reinvestment
by Securityholders of the proceeds in such an environment may produce a lower
return than that previously received in respect of the related Balloon Loan.
Conversely, a high interest environment may make it more difficult for the
Obligor to accomplish a refinancing and may result in delinquencies or defaults.
See "Risk Factors--Balloon Loans Create Additional Risks."
POOL FACTORS AND TRADING INFORMATION
The "Note Pool Factor" for each class of Notes will be a seven-digit
decimal which the Servicer will compute prior to each distribution with respect
to such class of Notes indicating the remaining outstanding principal balance of
such class of Notes, as of the applicable Payment Date (after giving effect to
payments to be made on such Payment Date), as a fraction of the initial
outstanding principal balance of such class of Notes. The "Certificate Pool
Factor" for each class of Certificates will be a seven-digit decimal which the
Servicer will compute prior to each distribution with respect to such class of
Certificates indicating the remaining Certificate Balance of such class of
Certificates, as of the applicable Distribution Date (after giving effect to
distributions to be made on such Distribution Date), as a fraction of the
initial Certificate Balance of such class of Certificates. Each Note Pool Factor
and each Certificate Pool Factor will initially be 1.0000000 and thereafter will
decline to reflect reductions in the outstanding principal balance of the
applicable class of Notes, or the reduction of the Certificate Balance of the
applicable class of Certificates, as the case may be. A Noteholder's portion of
the aggregate outstanding principal balance of the related class of Notes is the
product of (i) the original denomination of such Noteholder's Note and (ii) the
applicable Note Pool Factor. A Certificateholder's portion of the aggregate
outstanding Certificate Balance for the related class of Certificates is the
product of (a) the original denomination of such Certificateholder's Certificate
and (b) the applicable Certificate Pool Factor.
With respect to each Trust, the Noteholders, if any, and the
Certificateholders will receive monthly reports pursuant to the Indenture, the
Trust Agreement or the Pooling and Servicing Agreement, as the case may be,
concerning payments received on the Receivables, the Pool Balance (as such term
is defined in the related Prospectus Supplement, the "Pool Balance"), each
Certificate Pool Factor or Note Pool Factor, as applicable, and various other
items of information. In addition, Securityholders of record during any calendar
year will be furnished information for tax reporting purposes not later than the
latest date permitted by law. See "Certain Information Regarding the
Securities-Reports to Securityholders.
USE OF PROCEEDS
The net proceeds from the sale of the Securities of a given Series will be
applied by the Depositor to the purchase of the Receivables and other Trust
property from the Seller, to make the Reserve Account Initial Deposit, if any,
and to make the deposit of the Pre-Funded Amount into the Pre-Funding Account,
if any.
THE DEPOSITOR
The Depositor is a wholly-owned subsidiary of Mellon Bank, N.A. The
Depositor was incorporated in the State of Delaware in September 1998. The
principal executive offices of the Depositor are located at One Mellon Bank
Center, Fourth Floor, Pittsburgh, Pennsylvania, and its telephone number is
(412) 234-7142.
The Depositor is a separate, limited purpose subsidiary the certificate of
incorporation of which contains certain limitations (including restrictions on
the nature of the Depositor's business and a restriction on the Depositor's
ability to commence a voluntary case or proceeding under any Insolvency Law
without the prior unanimous affirmative vote of all of its directors).
The Indenture Trustee, the Trustee, all Noteholders and all
Certificateholders of each Trust will covenant that they will not at any time
institute against the Depositor any bankruptcy, reorganization or other
proceeding under any Federal or state bankruptcy or similar law.
THE SERVICER
Mellon Bank, N.A. , is engaged in, among other things, the business of
leasing new and used automobiles (including passenger cars, minivans,
sport/utility vehicles and light trucks) to individuals and businesses,
servicing such leases during their term and remarketing the automobiles upon the
expiration of the leases. Mellon Bank, N.A. services motor vehicle retail
installment sales contracts secured by new and used motor vehicles originated as
described in the related Prospectus Supplement. The Servicer's servicing
operations are located at Two Mellon Bank Center, Eighth Floor, Pittsburgh,
Pennsylvania, and its telephone number is (412) 236-2271.
As of December 31, 1998, the Servicer serviced approximately 30,253 retail
installments sale contracts, consisting primarily of new and used automobile
(including passenger car, minivan, sport/utility vehicle and light truck)
receivables, representing an outstanding balance of approximately $352 million.
As of December 31, 1998, the Servicer serviced approximately [60 automobile
leases equaling approximately $12.2 million] of automobile lease receivables.
DESCRIPTION OF THE NOTES
GENERAL
With respect to each Trust that issues Notes, one or more classes of Notes
of the related Series will be issued pursuant to the terms of an Indenture, a
form of which has been filed as an exhibit to the Registration Statement of
which this Prospectus forms a part. The following summary describes the material
terms of the Notes and the Indenture and is subject to, and is qualified in its
entirety by reference to, the related Prospectus Supplement.
The Depositor expects that the Notes will initially be represented by one
or more Notes, in each case registered in the name of the nominee of DTC, except
as set forth below. Persons acquiring beneficial ownership interests in the
Notes so registered will hold their interests in the Notes through DTC in the
United States and Cedel Bank, societe anonyme ("Cedel") and the Euroclear System
("Euroclear") in Europe. See "Certain Information Regarding the Securities" and
"Annex I" hereto. Unless the related Prospectus Supplement specifies that the
Notes are offered in definitive form, the Notes will be available for purchase
in denominations of $25,000 and integral multiples of $1,000 in excess thereof
in book-entry form only. The Depositor has been informed by DTC that DTC's
nominee will be Cede, unless another nominee is specified in the related
Prospectus Supplement. Accordingly, such nominee is expected to be the holder of
record of the Notes of each class. Unless and until Definitive Notes are issued
under the limited circumstances described herein or in the related Prospectus
Supplement, no Noteholder will be entitled to receive a physical certificate
representing a Note. All references herein and in the related Prospectus
Supplement to actions by Noteholders refer to actions taken by DTC upon
instructions from its participating organizations (the "Participants") and all
references herein and in the related Prospectus Supplement to distributions,
notices, reports and statements to Noteholders refer to distributions, notices,
reports and statements to DTC or its nominee, as the registered holder of the
Notes, for distribution to Noteholders in accordance with DTC's procedures with
respect thereto. See "Certain Information Regarding the SecuritiesBook-Entry
Registration" and "Definitive Securities."
PRINCIPAL AND INTEREST ON THE NOTES
The timing and priority of payment, seniority, allocations of losses,
Interest Rate and amount of or method of determining payments of principal and
interest on each class of Notes of a given Series will be described in the
related Prospectus Supplement. The right of holders of any class of Notes to
receive payments of principal and interest may be senior or subordinate to the
rights of holders of any other class or classes of Notes of such Series, as
described in the related Prospectus Supplement. Unless otherwise provided in the
related Prospectus Supplement, payments of interest on the Notes of such Series
will be made prior to payments of principal thereon. To the extent provided in
the related Prospectus Supplement, a Series may include one or more classes of
Strip Notes entitled to (i) principal payments with disproportionate, nominal or
no interest payments or (ii) interest payments with disproportionate, nominal or
no principal payments. Each class of Notes may have a different Interest Rate,
which may be a fixed, variable or adjustable Interest Rate (and which may be
zero for certain classes of Strip Notes), or any combination of the foregoing.
The related Prospectus Supplement will specify the Interest Rate for each class
of Notes of a given Series or the method for determining such Interest Rate. See
also "Certain Information Regarding the Securities-Fixed Rate Securities" and
"-Floating Rate Securities." One or more classes of Notes of a Series may be
redeemable in whole or in part under the circumstances specified in the related
Prospectus Supplement, including at the end of the Funding Period (if any) or as
a result of the Servicer's exercising its option to purchase the related
Receivables Pool.
To the extent specified in any Prospectus Supplement, one or more classes
of Notes of a given Series may have fixed principal payment schedules, as set
forth in such Prospectus Supplement; Noteholders of such Notes would be entitled
to receive as payments of principal on any given Payment Date the applicable
amounts set forth on such schedule with respect to such Notes, in the manner and
to the extent set forth in the related Prospectus Supplement.
Payments to Noteholders of all classes within a Series in respect of
interest generally will have the same priority. Under certain circumstances, the
amount available for such payments could be less than the amount of interest
payable on the Notes on any of the dates specified for payments in the related
Prospectus Supplement (each, a "Payment Date," which may be the same date as
each Distribution Date as specified in the related Prospectus Supplement), in
which case each class of Noteholders will receive its ratable share (based upon
the aggregate amount of interest due to such class of Noteholders) of the
aggregate amount available to be distributed in respect of interest on the Notes
of such Series. See "Description of the Transfer and Servicing
AgreementsDistributions" and "Credit and Cash Flow Enhancement."
With respect to a Series that includes two or more classes of Notes, each
class may differ as to the timing and priority of payments, seniority,
allocations of losses, Interest Rate or amount of payments of principal or
interest, or payments of principal or interest in respect of any such class or
classes may or may not be made upon the occurrence of specified events relating
to the performance of the Receivables (including loss, delinquency and
prepayment experience), the related subordination and/or the lapse of time or on
the basis of collections from designated portions of the related Receivables
Pool. Generally, the related Rating Agencies, the credit enhancer, if any, and
the prevailing market conditions at the time of issuance of the Notes of a
Series dictate the applicable specified events with respect to such Series.
Payments in respect of principal and interest of any class of Notes will be made
on a pro rata basis among all the Noteholders of such class.
THE INDENTURE
Events of Default; Rights upon Event of Default. With respect to the Notes
of a given Series, "Events of Default" under the related Indenture will include:
(i) a default for five days or more in the payment of any interest on any such
Note when the same becomes due and payable; (ii) a default in the payment of the
principal of or any installment of the principal of any such Note when the same
becomes due and payable; (iii) a default in the observance or performance of any
covenant or agreement of the applicable Trust made in the related Indenture and
the continuation of any such default for a period of 30 days after notice
thereof is given to such Trust by the applicable Indenture Trustee or to such
Trust and such Indenture Trustee by the holders of at least 25% in aggregate
principal amount of such Notes then outstanding; (iv) any representation or
warranty made by such Trust in the related Indenture or in any certificate
delivered pursuant thereto or in connection therewith having been incorrect in a
material respect as of the time made, and such breach not having been cured
within 30 days after notice thereof is given to such Trust by the applicable
Indenture Trustee or to such Trust and such Indenture Trustee by the holders of
at least 25% in principal amount of such Notes then outstanding; or (v) certain
events of bankruptcy, insolvency, receivership or liquidation of the applicable
Trust. However, the amount of principal required to be paid to Noteholders of
such Series under the related Indenture will generally be limited to amounts
available to be deposited from the applicable Collection Account (including
amounts deposited therein from the Reserve Account, if any) in the applicable
Note Distribution Account. Therefore, the failure to pay principal on a class of
Notes generally will not result in the occurrence of an Event of Default until
the final scheduled Payment Date for such class of Notes.
If an Event of Default should occur and be continuing with respect to the
Notes of any Series, the related Indenture Trustee or holders of a majority in
principal amount of such Notes then outstanding may declare the principal of
such Notes to be immediately due and payable. Such declaration may, under
certain circumstances, be rescinded by the holders of a majority in principal
amount of such Notes then outstanding.
If the Notes of any Series are due and payable following an Event of
Default with respect thereto, the related Indenture Trustee may, in its
discretion, either require the applicable Trust to sell the related Receivables
or elect to have the applicable Trust maintain possession of such Receivables
and continue to apply collections on such Receivables as if there had been no
declaration of acceleration. However, such Indenture Trustee is prohibited from
directing the Trust to sell the related Receivables following an Event of
Default, other than a default in the payment of any principal or a default for
five days or more in the payment of any interest on any Note of such Series,
unless (i) the holders of all such outstanding Notes consent to such sale, (ii)
the proceeds of such sale are sufficient to pay in full the principal of and the
accrued interest on such outstanding Notes at the date of such sale or (iii)
such Indenture Trustee determines that the collections on Receivables would not
be sufficient on an ongoing basis to make all payments on such Notes as such
payments would have become due if such obligations had not been declared due and
payable, and such Indenture Trustee obtains the consent of the holders of 66
2/3% of the aggregate outstanding amount of such Notes then outstanding. In the
event the Notes are accelerated and the Receivables are sold, no distributions
will be made on the Certificates until all of the interest on and principal of
the Notes has been paid in full. In such event, all the funds, if any, on
deposit in the applicable Reserve Account, if any, will be available to first
pay interest on and principal of the Notes.
Subject to the provisions of the applicable Indenture relating to the
duties of the related Indenture Trustee, if an Event of Default occurs and is
continuing with respect to a Series of Notes, such Indenture Trustee will be
under no obligation to exercise any of the rights or powers under such Indenture
at the request or direction of any of the holders of such Notes, if such
Indenture Trustee reasonably believes it will not be adequately indemnified
against the costs, expenses and liabilities which might be incurred by it in
complying with such request. Subject to such provisions for indemnification and
certain limitations contained in the related Indenture, the holders of a
majority in aggregate principal amount of the outstanding Notes of a given
Series will have the right to direct the time, method and place of conducting
any proceeding or any remedy available to the applicable Indenture Trustee, and
the holders of a majority in aggregate principal amount of such Notes then
outstanding may, in certain cases, waive any default with respect thereto,
except a default in the payment of principal or interest or a default in respect
of a covenant or provision of such Indenture that cannot be modified without the
waiver or consent of all the holders of such outstanding Notes.
No holder of a Note of any Series will have the right to institute any
proceeding with respect to the related Indenture, unless (i) such holder
previously has given to the applicable Indenture Trustee written notice of a
continuing Event of Default, (ii) the holders of not less than 25% in aggregate
principal amount of the outstanding Notes of such Series have made written
request to such Indenture Trustee to institute such aggregate proceeding in its
own name as Indenture Trustee, (iii) such holder or holders have offered such
Indenture Trustee reasonable indemnity, (iv) such Indenture Trustee has for 60
days after its receipt of such written request failed to institute such
proceeding and (v) no direction inconsistent with such written request has been
given to such Indenture Trustee during such 60-day period by the holders of a
majority in principal amount of such outstanding Notes. Notwithstanding the
foregoing, the holder of any Note shall have the right, which is absolute and
unconditional, to receive payment of the principal of and interest, if any, on
such Note on or after the respective due dates thereof and to institute suit for
the enforcement of any such payment, and such right shall not be impaired
without the consent of such holder.
In addition, each Indenture Trustee and the related Noteholders, by
accepting the related Notes, will covenant that they will not at any time
institute against the Depositor or the applicable Trust any bankruptcy,
reorganization or other proceeding under any federal or state bankruptcy or
similar law.
With respect to any Trust, neither the related Indenture Trustee nor the
related Trustee in its individual capacity, nor any holder of a Certificate
representing an ownership interest in such Trust nor the Seller, the Depositor
nor the Servicer nor any of their respective owners, beneficiaries, agents,
officers, directors, employees, affiliates, successors or assigns will, in the
absence of an express agreement to the contrary, be personally liable for the
payment of the principal of or interest on the related Notes or for the
agreements of such Trust contained in the applicable Indenture.
CERTAIN COVENANTS. Each Indenture will provide that the related Trust may
not consolidate or merge with or into any other entity, unless (i) the entity
formed by or surviving such consolidation or merger is organized under the laws
of the United States, any state or the District of Columbia, (ii) such entity
expressly assumes such Trust's obligation to make due and punctual payments on
the Notes of the related Series and the performance or observance of every
agreement and covenant of such Trust under the related Indenture, (iii) no Event
of Default shall have occurred and is continuing immediately after such
transaction, (iv) neither of the Rating Agencies, after 10 days' prior notice,
shall have notified the Depositor, the Seller, the Servicer or such Trust in
writing that such transaction will result in a reduction of withdrawal of the
then current ratings of any class of Notes of such Series, (v) such Trust has
received an opinion of counsel to the effect that such transaction would have no
material adverse federal or state tax consequence to such Trust or to any
Certificateholder or Noteholder, (vi) any action necessary to maintain the lien
and security interest created by the related Indenture has been taken and (vii)
that such Trust has delivered to the related Indenture Trustee an officers'
certificate of such Trust and an opinion of counsel each stating that such
transaction and the supplemental indenture executed in connection with such
transaction comply with such Indenture and that all conditions precedent
relating to the transaction have been complied with (including any filing
required by the Exchange Act).
A Trust may not convey or transfer all or substantially all its properties
or assets to any other entity, unless (i) the entity that acquires the assets of
such Trust (A) agrees that all right, title and interest conveyed or transferred
shall be subject and subordinate to the rights of the related Noteholders, (B)
unless otherwise agreed, expressly agrees to indemnify, defend and hold harmless
such Trust against and from any loss, liability or expense arising under or
related to the applicable Indenture and the Notes of such Series, (C) expressly
agrees to make all filings with the Commission and any other appropriate entity)
required by the Exchange Act in connection with the Notes of such Series and (D)
is organized under the laws of the United States, any state, or the District of
Columbia; and (ii) the criteria specified in clauses (ii) through (vii) of the
preceding paragraph have been complied with.
Each Trust will not, among other things, (i) except as expressly permitted
by the applicable Indenture, the applicable Trust Agreement, the applicable Sale
and Servicing Agreement or certain related documents with respect to such Trust
(collectively, the "Related Documents"), sell, transfer, exchange or otherwise
dispose of any of the assets of such Trust, (ii) claim any credit on or make any
deduction from the principal and interest payable in respect of the Notes of the
related Series (other than amounts withheld under the Code or applicable state
law) or assert any claim against any present or former holder of such Notes
because of the payment of taxes levied or assessed upon the collateral for such
Notes, (iii) except as contemplated in the Related Documents, dissolve or
liquidate in whole or in part, (iv) permit the validity or effectiveness of the
related Indenture to be impaired or permit any person to be released from any
covenants or obligations with respect to such Notes under such Indenture except
as may be expressly permitted thereby, (v) permit any lien, charge, excise,
claim, security interest, mortgage or other encumbrance to be created on or
extend to or otherwise arise upon or burden the collateral for such Notes, or
any part thereof, or any interest therein or the proceeds thereof, except as
expressly permitted by the Related Documents or (vi) permit the lien of the
applicable Indenture not to constitute a valid first priority security interest
in the collateral for the related Receivables.
No Trust may engage in any activity other than financing, purchasing,
owning, selling and managing the related Receivables, in each case as
contemplated by the Related Documents and activities incidental thereto. No
Trust will incur, assume or guarantee any indebtedness other than indebtedness
incurred pursuant to the related Notes and the related Indenture, pursuant to
any Advances made to it by the Servicer or otherwise in accordance with the
Related Documents.
ANNUAL COMPLIANCE STATEMENT. Each Trust will be required to file annually
with the related Indenture Trustee a written statement as to the fulfillment of
its obligations under the Indenture.
INDENTURE TRUSTEE'S ANNUAL REPORT. The Indenture Trustee for each Trust
will be required to mail each year to all related Noteholders a brief report
relating to, among other things, its eligibility and qualification to continue
as Indenture Trustee under the related Indenture, any amounts advanced by it
under the Indenture, the amount, interest rate and maturity date of certain
indebtedness owing by such Trust to the applicable Indenture Trustee in its
individual capacity, the property and funds physically held by such Indenture
Trustee as such and any action taken by it that materially affects the related
Notes and that has not been previously reported.
SATISFACTION AND DISCHARGE OF INDENTURE. An Indenture will be discharged
with respect to the collateral securing the related Notes upon the delivery to
the related Indenture Trustee for cancellation of all such Notes or, with
certain limitations, upon deposit with such Indenture Trustee of funds
sufficient for the payment in full of all such Notes.
MODIFICATION OF INDENTURE. With respect to each Trust that has issued Notes
pursuant to an Indenture, the Trust and the Indenture Trustee may, with the
consent of the holders of a majority of the outstanding Notes of the related
Series, execute a supplemental indenture to add provisions to, change in any
manner or eliminate any provisions of, the related Indenture, or modify (except
as provided below) in any manner the rights of the related Noteholders.
With respect to a Series of Notes, without the consent of the holder of
each such outstanding Note affected thereby, however, no supplemental indenture
will: (i) change the due date of any installment of principal of or interest on
any such Note or reduce the principal amount thereof, the interest rate
specified thereon or the redemption price with respect thereto, change the
provisions of the related Indenture relating to the application of collections
on or the proceeds of the sale of, the collateral for the Notes to payment of
principal of or interest on the Notes of such Series or change any place of
payment where or the coin or currency in which any such Note or any interest
thereon is payable; (ii) impair the right to institute suit for the enforcement
of certain provisions of the related Indenture regarding payment; (iii) reduce
the percentage of the aggregate principal amount of the outstanding Notes of
such Series, the consent of the holders of which is required for any such
supplemental indenture or the consent of the holders of which is required for
any waiver of compliance with certain provisions of the related Indenture or of
certain defaults thereunder and their consequences as provided for in such
Indenture; (iv) modify or alter the provisions of the related Indenture
regarding the voting of Notes held by the applicable Trust, the Depositor or an
affiliate of any of them or any obligor on such Notes; (v) reduce the percentage
of the aggregate outstanding amount of such Notes, the consent of the holders of
which is required to direct the related Indenture Trustee to sell or liquidate
the Receivables if the proceeds of such sale would be insufficient to pay the
principal amount and accrued but unpaid interest on the outstanding Notes of
such Series; (vi) decrease the percentage of the aggregate principal amount of
such Notes required to amend the sections of the related Indenture which specify
the applicable percentage of aggregate principal amount of the Notes of such
Series necessary to amend such Indenture or certain other related agreements;
(vii) modify any of the provisions of the related Indenture in such manner as to
affect the calculation of the amount of any payment of interest on any
Distribution Date or principal due on any Note of such Series on any
Distribution Date (including the calculation of any of the individual components
of such calculation) or to affect the rights of the related Noteholders to the
benefit of any provision for the mandatory redemption of the Notes of such
Series contained in the related Indenture; or (viii) permit the creation of any
lien ranking prior to or on a parity with the lien of the related Indenture with
respect to any of the collateral for such Notes or, except as otherwise
permitted or contemplated in such Indenture, terminate the lien of such
Indenture on any such collateral or deprive the holder of any such Note of the
security afforded by the lien of such Indenture.
The Trust and the applicable Indenture Trustee may also enter into
supplemental indentures, without obtaining the consent of the Noteholders of the
related Series, for the purpose of, among other things, adding any provisions to
or changing in any manner or eliminating any of the provisions of the related
Indenture or of modifying in any manner the rights of such Noteholders; so long
as such action will not, in the opinion of counsel satisfactory to the
applicable Indenture Trustee adversely affect in any material respect the
interest of any such Noteholder.
TRUST INDENTURE ACT. The related Indenture will comply with the applicable
provisions of the Trust Indenture Act of 1939, as amended.
THE INDENTURE TRUSTEE
The Indenture Trustee for a Series of Notes will be specified in the
related Prospectus Supplement. The Indenture Trustee for any Series may resign
at any time, in which event the applicable Trust will be obligated to appoint a
successor trustee for such Series. The applicable Trust may also remove any such
Indenture Trustee if such Indenture Trustee ceases to be eligible to continue as
such under the related Indenture or if such Indenture Trustee becomes insolvent.
In such circumstances, the applicable Trust will be obligated to appoint a
successor trustee for the related Series of Notes. Any resignation or removal of
the Indenture Trustee and appointment of a successor trustee for any Series of
Notes does not become effective until acceptance of the appointment by the
successor trustee for such Series.
DESCRIPTION OF THE CERTIFICATES
GENERAL
With respect to each Trust, one or more classes of Certificates of the
related Series will be issued pursuant to the terms of a Trust Agreement or a
Pooling and Servicing Agreement, a form of each of which has been filed as an
exhibit to the Registration Statement of which this Prospectus forms a part. The
following summary describes the material terms of each Trust Agreement and
Pooling and Servicing Agreement and is subject to, and is qualified in its
entirety by reference to the related Prospectus Supplement.
The Depositor expects that each class of Certificates will initially be
represented by one or more Certificates registered in the name of the
Depository, except as set forth below. Unless the related Prospectus Supplement
specifies that Certificates are offered in definitive form, the Certificates
will be available for purchase in minimum denominations of $25,000 and integral
multiples of $1,000 in excess thereof in book-entry form only (other than the
Certificates sold to the Depositor, as described in the related Prospectus
Supplement). The Depositor has been informed by DTC that DTC's nominee will be
Cede, unless another nominee is specified in the related Prospectus Supplement.
Accordingly, such nominee is expected to be the holder of record of the
Certificates of any Series. Unless and until Definitive Certificates are issued
under the limited circumstances described herein or in the related Prospectus
Supplement, no Certificateholder will be entitled to receive a physical
certificate representing a Certificate. All references herein and in the related
Prospectus Supplement to actions by Certificateholders refer to actions taken by
DTC upon instructions from the Participants and all references herein and in the
related Prospectus Supplement to distributions, notices, reports and statements
to Certificateholders refer to distributions, notices, reports and statements to
DTC or its nominee, as the case may be, as the registered holder of the
Certificates, for distribution to Certificateholders in accordance with DTC's
procedures with respect thereto. See "Certain Information Regarding the
SecuritiesBook-Entry Registration" and "Definitive Securities."
DISTRIBUTIONS OF PRINCIPAL AND INTEREST
The timing and priority of distributions, seniority, allocations of losses,
Pass-Through Rate and amount of or method of determining distributions with
respect to principal and interest of each class of Certificates will be
described in the related Prospectus Supplement. Distributions of interest on
such Certificates will be made on the dates specified in the related Prospectus
Supplement (each, a "Distribution Date") and will be made prior to distributions
with respect to principal of such Certificates. To the extent provided in the
related Prospectus Supplement, a Series may include one or more classes of Strip
Certificates entitled to (i) distributions in respect of principal with
disproportionate, nominal or no interest distributions or (ii) interest
distributions with disproportionate, nominal or no distributions in respect of
principal. Each class of Certificates may have a different Pass-Through Rate,
which may be a fixed, variable or adjustable Pass-Through Rate (and which may be
zero for certain classes of Strip Certificates) or any combination of the
foregoing. The related Prospectus Supplement will specify the Pass- Through Rate
for each class of Certificates of a given Series or the method for determining
such Pass-Through Rate. See also "Certain Information Regarding the
Securities-Fixed Rate Securities" and "-Floating Rate Securities." Distributions
in respect of the Certificates of a given Series that includes Notes may be
subordinate to payments in respect of the Notes of such Series as more fully
described in the related Prospectus Supplement. Distributions in respect of
interest on and principal of any class of Certificates will be made on a pro
rata basis among all the Certificateholders of such class.
With respect to a Series that includes two or more classes of Certificates,
each class may differ as to timing and priority of distributions, seniority,
allocations of losses, Pass-Through Rate or amount of distributions in respect
of principal or interest, or distributions in respect of principal or interest
in respect of any such class or classes may or may not be made upon the
occurrence of specified events relating to the performance of the Receivables
(including loss, delinquency and prepayment experience), the related
subordination and/or the lapse of time or on the basis of collections from
designated portions of the related Receivables Pool. Generally the related
Rating Agencies, the credit enhancer, if any, and the prevailing market
conditions at the time of issuance of the Certificates of a Series dictate the
applicable specified events with respect to such Series.
CERTAIN INFORMATION REGARDING THE SECURITIES
FIXED RATE SECURITIES
Each class of Securities (other than certain classes of Strip Notes or
Strip Certificates) may bear interest at a fixed rate per annum ("Fixed Rate
Securities") or at a variable or adjustable rate per annum ("Floating Rate
Securities"), as more fully described below and in the applicable Prospectus
Supplement. Each class of Fixed Rate Securities will bear interest at the
applicable per annum Interest Rate or Pass-Through Rate, as the case may be,
specified in the applicable Prospectus Supplement. Unless otherwise set forth in
the applicable Prospectus Supplement, interest on each class of Fixed Rate
Securities will be computed on the basis of a 360-day year of twelve 30-day
months. See "Description of the Notes-Principal and Interest on the Notes" and
"Description of the Certificates -Distributions of Principal and Interest."
FLOATING RATE SECURITIES
Each class of Floating Rate Securities will bear interest for each
applicable Interest Reset Period (as such term is defined in the related
Prospectus Supplement with respect to a class of Floating Rate Securities, the
"Interest Reset Period") at a rate per annum determined by reference to an
interest rate basis (the "Base Rate"), plus or minus the Spread, if any, or
multiplied by the Spread Multiplier, if any, in each case as specified in the
related Prospectus Supplement. The "Spread" is the number of basis points (one
basis point equals one one-hundredth of a percentage point) that may be
specified in the applicable Prospectus Supplement as being applicable to such
class, and the "Spread Multiplier" is the percentage that may be specified in
the applicable Prospectus Supplement as being applicable to such class.
The applicable Prospectus Supplement will designate one of the following
Base Rates as applicable to a given Floating Rate Security: (i) LIBOR (a "LIBOR
Security"), (ii) the Commercial Paper Rate (a "Commercial Paper Rate Security"),
(iii) the Treasury Rate (a "Treasury Rate Security"), (iv) the Federal Funds
Rate (a "Federal Funds Rate Security"), (v) the CD Rate (a "CD Rate Security")
or (vi) such other Base Rate as is set forth in such Prospectus Supplement. The
"Index Maturity" for any class of Floating Rate Securities is the period of
maturity of the instrument or obligation from which the Base Rate is calculated.
"H.15(519)" means the publication entitled "Statistical Release H.15(519),
Selected Interest Rates," or any successor publication, published by the Board
of Governors of the Federal Reserve System. "Composite Quotations" means the
daily statistical release entitled "Composite 3:30 p.m. Quotations for U.S.
Government Securities" published by the Federal Reserve Bank of New York.
"Interest Reset Date" will be the first day of the applicable Interest Reset
Period, or such other day as may be specified in the related Prospectus
Supplement with respect to a class of Floating Rate Securities.
As specified in the applicable Prospectus Supplement, Floating Rate
Securities of a given class may also have either or both of the following (in
each case expressed as a rate per annum): (i) a maximum limitation, or ceiling,
on the rate at which interest may accrue during any interest period and (ii) a
minimum limitation, or floor, on the rate at which interest may accrue during
any interest period. In addition to any maximum interest rate that may be
applicable to any class of Floating Rate Securities, the interest rate
applicable to any class of Floating Rate Securities will in no event be higher
than the maximum rate permitted by applicable law, as the same may be modified
by United States law of general application.
Each Trust with respect to which a class of Floating Rate Securities will
be issued will appoint, and enter into agreements with, a calculation agent
(each, a "Calculation Agent") to calculate interest rates on each such class of
Floating Rate Securities issued with respect thereto. The applicable Prospectus
Supplement will set forth the identity of the Calculation Agent for each such
class of Floating Rate Securities of a given Series, which may be either the
related Trustee or Indenture Trustee with respect to such Series. All
determinations of interest by the Calculation Agent shall, in the absence of
manifest error, be conclusive for all purposes and binding on the holders of
Floating Rate Securities of a given class. Unless otherwise specified in the
applicable Prospectus Supplement, all percentages resulting from any calculation
of the rate of interest on a Floating Rate Security will be rounded, if
necessary, to the nearest 1/100,000 of 1% (.0000001), with five one- millionths
of a percentage point rounded upward.
CD RATE SECURITIES. Each CD Rate Security will bear interest for each
Interest Reset Period at the interest rate calculated with reference to the CD
Rate and the Spread or Spread Multiplier, if any, specified in such Security and
in the applicable Prospectus Supplement.
The "CD Rate" for each Interest Reset Period generally will be the rate as
of the second business day prior to the Interest Reset Date for such Interest
Reset Period (a "CD Rate Determination Date") for negotiable certificates of
deposit having the Index Maturity designated in the applicable Prospectus
Supplement as published in H.I5 (519) under the heading "Cds (Secondary
Market)." In the event that such rate is not published prior to 3:00 p.m., New
York City time, on the Calculation Date (as defined below) pertaining to such CD
Rate Determination Date, then the "CD Rate" for such Interest Reset Period will
be the rate on such CD Rate Determination Date for negotiable certificates of
deposit of the Index Maturity designated in the applicable Prospectus Supplement
as published in Composite Quotations under the heading "Certificates of
Deposit." If by 3:00 p.m., New York City time, on such Calculation Date such
rate is not yet published in either H.I5 (519) or Composite Quotations, then the
"CD Rate" for such Interest Reset Period will be calculated by the Calculation
Agent for such CD Rate Security and will be the arithmetic mean of the secondary
market offered rates as of 10:00 a.m., New York City time, on such CD Rate
Determination Date, of three leading nonbank dealers in negotiable U.S. dollar
certificates of deposit in The City of New York selected by the Calculation
Agent for such CD Rate Security for negotiable certificates of deposit of major
United States money center banks of the highest credit standing (in the market
for negotiable certificates of deposit) with a remaining maturity closest to the
Index Maturity designated in the related Prospectus Supplement in a denomination
of $5,000,000; provided, however, that if the dealers selected as aforesaid by
such Calculation Agent are not quoting offered rates as mentioned in this
sentence, the "CD Rate" for such Interest Reset Period will be the same as the
CD Rate for the immediately preceding Interest Reset Period.
The "Calculation Date" pertaining to any CD Rate Determination Date will be
the first to occur of (a) the tenth calendar day after such CD Rate
Determination Date or, if such day is not a business day, the next succeeding
business day or (b) the second business day preceding the date any payment is
required to be made for any period following the applicable Interest Reset Date.
COMMERCIAL PAPER RATE SECURITIES. Each Commercial Paper Rate Security will
bear interest for each Interest Reset Period at the interest rate calculated
with reference to the Commercial Paper Rate and the Spread or Spread Multiplier,
if any, specified in such Security and in the applicable Prospectus Supplement.
The "Commercial Paper Rate" for each Interest Reset Period generally will
be determined by the Calculation Agent for such Commercial Paper Rate Security
as of the second business day prior to the Interest Reset Date for such Interest
Reset Period (a "Commercial Paper Rate Determination Date") and generally will
be the Money Market Yield (as defined below) on such Commercial Paper Rate
Determination Date of the rate for commercial paper having the Index Maturity
specified in the applicable Prospectus Supplement, as such rate shall be
published in H.I5(519) under the heading "Commercial Paper." In the event that
such rate is not published prior to 3:00 p.m., New York City time, on the
Calculation Date (as defined below) pertaining to such Commercial Paper Rate
Determination Date, then the "Commercial Paper Rate" for such Interest Reset
Period will be the Money Market Yield on such Commercial Paper Rate
Determination Date of the rate for commercial paper of the specified Index
Maturity as published in Composite Quotations under the heading "Commercial
Paper." If by 3:00 p.m., New York City time, on such Calculation Date such rate
is not yet published in either H.I5 (519) or Composite Quotations then the
"Commercial Paper Rate" for such Interest Reset Period will be the Money Market
Yield of the arithmetic mean of the offered rates, as of 11:00 a.m., New York
City time, on such Commercial Paper Rate Determination Date of three leading
dealers of commercial paper in The City of New York selected by the Calculation
Agent for such Commercial Paper Rate Security for commercial paper of the
specified Index Maturity placed for an industrial issuer whose bonds are rated
"AA" or the equivalent by a nationally recognized rating agency; provided,
however, that if the dealers selected as aforesaid by such Calculation Agent are
not quoting offered rates as mentioned in this sentence, the "Commercial Paper
Rate" for such Interest Reset Period will be the same as the Commercial Paper
Rate for the immediately preceding Interest Reset Period.
"Money Market Yield" will be a yield calculated in accordance with the
following formula:
Money Market Yield = D X 360 X 100
---------------
360 - (D X M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the specified Index Maturity.
The "Calculation Date" pertaining to any Commercial Paper Rate
Determination Date will be the first to occur of (a) the tenth calendar day
after such Commercial Paper Rate Determination Date or, if such day is not a
business day, the next succeeding business day or (b) the second business day
preceding the date any payment is required to be made for any period following
the applicable Interest Reset Date.
FEDERAL FUNDS RATE SECURITIES. Each Federal Funds Rate Security will bear
interest for each Interest Reset Period at the interest rate calculated with
reference to the Federal Funds Rate and the Spread or Spread Multiplier, if any,
specified in such Security and in the applicable Prospectus Supplement.
The "Federal Funds Rate" for each Interest Reset Period generally will be
the effective rate on the Interest Reset Date for such Interest Reset Period (a
"Federal Funds Rate Determination Date") for Federal Funds as published in
H.I5(519) under the heading "Federal Funds (Effective)." In the event that such
rate is not published prior to 3:00 p.m., New York City time, on the Calculation
Date (as defined below) pertaining to such Federal Funds Rate Determination
Date, the "Federal Funds Rate" for such Interest Reset Period will be the rate
on such Federal Funds Rate Determination Date as published in Composite
Quotations under the heading "Federal Funds/Effective Rate." If by 3:00 p.m.,
New York City time, on such Calculation Date such rate is not yet published in
either H.I5 (519) or Composite Quotations, then the "Federal Funds Rate" for
such Interest Reset Period will be the rate on such Federal Funds Rate
Determination Date made publicly available by the Federal Reserve Bank of New
York which is equivalent to the rate which appears in H.I5(5l9) under the
heading "Federal Funds (Effective);" provided, however, that if such rate is not
made publicly available by the Federal Reserve Bank of New York by 3:00 p.m.,
New York City time, on such Calculation Date, the "Federal Funds Rate" for such
Interest Reset Period will be the same as the Federal Funds Rate in effect for
the immediately preceding Interest Reset Period. In the case of a Federal Funds
Rate Security that resets daily, the interest rate on such Security for the
period from and including a Monday to but excluding the succeeding Monday will
be reset by the Calculation Agent for such Security on such second Monday (or,
if not a business day, on the next succeeding business day) to a rate equal to
the average of the Federal Funds Rates in effect with respect to each such day
in such week.
The "Calculation Date" pertaining to any Federal Funds Rate Determination
Date will be the next succeeding business day.
LIBOR SECURITIES. Each LIBOR Security will bear interest for each Interest
Reset Period at the interest rate calculated with reference to LIBOR and the
Spread or Spread Multiplier, if any, specified in such Security and in the
applicable Prospectus Supplement.
"LIBOR" for each Interest Reset Period will be determined by the
Calculation Agent for any LIBOR Security generally as follows:
(i) On the second London Banking Day prior to the Interest Reset Date
for such Interest Reset Period (a "LIBOR Determination Date"),
the Calculation Agent for such LIBOR Security will determine the
arithmetic mean of the offered rates for deposits in U.S. dollars
for the period of the Index Maturity specified in the applicable
Prospectus Supplement, commencing on such Interest Reset Date,
which appear on the Reuters Screen LIBO Page at approximately
11:00 a.m., London time, on such LIBOR Determination Date. For
purposes of calculating LIBOR, "London Banking Day" means any
business day on which dealings in deposits in United States
dollars are transacted in the London interbank market and
"Reuters Screen LIBO Page" means the display designated as page
"LIBO" on the Reuters Monitor Money Rates Service (or such other
page as may replace the LIBO page on that service for the purpose
of displaying London interbank offered rates of major banks). If
at least two such offered rates appear on the Reuters Screen LIBO
Page, "LIBOR" for such Interest Reset Period will be the
arithmetic mean of such offered rates as determined by the
Calculation Agent for such LIBOR Security.
(ii) If fewer than two offered rates appear on the Reuters Screen LIBO
Page on such LIBOR Determination Date, the Calculation Agent for
such LIBOR Security will request the principal London offices of
each of four major banks in the London interbank market selected
by such Calculation Agent to provide such Calculation Agent with
its offered quotations for deposits in U.S. dollars for the
period of the specified Index Maturity, commencing on such
Interest Reset Date, to prime banks in the London interbank
market at approximately 11:00 a.m., London time, on such LIBOR
Determination Date and in a principal amount equal to an amount
of not less than $1,000,000 that is representative of a single
transaction in such market at such time. If at least two such
quotations are provided, "LIBOR" for such Interest Reset Period
will be the arithmetic mean of such quotations. If fewer than two
such quotations are provided, "LIBOR" for such Interest Reset
Period will be the arithmetic mean of rates quoted by three major
banks in The City of New York selected by the Calculation Agent
for such LIBOR Security at approximately 11:00 a.m., New York
City time, on such LIBOR Determination Date for loans in U.S.
dollars to leading European banks, for the period of the
specified Index Maturity, commencing on such Interest Reset Date,
and in a principal amount equal to an amount of not less than
$1,000,000 that is representative of a single transaction in such
market at such time; provided, however, that if the banks
selected as aforesaid by such Calculation Agent are not quoting
rates as mentioned in this sentence, "LIBOR" for such Interest
Reset Period will be the same as LIBOR for the immediately
preceding Interest Reset Period.
TREASURY RATE SECURITIES. Each Treasury Rate Security will bear interest
for each Interest Reset Period at the interest rate calculated with reference to
the Treasury Rate and the Spread or Spread Multiplier, if any, specified in such
Security and in the applicable Prospectus Supplement.
The "Treasury Rate" for each Interest Period generally will be the rate for
the auction held on the Treasury Rate Determination Date (as defined below) for
such Interest Reset Period of direct obligations of the United States ("Treasury
bills") having the Index Maturity specified in the applicable Prospectus
Supplement, as such rate shall be published in H.I5 (519) under the heading
"U.S. Government Securities - Treasury bills - auction average (investment)" or,
in the event that such rate is not published prior to 3:00 p.m., New York City
time, on the Calculation Date (as defined below) pertaining to such Treasury
Rate Determination Date, the auction average rate (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and applied
on a daily basis) on such Treasury Rate Determination Date as otherwise
announced by the United States Department of the Treasury. In the event that the
results of the auction of Treasury bills having the specified Index Maturity are
not published or reported as provided above by 3:00 p.m., New York City time, on
such Calculation Date, or if no such auction is held on such Treasury Rate
Determination Date, then the "Treasury Rate" for such Interest Reset Period will
be calculated by the Calculation Agent for such Treasury Rate Security and will
be the yield to maturity (expressed as a bond equivalent on the basis of a year
of 365 or 366 days, as applicable, and applied on a daily basis) of the
arithmetic mean of the secondary market bid rates, as of approximately 3:30
p.m., New York City time, on such Treasury Rate Determination Date, of three
leading primary United States government securities dealers selected by such
Calculation Agent for the issue of Treasury bills with a remaining maturity
closest to the specified Index Maturity; provided, however, that if the dealers
selected as aforesaid by such Calculation Agent are not quoting bid rates as
mentioned in this sentence, then the "Treasury Rate" for such Interest Reset
Period will be the same as the Treasury Rate for the immediately preceding
Interest Reset Period.
The "Treasury Rate Determination Date" for each Interest Reset Period will
be the day of the week in which the Interest Reset Date for such Interest Reset
Period falls on which Treasury bills would normally be auctioned. Treasury bills
are normally sold at auction on Monday of each week, unless that day is a legal
holiday, in which case the auction is normally held on the following Tuesday,
except that such auction may be held on the preceding Friday. If, as the result
of a legal holiday, an auction is so held on the preceding Friday, such Friday
will be the Treasury Rate Determination Date pertaining to the Interest Reset
Period commencing in the next succeeding week. If an auction date shall fall on
any day that would otherwise be an Interest Reset Date for a Treasury Rate
Security, then such Interest Reset Date shall instead be the business day
immediately following such auction date.
The "Calculation Date" pertaining to any Treasury Rate Determination Date
will be the first to occur of (a) the tenth calendar day after such Treasury
Rate Determination Date or, if such a day is not a business day, the next
succeeding business day or (b) the second business day preceding the date any
payment is required to be made for any period following the applicable Interest
Reset Date.
INDEXED SECURITIES
To the extent so specified in any Prospectus Supplement, any class of
Securities of a given Series may consist of Securities ("Indexed Securities") in
which the principal amount payable at the final scheduled Payment Date or
Distribution Date, as the case may be, for such class (the "Indexed Principal
Amount") is determined by reference to a measure (the "Index") which will be
related to (i) the difference in the rate of exchange between United States
dollars and a currency or composite currency (the "Indexed Currency") specified
in the applicable Prospectus Supplement (such Indexed Securities, "Currency
Indexed Securities"); (ii) the difference in the price of a specified commodity
(the "Indexed Commodity") on specified dates (such Indexed Securities,
"Commodity Indexed Securities"); or (iii) the difference in the level of a
specified stock index (the "Stock Index"), which may be based on U.S. or foreign
stocks, on specified dates (such Indexed Securities, "Stock Indexed
Securities"); or (iv) such other objective price or economic measures as are
described in the applicable Prospectus Supplement. The manner of determining the
Indexed Principal Amount of an Indexed Security and historical and other
information concerning the Indexed Currency, the Indexed Commodity, the Stock
Index or other price or economic measures used in such determination will be set
forth in the applicable Prospectus Supplement, together with information
concerning tax consequences to the holders of such Indexed Securities.
If the determination of the Indexed Principal Amount of an Indexed Security
is based on an Index calculated or announced by a third party and such third
party either suspends the calculation or announcement of such Index or changes
the basis upon which such Index is calculated (other than changes consistent
with policies in effect at the time such Indexed Security was issued and
permitted changes described in the applicable Prospectus Supplement), then such
Index will be calculated for purposes of such Indexed Security by an independent
calculation agent named in the applicable Prospectus Supplement on the same
basis, and subject to the same conditions and controls, as applied to the
original third party. If for any reason such Index cannot be calculated on the
same basis and subject to the same conditions and controls as applied to the
original third party, then the Indexed Principal Amount of such Indexed Security
will be calculated in the manner set forth in the applicable Prospectus
Supplement. Any determination of such independent calculation agent shall in the
absence of manifest error be binding on all parties.
Interest on an Indexed Security will be payable based on the amount
designated in the applicable Prospectus Supplement as the "Face Amount" of such
Indexed Security. The applicable Prospectus Supplement will describe whether the
principal amount of the related Indexed Security, if any, that would be payable
upon redemption or repayment prior to the applicable final scheduled Payment
Date or Distribution Date, as the case may be, will be the Face Amount of such
Indexed Security, the Indexed Principal Amount of such Indexed Security at the
time of redemption or repayment or another amount described in such Prospectus
Supplement. Investors should carefully evaluate the Index related to each
Indexed Security since the return of principal and the payment of interest on
the related Indexed Securities is based on such Index. One Index might move in a
favorable direction to investors while another could move in the opposite
direction. The related Prospectus Supplement will contain the material risks of
the applicable Index related to each Indexed Security, if any.
BOOK-ENTRY REGISTRATION
The Depositor expects that persons acquiring beneficial ownership interests
in the Securities of each Series will hold their interests through DTC in the
United States or, in the case of any Series of Notes, Cedel or Euroclear in
Europe. Each Class of Securities will be registered in the name of Cede & Co.
("Cede") as nominee for DTC. Cedel and Euroclear will hold omnibus positions
with respect to the Notes and, if the related Prospectus Supplement so provides,
the Certificates on behalf of Cedel Participants and Euroclear Participants,
respectively, through customers' securities accounts in Cedel's and Euroclear's
name on the books of their respective depositories (collectively, the
"Depositories") which in turn will hold such positions in customers' securities
accounts in the Depositories' names on the books of DTC. For additional
information regarding clearance and settlement procedures see "Annex I" hereto.
DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Exchange Act. DTC accepts securities for deposit from its participating
organizations ("Participants") and facilitates the clearance and settlement of
securities transactions between Participants in such securities through
electronic book-entry changes in accounts of Participants, thereby eliminating
the need for physical movement of certificates. Participants include securities
brokers and dealers, banks and trust companies and clearing corporations and may
include certain other organizations. Indirect access to the DTC system is also
available to others such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a Participant, either
directly or indirectly ("Indirect Participants"). The rules applicable to DTC
and its participants are on file with the Commission.
Securityholders who are not Participants but desire to purchase, sell or
otherwise transfer ownership of Securities may do so only through Participants
(unless and until Definitive Certificates or Definitive Notes, each as defined
below, are issued). In addition, Securityholders will receive all distributions
of principal of, and interest on, the Securities, from the applicable Trustee or
any Indenture Trustee, as applicable (the "Applicable Trustee"), through DTC and
Participants. Securityholders will not receive or be entitled to receive
certificates representing their respective interests in the Securities, except
under the limited circumstances described below and such other circumstances, if
any, as may be specified in the related Prospectus Supplement.
Unless and until Definitive Securities are issued, it is anticipated that
the only Certificateholder of the Certificates and the only Noteholder of the
Notes, if any, will be Cede (other than the related Company, as described in the
related Prospectus Supplement) as nominee of DTC. Securityholders will not be
recognized by the Applicable Trustee as Certificateholders or as Noteholders, as
the case may be, as those terms are used in the Related Documents.
Securityholders will be permitted to exercise the rights of Certificateholders
or Noteholders, as the case may be, only indirectly through Participants and
DTC.
With respect to any Series of Securities issued in book-entry form, while
such Securities are outstanding (except under the circumstances described
below), under the rules, regulations and procedures creating and affecting DTC
and its operations (the "Rules"), DTC is required to make book-entry transfers
among Participants on whose behalf it acts with respect to the Securities and is
required to receive and transmit distributions of principal of, and interest on,
the Securities. Participants with whom Securityholders have accounts with
respect to Securities are similarly required to make book-entry transfers and
receive and transmit such distributions on behalf of their respective
Securityholders. Accordingly, although Securityholders will not possess
Securities, the Rules provide a mechanism by which Securityholders will receive
distributions and will be able to transfer their interests.
Transfers between Participants will occur in accordance with DTC Rules.
Transfers between Cedel Participants and Euroclear Participants will occur in
accordance with their respective rules and operating procedures.
Because of time zone differences, credits of securities received in Cedel
or Euroclear as a result of a transaction with a Participant will be made during
subsequent securities settlement processing and dated the business day following
the DTC settlement date, and any such credits or any transactions in such
securities settled during such processing will be reported to the relevant
Euroclear or Cedel Participants on such business day. Cash received in Cedel or
Euroclear as a result of sales of Notes and, if the related Prospectus
Supplement so provides, Certificates by or through a Cedel Participant or
Euroclear Participant to a DTC Participant will be received with value on the
DTC settlement date but will be available in the relevant Cedel or Euroclear
cash account only as of the business day following settlement in DTC.
Cross-market transfers between persons directly holding Notes and, if the
related Prospectus Supplement so provides, Certificates or indirectly through
DTC, on the one hand, and directly or indirectly through Cedel Participants or
Euroclear Participants, on the other, will be effected in DTC in accordance with
DTC Rules on behalf of the relevant European international clearing system by
its Depository; however, such cross-market transactions will require delivery of
instructions to the relevant European international clearing system by the
counterparty in such system in accordance with its rules and procedures and
within its established deadline (European time). The relevant European
international clearing system will, if the transaction meets its settlement
requirements, deliver instructions to its Depository to take action to effect
final settlement on its behalf by delivering or receiving securities in DTC, and
making or receiving payment in accordance with normal procedures for same day
funds settlement applicable to DTC. Cedel Participants and Euroclear
Participants may not deliver instructions to the Depositories.
With respect to any Series of Securities, Certificates and Notes (if any)
will be issued in registered form to Securityholders, or their nominees, rather
than to DTC (such Certificates and Notes being referred to herein as "Definitive
Certificates" and "Definitive Notes," respectively), only if (i) the Depositor
advises the applicable Trustee or Indenture Trustee, as the case may be, in
writing that DTC is no longer willing or able to discharge properly its
responsibilities as nominee and depository with respect to the Certificates or
the Notes and the Depositor is unable to locate a qualified successor, (ii) the
Depositor at its sole option has advised any Trustee or the applicable Indenture
Trustee, as the case may be, in writing that it elects to terminate the
book-entry system through DTC or (iii) after the occurrence of an Event of
Default, the holders representing a majority of the Certificate Balance (a
"Certificate Majority") or a Note Majority advises any Trustee or the applicable
Indenture Trustee, as the case may be, through DTC that continuation of a
book-entry system is no longer in their best interests. Upon issuance of
Definitive Certificates or Definitive Notes to Securityholders, such
Certificates or Notes will be transferable directly (and not exclusively on a
book-entry basis) and registered holders will deal directly with any Trustee or
the applicable Indenture Trustee, as the case may be, with respect to transfers,
notices and distributions.
DTC has advised the Depositor that, unless and until Definitive
Certificates or Definitive Notes are issued, DTC will take any action permitted
to be taken by a Certificateholder or a Noteholder under the related Trust
Documents or Indenture only at the direction of one or more Participants to
whose DTC accounts the Certificates or Notes are credited. DTC has advised the
Depositor that DTC will take such action with respect to any fractional interest
of the Certificates or the Notes only at the direction of and on behalf of such
Participants beneficially owning a corresponding fractional interest of the
Certificates or the Notes. DTC may take actions, at the direction of the related
Participants, with respect to some Certificates or Notes which conflict with
actions taken with respect to other Certificates or Notes.
Cedel is incorporated under the laws of Luxembourg as a professional
depository. Cedel holds securities for its participating organizations ("Cedel
Participants") and facilitates the clearance and settlement of securities
transactions between Cedel Participants through electronic book-entry changes in
accounts of Cedel Participants, thereby eliminating the need for physical
movement of certificates. Transactions may be settled in Cedel in any of 28
currencies, including United States dollars. Cedel provides to its Cedel
Participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. Cedel interfaces with domestic markets in several
countries. As a professional depository, Cedel is subject to regulation by the
Luxembourg Monetary Institute. Cedel Participants are recognized financial
institutions around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations. Indirect access to Cedel is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Cedel Participant, either directly or indirectly.
Euroclear was created in 1968 to hold securities for its participants
("Euroclear Participants") and to clear and settle transactions between
Euroclear Participants through simultaneous electronic book-entry delivery
against payment, thereby eliminating the need for physical movement of
certificates and any risk from lack of simultaneous transfers of securities and
cash. Transactions may be settled in any of 32 currencies, including United
States dollars. Euroclear includes various other services, including securities
lending and borrowing and interfaces with domestic markets in several countries
generally similar to the arrangements for cross-market transfers with DTC
described above. Euroclear is operated by the Brussels, Belgium office of Morgan
Guaranty Trust Company of New York the "Euroclear Operator"), under contract
with Euroclear Clearance Systems, S.C., a Belgian cooperative corporation (the
"Cooperative"). All operations are conducted by the Euroclear Operator, and all
Euroclear securities clearance accounts and Euroclear cash accounts are accounts
with the Euroclear Operator, not the Cooperative. The Cooperative establishes
policy for Euroclear on behalf of Euroclear Participants. Euroclear Participants
include banks (including central banks), securities brokers and dealers and
other professional financial intermediaries. Indirect access to Euroclear is
also available to other firms that clear through, or maintain a custodial
relationship with a Euroclear Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of Euroclear, and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities and
cash from Euroclear and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear Participants and has no record of or relationship with persons holding
through Euroclear Participants.
Distributions with respect to Notes and, if the related Prospectus
Supplement so provides, Certificates held through Cedel or Euroclear will be
credited to the cash accounts of Cedel Participants or Euroclear Participants in
accordance with the relevant system's rules and procedures, to the extent
received by its Depository. Such distributions will be subject to tax reporting
in accordance with relevant United States tax laws and regulations. Cedel or the
Euroclear Operator, as the case may be, will take any other action permitted to
be taken by a beneficial holder of Notes and, if the related Prospectus
Supplement so provides, Certificates under the Agreement on behalf of a Cedel
Participant or Euroclear Participant only in accordance with its relevant rules
and procedures and subject to its Depository's ability to effect such actions on
its behalf through DTC.
Although DTC, Cedel and Euroclear have agreed to the foregoing procedures
in order to facilitate transfers of interests in the Notes and, if the related
Prospectus Supplement so provides, the Certificates among Direct Participants of
DTC, Cedel and Euroclear, they are under no obligation to perform or continue to
perform such procedures and such procedures may be discontinued at any time.
Neither the Trust, the Seller, the Depositor, the Servicer, the Applicable
Trustee, any Indenture Trustee, nor any of the underwriters will have any
responsibility or obligation to any Participants, Cedel Participants or
Euroclear Participants or the persons for whom they act as nominees with respect
to (1) the accuracy of any records maintained by DTC, Cedel, Euroclear or any
Participant, (2) the payment by DTC, Cedel, Euroclear or any Participant of any
amount due to any beneficial owner in respect of the principal balance of, or
interest on, the Notes and, if the related prospectus supplement so provides,
the Certificates, (3) the delivery by any Participant, Cedel Participant or
Euroclear Participant of any notice to any beneficial owner which is required or
permitted under the terms of the agreement to be given to Noteholders and, if
the related prospectus supplement so provides, Certificateholders or (4) any
other action taken by DTC or its nominee as the Noteholder and, if the related
prospectus supplement so provides, the Certificateholder.
DEFINITIVE SECURITIES
The Notes, if any, and the Certificates of a given Series will be issued in
fully registered, certificated form ("Definitive Notes" and "Definitive
Certificates," respectively, and collectively referred to herein as "Definitive
Securities") to Noteholders or Certificateholders or their respective nominees,
rather than to DTC or its nominee, only if (i) the Servicer advises the
Applicable Trustee in writing that DTC is no longer willing or able to discharge
properly its responsibilities as depository with respect to such Securities and
the Servicer is unable to locate a qualified successor, (ii) the Servicer, at
its option, elects to terminate the book-entry system through DTC or (iii) after
the occurrence of an Event of Default or a Servicer Default with respect to such
Securities, holders representing at least a majority of the outstanding
principal amount of the Notes or the Certificates, as the case may be, of such
Series advise the Applicable Trustee through DTC in writing that the
continuation of a book-entry system through DTC (or a successor thereto) with
respect to such Notes or Certificates is no longer in the best interest of the
holders of such Securities.
Upon the occurrence of any event described in the immediately preceding
paragraph, the Applicable Trustee will be required to notify all applicable
Securityholders of a given Series through Participants of the availability of
Definitive Securities. Upon surrender by DTC of the definitive certificates
representing the corresponding Securities and receipt of instructions for
re-registration, the Trust will reissue such Securities as Definitive Securities
to such Securityholders.
Distributions of principal of, and interest on, such Definitive Securities
will thereafter be made by the Applicable Trustee in accordance with the
procedures set forth in the related Indenture or the related Trust Agreement or
Pooling and Servicing Agreement, as applicable, directly to holders of
Definitive Securities in whose names the Definitive Securities were registered
at the close of business on the applicable Record Date specified for such
Securities in the related Prospectus Supplement. Such distributions will be made
by check mailed to the address of such holder as it appears on the register
maintained by the Applicable Trustee. The final payment on any such Definitive
Security, however, will be made only upon presentation and surrender of such
Definitive Security at the office or agency specified in the notice of final
distribution to the applicable Securityholders.
Definitive Securities will be transferable and exchangeable at the offices
of the Applicable Trustee or of a registrar named in a notice delivered to
holders of Definitive Securities. No service charge will be imposed for any
registration of transfer or exchange, but the Applicable Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge
imposed in connection therewith.
LIST OF SECURITYHOLDERS
Three or more holders of the Notes of such Series or one or more holders of
such Notes evidencing not less than 25% of the aggregate outstanding principal
balance of such Notes may, by written request to the related Indenture Trustee,
obtain access to the list of all Noteholders maintained by such Indenture
Trustee for the purpose of communicating with other Noteholders with respect to
their rights under the related Indenture or under such Notes.
Three or more holders of the Certificates of such Series or one or more
holders of such Certificates evidencing not less than 25% of the Certificate
Balance of such Certificates may, by written request to the related Trustee,
obtain access to the list of all Certificateholders maintained by such Trustee
for the purpose of communicating with other Certificateholders with respect to
their rights under the related Trust Agreement or Pooling and Servicing
Agreement or under such Certificates.
REPORTS TO SECURITYHOLDERS
With respect to each Series of Securities that includes Notes, on or prior
to each Payment Date, the Servicer will prepare and provide to the related
Indenture Trustee a statement to be delivered to the related Noteholders on such
Payment Date. With respect to each Series of Securities, on or prior to each
Distribution Date, the Servicer will prepare and provide to the related Trustee
a statement to be delivered to the related Certificateholders. With respect to
each Series of Securities, each such statement to be delivered to the Indenture
Trustee and Noteholders will include (to the extent applicable) the following
information (and any other information so specified in the related Prospectus
Supplement) as to the Notes of such Series with respect to such Payment Date or
the period since the previous Payment Date, as applicable, and each such
statement to be delivered to the Trustee and Certificateholders will include (to
the extent applicable) the following information (and any other information so
specified in the related Prospectus Supplement) as to the Certificates of such
Series with respect to such Distribution Date or the period since the previous
Distribution Date, as applicable:
(i) the amount of the distribution allocable to principal of each
class of such Notes and to the Certificate Balance of each
class of such Certificates;
(ii) the amount of the distribution allocable to interest on or with
respect to each class of Securities of such Series;
(iii) the Pool Balance as of the close of business on the last day of
the preceding Collection Period;
(iv) the aggregate outstanding principal balance and the Note Pool
Factor for each class of such Notes, and the Certificate
Balance and the Certificate Pool Factor for each class of such
Certificates, each after giving effect to all payments reported
under clause (i) above on such date;
(v) the amount of the Servicing Fee paid to the Servicer with
respect to the related Collection Period or Collection Periods,
as the case may be;
(vi) the Interest Rate or Pass-Through Rate for the next period for
any class of Notes or Certificates of such Series with variable
or adjustable rates;
(vii) the amount of the aggregate realized losses, net of Recoveries,
if any, for such Collection Period;
(viii) the Noteholders' Interest Carryover Shortfall, the Noteholders'
Principal Carryover Shortfall, the Certificateholders' Interest
Carryover Shortfall and the Certificateholders' Principal
Carryover Shortfall (each as defined in the related Prospectus
Supplement under "Description of the Transfer and Servicing
Agreements" or "Description of the Certificates", as the case
may be), if any, in each case as applicable to each class of
Securities, and the change in such amounts from the preceding
statement;
(ix) the aggregate Purchase Amounts paid by the Seller or the
Servicer in such Collection Period;
(x) the balance of the Reserve Account (if any) on such date, after
giving effect to changes therein on such date;
(xi) for each such date during the Funding Period (if any), the
remaining Pre-Funded Amount;
(xii) for the first such date that is on or immediately following the
end of the Funding Period (if any), the amount of any remaining
Pre-Funded Amount that has not been used to fund the purchase
of Subsequent Receivables and is being passed through as
payments of principal on the Securities of such Series;
(xiii) the amounts collected by the Servicer;
(xiv) the amounts received by the related Trust from the Servicer;
and
(xv) delinquency information relating to Receivables which are 30,
60 or 90 days delinquent.
Each amount set forth pursuant to subclauses (i), (ii), (v) and (viii) with
respect to the Notes or the Certificates of any Series will be expressed as a
dollar amount per $1,000 of the initial principal balance of such Notes or the
initial Certificate Balance of such Certificates, as applicable.
Within the prescribed period of time for tax reporting purposes after the
end of each calendar year during the term of each Trust, the Applicable Trustee
will mail to each person who at any time during such calendar year has been a
Securityholder with respect to such Trust and received any payment thereon a
statement containing certain information for the purposes of such
Securityholder's preparation of federal income tax returns. See "Federal Income
Tax Consequences."
Those reports will not be financial statements prepared in accordance with
generally accepted accounting practices. So long as the Securities of a Series
are in book entry form, those monthly and annual unaudited reports will be sent
on behalf of the Trust only to Cede, as nominee of DTC and registered holder of
the Notes and the Certificates. DTC will forward such reports to Participants
and Indirect Participants, which in turn, will forward the reports to the
beneficial owners of the Securities in accordance with their own procedures. If
the Securities of a Series are not in book-entry form, such reports will be sent
by the Trustee directly to the registered holders of the Notes or Certificates,
as applicable.
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes the material terms of each Sale and
Servicing Agreement or Pooling and Servicing Agreement, as the case may be,
pursuant to which a Trust will purchase Receivables from the Depositor and the
Servicer will agree to service such Receivables and each Trust Agreement or
Pooling and Servicing Agreement, as the case may be, pursuant to which a Trust
will be created and Certificates will be issued (collectively, the "Transfer and
Servicing Agreements"). Forms of the Transfer and Servicing Agreements have been
filed as exhibits to the Registration Statement of which this Prospectus forms a
part. This summary is subject to, and qualified in its entirety by reference to
the related Prospectus Supplement.
SALE AND ASSIGNMENT OF RECEIVABLES
On or prior to the Closing Date specified with respect to any given Trust
in the related Prospectus Supplement (the "Closing Date"), the Seller will sell
and assign to the Depositor, without recourse, the Initial Receivables of the
related Receivables Pool, including the security interests in the related
Financed Vehicles and all collections received or to be received on or after the
Cutoff Date and, with respect to Receivables which are Actuarial Receivables,
monies received prior to the Cutoff Date that are due on or after the Cutoff
Date, and the Depositor will transfer and assign to such Trust, without
recourse, pursuant to a Sale and Servicing Agreement or a Pooling and Servicing
Agreement, as applicable, its entire interest in the Initial Receivables of the
related Receivables Pool, including its security interests in the related
Financed Vehicles and all collections received or to be received with respect
thereto on or after the Cutoff Date and, with respect to Receivables which are
Actuarial Receivables, monies received prior to the Cutoff Date that are due on
or after the Cutoff Date. Each such Receivable will be identified in a schedule,
as may be amended to reflect any Subsequent Receivables, appearing as an exhibit
to such Pooling and Servicing Agreement or Sale and Servicing Agreement (a
"Schedule of Receivables"). The Applicable Trustee will, concurrently with such
sale and assignment, execute and deliver the related Notes and/or Certificates.
The related Prospectus Supplement for a given Trust will specify whether, and
the terms, conditions and manner under which, Subsequent Receivables will be
sold by the Depositor to the applicable Trust from time to time during any
Funding Period on each date specified as a transfer date in the related
Prospectus Supplement (each, a "Subsequent Transfer Date").
In each Sale and Servicing Agreement or Pooling and Servicing Agreement,
the Seller will represent and warrant to the applicable Trust, among other
things, that: (i) as of the related Cutoff Date, the information provided in the
related Schedule of Receivables is correct in all material respects and the
computer tape supplied to the Applicable Trustee describing certain
characteristics of the related Receivables is correct in all material respects
as of the related Cutoff Date; (ii) the Obligor on each related Receivable has
obtained physical damage insurance covering the Financed Vehicle in accordance
with the Seller's normal requirements; (iii) at the Closing Date, or with
respect to any Subsequent Receivables, the applicable Subsequent Transfer Date,
no right of rescission, setoff, counterclaim or defense exists or has been
asserted or threatened with respect to any related Receivable; (iv) as of the
Closing Date or the applicable Subsequent Transfer Date, if any, as applicable,
each of such Receivables is or will be secured by a validly perfected priority
first security interest in favor of the Seller or appropriate action has been
taken to obtain the same; (v) each related Receivable, at the time it was
originated, complied and, as of the Closing Date or the applicable Subsequent
Transfer Date, if any, complies in all material respects with applicable federal
and state laws, including, without limitation, consumer credit, truth in
lending, equal credit opportunity and disclosure laws; and (vi) as of the
related Cutoff Date, there are no liens or claims, including liens for work,
labor, materials or unpaid state or federal taxes relating to any Financed
Vehicle securing the related Receivable that are or may be prior to or equal to
the lien granted by such Receivable.
If the related Prospectus Supplement specifies that Subsequent Receivables
are to be acquired by a Trust, then during the related Funding Period, the
Depositor will be obligated to purchase from the Seller and sell to the Trust
the related Subsequent Receivables. The aggregate principal balance of the
Subsequent Receivables will be in an amount that the Seller anticipates will
equal the amount deposited in the Pre-Funding Account on the date of the
issuance of the related Series. On each Subsequent Transfer Date, the Seller
will sell and assign to the Depositor, without recourse, its entire interest in
the Subsequent Receivables identified in a schedule attached to a supplemental
conveyance relating to such Subsequent Receivables executed on such date by the
Depositor and the Seller. In connection with each purchase of Subsequent
Receivables, the Trust will be required to pay to the Depositor a cash purchase
price equal to the outstanding principal balance of each Subsequent Receivable
as of its Cutoff Date, which price the Depositor will pay to the Seller. The
purchase price will be withdrawn form the Pre-Funding Account and paid to the
Depositor for payment to the Seller so long as the representations and
warranties set forth in the preceding paragraph and under "The Receivables
PoolsGeneral" apply to each Subsequent Receivable to be conveyed, and the
conditions set forth below are satisfied. The Seller will convey Subsequent
Receivables to the Depositor on each such Subsequent Transfer Date pursuant to
the applicable Subsequent Transfer Agreement (each, a "Subsequent Transfer
Agreement") executed by the Seller and the Depositor on the Subsequent Transfer
Date and including as an exhibit a schedule identifying the Subsequent
Receivables transferred on such date. The Seller will convey the Subsequent
Receivables to the Trust on such Subsequent Transfer Date pursuant to the
Pooling and Servicing Agreement or the Sale and Servicing Agreement and the
applicable Subsequent Transfer Assignment (each, a "Subsequent Transfer
Assignment") executed by the Depositor and the Applicable Trustee on the
Subsequent Transfer Date and including as an exhibit a schedule identifying the
Subsequent Receivables transferred on such date.
Any conveyance of Subsequent Receivables will be subject to the following
conditions, among others specified in the related Prospectus Supplement: (i)
each such Subsequent Receivable must satisfy the eligibility criteria specified
in the second preceding paragraph as of its Subsequent Cutoff Date and such
additional criteria as may be specified in the related Prospectus Supplement;
(ii) if and to the extent specified in the related Prospectus Supplement, the
third-party credit enhancement provider, if any, shall have approved the
transfer of such Subsequent Receivables to the Trust; (iii) neither the Seller
nor the Depositor will have selected such Subsequent Receivables in a manner
that either believes is adverse to the interests of the Securityholders; (iv)
the Seller and the Depositor will deliver certain opinions of counsel to the
Applicable Trustee and the Rating Agencies with respect to the validity of the
conveyance of such Subsequent Receivables; and (v) the Rating Agencies shall
confirm that the ratings on the Securities of such Series have not been
withdrawn or reduced as a result of the transfer of such Subsequent Receivables
to the Applicable Trustee.
Following the end of the Funding Period, a current report on Form 8-K
containing a description of the Receivables, including the information with
respect to the Subsequent Receivables represented in the tables under "The
Receivables Pool" in the related Prospectus Supplement, acquired by the Trust as
of their respective Cutoff Dates will be filed with the Commission. As described
under "Certain Information Regarding the Securities-Reports to Securityholders,"
the monthly statement to Securityholders will disclose the remaining Pre- Funded
Amount during any Funding Period and the remaining Pre-Funded Amount following
the end of the Funding Period.
Pursuant to a Sale and Servicing Agreement or Pooling and Servicing
Agreement, the Depositor, the Seller, the Servicer or the applicable Trustee
must promptly advise the others and the Indenture Trustee in writing upon a
discovery of a breach of any of the Seller's representations and warranties with
respect to the related Receivables. Unless any such breach shall have been cured
by the last day of the Collection Period following the discovery of such breach
by the applicable Trustee or receipt by the applicable Trustee of written notice
from the Depositor, the Seller or the Servicer of such breach, the Seller will
be obligated to repurchase any Receivable from the Trust in which the interests
of the Securityholders are materially and adversely affected by such breach as
of the last day of such Collection Period at a price equal to the unpaid
principal balance owed by the Obligor thereon plus interest thereon at the
respective APR to the last day of the month of repurchase (the "Purchase
Amount"). The repurchase obligation constitutes the sole remedy available to the
Certificateholders or the Trustee and any Noteholders or Indenture Trustee in
respect of such Trust for any such uncured breach.
Pursuant to each Sale and Servicing Agreement or Pooling and Servicing
Agreement to assure uniform quality in servicing the Receivables and to reduce
administrative costs, the related Trust will appoint the Servicer as custodian
of the Receivables. The Servicer, in its capacity as custodian, will hold the
Receivables and all electronic entries, documents, instruments and writings
relating thereto (each, a "Receivable File"), either directly or through one or
more subservicers, on behalf of the Trust for the benefit of Certificateholders.
The Servicer will covenant, among other things, that it grant extensions only in
accordance with the Sale and Servicing Agreement or Pooling and Servicing
Agreement and maintain the security interest in the related Financed Vehicles.
The Servicer will be required to purchase the related Receivables for which such
covenants are breached.
The Receivables will not be stamped or otherwise marked to reflect the sale
and assignment of the Receivables to the Trust and will not be segregated from
other receivables held by the Servicer. The Depositor will cause the accounting
records and computer systems used by the Depositor as a master record of the
Receivables conveyed by it to the Trust to be marked to reflect the sale and
assignment of the Receivables to the Trust, and will file UCC financing
statements reflecting such sale and assignment with appropriate governmental
authorities. The Seller will cause its accounting records and computer systems
to be marked to reflect the sale and assignment of the related Receivables to
the Depositor, and will file UCC financing statements reflecting such sale and
assignment, with appropriate governmental authorities. The Obligors under the
Receivables will not be notified of the sale and assignment of the Receivables
to the Trust. See "The Trusts " and "Certain Legal Aspects of the Receivables."
ACCOUNTS
With respect to each Trust that issues Notes, the Servicer will establish
and maintain with the related Indenture Trustee one or more accounts, in the
name of the Indenture Trustee on behalf of the related Noteholders and
Certificateholders, into which all payments made on or with respect to the
related Receivables will be deposited (the "Collection Account"). The Servicer
will establish and maintain with such Indenture Trustee an account, in the name
of such Indenture Trustee on behalf of such Noteholders, into which amounts
released from the Collection Account and any Pre-Funding Account, Reserve
Account or other credit enhancement for payment to such Noteholders will be
deposited and from which all distributions to such Noteholders will be made (the
"Note Distribution Account"). The Servicer will establish and maintain with the
related Trustee an account, in the name of such Trustee on behalf of such
Certificateholders, into which amounts released from the Collection Account and
any Pre-Funding Account, Reserve Account or other credit or cash flow
enhancement for distribution to such Certificateholders will be deposited and
from which all distributions to such Certificateholders will be made (the
"Certificate Distribution Account"). With respect to each Trust that does not
issue Notes, the Servicer will also establish and maintain the Collection
Account and any other Trust Account in the name of the related Trustee on behalf
of the related Certificateholders.
If so provided in the related Prospectus Supplement, the Servicer will
establish for each Series an additional account (the "Payahead Account"), in the
name of the related Indenture Trustee on behalf of the Noteholders, into which,
to the extent required by the Sale and Servicing Agreement or Pooling and
Servicing Agreement, early payments by or on behalf of Obligors on Actuarial
Receivables will be deposited until such time as the payment becomes due. Until
such time as payments are transferred from the Payahead Account to the
Collection Account, they will not constitute collected interest or collected
principal and will not be available for distribution to the applicable
Noteholders or Certificateholders. The Payahead Account will initially be
maintained with the applicable Indenture Trustee or, in the case of each Trust
that does not issue Notes, the applicable Trustee.
Any other accounts to be established with respect to a Trust, including any
Pre-Funding Account or any Reserve Account, will be described in the related
Prospectus Supplement.
For any Series of Securities, funds in the Collection Account, the Note
Distribution Account and any Pre-Funding Account, Reserve Account and other
accounts identified as such in the related Prospectus Supplement (collectively,
the "Trust Accounts") and the Certificate Distribution Account will be invested
as provided in the related Sale and Servicing Agreement or Pooling and Servicing
Agreement in Eligible Investments. "Eligible Investments" mean book-entry
securities, negotiable instruments or securities represented by instruments in
bearer or registered form which evidence: (a) direct obligations of, and
obligations fully guaranteed as to timely payment by, the United States of
America; (b) demand deposits, time deposits or certificates of deposit of any
depository institution (including the Depositor or any affiliate of the
Depositor) or trust company incorporated under the laws of the United States of
America or any state thereof or the District of Columbia (or any domestic branch
of a foreign bank) and subject to supervision and examination by Federal or
state banking or depository institution authorities (including depository
receipts issued by any such institution or trust company as custodian with
respect to any obligation referred to in clause (a) above or portion of such
obligation for the benefit of the holders of such depository receipts);
PROVIDED, HOWEVER, that at the time of the investment or contractual commitment
to invest therein (which shall be deemed to be made again each time funds are
reinvested following each Distribution Date), the commercial paper or other
short-term senior unsecured debt obligations (other than such obligations the
rating of which is based on the credit of a Person other than such depository
institution or trust company) of such depository institution or trust company
shall have a credit rating from Standard & Poor's of A-1+ and from Moody's of
P-1; (c) commercial paper (including commercial paper of the Depositor or any
affiliate of the Depositor) having, at the time of the investment or contractual
commitment to invest therein, a rating from Standard & Poor's of A-1+ and from
Moody's of P-1; (d) investments in money market funds (including funds for which
the Depositor, the Trustee or the Owner Trustee or any of their respective
Affiliates is investment manager or advisor) having a rating from Standard &
Poor's Structured Ratings Group of AAA-m or AAAm-G and from Moody's Investors
Service, Inc. of Aaa; (e) bankers' acceptances issued by any depository
institution or trust company referred to in clause (b) above; (f) repurchase
obligations with respect to any security that is a direct obligation of, or
fully guaranteed by, the United States of America or any agency or
instrumentality thereof the obligations of which are backed by the full faith
and credit of the United States of America, in either case entered into with a
depository institution or trust company (acting as principal) referred to in
clause (b) above; and (g) any other investment which would not cause any Rating
Agency to downgrade or withdraw its then current rating of the Securities of a
Series. Investments will consist of Eligible Investments only to the extent that
the investments would not require registration of the related Trust as an
"investment company" under the Investment Company Act of 1940, as amended.
Subject to certain conditions, Eligible Investments may include securities or
other obligations issued by the Depositor or its affiliates or trusts originated
by the Depositor or its affiliates. Except as described below or in the related
Prospectus Supplement, Eligible Investments are limited to obligations or
securities that mature not later than the business day before the date on which
the funds invested in such Eligible Investments are required to be withdrawn
from the Trust Accounts or the Certificate Distribution Account. However, to the
extent permitted by the Rating Agencies, funds in any Reserve Account may be
invested in securities that will not mature prior to the date of the next
distribution with respect to such Certificates or Notes and will not be sold to
meet any shortfalls. Thus, the amount of cash in any Reserve Account at any time
may be less than the balance of the Reserve Account. If the amount required to
be withdrawn from any Reserve Account to cover shortfalls in collections on the
related Receivables (as provided in the related Prospectus Supplement) exceeds
the amount of cash in the Reserve Account, a temporary shortfall in the amounts
distributed to the related Noteholders or Certificateholders could result, which
could, in turn, increase the average life of the Notes or the Certificates of
such Series. Except as otherwise specified in the related Prospectus Supplement,
investment earnings on funds deposited in the Trust Accounts and the Certificate
Distribution Account, net of losses and investment expenses (collectively,
"Investment Earnings"), will be deposited in the applicable Collection Account
on each Distribution Date or Payment Date and will be treated as collections of
interest on the related Receivables.
The Trust Accounts and the Certificate Distribution Account will be
maintained as Eligible Deposit Accounts. "Eligible Deposit Account" means either
(a) a segregated account with an Eligible Institution satisfying the criteria
set forth in clause (b) of the definition thereof below or (b) a segregated
trust account with the corporate trust department of a depository institution
(other than the Depositor or any affiliate of the Depositor) organized under the
laws of the United States of America or any one of the states thereof or the
District of Columbia (or any domestic branch of a foreign bank), having
corporate trust powers and acting as trustee for funds deposited in such
account, so long as any of the securities of such depository institution have a
credit rating from each Rating Agency in one of its generic rating categories
which signifies investment grade (an "Eligible Trust Company"). "Eligible
Institution" means, with respect to a Trust (a) the corporate trust department
of the related Indenture Trustee or Trustee, as applicable, or (b) a depository
institution organized under the laws of the United States of America or any one
of the states thereof or the District of Columbia (or any domestic branch of a
foreign bank), (i) which has either (A) a long-term senior unsecured debt rating
acceptable to the Rating Agencies or (B) a short-term senior unsecured debt
rating or certificate of deposit rating acceptable to the Rating Agencies and
(ii) whose deposits are insured by the FDIC.
SERVICING PROCEDURES
The Servicer will make reasonable efforts to collect all payments due with
respect to the Receivables held by any Trust and will, in a manner, consistent
with the related Sale and Servicing Agreement or Pooling and Servicing
Agreement, apply such collection procedures as it follows with respect to other
automobile retail installment sale contracts it services. Consistent with its
normal procedures, the Servicer may, in its discretion, arrange with the Obligor
on a Receivable to extend or modify the payment schedule, subject to certain
limitations contained in any Sale and Servicing Agreement or Pooling and
Servicing Agreement. Pursuant to any Sale and Servicing Agreement or Pooling and
Servicing Agreement, the Servicer or the applicable Trustee will inform the
other party and the Indenture Trustee in writing promptly upon the discovery of
the breach by the Servicer of certain covenants made by it. If the Servicer
fails to cure the breaches with respect to a related Receivable by the last day
of the second Collection Period following such discovery (or, at the Servicer's
option, the last day of the first following Collection Period), the Servicer
will be obligated to purchase for the Purchase Amount any Receivable in which
the interests of the Securityholders are materially and adversely affected by
the breach. See "Certain Legal Aspects of the Receivables."
PAYMENTS ON RECEIVABLES
With respect to each Trust, the Servicer will deposit all payments on the
related Receivables (from whatever source), other than any late fees, prepayment
charges and other administrative fees or similar charges retained by the
Servicer as part of its compensation, and all proceeds of such Receivables
collected during each collection period specified in the related Prospectus
Supplement (each, a "Collection Period") into the related Collection Account
within two business days after receipt thereof. However, in the event that the
Servicer satisfies certain requirements for monthly remittances and none of the
related Rating Agencies, after 10 days prior notice, shall have notified the
Depositor, the Servicer, the related Trustee or the Indenture Trustee in writing
that monthly deposits by the Servicer in and of itself will result in a
reduction or withdrawal of the then-current ratings of the Securities of a
series, then for so long as Mellon Bank, N.A. is the Servicer and provided that
(i) there exists no Servicer Default and (ii) each other condition to making
monthly deposits as may be specified by the Rating Agencies or set forth in the
related Prospectus Supplement is satisfied, the Servicer will not be required to
deposit such amounts into the Collection Account until on or before the business
day preceding the applicable Distribution Date or Payment Date. Pending deposit
into the Collection Account, collections may be invested by the Servicer at its
own risk and for its own benefit and will not be segregated from its own funds.
If the Servicer were unable to remit such funds, Securityholders might incur a
loss. In such event, the Servicer will also deposit the aggregate Purchase
Amount of Receivables repurchased by the Seller or purchased by the Servicer
into the applicable Collection Account on or before the business day preceding
the applicable Distribution Date or Payment Date. Pending deposit into the
applicable Collection Account, collections may be invested by the Servicer at
its own risk and for its own benefit, and will not be segregated from funds of
the Servicer.
Collections on an Actuarial Receivable made during a Collection Period will
be applied first to repay any outstanding Advances on Actuarial Receivables made
by the Servicer with respect to such Receivable (as described below), and to the
extent that collections on an Actuarial Receivable during a Collection Period
exceed the outstanding Advances on Actuarial Receivables, the collections will
then be applied to the scheduled payment on such Receivable. If any collections
remaining after the scheduled payment is made are insufficient to prepay the
Actuarial Receivable in full, then, unless otherwise provided in the related
Prospectus Supplement, generally such remaining collections (the "Payaheads")
shall be transferred to and kept in the Payahead Account, until such later
Collection Period as the collections may be transferred to the Collection
Account and applied either to the scheduled payment or to prepay such Receivable
in full. The scheduled payment with respect to an Actuarial Receivable is that
portion of the payment required to be made by the related Obligor during each
calendar month sufficient to amortize the principal balance thereof under the
actuarial method over the term of the Receivable (except in the case of a
Balloon Loan to the extent of the Balloon Payment) and to provide interest at
the APR of such Receivable.
ADVANCES
To the extent the collections of interest and principal on an Actuarial
Receivable with respect to a Collection Period fall short of the respective
scheduled payment, the Sale and Servicing Agreement or Pooling and Servicing
Agreement will require the Servicer to make an Advance in the amount of such
shortfall. The Servicer will be obligated to make an Advance on an Actuarial
Receivable only to the extent that the Servicer, in its sole discretion, expects
to recoup such advance from subsequent collections or recoveries on such
Receivable or other Actuarial Receivables in the related Receivables Pool. The
Servicer will deposit the Advance in the applicable Collection Account on or
before the business day preceding the applicable Distribution Date or Payment
Date. The Servicer will recoup its Advance from subsequent payments by or on
behalf of the respective Obligor or from insurance or liquidation proceeds with
respect to the Receivable and will release its right to reimbursement in
conjunction with its purchase of the Receivable as Servicer, or, upon the
determination that reimbursement from the preceding sources is unlikely, will
recoup its Advance from any collections made on other Actuarial Receivables in
the related Receivables Pool.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Servicer will be entitled to receive the Servicing Fee for each
Collection Period, payable on each Distribution Date (other than the initial
Distribution Date), in an amount equal to the product of one-twelfth of the
specified percentage per annum (as set forth in the related Prospectus
Supplement, the "Servicing Fee Rate") and the Pool Balance as of the first day
of the related Collection Period (the "Servicing Fee"). The Servicing Fee,
together with any portion of the Servicing Fee that remains unpaid from prior
Distribution Dates or Payment Dates (the "Total Servicing Fee") will be paid
solely to the extent of the Total Distribution Amount. The Total Servicing Fee
will be paid prior to the distribution of any portion of the Interest
Distribution Amount to the Noteholders or the Certificateholders of the given
series.
The "Servicing Fee" will also include any late fees, prepayment charges and
other administrative fees or similar charges allowed by applicable law with
respect to the related Receivables and will be entitled to reimbursement from
such Trust for certain expenses. Payments by or on behalf of Obligors will be
allocated to scheduled payments and late fees and other charges in accordance
with the Servicer's normal practices and procedures.
The Servicing Fee will compensate the Servicer for performing the functions
of a third party servicer of automobile receivables as an agent for their
beneficial owner, including collecting and posting all payments, responding to
inquiries of Obligors on the Receivables, investigating delinquencies, sending
payment coupons or coupon books to Obligors, paying costs of disposition of
defaults and policing the collateral. The Servicing Fee also will compensate the
Servicer for administering the particular Receivables Pool, accounting for
collections and furnishing monthly and annual statements to the related Trustee
and Indenture Trustee with respect to distributions and generating federal
income tax information for such Trust and for the related Noteholders and
Certificateholders. The Servicing Fee also will reimburse the Servicer for
certain taxes, accounting fees, outside auditor fees, data processing costs and
other costs incurred in connection with administering the applicable Receivables
Pool.
MANDATORY PREPAYMENT
To the extent a Pre-Funding Account is specified in the related Prospectus
Supplement, the Securities will be prepaid in part on the Payment Date or
Distribution Date on which the Funding Period ends (or on the Payment Date or
Distribution Date immediately following the last day of the Funding Period, if
the Funding Period does not end on a Payment Date or Distribution Date) in the
event that any amount remains on deposit in the Pre-Funding Account after giving
effect to the purchase of Subsequent Receivables, if any, on such Payment Date
or Distribution Date. The aggregate principal amount of Securities to be prepaid
will be an amount equal to the amount then on deposit in the Pre-Funding Account
in such portions as specified in the related Prospectus Supplement. In such
event, if and to the extent specified in the related Prospectus Supplement, a
limited recourse mandatory prepayment premium (the "Prepayment Premium") may be
payable by the Trust to the offered Securityholders if the aggregate principal
amount of the offered Securities to be prepaid pursuant to such mandatory
prepayment exceeds such threshold amount as will be specified in the related
Prospectus Supplement. The amount of such Prepayment Premium, if any, will be
specified in the related Prospectus Supplement. A Trust's obligation to pay the
Prepayment Premium will be limited to funds which are received from the Seller
as liquidated damages for the failure to deliver Subsequent Receivables. No
other assets of the Trust will be available for the purpose of making such
payment. The ratings of any Series of Securities with respect to which a
Prepayment Premium is payable does not evaluate the Prepayment Premium or the
likelihood that the Prepayment Premium will be paid.
DISTRIBUTIONS
With respect to each Series of Securities, beginning on the Payment Date or
Distribution Date, as applicable, specified in the related Prospectus
Supplement, distributions of principal and interest (or, where applicable, of
principal or interest only) on each class of such Securities entitled thereto
will be made by the Applicable Trustee to the Noteholders and the
Certificateholders of such Series. The timing, calculation, allocation, order,
source, priorities of and requirements for all payments to each class of
Noteholders and all distributions to each class of Certificateholders of such
Series will be set forth in the related Prospectus Supplement.
With respect to each Trust, on each Payment Date and Distribution Date, as
applicable, collections on the related Receivables will be transferred from the
Collection Account to the Note Distribution Account, if any, and the Certificate
Distribution Account for distribution to Noteholders, if any, and
Certificateholders to the extent provided in the related Prospectus Supplement.
Credit enhancement, such as a Reserve Account, will be available to cover any
shortfalls in the amount available for distribution on such date to the extent
specified in the related Prospectus Supplement. As more fully described in the
related Prospectus Supplement, and unless otherwise specified therein,
distributions in respect of principal of a class of Securities of a given Series
will be subordinate to distributions in respect of interest on such class, and
distributions in respect of one or more classes of Certificates of such Series
may be subordinate to payments in respect of Notes, if any, of such Series or
other classes of Certificates of such Series.
CREDIT AND CASH FLOW ENHANCEMENT
The amounts and types of credit and cash flow enhancement arrangements and
the provider thereof, if applicable, with respect to each class of Securities of
a given Series, if any, will be set forth in the related Prospectus Supplement.
If and to the extent provided in the related Prospectus Supplement, credit and
cash flow enhancement may be in the form of subordination of one or more classes
of Securities, Reserve Accounts, a Yield Supplement Agreement, a Yield
Supplement Account, over-collateralization, letters of credit, credit or
liquidity facilities, surety bonds, guaranteed investment contracts, swaps or
other interest rate protection agreements, repurchase obligations, yield
supplement agreements, other agreements with respect to third party payments or
other support or cash deposits or any combination of two or more of the
foregoing. If specified in the applicable Prospectus Supplement, credit or cash
flow enhancement for a class of Securities may cover one or more other classes
of Securities of the same Series, and credit or cash flow enhancement for a
Series of Securities may cover one or more other Series of Securities.
The presence of a Reserve Account, a Yield Supplement Agreement, a Yield
Supplement Account and other forms of credit enhancement for the benefit of any
class or Series of Securities is intended to enhance the likelihood of receipt
by the Securityholders of such class or Series of the full amount of principal
and interest due thereon and to decrease the likelihood that such
Securityholders will experience losses. Unless otherwise specified in the
related Prospectus Supplement, the credit enhancement for a class or Series of
Securities will not provide protection against all risks of loss and will not
guarantee repayment of the entire principal balance and interest thereon. If
losses occur which exceed the amount covered by any credit enhancement or which
are not covered by any credit enhancement, Securityholders of any class or
Series will bear their allocable share of deficiencies, as described in the
related Prospectus Supplement. In addition, if a form of credit enhancement
covers more than one Series of Securities, Securityholders of any such Series
will be subject to the risk that such credit enhancement will be exhausted by
the claims of Securityholders of other Series.
RESERVE ACCOUNT. If so provided in the related Prospectus Supplement,
pursuant to the related Sale and Servicing Agreement or Pool and Servicing
Agreement, the Depositor will establish for a Series or class of Securities an
account, as specified in the related Prospectus Supplement (the "Reserve
Account"), which will be maintained with the related Trustee or Indenture
Trustee, as applicable. Unless otherwise provided in the related Prospectus
Supplement, the Reserve Account will be funded by an initial deposit by the
Depositor on the Closing Date in the amount set forth in the related Prospectus
Supplement and, if the related Series has a Funding Period, will also be funded
on each Subsequent Transfer Date to the extent described in the related
Prospectus Supplement. As further described in the related Prospectus
Supplement, the amount on deposit in the Reserve Account will be increased on
each Distribution Date or Payment Date thereafter up to the Specified Reserve
Account Balance (as defined in the related Prospectus Supplement under "Summary
of Terms--Reserve Account" or "--Reserve Fund," as the case may be) by the
deposit therein of the amount of collections on the related Receivables
remaining on each such Distribution Date or Payment Date after the payment of
all other required payments and distributions on such date. The related
Prospectus Supplement will describe the circumstances and manner under which
distributions may be made out of the Reserve Account, either to holders of the
Securities covered thereby or to the Depositor.
YIELD SUPPLEMENT ACCOUNT; YIELD SUPPLEMENT AGREEMENT. If so provided in the
related Prospectus Supplement, the Depositor or a third party will enter into a
Yield Supplement Agreement and/or establish a Yield Supplement Account with the
related Indenture Trustee or related Trustee for the benefit of the holders of
the related Securities. A Yield Supplement Agreement or a Yield Supplement
Account will be designed to provide payments to the Securityholders in respect
of Receivables the Contract Rate of which is less than the Required Rate. A
Yield Supplement Account may be an asset of the Obligor under the Yield
Supplement Agreement holding funds to secure the obligation of such Obligor to
make payments under such Yield Supplement Agreement or, in the case of a Trust
that is not classified as a grantor trust, may be an asset of the Trust from
which cash may periodically be withdrawn to provide payments to the
Securityholders.
NET DEPOSITS
As an administrative convenience, if the Servicer is not required to remit
collections within two business days of receipt thereof (see "--Payments on
Receivables" above), the Servicer will be permitted to make the deposit of
collections, aggregate Advances and Purchase Amounts for any Trust for or with
respect to the related Collection Period net of distributions to be made to the
Servicer for such Trust with respect to such Collection Period. The Servicer may
cause to be made a single, net transfer from the Collection Account to the
related Payahead Account, if any, or vice versa. The Servicer, however, will
account to the Trustee, any Indenture Trustee, the Noteholders, if any, and the
Certificateholders with respect to each Trust as if all deposits, distributions
and transfers were made individually. With respect to any Trust that issues both
Certificates and Notes, if the related Payment Dates do not coincide with
Distribution Dates, all distributions, deposits or other remittances made on a
Payment Date will be treated as having been distributed, deposited or remitted
on the Distribution Date for the applicable Collection Period for purposes of
determining other amounts required to be distributed, deposited or otherwise
remitted on such Distribution Date.
STATEMENTS TO TRUSTEES AND TRUST
Prior to each Distribution Date or Payment Date with respect to each Series
of Securities, the Servicer will provide to the applicable Indenture Trustee, if
any, and the applicable Trustee as of the close of business on the last day of
the preceding Collection Period a statement setting forth substantially the same
information as is required to be provided in the periodic reports provided to
Securityholders of such series described under "Certain Information Regarding
the Securities-Reports to Securityholders."
EVIDENCE AS TO COMPLIANCE
Each Sale and Servicing Agreement and Pooling and Servicing Agreement will
provide that a firm of independent public accountants will furnish to the
related Trust and Indenture Trustee or Trustee, as applicable, on or before
October 31 of each year a statement as to compliance by the Servicer during the
preceding twelve months ended June 30 (or, in the case of the first such
certificate with respect to each Trust, the period from the applicable Closing
Date to June 30 of such calendar year), with certain standards relating to the
servicing of the Receivables under the Sale and Servicing Agreement or Pooling
and Servicing Agreement, as the case may be.
Each Sale and Servicing Agreement and Pooling and Servicing Agreement will
also provide for delivery to the related Indenture Trustee or Trustee, as
applicable, concurrently with the delivery of the statement of compliance
referred to above, of a certificate signed by an officer of the Servicer stating
that the Servicer has fulfilled its obligations under the Sale and Servicing
Agreement or Pooling and Servicing Agreement, as applicable, throughout the
preceding twelve months ended June 30 (or, in the case of the first such
certificate, from the Closing Date to June 30 of such calendar year) or, if
there has been a default in the fulfillment of any such obligation, describing
each such default. The Servicer has agreed to give each Indenture Trustee and
each Trustee notice of certain Servicer Defaults under the related Sale and
Servicing Agreement or Pooling and Servicing Agreement, as applicable.
Copies of such statements and certificates may be obtained by
Securityholders by a request in writing addressed to the Applicable Trustee at
the address specified in the related Prospectus Supplement.
CERTAIN MATTERS REGARDING THE SERVICER
Each Sale and Servicing Agreement and Pooling and Servicing Agreement will
provide that the Servicer may not resign from its obligations and duties as
Servicer thereunder, except upon determination that the Servicer's performance
of such duties is no longer permissible under applicable law or if such
resignation is required by regulatory authorities. Such resignation will become
effective on the earlier of the date the Servicer is required by regulatory
authorities to resign or the date on which the related Indenture Trustee or
Trustee, as applicable, or a successor servicer has assumed the Servicer's
servicing obligations and duties under such Sale and Servicing Agreement or
Pooling and Servicing Agreement.
Each Sale and Servicing Agreement and Pooling and Servicing Agreement will
further provide that neither the Servicer nor any of its directors, officers,
employees and agents will be under any liability to the related Trust or the
related Noteholders or Certificateholders for taking any action or for
refraining from taking any action pursuant to such Sale and Servicing Agreement
or Pooling and Servicing Agreement or for errors in judgment; provided, however,
that neither the Servicer nor any such person will be protected against any
liability that would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence in the performance of its duties thereunder or by
reason of reckless disregard of its obligations and duties thereunder. In
addition, each Sale and Servicing Agreement and Pooling and Servicing Agreement
will provide that the Servicer is under no obligation to appear in, prosecute or
defend any legal action that is incidental to its servicing responsibilities
under such Sale and Servicing Agreement or Pooling and Servicing Agreement and
that, in its opinion, may cause it to incur any expense or liability.
Under the circumstances specified in each Sale and Servicing Agreement and
Pooling and Servicing Agreement, any entity into which the Servicer may be
merged or consolidated, or any entity resulting from any merger or consolidation
to which the Servicer is a party, or any entity succeeding to the business of
the Servicer or which corporation or other entity in each of the foregoing cases
assumes the obligations of the Servicer, will be the successor of the Servicer
under such Sale and Servicing Agreement or Pooling and Servicing Agreement.
The Servicer may appoint one or more subservicers to perform all or any
portion of its obligations under the Pooling and Servicing Agreement or Sale and
Servicing Agreement; however, the Servicer shall remain obligated and be liable
to the Trust, the related Trustee and any Indenture Trustee and the
Securityholders for the servicing and administering of the related Receivables
as if the Servicer alone were servicing and administering such Receivables.
SERVICER DEFAULT
"Servicer Default" under each Sale and Servicing Agreement and Pooling and
Servicing Agreement will consist of (i) any failure by the Servicer to deliver
to the Applicable Trustee for deposit in any of the Trust Accounts or the
Certificate Distribution Account any required payment or to direct the
Applicable Trustee to make any required distributions therefrom, which failure
continues unremedied for three business days after written notice is received by
the Servicer from the Applicable Trustee, or after discovery of such failure by
the Servicer; (ii) any failure by the Servicer duly to observe or perform in any
material respect any other covenant or agreement in such Sale and Servicing
Agreement or Pooling and Servicing Agreement, which failure materially and
adversely affects the rights of the Noteholders or the Certificateholders of the
related Series and which continues unremedied for 30 days after the giving of
written notice of such failure (1) to the Servicer by the Applicable Trustee or
(2) to the Servicer and to the Applicable Trustee by holders of Notes or
Certificates of such Series, as applicable, evidencing not less than 25% in
aggregate outstanding principal amount of such Notes or of such Certificate
Balance; and (iii) the occurrence of an Insolvency Event with respect to the
Servicer. "Insolvency Event" means, with respect to any Person, any of the
following events or actions: certain events of insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings with respect to such
Person and certain actions by such Person indicating its insolvency,
reorganization pursuant to bankruptcy proceedings or inability to pay its
obligations.
RIGHTS UPON SERVICER DEFAULT
In the case of any Trust that has issued Notes, unless otherwise provided
in the related Prospectus Supplement, as long as a Servicer Default under a Sale
and Servicing Agreement remains unremedied, the related Indenture Trustee or
holders of Notes of the related Series evidencing not less than 25% of principal
amount of such Notes then outstanding may terminate all the rights and
obligations of the Servicer under such Sale and Servicing Agreement, whereupon
such Indenture Trustee or a successor servicer appointed by such Indenture
Trustee will succeed to all the responsibilities, duties and liabilities of the
Servicer under such Sale and Servicing Agreement. In the case of any Trust that
has not issued Notes, as long as a Servicer Default under the related Pooling
and Servicing Agreement remains unremedied, the related Trustee or holders of
Certificates of the related Series evidencing not less than a majority of the
aggregate outstanding principal balance of such Certificates may terminate all
the rights and obligations of the Servicer under such Pooling and Servicing
Agreement, whereupon such Trustee or a successor Servicer appointed by such
Trustee will succeed to all the responsibilities, duties and liabilities of the
Servicer under such Pooling and Servicing Agreement. If, however, a conservator
or receiver has been appointed for the Servicer, and no Servicer Default other
than such appointment has occurred, such conservator or receiver may have the
power to prevent such Indenture Trustee, such Noteholders, such Trustee or such
Certificateholders from effecting a transfer of servicing. In the event that
such Indenture Trustee or Trustee is unwilling or unable to so act, it may
appoint, or petition a court of competent jurisdiction for the appointment of, a
successor with a net worth of at least $50,000,000 and whose regular business
includes the servicing of automotive receivables. In no event may the servicing
compensation to be paid to such successor be greater than the servicing
compensation payable to the Servicer under such Sale and Servicing Agreement or
Pooling and Servicing Agreement.
WAIVER OF PAST DEFAULTS
With respect to each Trust that has issued Notes, the holders of Notes
evidencing at least a majority in aggregate principal amount of the then
outstanding Notes of the related Series (or the holders of the Certificates of
such Series evidencing not less than a majority of the aggregate outstanding
Certificate Balance, in the case of any default which does not adversely affect
the related Indenture Trustee or such Noteholders) may, on behalf of all such
Noteholders and Certificateholders, waive any default by the Servicer in the
performance of its obligations under the related Sale and Servicing Agreement
and its consequences, except a default in making any required deposits to or
payments from any of the Trust Accounts or to the Certificate Distribution
Account in accordance with such Sale and Servicing Agreement. With respect to
each Trust that has not issued Notes, holders of Certificates of such Series
evidencing not less than a majority of the principal amount of such Certificates
then outstanding, in the case of any default which does not adversely affect the
related Trustee may, on behalf of all such Certificateholders, waive any default
by the Servicer in the performance of its obligations under the related Pooling
and Servicing Agreement and its consequences, except a default in making any
required deposits to or payments from the Certificate Distribution Account or
the related Trust Accounts in accordance with such Pooling and Servicing
Agreement. No such waiver will impair such Noteholders' or Certificateholders'
rights with respect to subsequent defaults.
AMENDMENT
Each of the Transfer and Servicing Agreements may be amended by the parties
thereto, without the consent of the related Noteholders or Certificateholders,
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of such Transfer and Servicing Agreements or
of modifying in any manner the rights of such Noteholders or Certificateholders;
provided that such action will not, in the opinion of counsel satisfactory to
the related Trustee or Indenture Trustee, as applicable, materially and
adversely affect the interest of any such Noteholder or Certificateholder. The
Transfer and Servicing Agreements may also be amended by the Depositor, the
Servicer, the Seller, the related Trustee and any related Indenture Trustee with
the consent of the holders of Notes evidencing at least a majority in aggregate
principal amount of then outstanding Notes, if any, of the related Series and
the holders of the Certificates of such Series evidencing at least a majority of
the aggregate principal amount of such Certificates then outstanding, for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of such Transfer and Servicing Agreements or of modifying in
any manner the rights of such Noteholders or Certificateholders; provided,
however, that no such amendment may (i) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, collections of payments on the
related Receivables or distributions that are required to be made for the
benefit of such Noteholders or Certificateholders or (ii) reduce the aforesaid
percentage of the aggregate outstanding principal balance of the Notes or
Certificates of such Series which are required to consent to any such amendment,
without the consent of the holders of all the outstanding Notes or Certificates,
as the case may be, of such Series.
PAYMENT OF NOTES
Upon the payment in full of all outstanding Notes of a given Series and the
satisfaction and discharge of the related Indenture, the related Trustee will
succeed to all the rights and duties of the Indenture Trustee, and the
Certificateholders of such Series will succeed to all the rights of the
Noteholders of such series, under the related Sale and Servicing Agreement,
except as otherwise provided therein.
TERMINATION
With respect to each Trust, the obligations of the Servicer, the Depositor,
the Seller, the related Trustee and the related Indenture Trustee, if any,
pursuant to the Transfer and Servicing Agreements will terminate upon the
earlier of (i) the maturity or other liquidation of the last related Receivable
and the disposition of any amounts received upon liquidation of any such
remaining Receivables, (ii) the payment to Noteholders, if any, and
Certificateholders of the related Series of all amounts required to be paid to
them pursuant to the Transfer and Servicing Agreements and (iii) the occurrence
of either event described below.
In order to avoid excessive administrative expense, the Servicer will be
permitted at its option to purchase from each Trust, as of the end of any
applicable Collection Period, if the then outstanding Pool Balance with respect
to the Receivables held by such Trust is equal to or less than a specified
percentage (not more than 10%) of the initial Pool Balance (as defined in the
related Prospectus Supplement, the "Initial Pool Balance"), all remaining
related Receivables at a price equal to an amount which, when added to the
amounts on deposit in the Collection Account for such Series for such
Distribution Date, equals the unpaid principal balances of the Securities of
such Series, plus accrued and unpaid interest thereon. The optional termination
provision allows the Servicer administrative convenience. Once the outstanding
principal balance of the Receivables is reduced to a small percentage of the
Initial Pool Balance, it is often not economical for the Servicer to service the
Receivables for the Trust.
If and to the extent provided in the related Prospectus Supplement with
respect to a Trust, the Applicable Trustee will, within ten days following a
Distribution Date or Payment Date as of which the Pool Balance is equal to or
less than 5% of the Initial Pool Balance and the Servicer has not exercised its
option to repurchase the Receivables, conduct an Auction sale by soliciting bids
for the purchase of the Receivables remaining in such Trust, in the manner and
subject to the terms and conditions set forth below. An Auction sale could be
included in the structure of a Series in order to provide investors a more
identifiable final maturity.
In the event that satisfactory bids are received as described below, the
sale proceeds will be distributed to Securityholders on the second Distribution
Date succeeding such Record Date. Any purchaser of the Receivables must agree to
the continuation of Mellon Bank, N.A. as Servicer on terms substantially similar
to those in the related Sale and Servicing Agreement or Pooling and Servicing
Agreement. Any such sale will effect early retirement of the Securities. The
Applicable Trustee must receive at least two bids from prospective purchasers
that are considered at the time to be competitive participants in the market for
motor vehicle retail installment sale contracts. The highest bid may not be less
than the fair market value of such Receivables and must equal the greater of (a)
the aggregate purchase price for the Receivables (including liquidated
receivables), plus the appraised value of any other property held by the Trust
(less liquidation expenses) or (b) an amount that when added to amounts on
deposit in the Collection Account for such Series available for distribution to
Securityholders for such second succeeding Determination Date would result in
proceeds sufficient to distribute the amount of the unpaid principal balances of
the Securities of such Series plus accrued and unpaid interest therein, and the
Total Servicing Fee payable on such final Distribution Date. The Applicable
Trustee may consult with financial advisors, including any underwriter, to
determine if the fair market value of such Receivables has been offered. Upon
the receipt of such bids, the Applicable Trustee shall sell and assign such
Receivables to the highest bidder and the Securities shall be retired on such
Distribution Date. If any of the foregoing conditions are not met, the
Applicable Trustee will not consummate such sale and will not be under any
obligation to solicit any further bids or otherwise negotiate any future sale of
Receivables remaining in the Trust. In such event, however, the Applicable
Trustee may from time to time solicit bids in the future for the purchase of
such Receivables upon the same terms described above.
In the event that an Auction Sale is consummated, the Applicable Trustee
will give written notice of termination to each Securityholder of record. The
final distribution to each Securityholder will be made only upon surrender and
cancellation of such holder's Securities at any office or agency of the
Applicable Trustee specified for such purpose. Any funds remaining in the Trust,
after the applicable Trustee has taken certain measures to locate a
Securityholder and such measures have failed, will be distributed to the
Depositor.
As more fully described in the related Prospectus Supplement, any
outstanding Notes of the related Series will be redeemed concurrently with
either of the events specified above, and the subsequent distribution to the
related Certificateholders of all amounts required to be distributed to them
pursuant to the applicable Trust Agreement or Pooling and Servicing Agreement
will effect early retirement of the Certificates of such Series.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
RIGHTS IN THE RECEIVABLES
The Receivables are "chattel paper" as defined in the UCC. Pursuant to the
UCC, for most purposes, a sale of chattel paper is treated in a manner similar
to a transaction creating a security interest in chattel paper. The Depositor
will cause appropriate financing statements to be filed with the appropriate
governmental authorities in the Commonwealth of Pennsylvania to perfect the
interest of the Trust in its purchase of the Receivables from the Depositor and
in the Depositor's purchase of the Receivables from the Seller.
Pursuant to the related Pooling and Servicing Agreement or Sale and
Servicing Agreement, the Servicer will hold the Receivables, either directly or
through subservicers, as custodian for the Trust and Indenture Trustee following
the sale and assignment of the Receivables to the Trust. The Depositor will take
such action as is required to perfect the rights of the Trust and the Indenture
Trustee in the Receivables. The Receivables will not be segregated, stamped or
otherwise marked to indicate that they have been sold to the Trust. If, through
inadvertence or otherwise, another party purchases (or takes a security interest
in) the Receivables for new value in the ordinary course of business and takes
possession of the Receivables without actual knowledge of the Trust's interest,
the purchaser (or secured party) will acquire an interest in the Receivables
superior to the interest of the Trust.
Under the related Pooling and Servicing Agreement or Sale and Servicing
Agreement, the Servicer will be obligated from time to time to take such actions
as are necessary to protect and perfect the Trust's interest in the Receivables
and their proceeds.
SECURITY INTERESTS IN THE FINANCED VEHICLES
Generally, motor vehicle retail installment sale contracts, such as the
Receivables, evidence loans to obligors to finance the purchase of such motor
vehicles. The Receivables also constitute personal property security agreements
and include grants of security interests in the vehicles under the UCC.
Perfection of security interests in motor vehicles is generally governed by the
motor vehicle registration laws of the state in which the vehicle is located. In
most states, a security interest in the vehicle is perfected by notation of the
secured party's lien on the vehicle's certificate of title.
The Bank's practice is to take such action as is required in order to
perfect its security interest in a Financed Vehicle under the laws of the
jurisdiction in which the Financed Vehicle is registered. If the Bank, because
of clerical error or otherwise, has failed to take such action with respect to a
Financed Vehicle, it will not have a perfected security interest in the Financed
Vehicle and its security interest may be subordinate to the interests of, among
others, subsequent purchasers of the Financed Vehicle that give value without
notice of the Bank's security interest and to whom a certificate of ownership is
issued in such purchaser's name, holders of perfected security interests in the
Financed Vehicle, and the trustee in bankruptcy of the Obligor. The Bank's
security interest may also be subordinate to such third parties in the event of
fraud or forgery by the Obligor or administrative error by state recording
officials or in the circumstances noted below. As described more fully below,
the Seller will warrant in the related Pooling and Servicing Agreement or Sale
and Servicing Agreement that an enforceable first priority perfected security
interest with respect to each Financed Vehicle on the Closing Date has been
created in favor of the Seller, and the Seller will be required to repurchase
the related Receivable in the event of an uncured breach of such warranty in
accordance with the related Pooling and Servicing Agreement or Sale and
Servicing Agreement.
The Seller will assign its security interest in any related Financed
Vehicles, along with the sale and assignment of the related Receivables to the
Depositor and pursuant to the related Pooling and Servicing Agreement or Sale
and Servicing Agreement, the Depositor will assign its security interests in the
Financed Vehicles, along with the sale and assignment of the Receivables, to the
Trust, and the Servicer will hold the certificates of title relating to the
Financed Vehicles, either directly or through subservicers, as custodian for the
Trust following such sale and assignment. The certificates of title will not be
endorsed or otherwise amended to identify the Trust or the related Trustee or
Indenture Trustee as the new secured party, however, because of the
administrative burden and expense involved in connection therewith.
In most states, an assignment of a security interest in a Financed Vehicle
along with the applicable Receivable is effective without amendment of any lien
noted on a vehicle's certificate of title or ownership, and the assignee
succeeds thereby to the assignor's rights as secured party.
In most states, in the absence of fraud or forgery by the vehicle owner or
of fraud, forgery, negligence or error by the Seller or administrative error by
state or local agencies, the notation of the Seller's lien on the certificates
of title or ownership and/or possession of such certificates with such notation
will be sufficient to protect the Trust against the rights of subsequent
purchasers of a Financed Vehicle or subsequent lenders who take a security
interest in a Financed Vehicle. There exists a risk, however, in not identifying
the Trust and the Indenture Trustee, if applicable, as the new secured party on
the certificate of title, that the security interest of the Trust or the
Indenture Trustee may not be enforceable. In the event the Trust has failed to
obtain or maintain a perfected security interest in a Financed Vehicle, its
security interest would be subordinate to, among others, a bankruptcy trustee of
the Obligor, a subsequent purchaser of the Financed Vehicle or a holder of a
perfected security interest.
The Seller will warrant in the related Pooling and Servicing Agreement or
Sale and Servicing Agreement as to each Receivable conveyed by it to the
Depositor that, on the Closing Date, the Seller has a valid, subsisting, and
enforceable first priority perfected security interest in the Financed Vehicle
securing the Receivable (subject to administrative delays and clerical errors on
the part of the applicable government agency and to any statutory or other lien
arising by operation of law after the Closing Date which is prior to such
security interest) and such security interest will be assigned to the Depositor
and, by the Depositor to the Trust and the Indenture Trustee, if applicable. In
the event of an uncured breach of such warranty, the Seller will be required to
repurchase such Receivable for its Purchase Amount in accordance with the
related Pooling and Servicing Agreement or Sale and Servicing Agreement. This
repurchase obligation will constitute the sole remedy available to the Trust,
the related Trustee, any Indenture Trustee, the Noteholders and the
Certificateholders in respect of a given Trust for such breach. The Seller's
warranties with respect to perfection and enforceability of a security interest
in a Financed Vehicle will not cover statutory or other liens arising after the
Closing Date by operation of law which have priority over such security
interest. Accordingly, any such lien would not by itself give rise to a
repurchase obligation on the part of the Seller.
In the event that an Obligor moves to a state other than the state in which
the Financed Vehicle is registered, under the laws of most states, a perfected
security interest in a motor vehicle continues for four months after such
relocation and thereafter, in most instances, until the Obligor re-registers the
motor vehicle in the new state, but in any event not beyond the surrender of the
certificate. A majority of states require surrender of a certificate of title to
re-register a motor vehicle and require that notice of such surrender be given
to each secured party noted on the certificate of title. In those states that
require a secured party to take possession of a certificate of title to perfect
a security interest, the secured party would learn of the re-registration
through the request from the Obligor to surrender possession of the certificate
of title. In those states that require a secured party to note its lien on a
certificate of title to perfect a security interest but do not require
possession of the certificate of title, the secured party would learn of the
re-registration through the notice from the applicable state department of motor
vehicles that the certificate of title had been surrendered. The requirements
that a certificate of title be surrendered and that notices of such surrender be
given to each secured party also apply to re- registrations effected following a
sale of a motor vehicle. The Seller would therefore have the opportunity to
re-perfect its security interest in a Financed Vehicle in the state of
re-registration following relocation of the Obligor and would be able to require
satisfaction of the related Receivable following a sale of the Financed Vehicle.
In states that do not require a certificate of title for registration of a motor
vehicle, re-registration could defeat perfection. In the ordinary course of
servicing motor vehicle receivables, the Servicer takes steps to effect
re-perfection upon receipt of notice of re-registration or information from the
Obligor as to relocation. However, there is a risk that an Obligor could
relocate without notification to the Servicer, then file a false affidavit with
the new state to cause a new certificate of title to be issued without notation
of the Seller's lien.
Under the laws of many states, certain possessory liens for repairs
performed on or storage of a motor vehicle and liens for unpaid taxes as well as
certain rights arising from the use of a motor vehicle in connection with
illegal activities, may take priority over a perfected security interest in the
motor vehicle. The Seller will warrant in the related Pooling and Servicing
Agreement or Sale and Servicing Agreement that, as of the Closing Date, the
Seller has not received notice that any such liens are pending. In the event of
a breach of such warranty which has a material and adverse effect on the
interests of the Trust, the related Trustee, any Indenture Trustee, the
Noteholders and the Certificateholders in respect of a given Trust, the Seller
will be required to repurchase the Receivable secured by the Financed Vehicle
involved. This repurchase obligation will constitute the sole remedy available
to the Trust, the related Trustee, any Indenture Trustee, the Noteholders and
the Certificateholders in respect of a given Trust for such breach. Any liens
for repairs or taxes arising at any time after the Closing Date during the term
of a related Receivable would not give rise to a repurchase obligation on the
part of the Seller.
REPOSSESSION
In the event of a default by an Obligor, the holder of a Receivable has all
the remedies of a secured party under the UCC, except where specifically limited
by other state laws or by contract. The remedies of a secured party under the
UCC include the right to repossession by means of self-help, unless such means
would constitute a breach of the peace. Self-help repossession is the method
employed by the Seller in most cases, and is accomplished simply by taking
possession of the motor vehicle. Generally, where the Obligor objects or raises
a defense to repossession, a court order must be obtained from the appropriate
state court and the motor vehicle must then be repossessed in accordance with
that order. In the event of a default by an Obligor, many jurisdictions require
that, absent a waiver, the Obligor be notified of the default and be given a
time period within which he may cure the default prior to repossession except
such notice need not be given in emergency situations pursuant to an order from
the appropriate state court.
NOTICE OF SALE; REDEMPTION RIGHTS
The UCC and other state laws require the secured party to provide an
Obligor with reasonable notice of the date, time and place of any public sale
and/or the date after which any private sale of the collateral may be held. The
Obligor generally has the right to redeem the collateral prior to actual sale by
paying the secured party the unpaid principal balance of the obligation plus, in
most cases, reasonable expenses for repossessing, holding and preparing the
collateral for disposition and arranging for its sale plus, in some
jurisdictions, reasonable attorneys' fees. In some states, the obligor has the
right, prior to actual sale, to reinstatement of the original loan terms and to
return of the collateral by payment of delinquent installments of the unpaid
balance.
DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS
The proceeds of resale of Financed Vehicles generally will be applied first
to the expenses of repossession and resale and then to the satisfaction of the
indebtedness on the related Receivable. While some states impose prohibitions or
limitations on deficiency judgments if the net proceeds from resale do not cover
the full amount of the indebtedness, a deficiency judgment can be sought in
those states that do not prohibit or limit such judgments. Any such deficiency
judgment would be a personal judgment against the Obligor for the shortfall,
however, a defaulting Obligor may have very little capital or sources of income
available following repossession. Other statutory provisions, including state
and federal bankruptcy laws, may interfere with a lender's ability to enforce a
deficiency judgment or to collect a debt owed or realize upon collateral.
Therefore, in many cases, it may not be useful to seek a deficiency judgment or,
if one is obtained, it may be settled at a significant discount or not paid at
all.
Occasionally, after resale of a repossessed motor vehicle and payment of
all expenses and indebtedness, there is a surplus of funds. In that case, the
UCC requires the secured party to remit the surplus to any other holder of a
lien with respect to the motor vehicle or, if no such lienholder exists or funds
remain after paying such other lienholder, to the Obligor.
CONSUMER PROTECTION LAWS
Numerous Federal and state consumer protection laws and related regulations
impose substantial requirements upon lenders and servicers involved in consumer
finance. These laws include the Truth In Lending Act, the Equal Credit
Opportunity Act, the Federal Trade Commission Act, the Fair Credit Billing Act,
the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the
Magnuson-Moss Warranty Act, the Federal Reserve Board's Regulations B, Z and AA,
and other similar acts and regulations, state adoptions of the Uniform Consumer
Credit Code and other similar laws, and state usury laws. Also, state laws
impose other restrictions on consumer transactions, may require contract
disclosures in addition to those required under Federal law and may limit the
remedies available in the event of default by an Obligor. These requirements
impose specific statutory liabilities upon creditors who fail to comply with
their provisions where applicable. In most cases, this liability could affect
the ability of an assignee, such as the Trust, to enforce secured loans such as
the Receivables.
The FTC's holder-in-due-course rule (the "FTC Rule") has the effect of
subjecting any assignee of the seller of the vehicle to all claims and defenses
which the purchaser could assert against such seller of the vehicle. Liability
under the FTC Rule is limited to the amounts paid by the purchaser under the
contract, and the holder of the contract may also be unable to collect any
balance remaining due thereunder from the purchaser. The FTC Rule may be
duplicated by state statutes or the common law in certain states. Although the
Seller is not a seller of motor vehicles and is not subject to the jurisdiction
of the FTC, the retail installment sale contracts evidencing the Receivables
contain provisions which contractually apply the FTC Rule. Accordingly, the
Seller, the Depositor, and the Trust as holders of the Receivables, may be
subject to claims or defenses, if any, that the purchaser of a Financed Vehicle
may assert against the seller of such vehicle.
Under the motor vehicle dealer licensing laws of most states, sellers of
motor vehicles are required to be licensed to sell such vehicles at retail sale.
In addition, with respect to used motor vehicles, the FTC's Rule on Sale of Used
Vehicles requires that all sellers of used motor vehicles prepare, complete and
display a "Buyer's Guide" which explains the warranty coverage for such
vehicles. Federal Odometer Regulations promulgated under the Motor Vehicle
Information and Cost Savings Act require that all sellers of used motor vehicles
furnish a written statement signed by the seller certifying the accuracy of the
odometer reading. If a seller is not properly licensed or if either a Buyer's
Guide or Odometer Disclosure Statement was not properly provided to the
purchaser of a Financed Vehicle, such purchaser may be able to assert a claim
against the seller of such vehicle. Although the Seller is not a seller of motor
vehicles and is not subject to these laws, a violation thereof may form the
basis for a claim or defense against the Seller, the Depositor, the Trust and
the Indenture Trustee as holders of the Receivables.
Courts have applied general equitable principles to secured parties
pursuing repossession or litigation involving deficiency balances. These
equitable principles may have the effect of relieving an Obligor from some or
all of the legal consequences of a default.
The Seller will warrant as to each Receivable conveyed by it to the
Depositor that such Receivable complied at the time it was originated and as of
the Closing Date in all material respects with all requirements of applicable
law. The Depositor will assign the Seller's warranty to the Trust. If, as of the
related Cutoff Date, an Obligor had a claim against the Trust for violation of
any law and such claim materially and adversely affected the Trust's interest in
a Receivable, such violation would create an obligation of the Seller to
repurchase the Receivable unless the breach was cured. This repurchase
obligation will constitute the sole remedy of the Trust, the related Trustee,
any Indenture Trustee, the Noteholders and the Certificateholders in respect of
a given Trust against the Seller in respect of any such uncured breach. See
"Description of the Transfer and Servicing Agreements--Sale and Assignment of
Receivables."
OTHER LIMITATIONS
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including Federal bankruptcy laws and
related state laws, may interfere with or affect the ability of a lender to
realize upon collateral or enforce a deficiency judgment. For example, in a
Chapter 13 proceeding under the Bankruptcy Code, a court may prevent a lender
from repossessing a motor vehicle and, as part of the rehabilitation plan,
reduce the amount of the secured indebtedness to the market value of such
vehicle at the time of bankruptcy (as determined by the court), leaving the
party providing financing as a general unsecured creditor for the remainder of
the indebtedness. A bankruptcy court may also reduce the monthly payments due
under a contract or change the rate of interest and time of repayment of the
indebtedness. In such a case, the amount collected on the related Receivable and
payable to the Securityholders on account thereof, may be less than the amount
anticipated.
The Depositor intends that the transfer of the Receivables by it to the
Trust under the related Sale and Servicing Agreement or Pooling and Servicing
Agreement constitutes a valid sale and assignment of such Receivables.
Notwithstanding the foregoing, if the Depositor were to become a debtor in a
bankruptcy case and a creditor or trustee-in-bankruptcy of the Depositor or the
Depositor itself were to take the position that the sale of the Receivables by
the Depositor to the Trust should instead be treated as a pledge of Receivables
to secure a borrowing of the Depositor, delays in payments or collections of
Receivables could occur or (should the court rule in favor of any such trustee,
debtor or creditor) reductions in the amounts of such payments could result. If
the transfer of Receivables by the Depositor to the Trust is treated as a pledge
instead of a sale, a tax or government lien on the property of the Depositor
arising before the transfer of the Receivables to the Trust may have priority
over the Trust's interest in such Receivables.
FEDERAL INCOME TAX CONSEQUENCES
This section sets forth (i) certain federal income tax opinions of Stroock
& Stroock & Lavan LLP, special counsel to the Depositor ("Federal Tax Counsel"),
and (ii) a discussion, based on the advice of Federal Tax Counsel, of the
material federal income tax consequences of the purchase, ownership and
disposition of Securities.
The federal income tax consequences to holders of Securities will vary
depending on whether an election is made to treat the Trust as a partnership or
division of its owner under the Code or whether the Trust will be treated as a
grantor trust. The Prospectus Supplement for each Series of Certificates will
specify whether the Trust is intended to be treated as a partnership or a
division of its owner, or the Trust will be treated as a grantor trust.
OPINIONS
Federal Tax Counsel is of the opinion, as of the date of this Prospectus,
that:
(i) If a Prospectus Supplement indicates that one or more classes
of Notes of the related Series are to be treated as indebtedness for
federal income tax purposes, assuming that all of the provisions of
the applicable Indenture are complied with, the Notes so designated
will be considered indebtedness for federal income tax purposes;
(ii) If a Prospectus Supplement indicates that a Trust will be
treated as a grantor trust for federal income tax purposes, assuming
compliance with all of the provisions of the applicable Pooling and
Servicing Agreement, (a) the Trust will be considered to be a grantor
trust under Subpart E, Part 1 of Subchapter J of the Code and will not
be considered to be an association taxable as a corporation and (b) an
owner of the related Certificates (referred to herein as "Grantor
Trust Certificates") will be treated for federal income tax purposes
as the owner of an undivided interest in the Trust's assets;
(iii) If a Prospectus Supplement indicates that a Trust is to be
treated as a partnership for federal income tax purposes, assuming
that all of the provisions of the applicable Trust Agreement or
Pooling and Servicing Agreement are complied with, such Trust will not
be considered to be an association or publicly traded partnership
taxable as a corporation;
(iv) If a Prospectus Supplement indicates that one or more
classes of Certificates of the related Series are to be treated as
indebtedness for federal income tax purposes, assuming all of the
provisions of the applicable Pooling and Servicing Agreement are
complied with, the Certificates so designated will be considered
indebtedness for federal income tax purposes.
Each such opinion is an expression of an opinion only, is not a guarantee
of results and is not binding on the Internal Revenue Service (the "IRS"), the
courts or any third-party.
DISCUSSION
The discussion does not purport to deal with federal income tax
consequences applicable to individuals holding Securities directly or indirectly
through partnerships, trusts, estates, or corporations or investors holding
Securities as other than a capital asset. Moreover, there are no cases or IRS
rulings on all of the issues discussed below. As a result, the IRS may disagree
with all or a part of the discussion below. Prospective investors are urged to
consult their own tax advisors in determining the federal, state, local foreign
and any other tax consequences to them of the purchase, ownership and
disposition of the Notes and the Certificates.
The following discussion is based upon current provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), the Treasury regulations
promulgated thereunder and judicial or ruling authority, all of which are
subject to change, which change may be retroactive. No ruling on any of the
issues discussed below will be sought from the IRS. For purposes of the
following discussion, references to the Trust, the Notes, the Certificates and
related terms, parties and documents shall be deemed to refer, unless otherwise
specified herein, to each Trust and the Notes, Certificates and related terms,
parties and documents applicable to such Trust.
TRUSTS CHARACTERIZED AS PARTNERSHIPS OR DIVISIONS
TAX CHARACTERIZATION OF THE TRUST
If a Trust is intended to be a partnership for federal income tax purposes,
the applicable Pooling and Servicing Agreement or Trust Agreement will provide
that the nature of the income of the Trust will exempt it from the rule that
certain publicly traded partnerships are taxable as corporations or the issuance
of the Securities will be structured as a private placement under an IRS safe
harbor, so that the Trust will not be characterized as a publicly traded
partnership taxable as a corporation and that no election will be made to treat
the Trust as a corporation for federal income tax purposes. If the Trust has a
single owner, it will be treated as a division of its owner, and as such will be
disregarded as an entity separate from its owner for federal income tax
purposes, assuming no election will be made to treat the Trust as a corporation
for federal income tax purposes.
TAX CONSEQUENCES TO HOLDERS OF THE NOTES
TREATMENT OF THE NOTES AS INDEBTEDNESS. The Depositor will agree, and the
Noteholders will agree by their purchase of Notes, to treat the Notes as debt
for federal income tax purposes. The discussion below assumes this
characterization of the Notes is correct, that all payments on the Notes are
denominated in U.S. dollars, and that the Notes are not Indexed Securities or
Strip Notes.
Moreover, the discussion assumes that the interest formula for the Notes
meets the requirements for "qualified stated interest" under Treasury
regulations (the "OID Regulations") relating to "original issue discount" within
the meaning of Section 1273 of the Code ("OID"), and that any OID on the Notes
(i.e., any excess of the principal amount of the Notes over their issue price)
does not exceed a de minimis amount (i.e., 3% of their principal amount
multiplied by the number of full years included in their term), all within the
meaning of the OID regulations. If these conditions are not satisfied with
respect to any given Series of Notes, additional tax considerations with respect
to such Notes will be disclosed in the applicable Prospectus Supplement.
INTEREST INCOME ON THE NOTES. Based on the above assumptions, except as
discussed in the following paragraph, the Notes will not be considered issued
with OID. The stated interest thereon will be taxable to a Noteholder as
ordinary interest income when received or accrued in accordance with such
Noteholder's method of tax accounting. Under the OID regulations, a holder of a
Note issued with a de minimis amount of OID must include such OID in income, on
a pro rata basis, as principal payments are made on the Note. It is believed,
but Federal Tax Counsel is unable to opine, that any prepayment premium paid as
a result of a mandatory redemption will be taxable as contingent interest when
it becomes fixed and unconditionally payable. A purchaser who buys a Note for
more or less than its principal amount will generally be subject, respectively,
to the premium amortization or market discount rules of the Code.
A holder of a Note that has a fixed maturity date of not more than one year
from the issue date of such Note (a "Short-Term Note") may be subject to special
rules. An accrual basis holder of a Short-Term Note (and certain cash method
holders, including regulated investment companies, as set forth in Section 1281
of the Code) generally would be required to report interest income as interest
accrues on a straight-line basis over the term of each interest period. Other
cash basis holders of a Short-Term Note would, in general, be required to report
interest income as interest is paid (or, if earlier, upon the taxable
disposition of the Short-Term Note). However, a cash basis holder of a
Short-Term Note reporting interest income as it is paid may be required to defer
a portion of any interest expense otherwise deductible on indebtedness incurred
to purchase or carry the Short-Term Note until the taxable disposition of the
Short-Term Note. A cash basis taxpayer may elect under Section 1281 of the Code
to accrue interest income on all nongovernment debt obligations with a term of
one year or less, in which case the taxpayer would include interest on the
Short-Term Note in income as it accrues, but would not be subject to the
interest expense deferral rule referred to in the preceding sentence. Certain
special rules apply if a Short-Term Note is purchased for more or less than its
principal amount.
SALE OR OTHER DISPOSITION. If a Noteholder sells a Note, the holder will
recognize gain or loss in an amount equal to the difference between the amount
realized on the sale and the holder's adjusted tax basis in the Note. The
adjusted tax basis of a Note to a particular Noteholder will equal the holder's
cost for the Note, increased by any market discount, acquisition discount, OID,
if any, and gain previously included by such Noteholder in income with respect
to the Note and decreased by the amount of bond premium (if any) previously
amortized and by the amount of principal payments previously received by such
Noteholder with respect to such Note. Any such gain or loss will be capital gain
or loss if the Note was held as a capital asset, except for gain representing
accrued interest and accrued market discount not previously included in income.
Capital losses generally may be used only to offset capital gains.
FOREIGN HOLDERS. Interest payments made (or accrued) to a Noteholder who is
a foreign corporation or other non-United States person (a "foreign person")
generally will be considered "portfolio interest", and generally will not be
subject to United States federal income tax and withholding tax, if the interest
is not effectively connected with the conduct of a trade or business within the
United States by the foreign person and the foreign person (i) is not actually
or constructively a "10 percent shareholder" of the Trust or the Depositor
(including a holder of 10% of the outstanding Certificates) or a "controlled
foreign corporation" with respect to which the Trust or the Depositor is a
"related person" within the meaning of the Code and (ii) provides the Applicable
Trustee or other person who is otherwise required to withhold U.S. tax with
respect to the Notes with an appropriate statement (on Form W-8 or a similar
form), signed under penalties of perjury, certifying that the beneficial owner
of the Note is a foreign person and providing the foreign person's name and
address. If a Note is held through a securities clearing organization or certain
other financial institutions, the organization or institution may provide the
relevant signed statement to the withholding agent; in that case, however, the
signed statement must be accompanied by a Form W-8 or substitute form provided
by the foreign person that owns the Note. If such interest is not portfolio
interest, then it will be subject to United States federal income and
withholding tax at a rate of 30 percent, unless reduced or eliminated pursuant
to an applicable tax treaty.
Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a Note by a foreign person generally will be exempt from
United States federal income and withholding tax, provided that such gain is not
effectively connected with the conduct of a trade or business in the United
States by the foreign person.
BACKUP WITHHOLDING. Each holder of a Note (other than an exempt holder such
as a corporation, tax-exempt organization, qualified pension and profit-sharing
trust or individual retirement account will be required to provide, under
penalties of perjury, a certificate containing the holder's name, address,
correct federal taxpayer identification number and a statement that the holder
is not subject to backup withholding. Should a nonexempt Noteholder fail to
provide the required certification, the Trust will be required to withhold 31
percent of the amount otherwise payable to the holder, and remit the withheld
amount to the IRS as a credit against the holder's federal income tax liability.
POSSIBLE ALTERNATIVE TREATMENTS OF THE NOTES. If, contrary to the opinion
of Federal Tax Counsel, the IRS successfully asserted that one or more of the
Notes did not represent debt for federal income tax purposes, the Notes might be
treated as equity interests in the Trust. If so treated, the Trust might be
taxable as a corporation with the adverse consequences described above (and the
taxable corporation would not be able to reduce its taxable income by deductions
for interest expense on Notes recharacterized as equity). Alternatively, the
Trust might be treated as a publicly traded partnership that would not be
taxable as a corporation if it met certain qualifying income tests. Nonetheless,
treatment of the Notes as equity interests in such a publicly traded partnership
could have adverse tax consequences to certain holders. For example, income to
certain tax-exempt entities (including pension funds) would be "unrelated
business taxable income," income to foreign holders generally would be subject
to U.S. tax and U.S. tax return filing and withholding requirements, and
individual holders might be subject to certain limitations on their ability to
deduct their share of Trust expenses.
TAX CONSEQUENCES TO HOLDERS OF THE CERTIFICATES
TREATMENT OF THE TRUST AS A PARTNERSHIP. The Depositor and the Servicer
will agree, and the Certificateholders will agree by their purchase of
Certificates, to treat the Trust as a partnership for purposes of federal and
state income tax, franchise tax and any other tax measured in whole or in part
by income, with the assets of the partnership being the assets held by the
Trust, the partners of the partnership being the Certificateholders, and the
Notes, if any, being debt of the partnership, or if there is a single
Certificateholder, to disregard the Trust as an entity separate from its owner.
However, the proper characterization of the arrangement involving the Trust, the
Certificates, the Notes, if any, the Depositor and the Servicer is not clear
because there is no authority on transactions closely comparable to that
contemplated herein.
For example, because the Certificates have certain features characteristic
of debt, the Certificates might be considered debt of the Depositor or the
Trust. Generally, provided such Certificates are issued at or close to face
value, any characterization would not result in materially adverse tax
consequences to Certificateholders as compared to the consequences from
treatment of the Certificates as equity in a partnership, described below. If
Certificates are issued at a substantial discount, a discussion of the relevant
tax consequences will be set forth in the related Prospectus Supplement. The
following discussion assumes that the Certificates represent equity interests in
a partnership.
The following discussion assumes that all payments on the Certificates are
denominated in U.S. dollars, none of the Certificates are Indexed Securities or
Strip Certificates, and that a Series of Securities includes a single class of
Certificates. If these conditions are not satisfied with respect to any given
Series of Certificates, additional tax considerations with respect to such
Certificates will be disclosed in the applicable Prospectus Supplement.
PARTNERSHIP TAXATION. As a partnership, the Trust will not be subject to
federal income tax. Rather, each Certificateholder will be required to
separately take into account such holder's allocated share of income, gains,
losses, deductions and credits of the Trust. In certain instances, however, the
Trust could have an obligation to make payments of withholding tax on behalf of
a Certificateholder. See "Backup Withholding" and "Tax Consequences to Foreign
Certificateholders" below. The Trust's income will consist primarily of interest
and finance charges earned on the Receivables (including appropriate adjustments
for market discount, OID and bond premium) and any gain upon collection or
disposition of Receivables. The Trust's deductions will consist primarily of
interest accruing with respect to the Notes, servicing and other fees, and
losses or deductions upon collection or disposition of Receivables.
The tax items of a partnership are allocable to the partners in accordance
with the Code, Treasury regulations and the partnership agreement (here, the
related documents). The related Trust Agreement or Pooling and Servicing
Agreement will provide, in general, that the Certificateholders will be
allocated taxable income of the Trust for each month equal to the sum of (i) the
interest that accrues on the Certificates in accordance with their terms for
such month, including interest accruing at the Pass-Through Rate for such month
and interest on amounts previously due on the Certificates but not yet
distributed; (ii) any amount of Trust income that corresponds to any excess of
the principal amount of the Certificates over their initial issue price; (iii)
prepayment premium payable to the Certificateholders for such month; and (iv)
any other amounts of income payable to the Certificateholders for such month.
Such allocation will be reduced by any amortization by the Trust of premium on
Receivables that corresponds to any excess of the issue price of Certificates
over their principal amount. All remaining taxable income of the Trust will be
allocated to the related Company. Based on the economic arrangement of the
parties, this approach for allocating Trust income should be permissible under
applicable Treasury regulations, although Federal Tax Counsel is unable to opine
that the IRS would not require a greater amount of income to be allocated to
Certificateholders. Moreover, even under the foregoing method of allocation,
Certificateholders may be allocated income equal to the entire Pass-Through Rate
plus the other items described above even though the Trust might not have
sufficient cash to make current cash distributions of such amount. Thus, cash
basis holders will in effect be required to report income from the Certificates
on the accrual basis and Certificateholders may become liable for taxes on Trust
income even if they have not received cash from the Trust to pay such taxes. In
addition, because tax allocations and tax reporting will be done on a uniform
basis for all Certificateholders but Certificateholders may be purchasing
Certificates at different times and at different prices, Certificateholders may
be required to report on their tax returns taxable income that is greater or
less than the amount reported to them by the Trust.
Substantially all of the taxable income allocated to a Certificateholder
that is a pension, profit sharing or employee benefit plan or other tax-exempt
entity (including an individual retirement account) will constitute "unrelated
business taxable income" generally taxable to such a holder under the Code.
Except as provided in the following paragraph the Trust intends to make all
tax calculations relating to income and allocations to Certificateholders on an
aggregate basis. If the IRS were to require that such calculations be made
separately for each Receivable, the Trust might be required to incur additional
expense but it is believed that there would not be a material adverse effect on
Certificateholders.
DISCOUNT AND PREMIUM. It is believed that the Receivables will not be
issued with OID, and, therefore, the Trust should not have OID income. However,
the purchase price paid by the Trust for the Receivables may be greater or less
than the remaining principal balance of the Receivables at the time of purchase.
If so, the Receivables will have been acquired at a premium or discount, as the
case may be. (As indicated above, the Trust will make this calculation on an
aggregate basis, but might be required to recompute it on a
Receivable-by-Receivable basis.)
If the Trust acquires the Receivables at a market discount or premium, the
Trust will elect to include any such discount in income currently as it accrues
over the life of the Receivables or to offset any such premium against interest
income on the Receivables. As indicated above, a portion of such market discount
income or premium deduction will be allocated to Certificateholders if the
related Trust Agreement or Pooling and Servicing Agreement so provides. Any such
allocation will be disclosed in the related Prospectus Supplement.
SECTION 708 TERMINATION. Under Section 708 of the Code, the Trust will be
deemed to terminate for federal income tax purposes if 50% or more of the
capital and profits interests in the Trust are sold or exchanged within a
12-month period. If such a termination occurs, the partnership will be
considered to have transferred its assets and liabilities to a new partnership
in exchange for interests in that new partnership which it would then be treated
as transferring to its partners. The Trust will not comply with certain
technical requirements that might apply when such a constructive termination
occurs. As a result, the Trust may be subject to certain tax penalties and may
incur additional expenses if it is required to comply with those requirements.
Furthermore, the Trust might not be able to comply due to lack of data.
DISPOSITION OF CERTIFICATES. Generally, capital gain or loss will be
recognized on a sale of Certificates in an amount equal to the difference
between the amount realized and the seller's tax basis in the Certificates sold.
A Certificateholder's tax basis in a Certificate will generally equal the
holder's cost increased by the holder's share of Trust income (includible in
income) and decreased by any distributions received with respect to such
Certificate. In addition, both the tax basis in the Certificates and the amount
realized on a sale of a Certificate would include the holder's share of the
Notes and other liabilities of the Trust. A holder acquiring Certificates at
different prices may be required to maintain a single aggregate adjusted tax
basis in such Certificates, and, upon sale or other disposition of some of the
Certificates, allocate a portion of such aggregate tax basis to the Certificates
sold (rather than maintaining a separate tax basis in each Certificate for
purposes of computing gain or loss on a sale of that Certificate).
Any gain on the sale of a Certificate attributable to the holder's share of
unrecognized accrued market discount on the Receivables would generally be
treated as ordinary income to the holder and would give rise to special tax
reporting requirements. The Trust does not expect to have any other assets that
would give rise to such special reporting requirements. Thus, to avoid those
special reporting requirements, the Trust will elect to include market discount
in income as it accrues.
If a Certificateholder is required to recognize an aggregate amount of
income over the life of the Certificates that exceeds the aggregate cash
distributions with respect thereto, such excess will generally give rise to a
capital loss upon the retirement of the Certificates.
ALLOCATIONS BETWEEN TRANSFERORS AND TRANSFEREES. In general, the Trust's
taxable income and losses will be determined monthly and the tax items for a
particular calendar month will be apportioned among the Certificateholders in
proportion to the principal amount of Certificates owned by them as of the close
of the last day of such month. As a result, a holder purchasing Certificates may
be allocated tax items (which will affect its tax liability and tax basis)
attributable to periods before the actual transaction.
The use of such a monthly convention may not be permitted by existing
regulations. If a monthly convention is not allowed (or only applies to
transfers of less than all of the partner's interest), taxable income or losses
of the Trust might be reallocated among the Certificateholders. The related
Company is authorized to revise the Trust's method of allocation between
transferors and transferees to conform to a method permitted by future
regulations.
SECTION 754 Election. In the event that a Certificateholder sells its
Certificates at a profit (or loss), the purchasing Certificateholder will have a
higher (or lower) basis in the Certificates than the selling Certificateholder
had. The tax basis of the Trust's assets will not be adjusted to reflect that
higher (or lower) basis unless the Trust were to file an election under Section
754 of the Code. In order to avoid the administrative complexities that would be
involved in keeping accurate accounting records, as well as potentially onerous
information reporting requirements, the Trust will not make such election. As a
result, Certificateholders might be allocated a greater or lesser amount of
Trust income than would be appropriate based on their own purchase price for
Certificates.
ADMINISTRATIVE MATTERS. The Trustee is required to keep or have kept
complete and accurate books of the Trust. Such books will be maintained for
financial reporting and tax purposes on an accrual basis and the fiscal year of
the Trust will be the calendar year. The Trustee will file a partnership
information return (IRS Form 1065) with the IRS for each taxable year of the
Trust and will report each Certificateholder's allocable share of items of Trust
income and expense to holders and the IRS on Schedule K-1. The Trust will
provide the Schedule K-1 information to nominees that fail to provide the Trust
with the information statement described below and such nominees will be
required to forward such information to the beneficial owners of the
Certificates. Generally, holders must file tax returns that are consistent with
the information return filed by the Trust or be subject to penalties unless the
holder timely notifies the IRS of all such inconsistencies.
Under Section 6031 of the Code, any person that holds Certificates as a
nominee at any time during a calendar year is required to furnish the Trust with
a statement containing certain information on the nominee, the beneficial owners
and the Certificates so held. Such information includes (i) the name, address
and taxpayer identification number of the nominee and (ii) as to each beneficial
owner (x) the name, address and identification number of such person, (y)
whether such person is a United States person, a tax-exempt entity or a foreign
government, an international organization, or any wholly-owned agency or
instrumentality of either of the foregoing, and (z) certain information on
Certificates that were held, bought or sold on behalf of such person throughout
the year. In addition, brokers and financial institutions that hold Certificates
through a nominee are required to furnish directly to the Trust information as
to themselves and their ownership of Certificates. A clearing agency registered
under Section 17A of the Exchange Act is not required to furnish any such
information statement to the Trust. The information referred to above for any
calendar year must be furnished to the Trust on or before the following January
31. Nominees, brokers and financial institutions that fail to provide the Trust
with the information described above may be subject to penalties.
The Servicer or the Applicable Trustee will be designated as the tax
matters partner in the related Trust Agreement or Pooling and Servicing
Agreement and, as such, will be responsible for representing the
Certificateholders in any dispute with the IRS. The Code provides for
administrative examination of a partnership as if the partnership were a
separate and distinct taxpayer. Generally, the statute of limitations for
partnership items does not expire before three years after the date on which the
partnership information return is filed. Any adverse determination following an
audit of the return of the Trust by the appropriate taxing authorities could
result in an adjustment of the returns of the Certificateholders, and, under
certain circumstances, a Certificateholder may be precluded from separately
litigating a proposed adjustment to the items of the Trust. An adjustment could
also result in an audit of a Certificateholder's returns and adjustments of
items not related to the income and losses of the Trust.
TAX CONSEQUENCES TO FOREIGN CERTIFICATEHOLDERS. As discussed below, an
investment in a Certificate is not suitable for any non-U.S. person which is not
eligible for a complete exemption from U.S. withholding tax on interest under a
tax treaty with the United States. Accordingly, no interest in a Certificate
should be acquired by or on behalf of any such non-U.S. person.
No regulations, published rulings or judicial decisions exist that would
discuss the characterization for Federal withholding tax purposes with respect
to non-U.S. persons of a partnership with activities substantially the same as
the Trust. Depending upon the particular terms of the related Trust Agreement
and Sale and Servicing Agreement or Pooling and Servicing Agreement, a trust may
be considered to be engaged in a trade or business in the United States for
purposes of Federal withholding taxes with respect to non-U.S. persons. If the
Trust is considered to be engaged in a trade or business in the United States
for such purposes, the income of the Trust distributable to a non-U.S. person
would be subject to Federal withholding tax at a rate of 35% for persons taxable
as a corporation. Also, in such cases, a non- U.S. Certificateholder that is a
corporation may be subject to the branch profits tax. Subsequent adoption of
Treasury regulations or the issuance of other administrative pronouncements may
require the Trust to change its withholding procedures.
If a Trust is engaged in a trade or business, each foreign
Certificateholder will be required to file a U.S. income tax return (including
in the case of a corporation, the branch profits tax) on its share of the
Trust's income. A foreign holder generally would be entitled to file with the
IRS a claim for refund with respect to withheld taxes, taking the position that
no taxes were due because the Trust was not engaged in a U.S. trade or business.
However, interest payments made to (or accrued by) a Certificateholder who is a
foreign person may be considered guaranteed payments to the extent such payments
are determined without regard to the income of the Trust and for that reason or
because of the nature of the Receivables, the interest will likely not be
considered "portfolio interest." See "--Tax Consequences with respect to Holders
of the Notes - Foreign Holders." As a result, even if the Trust is not
considered to be engaged in a U.S. trade or business, Certificateholders would
be subject to United States Federal income tax which must be withheld at a rate
of 30% on their share of the Trust's income (without reduction for interest
expense), unless reduced or eliminated pursuant to an applicable income tax
treaty. If the Trust is notified that a Certificateholder is a foreign person,
the Trust may be required to withhold and pay over such tax, which can exceed
the amounts otherwise available for distribution to such a Certificateholder. A
foreign holder would generally be entitled to file with the IRS a refund claim
for such withheld taxes, taking the position that the interest was portfolio
interest and therefore not subject to U.S. tax. However, the IRS may disagree
and no assurance can be given as to the appropriate amount of tax liability. As
a result, each potential foreign Certificateholder should consult its tax
advisor as to whether the tax consequences of holding an interest in a
Certificate make it an unsuitable investment.
BACKUP WITHHOLDING. Distributions made on the Certificates and proceeds
from the sale of the Certificates will be subject to a "backup" withholding tax
of 31% if, in general, the Certificateholder fails to comply with certain
identification procedures, unless the holder is an exempt recipient under
applicable provisions of the Code.
TRUSTS TREATED AS GRANTOR TRUSTS
TAX CHARACTERIZATION OF THE TRUST AS A GRANTOR TRUST
CHARACTERIZATION. Each Grantor Trust Certificateholder will be treated as
the owner of a pro rata undivided interest in the interest and principal
portions of the Trust represented by the Grantor Trust Certificates and will be
considered the equitable owner of a pro rata undivided interest in each of the
Receivables in the Trust. Any amounts received by a Grantor Trust
Certificateholder in lieu of amounts due with respect to any Receivable because
of a default or delinquency in payment will be treated for federal income tax
purposes as having the same character as the payments they replace.
Each Grantor Trust Certificateholder will be required to report on its
federal income tax return in accordance with such Grantor Trust
Certificateholder's method of accounting its pro rata share of the entire income
from the Receivables in the Trust represented by Grantor Trust Certificates,
including interest, OID, if any, prepayment fees, assumption fees, any gain
recognized upon an assumption and late payment charges received by the Servicer.
Under Sections 162 or 212 each Grantor Trust Certificateholder will be entitled
to deduct its pro rata share of servicing fees, prepayment fees, assumption
fees, any loss recognized upon an assumption and late payment charges retained
by the Servicer, provided that such amounts are reasonable compensation for
services rendered to the Trust. Grantor Trust Certificateholders that are
individuals, estates or trusts will be entitled to deduct their share of
expenses only to the extent such expenses plus all other Section 212 expenses
exceed two percent of its adjusted gross income. For taxable years beginning
after December 31, 1997, in the case of a partnership that has 100 or more
partners and elects to be treated as an "electing large partnership," 70 percent
of such partnership's miscellaneous itemized deductions will be disallowed,
although the remaining deductions will generally be allowed at the partnership
level and will not be subject to the 2 percent floor that would otherwise be
applicable to individual partners.
A Grantor Trust Certificateholder using the cash method of accounting must
take into account its pro rata share of income and deductions as and when
collected by or paid to the Servicer. A Grantor Trust Certificateholder using an
accrual method of accounting must take into account its pro rata share of income
and deductions as they become due or are paid to the Servicer, whichever is
earlier. If the servicing fees or other amounts paid to the Servicer exceed
reasonable servicing compensation, the amount of such excess would be considered
as an ownership interest retained by the Servicer (or any person to whom the
Servicer assigned all or a portion of the servicing fees) in a portion of the
interest payments on the Receivables. The Receivables would then be subject to
the stripped bond rules of the Code discussed below.
The first two subsections below describe certain federal income tax
consequences dependent on whether or not the stripped bond rules apply and the
third subsection below describes certain federal income tax consequence which
are not dependent on the applicability of the stripped rules.
TAXATION OF HOLDERS IF STRIPPED BOND RULES APPLY
In the absence of comprehensive regulations, Federal Tax Counsel is unable
to opine as to the tax treatment of stripped bonds. The preamble to certain
stripped bond regulations suggests that each purchaser of a Grantor Trust
Certificate will be treated with respect to each Receivable as the purchaser of
a single stripped bond consisting of all of the stripped portions of the
applicable Receivable (such portions with respect to a Receivable are referred
to herein as a "Stripped Bond") which generally should be treated as a single
debt instrument issued on the day it is purchased for purposes of calculating
any original issue discount. Generally, under Treasury regulations relating to
Stripped Bonds (the "Section 1286 Treasury Regulations"), if the discount on a
Stripped Bond is larger than a de minimis amount (as calculated for purposes of
the OID rules of the Code) such Stripped Bond will be considered to have been
issued with OID. See "Original Issue Discount" herein. Based on the preamble to
the Section 1286 Treasury Regulations, Federal Tax Counsel is of the opinion
that, although the matter is not entirely clear, the interest income on the
Certificates at the sum of the Pass-Through Rate and the portion of the
Servicing Fee Rate that does not constitute excess servicing will be treated as
"qualified stated interest" within the meaning of the Section 1286 Treasury
Regulations and such income will be so treated in the Trustee's tax information
reporting.
ORIGINAL ISSUE DISCOUNT. When Stripped Bonds have more than a de minimis
amount of OID, the special rules of the Code relating to "original issue
discount" (currently Sections 1271 through 1275) will be applicable to a Grantor
Trust Certificateholder's interest in those Stripped Bonds. Generally, a Grantor
Trust Certificateholder that acquires an interest in a Stripped Bond issued or
acquired with OID must include in gross income the sum of the "daily portions,"
as defined below, of the OID on such Stripped Bond for each day on which it owns
a Certificate, including the date of purchase but excluding the date of
disposition. The daily portions of OID with respect to a Stripped Bond generally
would be determined as follows. A calculation will be made of the portion of OID
that accrues on the Stripped Bond during each successive monthly accrual period
(or shorter period in respect of the date of original issue or the final
Distribution Date). This will be done, in the case of each full monthly accrual
period, by adding (i) the present value of all remaining payments to be received
on the Stripped Bond under the prepayment assumption, if any, used in respect of
the Stripped Bonds and (ii) any payments received during such accrual period,
and subtracting from that total the "adjusted issue price" of the Stripped Bond
at the beginning of such accrual period. No representation is made that the
Stripped Bonds will prepay at any prepayment assumption. The "adjusted issue
price" of a Stripped Bond at the beginning of the first accrual period is its
issue price (as determined for purposes of the OID rules of the Code) and the
"adjusted issue price" of a Stripped Bond at the beginning of a subsequent
accrual period is the "adjusted issue price" at the beginning of the immediately
preceding accrual period plus the amount of OID allocable to that accrual period
and reduced by the amount of any payment (other than "qualified stated
interest") made at the end of or during that accrual period. The OID accruing
during such accrual period will then be divided by the number of days in the
period to determine the daily portion of OID for each day in the period. With
respect to an initial accrual period shorter than a full monthly accrual period,
the daily portions of OID must be determined according to an appropriate
allocation under either an exact or approximate method set forth in the OID
Regulations, or some other reasonable method, provided that such method is
consistent with the method used to determine the yield to maturity of the
Receivables.
With respect to the Stripped Bonds, the method of calculating OID as
described above will cause the accrual of OID to either increase or decrease
(but never below zero) in any given accrual period to reflect the fact that
prepayments are occurring at a faster or slower rate than the prepayment
assumption used in respect of the Stripped Bonds.
TAXATION OF HOLDERS IF STRIPPED BOND RULES DO NOT APPLY
PREMIUM. The price paid for a Grantor Trust Certificate by a holder will be
allocated to such holder's undivided interest in each Receivable based on each
Receivables relative fair market value, so that such holder's undivided interest
in each Receivable will have its own tax basis. A Grantor Trust
Certificateholder that acquires an interest in Receivables at a premium may
elect to amortize such premium under a constant interest method. Amortizable
bond premium will be treated as an offset to interest income on such Grantor
Trust Certificate. The basis for such Grantor Trust Certificate will be reduced
to the extent that amortizable premium is applied to offset interest payments.
There is no law as to whether a reasonable prepayment assumption should be used
in computing amortization of premium allowable under Section 171. A Grantor
Trust Certificateholder that makes this election for Receivables that are
construed to be acquired at a premium will be deemed to have made an election to
amortize bond premium with respect to all debt instruments having amortizable
bond premium that such Grantor Trust Certificateholder acquires during the year
of the election or thereafter.
If a premium is not subject to amortization using a reasonable prepayment
assumption or it prepays faster than the prepayment assumption, the holder of a
Grantor Trust Certificate acquired at a premium should recognize a loss if a
Receivable prepays in full, equal to the difference between the portion of the
prepaid principal amount of such Receivable that is allocable to the Grantor
Trust Certificate and the portion of the adjusted basis of the Grantor Trust
Certificate that is allocable to such Receivable.
MARKET DISCOUNT. A Grantor Trust Certificateholder that acquires an
undivided interest in Receivables may be subject to the market discount rules of
Sections 1276 through 1278 to the extent an undivided interest in a Receivable
is considered to have been purchased at a "market discount." Generally, the
amount of market discount is equal to the excess of the portion of the principal
amount of such Receivable allocable to such holder's undivided interest over
such holder's tax basis in such interest. Market discount with respect to a
Receivable will be considered to be zero if the amount allocable to the
Receivable is less than 0.25% of the Receivable's stated redemption price at
maturity multiplied by the weighted average maturity remaining after the date of
purchase. Treasury regulations implementing the market discount rules have not
yet been issued; therefore, investors should consult their own tax advisors
regarding the application of these rules and the advisability of making any of
the elections allowed under Code Sections 1276 through 1278.
The Code provides that any principal payment (whether a scheduled payment
or a prepayment) or any gain on disposition of a market discount bond shall be
treated as ordinary income to the extent that it does not exceed the accrued
market discount at the time of such payment. The amount of accrued market
discount for purposes of determining the tax treatment of subsequent principal
payments or dispositions of the market discount bond is to be reduced by the
amount so treated as ordinary income.
The Code also grants the Treasury Department authority to issue regulations
providing for the computation of accrued market discount on debt instruments,
the principal of which is payable in more than one installment. Because the
regulations described above have not been issued, Federal Tax Counsel is unable
to opine as to what effect those regulations might have on the tax treatment of
a Grantor Trust Certificate purchased at a discount or premium.
A holder who acquired a Grantor Trust Certificate at a market discount also
may be required to defer a portion of its interest deductions for the taxable
year attributable to any indebtedness incurred or continued to purchase or carry
such Grantor Trust Certificate purchased with market discount. For these
purposes, the de minimis rule referred above applies. Any such deferred interest
expense would not exceed the market discount that accrues during such taxable
year and is, in general, allowed as a deduction not later than the year in which
such market discount is includible in income. If such holder elects to include
market discount in income currently as it accrues on all market discount
instruments acquired by such holder in that taxable year or thereafter, the
interest deferral rule described above will not apply.
ELECTION TO TREAT ALL INTEREST AS OID. The OID regulations permit a Grantor
Trust Certificateholder to elect to accrue all interest, discount (including de
minimis market or original issue discount) and premium in income as interest,
based on a constant yield method. If such an election were to be made with
respect to a Grantor Trust Certificate with market discount, the
Certificateholder would be deemed to have made an election to include in income
currently market discount with respect to all other debt instruments having
market discount that such Grantor Trust Certificateholder acquires during the
year of the election or thereafter. Similarly, a Grantor Trust Certificateholder
that makes this election for a Grantor Trust Certificate that is acquired at a
premium will be deemed to have made an election to amortize bond premium with
respect to all debt instruments having amortizable bond premium that such
Grantor Trust Certificateholder owns or acquires. See "--Premium" herein. The
election to accrue interest, discount and premium on a constant yield method
with respect to a Grantor Trust Certificate is irrevocable.
TAXATION OF HOLDERS REGARDLESS OF WHETHER STRIPPED BOND RULES APPLY
SALE OR EXCHANGE OF A GRANTOR TRUST CERTIFICATE. Sale or exchange of a
Grantor Trust Certificate prior to its maturity will result in gain or loss
equal to the difference, if any, between the amount received and the owner's
adjusted basis in the Grantor Trust Certificate. Such adjusted basis generally
will equal the seller's purchase price for the Grantor Trust Certificate,
increased by the OID included in the seller's gross income with respect to the
Grantor Trust Certificate, and reduced by principal payments on the Grantor
Trust Certificate previously received by the seller. Such gain or loss generally
will be capital gain or loss to an owner for which a Grantor Trust Certificate
is a "capital asset" within the meaning of Section 1221, and will be long-term
or short-term depending on whether the Grantor Trust Certificate has been owned
for the long-term capital gain holding period (currently more than one year).
Grantor Trust Certificates will be "evidences of indebtedness" within the
meaning of Section 582(c)(1), so that gain or loss recognized from the sale of a
Grantor Trust Certificate by a bank or a thrift institution to which such
section applies will be treated as ordinary income or loss.
NON-U.S. PERSONS. To the extent that a Grantor Trust Certificate evidences
ownership in underlying Receivables that were issued on or before July 18, 1984,
interest or OID paid by the person required to withhold tax under Section 1441
or 1442 to (i) an owner that is not a U.S. Person (as defined below) or (ii) a
Grantor Trust Certificateholder holding on behalf of an owner that is not a U.S.
Person will be subject to federal income tax, collected by withholding, at a
rate of 30% or such lower rate as may be provided for interest by an applicable
tax treaty. Accrued OID recognized by the owner on the sale or exchange of such
a Grantor Trust Certificate also will be subject to federal income tax at the
same rate. Generally, such payments would not be subject to withholding to the
extent that a Grantor Trust Certificate evidences ownership in Receivables
issued after July 18, 1984, by natural persons if such Grantor Trust
Certificateholder complies with certain identification requirements (including
delivery of a statement, signed by the Grantor Trust Certificateholder under
penalties of perjury, certifying that such Grantor Trust Certificateholder is
the beneficial owner, is not a U.S. Person and providing the name and address of
such Grantor Trust Certificateholder). Additional restrictions apply to
Receivables where the Obligor is not a natural person in order to qualify for
the exemption from withholding.
As used herein, a "U.S. Person" means a citizen or resident of the United
States, a corporation or a partnership organized in or under the laws of the
United States or any political subdivision thereof (unless, in the case of a
partnership, future Treasury regulations provide otherwise), an estate, the
income of which from sources outside the United States is includible in gross
income for federal income tax purposes regardless of its connection with the
conduct of a trade or business within the United States, or a trust other than a
"foreign trust," as defined in Section 7701(a)(3) of the Code.
INFORMATION REPORTING AND BACKUP WITHHOLDING. The Servicer will furnish or
make available, within a reasonable time after the end of each calendar year, to
each person who was a Grantor Trust Certificateholder at any time during such
year, such information as may be deemed necessary or desirable to assist Grantor
Trust Certificateholders in preparing their federal income tax returns, or to
enable holders to make such information available to beneficial owners or
financial intermediaries that hold Grantor Trust Certificates as nominees on
behalf of beneficial owners. If a holder, beneficial owner, financial
intermediary or other recipient of a payment on behalf of a beneficial owner
fails to supply a certified taxpayer identification number or if the Secretary
of the Treasury determines that such person has not reported all interest and
dividend income required to be shown on its federal income tax return, 31%
backup withholding may be required with respect to any payments. Any amounts
deducted and withheld from a distribution to a recipient would be allowed as a
credit against such recipient's federal income tax liability.
CERTAIN CERTIFICATES TREATED AS INDEBTEDNESS
Upon the issuance of Certificates that are intended to be treated as
indebtedness for federal income tax purposes, Federal Tax Counsel will opine
that, based upon its analysis of the factors discussed below and certain
assumptions and qualifications, the Certificates will be treated as indebtedness
for federal income tax purposes. However, opinions of counsel are not binding on
the IRS and there can be no assurance that the IRS could not successfully
challenge this conclusion. Such Certificates that are intended to be treated as
indebtedness are herein referred to as "Debt Certificates" and holders of such
Certificates are herein referred to as "Debt Certificateholders."
The Seller will express in the Trust Documents its intent that for federal,
state and local income and franchise tax purposes, the Debt Certificates will be
indebtedness secured by the Receivables. The Seller agrees and each Debt
Certificateholder, by acquiring an interest in a Debt Certificate, agrees or
will be deemed to agree to treat the Debt Certificates as indebtedness for
federal, state and local income or franchise tax purposes. However, because
different criteria are used to determine the non-tax accounting characterization
of the transactions contemplated by the Trust Documents, the Seller expects to
treat such transactions, for regulatory and financial accounting purposes, as a
sale of ownership interests in the Receivables and not as debt obligations.
In general, whether for federal income tax purposes, a transaction
constitutes a sale of property or a loan the repayment of which is secured by
the property, is a question of fact, the resolution of which is based upon the
economic substance of the transaction. The form of a transaction, while a
relevant factor, is not conclusive evidence of its economic substance. In
appropriate circumstances, the courts have allowed taxpayers, as well as the IRS
to treat a transaction in accordance with its economic substance, as determined
under federal income tax laws, notwithstanding that the participants
characterize the transaction differently for non-tax purposes. In some
instances, however, courts have held that a taxpayer is bound by a particular
form it has chosen for a transaction, even if the substance of the transaction
does not accord with its form. It is expected that Federal Tax Counsel will
advise that the rationale of those cases will not apply to the transactions
evidenced by a series of Debt Certificates.
While the IRS and the courts have set forth several factors to be taken
into account in determining whether the substance of a transaction is a sale of
property or a secured indebtedness for federal income tax purposes, the primary
factor in making this determination is whether the transferee has assumed the
risk of loss or other economic burdens relating to the property and has obtained
the economic benefits of ownership thereof. Federal Tax Counsel will analyze and
rely on several factors in reaching its opinion that the weight of the benefits
and burdens of ownership of the Receivables has not been transferred to the Debt
Certificateholders and that the Debt Certificates are properly characterized as
indebtedness for federal income tax purposes. Contrary characterizations that
could be asserted by the IRS are described below under "--Possible
Characterization of the Transaction as a Partnership or as an Association
Taxable as a Corporation."
TAXATION OF INCOME OF DEBT CERTIFICATEHOLDERS
As set forth above, it is expected that Federal Tax Counsel will advise the
Depositor that the Debt Certificates will constitute indebtedness for federal
income tax purposes, and accordingly, holders of Debt Certificates generally
will be taxed in the manner described above in "Trusts Treated as
Partnerships--Tax Consequences to Holders of Notes Issued By a Partnership."
If the Debt Certificates are issued with OID that is more than a de minimis
amount as defined in the Code and Treasury regulations (see "Trusts Treated as
Partnerships--Tax Consequences to Holders of Notes Issued By a Partnership"), a
United States holder of a Debt Certificate (including a cash basis holder)
generally would be required to accrue the OID on its interest in a Certificate
in income for federal income tax purposes on a constant yield basis, resulting
in the inclusion of OID in income in advance of the receipt of cash attributable
to that income. Under section 1272(a)(6) of the Code, special provisions apply
to debt instruments on which payments may be accelerated due to prepayments of
other obligations securing those debt instruments. However, no regulations have
been issued interpreting those provisions, and the manner in which those
provisions would apply to the Debt Certificates is unclear. Additionally, the
IRS could take the position based on Treasury regulations that none of the
interest payable on a Debt Certificate is "unconditionally payable" and hence
that all of such interest should be included in the Debt Certificate's stated
redemption price at maturity. Accordingly, Federal Tax Counsel is unable to
opine as to whether interest payable on a Debt Certificates constitutes
"qualified stated interest" that is not included in a Certificate's stated
redemption price at maturity. Consequently, prospective investors in Debt
Certificates should consult their own tax advisors concerning the impact to them
in their particular circumstances. The Prospectus Supplement will indicate
whether the Trust intends to treat the interest on the Certificates as
"qualified stated interest."
TAX CHARACTERIZATION OF TRUST
Consistent with the treatment of the Debt Certificates as indebtedness, the
Trust will be treated as a security device to hold Receivables securing the
repayment of the Debt Certificates. In connection with the issuance of Debt
Certificates of any series, Federal Tax Counsel will render an opinion that,
based on the assumptions and qualifications set forth therein, under
then-current law, the issuance of the Debt Certificates of such series will not
cause the applicable Trust to be characterized for federal income tax purposes
as an association (or publicly traded partnership) taxable as a corporation.
POSSIBLE CLASSIFICATION OF THE TRANSACTION AS A PARTNERSHIP OR AS AN ASSOCIATION
TAXABLE AS A CORPORATION
The opinion of Federal Tax Counsel with respect to Debt Certificates will
not be binding on the courts or the IRS. It is possible that the IRS could
assert that, for federal income tax purposes, the transactions contemplated
constitute a sale of the Receivables (or an interest therein) to the Debt
Certificateholders and that the proper classification of the legal relationship
between the Depositor and some or all of the Debt Certificateholders resulting
from the transactions is that of a partnership (including a publicly traded
partnership), a publicly traded partnership taxable as a corporation, or an
association taxable as a corporation. The Depositor currently does not intend to
comply with the federal income tax reporting requirements that would apply if
any Classes of Debt Certificates were treated as interests in a partnership or
corporation.
If a transaction were treated as creating a partnership between the
Depositor and the Debt Certificateholders, the partnership itself would not be
subject to federal income tax (unless it were characterized as a publicly traded
partnership taxable as a corporation); rather, the partners of such partnership,
including the Debt Certificateholders, would be taxed individually on their
respective distributive shares of the partnership's income, gain, loss,
deductions and credits. The amount and timing of items of income and deductions
of a Debt Certificate could differ if the Debt Certificates were held to
constitute partnership interests, rather than indebtedness. Moreover, unless the
partnership were treated as engaged in a trade or business, an individual's
share of expenses of the partnership would be miscellaneous itemized deductions
that, in the aggregate, are allowed as deductions only to the extent they exceed
two percent of the individual's adjusted gross income, and would be subject to
reduction under Section 68 of the Code if the individual's adjusted gross income
exceeded certain limits. As a result, the individual might be taxed on a greater
amount of income than the stated rate on the Debt Certificates. Finally, all or
a portion of any taxable income allocated to a Debt Certificateholder that is a
pension, profit-sharing or employee benefit plan or other tax-exempt entity
(including an individual retirement account) may, under certain circumstances,
constitute "unrelated business taxable income" which generally would be taxable
to the holder under the Code.
If it were determined that a transaction created an entity classified as an
association or as a publicly traded partnership taxable as a corporation, the
Trust would be subject to federal income tax at corporate income tax rates on
the income it derives from the Receivables, which would reduce the amounts
available for distribution to the Debt Certificateholders. Such classification
may also have adverse state and local tax consequences that would reduce amounts
available for distribution to Debt Certificateholders. Moreover, distributions
on Debt Certificates that are recharacterized as equity in an entity taxable as
a corporation would not be deductible in computing the entity's taxable income,
and cash distributions on such Debt Certificates generally would be treated as
dividends for tax purposes to the extent of such deemed corporation's earnings
and profits.
FOREIGN INVESTORS
If the IRS were to contend successfully that the Debt Certificates are
interest in a partnership and if such partnership were considered to be engaged
in a trade or business in the United States, the partnership would be subject to
a withholding tax on income of the Trust that is allocable to a foreign investor
and such foreign investor would be credited for his or her share of the
withholding tax paid by the partnership. In such case, the holder generally
would be subject to United States federal income tax at regular income tax
rates, and possibly a branch profits tax in the case of a corporate holder.
Alternatively, although there may be arguments to the contrary, if such
partnership is not considered to be engaged in a trade or business within the
United States and if income with respect to the Debt Certificates is not
otherwise effectively connected with the conduct of a trade or business in the
United States by the foreign investor, the foreign investor would be subject to
United States income tax and withholding at a rate of 30% (unless reduced by an
applicable tax treaty) on the holder's distributive share of the partnership's
interest income. See "Trusts Characterized as Partnerships or Divisions--Tax
Consequences to Holders of the Certificates-- Tax Consequences to Foreign
Certificateholders" for a more detailed discussion of the consequences of an
equity investment by a foreign investor in an entity characterized as a
partnership.
If the Trust were taxable as a corporation, distribution to foreign
investors, to the extent treated as dividends, would generally be subject to
withholding at the rate of 30% unless such rate were reduced or eliminated by an
applicable income tax treaty.
FASIT LEGISLATION
In August, 1996, the United States Congress passed and President Clinton
signed into law the "Small Business Job Protection Act of 1996," H.R. 3448 (the
"Act"). The Act creates a new type of entity for federal income tax purposes
called a "financial asset securitization investment trust" or "FASIT." The
effective date of the FASIT provisions of the Act is September 1, 1997. The Act
enables certain arrangements similar to a Trust to elect to be treated as a
FASIT. Under the FASIT provisions of the Act a FASIT generally would avoid
federal income taxation and could issue securities substantially similar to the
Certificates and Notes, and those securities would be treated as debt for
federal income tax purposes. If so specified in the related Prospectus
Supplement, a Trust may make an election to be treated as a FASIT. The
applicable Transfer and Servicing Agreement for such a Trust may contain any
such terms and provide for the issuance of Notes or Certificates on such terms
and conditions as are permitted to a FASIT and described in the related
Prospectus Supplement. In addition, upon satisfying certain conditions set forth
in the Transfer and Servicing Agreements, the Depositor, the Seller and Servicer
will be permitted to amend the Transfer and Servicing Agreements in order to
enable all or a portion of a Trust to qualify as a FASIT and to permit a FASIT
election to be made with respect thereto, and to make such modifications to a
"Description of the Transfer and Servicing Agreements--Amendment." However,
there can be no assurance that the Depositor will or will not cause any
permissible FASIT election to be made with respect to a Trust or amend a
Transfer and Servicing Agreement in connection with any election. In addition,
if such an election is made, it may cause a holder to recognize gain (but not
loss) with respect to any Notes or Certificates held by it, even though Federal
Tax Counsel will deliver its opinion that a Note will be treated as debt for
federal income tax purposes without regard to the election and the Note or
Certificate would be treated as debt following the election. Additionally, any
such election and any related amendments to a Transfer and Servicing Agreement
may have other tax and non-tax consequences to Securityholders. Accordingly,
prospective Securityholders are encouraged to consult their tax advisors with
regard to the effects of any such election and any permitted related amendments
on them in their particular circumstances.
STATE AND LOCAL TAX CONSEQUENCES
The discussion above does not address the tax consequences of purchase,
ownership or disposition of the Securities under any state or local tax law.
Investors are encouraged to consult their own tax advisors regarding state and
local tax consequences.
ERISA CONSIDERATIONS
A fiduciary of an employee benefit plan subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), should consider
the fiduciary standards under ERISA in the context of the plan's particular
circumstances before authorizing an investment of a portion of such plan's
assets in the Securities. Accordingly, among other factors, such fiduciary
should consider (i) whether the investment is for the exclusive benefit of plan
participants and their beneficiaries; (ii) whether the investment satisfies the
diversification requirements of Section 404 of ERISA; (iii) whether the
investment is in accordance with the documents and instruments governing the
plan; and (iv) whether the investment is prudent, considering the nature of the
investment. Fiduciaries of such plans also should consider ERISA's prohibition
on improper delegation of control over, or responsibility for, plan assets.
In addition, fiduciaries of employee benefit plans subject to Title I of
ERISA, as well as certain plans or other retirement arrangements not subject to
ERISA, but which are subject to Section 4975 of the Code (such as individual
retirement accounts and Keogh plans covering only a sole proprietor or
partners), or any entity (including an insurance company general account) whose
underlying assets include plan assets by reason of a plan or account investing
in such entity (collectively, "Plans(s)") are prohibited from engaging in a
broad range of transactions involving Plan assets and persons having certain
specified relationships to a Plan ("parties in interest" and "disqualified
persons"). Such transactions are treated as "prohibited transactions" under
Sections 406 and 407 of ERISA and excise taxes are imposed upon such persons by
Section 4975 of the Code. The Depositor, the related Trustee, the related
Indenture Trustee and any underwriter of the offered Securities and certain of
their affiliates might be considered "parties in interest" or "disqualified
persons" with respect to a Plan. If so, the acquisition, holding or transfer of
Securities by, or on behalf of, such Plan could be considered to give rise to a
"prohibited transaction" within the meaning of ERISA and the Code unless a
regulatory exception or administrative exemption is available. In addition, the
Department of Labor ("DOL") has issued a regulation (29 C.F.R. Section
2510.3-101) (the "Plan Assets Regulation") concerning the definition of what
constitutes the assets of a Plan, which provides that, as a general rule, the
underlying assets and properties of corporations, partnerships, trusts and
certain other entities in which a Plan makes an "equity" investment will be
deemed for purposes of ERISA to be assets of the investing Plan unless certain
exceptions apply. If an investing Plan's assets were deemed to include an
interest in the Trust Property and not merely an interest in the Securities,
transactions occurring in connection with the servicing, management and
operation of the Trust between the Depositor, the related Trustee, the related
Indenture Trustee, the Servicer (or any other servicer), any insurer or any of
their respective affiliates might constitute prohibited transactions, and the
Trust Property would become subject to the fiduciary investment standards of
ERISA, unless a regulatory exception or administrative exemption applies.
With respect to offered Securities which are Certificates, the DOL has
issued to a number of underwriters of pass-through certificates, similar to the
Certificates, administrative exemptions (collectively, the "Exemption"), which
generally exempt from the application of the prohibited transaction provisions
of Section 406(a), Section 406(b)(1) and Section 406(b)(2) of ERISA, and the
excise taxes imposed pursuant to Section 4975(a) and (b) of the Code, the
initial purchase, holding and subsequent resale of mortgage-backed or
asset-backed pass-through certificates representing a beneficial undivided
interest in certain fixed pools of assets held in a trust (as defined in
paragraph III. B of Section III of the Exemption), along with certain
transactions relating to the servicing and operation of such asset pools,
provided that certain conditions set forth in the Exemption are satisfied.
Paragraph III. B of Section III of the Exemption provides in part that a trust
means an investment pool the corpus of which is held in trust and consists
solely of: (1) secured consumer receivables, (2) secured credit instruments, (3)
obligations secured by residential or commercial real property, (4) obligations
secured by motor vehicles or equipment or qualified motor vehicle leases, (5)
guaranteed governmental mortgage pool certificates or (6) an undivided
fractional interest in any of the obligations listed in clauses (1) - (5) above.
If the general conditions of Section II of the Exemption are satisfied, the
Exemption may provide an exemption from the restrictions imposed by Sections
406(a) and 407(a) of ERISA (as well as the excise taxes imposed by Section
4975(a) and (b) of the Code by reason of Sections 4975(c)(1)(A) through (D) of
the Code) in connection with the direct or indirect sale, exchange or transfer
of Certificates by Plans in the initial issue of Certificates, the holding of
Certificates by Plans or the direct or indirect acquisition or disposition in
the secondary market of Certificates by Plans. However, no exemption is provided
from the restrictions of Sections 406(a)(1)(E), 406(a)(2) and 407 of ERISA for
the acquisition or holding of a Certificate on behalf of an "Excluded Plan" by
any person who has discretionary authority or renders investment advice with
respect to the assets of such Excluded Plan. For purposes of the Certificates,
an Excluded Plan is a Plan sponsored by (1) an underwriter which has been
granted an Exemption (or certain specified entities affiliated or associated
with such underwriter) ("Underwriter"), (2) the Depositor, (3) the Servicer (or
any other servicer), (4) the related Trustee or the related Indenture Trustee,
(5) any obligor with respect to Receivables constituting more than 5 percent of
the aggregate unamortized principal balance of the Receivables as of the date of
initial issuance, (6) any insurer and (7) any affiliate or successor of a person
described in (1) to (6) above (the "Restricted Group").
If the specific conditions of paragraph I.B of Section I of the Exemption
are also satisfied, the Exemption may provide an exemption from the restrictions
imposed by Sections 406(b)(1) and (b)(2) of ERISA and the taxes imposed by
Sections 4975(a) and (b) of the Code by reason of Section 4975(c)(I)(E) of the
Code in connection with (1) the direct or indirect sale, exchange or transfer of
Certificates in the initial issuance of Certificates between the Depositor or
Underwriter and a Plan when the person who has discretionary authority or
renders investment advice with respect to the investment of Plan assets in
Certificates is (a) an obligor with respect to 5 percent or less of the fair
market value of the Receivables or (b) an affiliate of such a person, (2) the
direct or indirect acquisition or disposition in the secondary market of
Certificates by Plans and (3) the holding of Certificates by Plans.
If the specified conditions of paragraph I.C of Section I of the Exemption
are satisfied, the Exemption may provide an exemption from the restrictions
imposed by Sections 406(a), 406(b) and 407(a) of ERISA, and the taxes imposed by
Sections 4975(a) and (b) of the Code by reason of Section 4975(c) of the Code
for transactions in connection with the servicing, management and operation of
the Trust and the Trust Property.
The Exemption may provide an exemption from the restrictions imposed by
Sections 406(a) and 407(a) of ERISA, and the taxes imposed by Sections 4975(a)
and (b) of the Code by reason of Sections 4975(c)(1)(A) through (D) of the Code
if such restrictions are deemed to otherwise apply merely because a person is
deemed to be a "party in interest" or a "disqualified person" with respect to an
investing Plan by virtue of providing services to the Plan (or by virtue of
having certain specified relationships to such a person) solely as a result of
such Plan's ownership of Certificates.
The Exemption sets forth the following seven general conditions which must
be satisfied for a transaction to be eligible for exemptive relief thereunder.
(1) The acquisition of the Certificates by a Plan is on terms
(including the price for the Certificates) that are at least as
favorable to the Plan as they would be in an arm's length
transaction with an unrelated party;
(2) The rights and interests evidenced by the Certificates acquired
by the Plan are not subordinated to the rights and interests
evidenced by other Securities issued by the Trust;
(3) The Certificates acquired by the Plan have received a rating at
the time of such acquisition that is one of the three highest
generic rating categories from either Standard & Poor's
Structured Ratings Group, Moody's Investors Service, Inc., Duff &
Phelps Credit Rating Co. or Fitch IBCA, Inc. ("National Credit
Rating Agencies");
(4) Neither the Trustee or the related Indenture Trustee is an
affiliate of any other member of the Restricted Group (as defined
above);
(5) The sum of all payments made to and retained by the Underwriter
in connection with the distribution of Certificates represents
not more than reasonable compensation for underwriting the
Certificates. The sum of all payments made and retained by the
Depositor pursuant to the assignment of the loans to the trust
fund represents not more than the fair market value of such
loans. The sum of all payments made to and retained by the
Servicer or any other servicer represents not more than
reasonable compensation for such person's services under the
pooling and servicing agreement and reimbursement of such
person's reasonable expenses in connection therewith; and
(6) The Plan investing in the certificates is an "accredited
investor" as defined in Rule 501(a)(1) of Regulation D under the
Securities Act of 1933. The Depositor assumes that only Plans
which are accredited investors under the federal securities laws
will be permitted to purchase the Certificates.
(7) The trust fund must also meet the following requirements:
(i) the corpus of the trust fund must consist solely of assets
of the type that have been included in other investment
pools;
(ii) certificates in such other investment pools must have been
rated in one of the three highest rating categories of one
of the National Credit Rating Agencies for at least one year
prior to the Plan's acquisition of Certificates; and
(iii) certificates evidencing interests in such other investment
pools must have been purchased by investors other than Plans
for at least one year prior to any Plan's acquisition of
certificates.
The Exemption may apply to a Plan's purchase, holding and transfer of
Certificates and the operation, management and servicing of the Trust and the
Trust Property as specified in the related Prospectus Supplement. In addition,
in the event the Exemption is not available, certain exemptions from the
prohibited transaction rules may be applicable depending on the type and
circumstances of the plan fiduciary making the decision to acquire a
Certificate. Included among these exemptions are: Prohibited Transaction Class
Exemption ("PTCE") 90-1, regarding investments by insurance company pooled
separate accounts; PTCE 91-38 regarding investments by bank collective
investment funds PTCE 95-60, regarding investments by insurance company general
accounts; PTCE 96-23, regarding transactions affected by in-house asset
managers; and PTCE 84-14, regarding transactions effected by "qualified
professional asset managers".
Certain transactions involving the purchase of Securities which are Notes
might be deemed to constitute prohibited transactions under ERISA and the Code
if the Trust Property were deemed to be assets of a Plan. Under the Plan Assets
Regulation, the Trust Property would be treated as plan assets of a Plan for the
purposes of ERISA and the Code only if the Plan acquires an "Equity Interest" in
the Trust and none of the exceptions contained in the Plan Assets Regulation is
applicable. An equity interest is defined under the Plan Assets Regulation as an
interest other than an instrument which is treated as indebtedness under
applicable local law and which has no substantial equity features. The Depositor
believes that the Notes should be treated as indebtedness without substantial
equity features for purposes of the Plan Assets Regulation. In addition, even in
the event that the Notes are deemed to be an Equity Interest in the Trust, the
Exemption may be applicable to both a Plan's purchase, holding and transfer of
Notes (which in this situation are considered Certificates for purposes of the
Exemption) and the operation, management and servicing of the Trust and the
Trust Property, if so specified in the related Prospectus Supplement.
Without regard to whether the Notes are characterized as Equity Interests,
the acquisition, transfer or holding of Notes by or on behalf of a Plan could be
considered to give rise to a prohibited transaction if the Trust, the related
Trustee or the related Indenture Trustee or any of their respective affiliates
is or becomes a party in interest or a disqualified person with respect to such
Plan. In such case, PTCE 90-1, PTCE 91-38, PTCE 95-60, PTCE 96-23 and PTCE 84-14
may be applicable depending on the type and circumstances of the plan fiduciary
making the decision to acquire a Note.
Investors that are insurance companies are encouraged to consult with their
legal counsel with respect to the United States Supreme Court case, John Hancock
Mutual Life Insurance co. v. Harris Trust and Savings Bank, 114 S.Ct. 517
(1993). In Harris Trust, the Supreme Court ruled that assets held in an
insurance company's general account may be deemed plan assets under certain
circumstances. Accordingly, such insurance company general accounts would be
subject to the same considerations under ERISA and would be eligible for the
same relief under the Exemption that would apply to any other Plan investor. In
the event the Exemption is not applicable to the purchase, holding and transfer
of Securities and the operation, management and servicing of the Trust and Trust
Property, PTCE 95-60 may be applicable depending on the circumstances.
Any Plan fiduciary considering the purchase of Securities is encouraged to
consult with its counsel with respect to the potential applicability of the
fiduciary responsibility and prohibited transaction provisions of ERISA and the
Code to such investment.
RATINGS
As a condition of issuance, the offered Securities of each Series will be
rated an investment grade, that is, in one of its four highest rating
categories, by at least one nationally recognized rating agency (a "Rating
Agency") as specified in the related Prospectus Supplement. Ratings on the
offered Securities of each Series address the likelihood of receipt by the
related Securityholders of all distributions on the underlying Receivables.
These ratings address the structural, legal and issuer-related aspects
associated with the Securities of such Series, the nature of the underlying
Receivables of such Series, the subordination and any credit enhancement
provided therefor, including the credit quality of the third party credit
enhancement provider, if any. Ratings on offered Securities of each Series do
not represent any assessment of the likelihood of principal prepayments by
Obligors or of the degree by which prepayments might differ from those
originally anticipated. As a result, the related Securityholders might suffer a
lower than anticipated yield, and, in addition, holders of Strip Securities in
extreme cases might fail to recoup their underlying investments. Each security
rating should be evaluated independently of any other security rating. A
security rating is not a recommendation to buy, sell or hold securities. There
is no assurance that the ratings initially assigned to the Securities will not
be subsequently lowered or withdrawn by the Rating Agencies. In the event the
rating initially assigned to any Securities is subsequently lowered for any
reason, no person or entity will be obligated to provide any credit enhancement
unless otherwise specified in the related Prospectus Supplement.
METHOD OF DISTRIBUTION
Notes and/or Certificates are being offered hereby in Series from time to
time through any of the following methods:
1. By negotiated firm commitment underwriting and public reoffering by
underwriters;
2. By agency placements through one or more placement agents primarily with
institutional investors and dealers; and
3. By placement directly by the Depositor with institutional investors.
A Prospectus Supplement will be prepared for each Series which will
describe the method of offering being used for that Series and will set forth
the identity of any underwriters thereof and either the price at which such
Series is being offered, the nature and amount of any underwriting discounts or
additional compensation to such underwriters and the proceeds of the offering to
the Depositor, or the method by which the price at which the underwriters will
sell the Notes and/or the Certificates will be determined. Each Prospectus
Supplement for an underwritten offering will also contain information regarding
the nature of the underwriters' obligations, any material relationship between
the Depositor and any underwriter and, where appropriate, information regarding
any discounts or concessions to be allowed or reallowed to dealers or others and
any arrangements to stabilize the market for the Notes and/or the Certificates
so offered. In firm commitment underwritten offerings, the underwriters will be
obligated to purchase all of the Notes and/or Certificates of such Series if any
such Notes and/or Certificates are purchased. Notes and/or Certificates may be
acquired by the underwriters for their own accounts and may be resold from time
to time in one or more transactions including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
Mellon Financial Services, Inc., an affiliate of the Depositor, may from
time to time act as agent or underwriter in connection with the sale of the
Notes and/or Certificates. This Prospectus and the related Prospectus Supplement
may be used by Mellon Financial Services, Inc. in connection with offers and
sales related to secondary market transactions in any Series of Notes and/or
Certificates. Mellon Financial Services, Inc. may act as principal or agent in
such transactions. Such sales will be made at prices related to the prevailing
prices at the time of sale.
Underwriters and agents may be entitled under agreements entered into with
the Depositor to indemnification by the Depositor against certain civil
liabilities, including liabilities under the Securities Act of 1933, as amended,
or to contribution with respect to payments which such underwriters or agents
may be required to make in respect thereof.
If a Series is offered other than through underwriters, the Prospectus
Supplement relating thereto will contain information regarding the nature of
such offering and any agreements to be entered into between the Depositor and
purchasers of Notes and/or Certificates of such Series.
LEGAL OPINIONS
Unless otherwise specified in the related Prospectus Supplement, certain
legal matters relating to the issuance of the Securities of any Series and the
income tax consequences thereof will be passed upon for the Underwriters and the
Depositor by Stroock & Stroock & Lavan LLP, New York, New York.
<PAGE>
INDEX OF PRINCIPAL DEFINED TERMS
Act....................................................................85
Actuarial Receivables..................................................10
Applicable Trustee.....................................................37
APR....................................................................10
Base Rate..............................................................30
Calculation Agent......................................................31
Calculation Date.......................................................32
CD Rate................................................................30
CD Rate Determination Date.............................................31
CD Rate Security.......................................................30
Cede...................................................................44
Cedel Participants.....................................................39
Certificate Distribution Account.......................................48
Certificate Majority...................................................39
Certificate Pool Factor................................................20
Certificateholders......................................................7
Closing Date...........................................................44
Code...................................................................67
Collection Account.....................................................48
Commercial Paper Rate..................................................32
Commercial Paper Rate Determination Date...............................32
Commercial Paper Rate Security.........................................30
Commission..............................................................8
Commodity Indexed Securities...........................................36
Composite Quotations...................................................30
Cooperative............................................................40
Currency Indexed Securities............................................36
Definitive Certificates................................................39
Definitive Notes.......................................................39
Definitive Securities..................................................41
Depositories...........................................................37
DOL....................................................................86
DTC....................................................................44
Eligible Deposit Account...............................................50
Eligible Institution...................................................50
Eligible Trust Company.................................................50
Equity Interest........................................................89
Euroclear Operator.....................................................40
Euroclear Participants.................................................39
Events of Default......................................................23
Exchange Act............................................................8
Excluded Plan..........................................................87
Exemption..............................................................86
Face Amount............................................................36
FASIT..................................................................11
Federal Funds Rate.....................................................30
Federal Funds Rate Determination Date..................................33
Federal Funds Rate Security............................................30
Financed Vehicle Loans.................................................13
Fixed Rate Securities..................................................30
Floating Rate Securities...............................................30
FTC Rule...............................................................65
Global Securities......................................................94
H.15(519)..............................................................30
Index..................................................................36
Index Maturity.........................................................30
Indexed Commodity......................................................36
Indexed Currency.......................................................36
Indexed Principal Amount...............................................36
Indexed Securities.....................................................36
Indirect Participants..................................................37
Initial Pool Balance...................................................59
Insolvency Event.......................................................57
Interest Reset Date....................................................30
Interest Reset Period..................................................30
Investment Earnings....................................................49
IRS....................................................................67
LIBOR..................................................................34
LIBOR Determination Date...............................................34
LIBOR Security.........................................................30
London Banking Day.....................................................34
Money Market Yield.....................................................33
National Credit Rating Agencies........................................88
Note Distribution Account..............................................48
Note Pool Factor.......................................................20
OID....................................................................68
OID Regulations........................................................68
Paid-Ahead Period......................................................19
Paid-Ahead Receivable..................................................19
Participants...........................................................22
Payahead Account.......................................................48
Payaheads..............................................................51
Payment Date...........................................................23
Plan Assets Regulation.................................................86
Pool Balance...........................................................20
Prepayment Premium.....................................................53
PTCE...................................................................89
Purchase Amount........................................................47
Receivable File........................................................47
Registration Statement..................................................8
Related Documents......................................................26
Related Person.........................................................69
Reserve Account........................................................54
Restricted Group.......................................................87
Reuters Screen LIBO Page...............................................34
Rules..................................................................38
Schedule of Receivables................................................45
Section 1286 Treasury Regulations......................................76
Securities Act..........................................................8
Series..................................................................1
Servicer Default.......................................................57
Servicing Fee..........................................................52
Servicing Fee Rate.....................................................52
Short-Term Note........................................................68
Simple Interest Receivables............................................16
Spread.................................................................30
Spread Multiplier......................................................30
Stock Index............................................................36
Stock Indexed Securities...............................................36
Stripped Bond..........................................................76
Subsequent Transfer Date...............................................45
Terms and Conditions...................................................40
Total Servicing Fee....................................................52
Transfer and Servicing Agreements......................................44
Treasury Bills.........................................................35
Treasury Rate..........................................................35
Treasury Rate Determination Date.......................................35
Treasury Rate Security.................................................30
Trust Accounts.........................................................48
U.S. Person............................................................98
Underwriter............................................................87
<PAGE>
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION
PROCEDURES
Except in certain limited circumstances, any globally offered series of
Securities (the "Global Securities") will be available only in book-entry form.
Investors in the Global Securities may hold such Global Securities through any
of DTC, Cedel or Euroclear. The Global Securities will be tradable as home
market instruments in both the European and U.S. domestic markets. Initial
settlement and all secondary trades will settle in same-day funds.
Secondary market trading between investors holding Global Securities
through Cedel and Euroclear will be conducted in the ordinary way in accordance
with their normal rules and operating procedures and in accordance with
conventional eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
Secondary cross-market trading between Cedel or Euroclear and DTC
Participants holding Notes and, if the related Prospectus Supplement so
provides, Certificates will be effected on a delivery-against-payment basis
through the respective Depositories of Cedel and Euroclear (in such capacity)
and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing organizations
or their Participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the name of
Cede as nominee of DTC. Investors' interests in the Global Securities will be
represented through financial institutions acting on their behalf as direct and
indirect Participants in DTC. As a result, Cedel and Euroclear will hold
positions on behalf of their Participants through their respective Depositories,
which in turn will hold such positions in accounts as DTC Participants.
Investors electing to hold their Global Securities through DTC will follow
the settlement practices specified by the Underwriters. Investor securities
custody accounts will be credited with their holdings against payment in
same-day funds on the settlement date.
Investors electing to hold their Global Securities through Cedel or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global securities
and no "lock-up" or restricted period. Global Securities will be credited to the
securities custody accounts on the settlement date against payment in same-day
funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to insure that settlement can be made on the desired value
date.
TRADING BETWEEN DTC PARTICIPANTS. Secondary market trading between DTC
Participants will be settled in same-day funds.
TRADING BETWEEN CEDEL AND/OR EUROCLEAR PARTICIPANTS. Secondary market
trading between Cedel Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
TRADING BETWEEN DTC DEPOSITOR AND CEDEL OR EUROCLEAR PURCHASER. When Global
Securities are to be transferred from the account of a DTC Participant to the
account of a Cedel Participant or a Euroclear Participant, the purchaser will
send instructions to Cedel or Euroclear through a Cedel Participant or Euroclear
Participant at least one business day prior to settlement. Cedel or Euroclear
will instruct the respective Depository, as the case may be, to receive the
Global Securities against payment. Payment will include interest accrued on the
Global Securities from and including the last coupon payment date to and
excluding the settlement date, on the basis of the actual number of days in such
accrual period and year assumed to consist of 360 days. For transactions
settling on the 31st of the month, payment will include interest accrued to and
excluding the first day of the following month. Payment will then be made by the
respective Depository of the DTC Participant's account against delivery of the
Global Securities. After settlement has been completed, the Global Securities
will be credited to the respective clearing system and by the clearing system,
in accordance with its usual procedures, to the Cedel Participant's or Euroclear
Participant's account. The securities credit will appear the next day (European
time) and the cash debt will be back-valued to, and the interest on the Global
Securities will accrue from, the value date (which would be the preceding day
when settlement occurred in New York). If settlement is not completed on the
intended value date (i.e., the trade fails), the Cedel or Euroclear cash debt
will be valued instead as of the actual settlement date.
Cedel Participants and Euroclear Participants will need to make available
to the respective clearing systems the funds necessary to process same-day funds
settlement. The most direct means of doing so is to preposition funds for
settlement, either from cash on hand or existing lines of credit, as they would
for any settlement occurring within Cedel or Euroclear. Under this approach,
they may take on credit exposure to Cedel or Euroclear until the Global
Securities are credited to their accounts one day later.
As an alternative, if Cedel or Euroclear has extended a line of credit to
them, Cedel Participants or Euroclear Participants can elect not to preposition
funds and allow that credit line to be drawn upon to finance the settlement.
Under this procedure, Cedel Participants or Euroclear Participants purchasing
Global Securities would incur overdraft charges for one day, assuming they
cleared the overdraft when the Global Securities were credited to their
accounts. However, interest on the Global Securities would accrue from the value
date. Therefore, in many cases the investment income on the Global Securities
earned during that one-day period may substantially reduce or offset the amount
of such overdraft charges, although this result will depend on each Cedel
Participant's or Euroclear Participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Securities to
the respective European Depository for the benefit of Cedel Participants or
Euroclear Participants. The sale proceeds will be available to the DTC seller on
the settlement date. Thus, to the DTC Participants a cross- market transaction
will settle no differently than a trade between two DTC Participants.
TRADING BETWEEN CEDEL OR EUROCLEAR DEPOSITOR AND DTC PURCHASER. Due to time
zone differences in their favor, Cedel Participants and Euroclear Participants
may employ their customary procedures for transactions in which Global
Securities are to be transferred by the respective clearing system, through the
respective Depository, to a DTC Participant. The seller will send instructions
to Cedel or Euroclear through a Cedel Participant or Euroclear Participant at
least one business day prior to settlement. In these cases Cedel or Euroclear
will instruct the respective Depository, as appropriate, to deliver the Global
Securities to the DTC Participant's account against payment. Payment will
include interest accrued on the Global Securities from and including the last
interest payment to and excluding the settlement date on the basis of the actual
number of days in such accrual period and a year assumed to consist of 360 days.
For transactions settling on the 31st of the month, payment will include
interest accrued to and excluding the first day of the following month. The
payment will then be reflected in the account of the Cedel Participant or
Euroclear Participant the following day, and receipt of the cash proceeds in the
Cedel Participant's or Euroclear Participant's account would be back-valued to
the value date (which would be the preceding day, when settlement occurred in
New York). Should the Cedel Participant or Euroclear Participant have a line of
credit with its respective clearing system and elect to be in debt in
anticipation of receipt of the sale proceeds in its account, the back-valuation
will extinguish any overdraft incurred over that one-day period. If settlement
is not completed on the intended value date (i.e., the trade fails), receipt of
the cash proceeds in the Cedel Participant's or Euroclear Participant's account
would instead be valued as of the actual settlement date.
Finally, day traders that use Cedel or Euroclear and that purchase Global
Securities from DTC Participants for delivery to Cedel Participants or Euroclear
Participants should note that these trades would automatically fail on the sale
side unless affirmative action were taken. At least three techniques should be
readily available to eliminate this potential problem:
(a) borrowing through Cedel or Euroclear for one day (until the
purchase side of the day trade is reflected in their Cedel or
Euroclear accounts) in accordance with the clearing system's customary
procedures;
(b) borrowing the Global Securities in the U.S. from a DTC Participant
no later than one day prior to settlement, which would give the Global
Securities sufficient time to be reflected in their Cedel or Euroclear
account in order to settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the trade
so that the value date for the purchase from the DTC Participant is at
least one day prior to the value date for the sale to the Cedel
Participant or Euroclear Participant.
CERTAIN U.S. FEDERAL WITHHOLDING TAXES AND DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities through Cedel or Euroclear (or
through DTC if the holder has an address outside the U.S.) will be subject to
30% U.S. withholding tax that generally applies to payments of interest
(including original issue discount) on registered debt issued by U.S. Persons,
unless (i) each clearing system, bank or other financial institution that holds
customers' securities in the ordinary course of its trade or business in the
chain of intermediaries between such beneficial owner and the U.S. entity
required to withhold tax complies with applicable certification requirements and
(ii) such beneficial owners take one of the following steps to obtain an
exemption or reduced tax rate:
EXEMPTION FOR NON-U.S. PERSONS (FORM W-8). Beneficial owners of Global
Securities that are non-U.S. Persons can obtain a complete exemption from the
withholding tax by filing a signed Form W-8 (Certificate of Foreign Status). If
the information shown on Form W-8 changes, a new Form W-8 must be filed within
30 days of such change.
EXEMPTION FOR NON-U.S. PERSONS WITH EFFECTIVELY CONNECTED INCOME (FORM
4224). A non- U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its conduct
of a trade or business in the United States, can obtain an exemption from the
withholding tax by filing Form 4224 (Exemption from Withholding of Tax on Income
Effectively Connected with the Conduct of a Trade or Business in the United
States).
EXEMPTION OR REDUCED RATE FOR NON-U.S. PERSONS RESIDENT IN TREATY COUNTRIES
(FORM 1001). Non-U.S. Persons that are beneficial owners of Global Securities
residing in a country that has a tax treaty with the United States can obtain an
exemption or reduced tax rate (depending on the treaty terms) by filing Form
1001 (Ownership, Exemption or Reduced Rate Certificate). If the treaty provides
for a reduced rate, withholding tax will be imposed at that rate unless the
filer alternatively files Form W-8. Form 1001 may be filed by the
Certificateholder or his agent.
EXEMPTION FOR U.S. PERSONS (FORM W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
U.S. FEDERAL INCOME TAX REPORTING PROCEDURE. The holder of a Global
Securities or, in the case of a Form 1001 or a Form 4224 filer, his agent, files
by submitting the appropriate form to the person through whom it holds (the
clearing agency, in the case of persons holding directly on the books of the
clearing agency). Form W-8 and Form 1001 are effective for three calendar years
and Form 4224 is effective for one calendar year.
The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of the
United States or any political subdivision thereof or (iii) an estate the income
of which is includible in gross income for United States tax purposes,
regardless of its source or a trust if a court within the United States is able
to exercise primary supervision of the administration of the trust and one or
more United States fiduciaries have the authority to control all substantial
decisions of the trust. This summary of documentation requirements does not deal
with all aspects of U.S. Federal income tax withholding or 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.
<PAGE>
MELLON AUTO TRUST 199_-_
$-----------------------
[ASSET-BACKED NOTES]
ASSET-BACKED CERTIFICATES [CLASS ___]
-----------------------------
PROSPECTUS SUPPLEMENT
-----------------------------
UNDERWRITER
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We have
not authorized anyone to provide you with different information.
We are not offering the [Asset-Backed Notes or] Asset-Backed Certificates
in any state where the offer is not permitted.
Dealers will deliver a prospectus supplement and prospectus when acting as
underwriters of the [Asset-Backed Notes or] Asset-Backed Certificates, and with
respect to their unsold allotments or subscriptions. In addition, all dealers
selling the [Asset-Backed Notes or] Asset- Backed Certificates will be required
to deliver a prospectus supplement and prospectus until __________, 1999_.
__________, 199_
<PAGE>
[Alternate Page]
SUPPLEMENT
TO PROSPECTUS SUPPLEMENT DATED , 19
(To Prospectus dated , 199 )
Mellon Auto Trust 199__
Mellon Auto Receivables Corporation
Depositor
[Asset Backed Notes, Series __]
[Asset Backed Certificates, Series __]
This Supplement relates to the offering of the [Notes][Certificates] of the
Series referenced above. This Supplement does not contain complete information
about the offering of the [Notes][Certificates]. Additional information is
contained in the Prospectus Supplement dated , 199 (the
"Prospectus Supplement") prepared in connection with the offering of the
[Notes][Certificates] of the Series referenced above and in the Prospectus of
the Depositor dated , 199 (the "Prospectus"). Purchasers are
encouraged to read this Supplement, the Prospectus Supplement and the Prospectus
in full.
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS DISCUSSED
UNDER "RISK FACTORS" BEGINNING ON PAGE __ OF THE PROSPECTUS
This Supplement is to be used by Mellon Financial Markets, Inc., an
affiliate of Mellon Auto Receivables Corporation, in connection with offers and
sales relating to market making transactions in the [Notes][Certificates] of the
above-referenced Series in which Mellon Financial Markets, Inc. acts as
principal. Mellon Financial Markets, Inc. may also act as agent in such
transactions. Sales will be made at prices related to the prevailing prices at
the time of sale.
This Supplement is qualified in its entirety by reference to the detailed
information appearing in the accompanying Prospectus Supplement and Prospectus.
Certain capitalized terms used in this Supplement are defined in the Prospectus
Supplement or the Prospectus.
THE RECEIVABLES POOL
Certain information regarding the Receivables as of June 30, 199_ (the
"Reference Date") is set forth in Exhibit I in tabular format. Other than with
respect to rates of interest, percentages (approximate) are stated in such
tables by principal balance of the Receivables of the Reference Date and have
been rounded in order to total 100.00%.
METHOD OF DISTRIBUTION
The Supplement is to be used by Mellon Financial Markets, Inc., an
affiliate of Mellon Auto Receivables Corporation, in connection with offers and
sales relating to market-making transactions in the [Notes][Certificates] of the
Series referred to on the cover page hereof in which Mellon Financial Markets,
Inc., acts as principal. Mellon Financial Markets, Inc. may also act as agent in
such transactions. Sales will be made at prices related to the prevailing prices
at the time of sale.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemized list of the estimated expenses to be incurred in
connection with the offering of the securities being offered hereunder other
than underwriting discounts and commissions.
SEC Registration Fee................................... $295.00
Printing and Engraving................................. *
Trustee's Fees......................................... *
Legal Fees and Expenses................................ *
Blue Sky Fees and Expenses............................. *
Accountant's Fees and Expenses......................... *
Rating Agency Fees..................................... *
Miscellaneous Fees and Expenses........................ *__________
Total Expenses............ *
- -------------
*To be completed by amendment
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant's Certificate of Incorporation provides for indemnification of
directors and officers of the Registrant to the full extent permitted by
Delaware law.
Section 145 of the Delaware General Corporation Law provides, in substance, that
Delaware corporations shall have the power, under specified circumstances, to
indemnify their directors, officers, employees and agents in connection with
actions, suits or proceedings brought against them by a third party or in the
right of the corporation, by reason of the fact that they were or are such
directors, officers, employees or agents, against expenses incurred in any such
action, suit or proceeding. The Delaware General Corporation Law also provides
that the Registrant may purchase insurance on behalf of any such director,
officer, employee or agent.
The general effect of the provisions for indemnification of directors and
officers of the Registrant is to permit the Registrant to obtain the services of
qualified individuals who otherwise would be unwilling to serve because it might
expose their personal assets to potential liability arising from legal actions
in the right of, or against, the Registrant. Such provisions do not insultate
the officers or directors from their own unlawful acts but do permit the
Registrant to provide funds to defend themselves from allegations unless and
until they are finally judged to have acted unlawfully.
ITEM 16. EXHIBITS
1.1. Form of Underwriting Agreement
3.1. Certificate of Incorporation of the Registrant
3.2. By-laws of the Registrant
4.1. Form of Pooling and Servicing Agreement
4.2. Form of Certificate (included as part of Exhibit 4.1)
4.3 Form of Indenture
4.4 Form of Trust Agreement
5.1. Opinion of Stroock & Stroock & Lavan LLP with respect to legality
8.1. Opinion of Stroock & Stroock & Lavan LLP with respect to federal income
tax matters
(contained in Exhibit 5.1)
10.1 Form of Sale and Servicing Agreement
23.1. Consent of Stroock & Stroock & Lavan LLP (contained in Exhibit 5.1)
24.1. Powers of Attorney (included as part of signature page) 25.1 Statement
of Eligibility and Qualification of Indenture Trustee (Form T-1)*
- --------------------------
* To be filed subsequently.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, as amended (the "Securities Act"), the information omitted
from the form of prospectus filed as part of this registration
statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at the
time shall be deemed to be the initial bona fide offering thereof.
(3) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission (the "Commission") such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(4) For purposes of determining any liability under the Securities
Act, each filing of the Registrant's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") that is incorporated by reference in the
registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(5) To provide to the Underwriters at the closing specified in the
underwriting agreements, securities in such denominations and
registered in such names as required by the Underwriters to permit
prompt delivery to each purchaser.
(6) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a) (3) of
the Securities Act;
(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 and of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than 20 percent
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(7) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(8) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(9) To file an application for the purpose of determining the
eligibility of the trustee to act under subsection (a) of Section 310
of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of
the Act.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has
duly caused this Amendment to Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in Pittsburgh, PA on the 21st day
of January 1999.
MELLON AUTO RECEIVABLES
CORPORATION
By: /S/ STEPHEN COBAIN
----------------------------------
Name: Stephen Cobain
Title: Chairman and President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints each of Stephen Cobain, Jeffrey S. Gearhart and Paul S.
Beideman, or any of them, his true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him and his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
Registration Statement has been signed by the following persons in the
capacities indicated on January 21, 1999.
SIGNATURE Title
/S/ STEPHEN COBAIN Chairman of the Board, President and Director
Stephen Cobain (principal executive officer)
/S/ JEFFREY S. GEARHART Treasurer
Jeffrey S. Gearhart (principal financial and accounting officer)
/S/ PAUL S. BEIDEMAN Director
Paul S. Beideman
/S/ PAUL H. DIMMICK Director
Paul H. Dimmick
/S/ PHILIP K. HAMM Director
Philip K. Hamm
/S/ WILLIAM R. BAIREL Director
William R. Bairel
/S/ WILLIAM E. NUMRICH Director
William E. Numrich
<PAGE>
INDEX TO EXHIBITS
Exhibit
NUMBER EXHIBIT PAGE
1.1. Form of Underwriting Agreement
3.1. Certificate of Incorporation of the Registrant
3.2. By-laws of the Registrant
4.1. Form of Pooling and Servicing Agreement
4.2. Form of Certificate (included as part of Exhibit 4.1)
4.3. Form of Indenture
4.4 Form of Trust Agreement
5.1. Opinion of Stroock & Stroock & Lavan LLP with respect to
legality
8.1 Opinion of Stroock & Stroock & Lavan LLP with respect
to federal income tax matters (contained in Exhibit
5.1)
10.1 Form of Sale and Servicing Agreement
23.1. Consent of Stroock & Stroock & Lavan LLP (contained in
Exhibit 5.1)
24.1. Powers of Attorney (included as part of signature page)
25.1 Statement of Eligibility and Qualification of Indenture
Trustee (Form T-1)*
- ---------------------
* To be filed subsequently.
EXHIBIT 1.1
MELLON AUTO TRUST 199_-_
$_______ ___% CLASS A ASSET BACKED CERTIFICATES
$_______ ___% CLASS B ASSET BACKED CERTIFICATES
Mellon Auto Receivables Corporation
(DEPOSITOR)
FORM OF UNDERWRITING AGREEMENT
_______ __, 199_
[Name of Underwriter(s)]
[Address(es) of Underwriter(s)]
Ladies and Gentlemen:
Mellon Auto Receivables Corporation (the "Depositor") has previously
filed a registration statement with the Securities and Exchange Commission
relating to the issuance and sale from time to time of up to $____ of asset
backed notes and/or asset backed certificates. The Depositor proposes to cause
MELLON AUTO TRUST 199_-_ (the "Trust") to issue and sell $_________ principal
amount of its ___% Class A Asset Backed Certificates (the "Class A
Certificates") and $________ principal amount of its Class B ___% Asset Backed
Certificates (the "Class B Certificates" and, together with the Class A
Certificates, the "Certificates") to you, as underwriters (each, an
"Underwriter"). The assets of the Trust will include, among other things, a pool
of motor vehicle retail installment sale contracts and other motor vehicle
installment chattel paper (the "Receivables") secured by new and used
automobiles (including passenger cars, minivans, sport/utility vehicles and
light trucks) financed thereby (the "Financed Vehicles"), and certain monies
received thereunder on or after , _____________ __, 199__ (the "Cutoff Date"),
and the other property and the proceeds thereof to be conveyed to the Trust
pursuant to the Pooling and Servicing Agreement to be dated as of , ______ __,
199__ (the "Pooling and Servicing Agreement") among _________________, a
___________________ (the "Trustee"), the Depositor, Mellon Bank, N.A., as seller
(in such capacity, the "Seller") and as servicer (in such capacity, the
"Servicer"). Pursuant to the Pooling and Servicing Agreement, the Seller will
sell the Receivables to the Depositor, the Depositor will sell the Receivables
to the Trust and the Servicer will service the Receivables on behalf of the
Trust. In addition, pursuant to the Pooling and Servicing Agreement, the
Servicer will agree to perform certain administrative tasks on behalf of the
Trust.
Capitalized terms used and not otherwise defined herein shall have the
meanings given them in the Servicing Agreement.
SECTION 1 REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR. The
Depositor represents and warrants to, and agrees with the Underwriters that:
A. A Registration Statement on Form S-3 (No. 333-65271) has (i) been
prepared by the Depositor in conformity with the requirements of the
Securities Act of 1933 (the "Securities Act") and the rules and
regulations (the "Rules and Regulations") of the United States
Securities and Exchange Commission (the "Commission") thereunder, (ii)
been filed with the Commission under the Securities Act and (iii)
become effective under the Securities Act. Copies of such Registration
Statement have been delivered by the Depositor to the Underwriters. As
used in this Agreement, "Effective Time" means the date and the time
as of which such Registration Statement, or the most recent post-
effective amendment thereto, if any, was declared effective by the
Commission; "Effective Date" means the date of the Effective Time;
"Registration Statement" means such registration statement, at the
Effective Time, including any documents incorporated by reference
therein at such time; "Basic Prospectus" means the final prospectus
included in the Registration Statement at the Effective Time;
"Prospectus Supplement" means the final prospectus supplement relating
to the Offered Certificates, to be filed with the Commission pursuant
to paragraph (2), (3) or (5) of Rule 424(b) of the Rules and
Regulations; and "Prospectus" means the Basic Prospectus together with
the Prospectus Supplement. Reference made herein to the Prospectus
shall be deemed to refer to and include any documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the Securities
Act, as of the date of the Prospectus and any reference to any
amendment or supplement to the Prospectus shall be deemed to refer to
and include any document filed under the Securities Exchange Act of
1934 (the "Exchange Act") after the date of the Prospectus, and
incorporated by reference in the Prospectus and any reference to any
amendment to the Registration Statement shall be deemed to include any
report of the Depositor filed with the Commission pursuant to Section
13(a) or 15(d) of the Exchange Act after the Effective Time that is
incorporated by reference in the Registration Statement. There are no
contracts or documents of the Depositor which are required to be filed
as exhibits to the Registration Statement pursuant to the Securities
Act or the Rules and Regulations which have not been so filed or
incorporated by reference therein on or prior to the Effective Date of
the Registration Statement. The conditions for use of Form S-3, as set
forth in the General Instructions thereto, have been satisfied.
B. The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will, when they become effective or are filed with the
Commission, as the case may be, conform in all respects to the
requirements of the Securities Act and the Rules and Regulations. The
Registration Statement, as of the Effective Date thereof and of any
amendment thereto, did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. The
Prospectus as of its date, and as amended or supplemented as of the
Closing Date, does not and will not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided that no representation
or warranty is made as to information contained in or omitted from the
Registration Statement or the Prospectus in reliance upon and in
conformity with written information furnished to the Depositor in
writing by the Underwriters expressly for use therein. The only
information furnished by or on behalf of the Underwriters for use in
connection with the preparation of the Registration Statement or the
Prospectus is described in Section 8(I) hereof.
C. The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case
may be, conformed in all material respects to the requirements of the
Securities Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder, and none of such documents
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and any further documents so filed
and incorporated by reference in the Prospectus, when such documents
become effective or are filed with the Commission, as the case may be,
will conform in all material respects to the requirements of the
Securities Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder and will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; provided that no representation is made as to
documents deemed to be incorporated by reference in the Prospectus as
the result of filing a Form 8-K at the request of the Underwriters
except to the extent such documents reflect information furnished by
the Depositor to the Underwriters for the purpose of preparing such
documents.
D. Since the respective dates as of which information is given in the
Prospectus, there has not been any material adverse change in the
general affairs, management, financial condition, or results of
operations of the Depositor, otherwise than as set forth or
contemplated in the Prospectus as supplemented or amended as of the
Closing Date.
E. The Depositor has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware
and is in good standing as a foreign corporation in each jurisdiction
in which its ownership or lease of property or the conduct of its
business requires such qualification, and has all power and authority
necessary to own or hold its properties, to conduct the business in
which it is engaged and to enter into and perform its obligations
under this Agreement and the Pooling and Servicing Agreement and to
cause the Certificates to be issued.
F. There are no actions, proceedings or investigations pending before
or threatened by any court, administrative agency or other tribunal to
which the Depositor is a party or of which any of its properties is
the subject (a) which if determined adversely to the Depositor would
have a material adverse effect on the business or financial condition
of the Depositor, (b) asserting the invalidity of this Agreement, the
Pooling and Servicing Agreement, or the Certificates, (c) seeking to
prevent the issuance of the Certificates or the consummation by the
Depositor of any of the transactions contemplated by the Pooling and
Servicing Agreement or this Agreement, or (d) which might materially
and adversely affect the performance by the Depositor of its
obligations under, or the validity or enforceability of, the Pooling
and Servicing Agreement, this Agreement or the Certificates.
G. This Agreement has been, and the Pooling and Servicing Agreement,
when executed and delivered as contemplated hereby and thereby will
have been, duly authorized, executed and delivered by the Depositor,
and this Agreement constitutes, and the Pooling and Servicing
Agreement when executed and delivered as contemplated herein, will
constitute, legal, valid and binding instruments enforceable against
the Depositor in accordance with their respective terms, subject as to
enforceability to (x) applicable bankruptcy, reorganization,
insolvency moratorium or other similar laws affecting creditors'
rights generally, (y) general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law),
and (z) with respect to rights of indemnity under this Agreement,
limitations of public policy under applicable securities laws.
H. The execution, delivery and performance of this Agreement and the
Pooling and Servicing Agreement by the Depositor and the consummation
of the transactions contemplated hereby and thereby, and the issuance
and delivery of the Certificates do not and will not conflict with or
result in a breach or violation of any of the terms or provisions of,
or constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which the Depositor
is a party, by which the Depositor is bound or to which any of the
properties or assets of the Depositor is subject, nor will such
actions result in any violation of the provisions of the certificate
of incorporation or by-laws of the Depositor or any statute or any
order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Depositor or any of its properties or
assets.
I. KPMG Peat Marwick LLP is an independent public accountant with
respect to the Depositor as required by the Securities Act and the
Rules and Regulations.
J. The direction by the Depositor to the Trustee to execute,
authenticate, issue and deliver the Certificates has been duly
authorized by the Depositor, and assuming the Trustee has been duly
authorized to do so, when executed, authenticated, issued and
delivered by the Trustee in accordance with the Pooling and Servicing
Agreement, the Certificates will be validly issued and outstanding and
will be entitled to the benefits provided by the Pooling and Servicing
Agreement.
K. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of
the United States is required for the issuance of the Certificates and
the sale of the Certificates to the Underwriters, or the consummation
by the Depositor of the other transactions contemplated by this
Agreement and the Pooling and Servicing Agreement, except such
consents, approvals, authorizations, registrations or qualifications
as may be required under state securities or blue sky laws in
connection with the purchase and distribution of the Certificates by
the Underwriters or as have been obtained.
L. The Depositor possesses all material licenses, certificates,
authorities or permits issued by the appropriate State, Federal or
foreign regulatory agencies or bodies necessary to conduct the
business now conducted by it and as described in the Prospectus, and
the Depositor has not received notice of any proceedings relating to
the revocation or modification of any such license, certificate,
authority or permit which if decided adversely to the Depositor would,
singly or in the aggregate, materially and adversely affect the
conduct of its business, operations or financial condition.
M. The Depositor's assignment and sale of the Receivables to the Trust
on the Closing Date will vest in the Trust all the Depositor's right,
title and interest therein, or will result in a first priority
perfected security interest therein, in either case subject to no
other outstanding lien, mortgage, pledge, charge, encumbrance, adverse
claim or other security interest (collectively, "Liens").
N. The Receivables are chattel paper as defined in the Uniform
Commercial Code as in effect in the State of [Pennsylvania].
O. Under generally accepted accounting principles, the Depositor will
report its transfer of the Receivables to the Trustee pursuant to the
Pooling and Servicing Agreement as a sale of the Receivables. The
Depositor has been advised by KPMG Peat Marwick LLP that the transfer
will be so classified under generally accepted accounting principles
in accordance with Statement No. 77 of the Financial Accounting
Standards Board. The Depositor will also report such transfer in all
financial statements and reports prepared by it in accordance with
applicable regulatory accounting principles.
P. The Depositor, pursuant to the Pooling and Servicing Agreement, is
transferring to the Trust ownership of the Receivables, the security
interest in the Financed Vehicles securing the Receivables and the
proceeds of each of the foregoing, and, immediately prior to the
transfer thereof to the Trust, the Depositor will be the sole owner of
all right, title and interest in, and will have good and marketable
title to, the Receivables and the other property to be transferred by
it to the Trust. The assignment of the Receivables, all documents and
instruments relating thereto and all proceeds thereof to the Trust,
pursuant to the Pooling and Servicing Agreement, vests in the Trust
all interests which are purported to be conveyed thereby, free and
clear of any Liens.
Q. Immediately prior to the transfer of the Receivables to the Trust,
the Depositor's interest in the Receivables and the proceeds thereof
shall be perfected upon the filing of UCC-1 financing statements (the
"Financing Statements") in the offices specified in Schedule I, and
there shall be no unreleased statements affecting the Receivables
filed in such offices other than the Financing Statements. If a court
concludes that the transfer of the Receivables from the Depositor to
the Trust is a sale, the interest of the Trust in the Receivables and
the proceeds thereof will be perfected upon the filing of the
Financing Statements in the office of the Secretary of State of the
State of __________. If a court concludes that each such transfer is
not a sale, the Pooling and Servicing Agreement and the transactions
contemplated thereby constitute a grant by the Depositor and the
Depositor to the Trust of a valid security interest in the Receivables
and the proceeds thereof, which security interest will be perfected
upon the filing of the Financing Statements in the office of the
Secretary of State of the State of __________ and [Pennsylvania]. No
filing or other action, other than the filing of the Financing
Statements in the office of the Secretary of State of the State of
_____________ [and Pennsylvania] referred to above, is necessary to
perfect and maintain the interest or the security interest of the
Trust in the Receivables and the proceeds thereof against third
parties.
R. As of the Cut-Off Date, each of the Receivables will meet the
eligibility criteria described in the Prospectus and will conform to
the descriptions thereof contained in the Prospectus.
S. Neither the Depositor nor the Trust created by the Pooling and
Servicing Agreement is an "investment company" within the meaning of
such term under the Investment Company Act of 1940 (the "1940 Act")
and the rules and regulations of the Commission thereunder.
T. At the Closing Date, the Certificates and the Pooling and Servicing
Agreement will conform in all material respects to the descriptions
thereof contained in the Prospectus.
U. At the Closing Date, the Certificates shall have been rated in the
categories and by the nationally recognized rating agencies as set
forth in the Prospectus Supplement.
V. Any taxes, fees and other governmental charges in connection with
the execution, delivery and issuance of this Agreement, the Pooling
and Servicing Agreement and the Certificates have been paid or will be
paid at or prior to the Closing Date.
W. At the Closing Date, each of the representations and warranties of
the Depositor set forth in the Pooling and Servicing Agreement will be
true and correct in all material respects.
Any certificate signed by an officer of the Depositor and delivered to
the Underwriters or counsel for the Underwriters in connection with an offering
of the Offered Certificates shall be deemed a representation and warranty as to
the matters covered thereby to each person to whom the representations and
warranties in this Section 1 are made.
SECTION 2 PURCHASE AND SALE. The commitment of the Underwriters to
purchase the Certificates pursuant to this Agreement shall be deemed to have
been made on the basis of the representations and warranties herein contained
and shall be subject to the terms and conditions herein set forth. The Depositor
agrees to instruct the Trustee to issue the Certificates and agrees to sell to
each Underwriter, and each Underwriter agrees (except as provided in Sections 10
and 11 hereof) severally and not jointly to purchase from the Depositor the
aggregate initial principal amounts or percentage interests of the respective
Class or Classes of Certificates set forth opposite their names on Schedule A,
at the purchase price or prices set forth in Schedule A.
SECTION 3 DELIVERY AND PAYMENT. Delivery of and payment for the
Certificates to be purchased by the Underwriters shall be made at the offices of
Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New York 10038, or at
such other place as shall be agreed upon by the Underwriters and the Depositor
at 10:00 A.M. New York City time on _____________, 199_, or at such other time
or date as shall be agreed upon in writing by the Underwriters and the Depositor
(such date being referred to as the "Closing Date"). Payment shall be made to
the Depositor by wire transfer of same day funds payable to the account of the
Depositor. Delivery of the Certificates shall be made to the Underwriters for
the accounts of the applicable Underwriters against payment of the purchase
price thereof. The Certificates shall be in such authorized denominations and
registered in such names as the Underwriters may request in writing at least two
business days prior to the Closing Date. The Certificates will be made available
for examination by the Underwriters no later than 2:00 P.M. New York City time
on the first business day prior to the Closing Date.
SECTION 4 OFFERING BY THE UNDERWRITERS. It is understood that, subject
to the terms and conditions hereof, the Underwriters propose to offer the
Certificates for sale to the public as set forth in the Prospectus.
SECTION 5 COVENANTS OF THE DEPOSITOR. The Depositor agrees as follows:
A. To prepare the Prospectus in a form approved by the Underwriters
and to file such Prospectus pursuant to Rule 424(b) under the
Securities Act not later than the time required thereby; to make no
further amendment or any supplement to the Registration Statement or
to the Prospectus prior to the Closing Date except as permitted
herein; to advise the Underwriters, promptly after it receives notice
thereof, of the time when any amendment to the Registration Statement
has been filed or becomes effective prior to the Closing Date or any
supplement to the Prospectus or any amended Prospectus has been filed
prior to the Closing Date and to furnish the Underwriters with copies
thereof; to file promptly all reports and any definitive proxy or
information statements required to be filed by the Depositor with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of the Prospectus and, for so long
as the delivery of a prospectus is required in connection with the
offering or sale of the Certificates, to promptly advise the
Underwriters of its receipt of notice of the issuance by the
Commission of any stop order or of: (i) any order preventing or
suspending the use of the Prospectus; (ii) the suspension of the
qualification of the Certificates for offering or sale in any
jurisdiction; (iii) the initiation of or threat of any proceeding for
any such purpose; (iv) any request by the Commission for the amending
or supplementing of the Registration Statement or the Prospectus or
for additional information. In the event of the issuance of any stop
order or of any order preventing or suspending the use of the
Prospectus or suspending any such qualification, the Depositor
promptly shall use its best efforts to obtain the withdrawal of such
order by the Commission.
B. To furnish promptly to the Underwriters and to counsel for the
Underwriters a signed copy of the Registration Statement as originally
filed with the Commission, and of each amendment thereto filed with
the Commission, including all consents and exhibits filed therewith.
C. To deliver promptly to the Underwriters such number of the
following documents as the Underwriters shall reasonably request: (i)
conformed copies of the Registration Statement as originally filed
with the Commission and each amendment thereto (in each case including
exhibits); (ii) the Prospectus and any amended or supplemented
Prospectus; and (iii) any document incorporated by reference in the
Prospectus (including exhibits thereto). If the delivery of a
prospectus is required at any time prior to the expiration of nine
months after the Effective Time in connection with the offering or
sale of the Certificates, and if at such time any events shall have
occurred as a result of which the Prospectus as then amended or
supplemented would include any untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made when such Prospectus is delivered, not misleading, or, if
for any other reason it shall be necessary during such same period to
amend or supplement the Prospectus or to file under the Exchange Act
any document incorporated by reference in the Prospectus in order to
comply with the Securities Act or the Exchange Act, the Depositor
shall notify the Underwriters and, upon the Underwriters' request,
shall file such document and prepare and furnish without charge to the
Underwriters and to any dealer in securities as many copies as the
Underwriters may from time to time reasonably request of an amended
Prospectus or a supplement to the Prospectus which corrects such
statement or omission or effects such compliance, and in case the
Underwriters are required to deliver a Prospectus in connection with
sales of any of the Certificates at any time nine months or more after
the Effective Time, upon the request of the Underwriters but at their
expense, the Depositor shall prepare and deliver to the Underwriters
as many copies as the Underwriters may reasonably request of an
amended or supplemented Prospectus complying with Section 10(a)(3) of
the Securities Act.
D. To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Depositor or the
Underwriters, be required by the Securities Act or requested by the
Commission.
E. The Depositor will cause any Investor Materials (as defined below)
with respect to the Certificates which are delivered by any
Underwriter to the Depositor and accompanied by a letter, reasonably
acceptable to the Underwriters and the Depositor, of KPMG Peat Marwick
LLP with respect to such Investor Materials to be filed with the
Commission on a Current Report on Form 8-K (the "Form 8-K -- Investor
Materials") at or before the time required by the No Action Letters
(defined below); provided, however, that the Depositor shall have no
obligation to file any materials which, in the reasonable
determination of the Depositor after consultation with such
Underwriter, (i) are not required to be filed pursuant to the No
Action Letters or (ii) contain any erroneous information or untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; it being understood, however, that the Depositor shall
have no obligation to review or pass upon the accuracy or adequacy of,
or to correct, any Investor Materials provided by any Underwriter to
the Depositor as aforesaid. For purposes hereof, as to each
Underwriter, the term "Investor Materials" shall mean those
Computational Materials, ABS Term Sheets and Collateral Term Sheets
delivered by an Underwriter to the Depositor within the meaning of the
no-action letter dated May 20, 1994 issued by the Commission to
Kidder, Peabody Acceptance Corporation I and certain affiliates, the
no-action letter dated May 27, 1994 issued by the Commission to the
Public Securities Association and the no action letter dated February
17, 1995 issued by the Commission to the Public Securities Association
(collectively, the "No Action Letters") for which the filing of such
material is a condition of the relief granted in such letters.
F. To furnish the Underwriters and counsel for the Underwriters, prior
to filing with the Commission, and to obtain the consent of the
Underwriters for the filing of the following documents relating to the
Certificates: (i) amendment to the Registration Statement or
supplement to the Prospectus, or document incorporated by reference in
the Prospectus, or (ii) Prospectus pursuant to Rule 424 of the Rules
and Regulations.
G. To use its best efforts, in cooperation with the Underwriters, to
qualify the Certificates for offering and sale under the applicable
securities laws of such states and other jurisdictions of the United
States or elsewhere as the Underwriters may designate, and maintain or
cause to be maintained such qualifications in effect for as long as
may be required for the distribution of the Certificates. The
Depositor will file or cause the filing of such statements and reports
as may be required by the laws of each jurisdiction in which the
Certificates have been so qualified.
H. Unless the Underwriters shall otherwise have given their written
consent, no asset-backed securities backed by motor vehicle
receivables or other similar securities representing interest in or
secured by other motor vehicle-related assets originated or owned by
the Depositor or the Seller shall be publicly offered, sold nor shall
the Depositor or the Seller enter into any contractual arrangements
that contemplate the public offering or sale of such securities for a
period of seven (7) business days following the commencement of the
offering of the Certificates to the public.
I. For a period from the date of this Agreement until the retirement
of the Certificates, or until such time as the Underwriters shall
cease to maintain a secondary market in the Certificates, whichever
occurs first, the Depositor will deliver to the Underwriters the
annual statements of compliance and the annual independent certified
public accountants' reports furnished to the Trustee pursuant to the
Pooling and Servicing Agreement, as soon as such statements and
reports are furnished to the Trustee.
J. So long as any of the Certificates are outstanding, the Depositor
will furnish to the Underwriters (i) as soon as practicable after the
end of the fiscal year all documents required to be distributed to
Certificateholders or filed with the Commission on behalf of the Trust
pursuant to the Exchange Act, or any order of the Commission
thereunder and (ii) from time to time, any other information
concerning the Depositor as the Underwriters may reasonably request
only insofar as such information reasonably relates to the
Registration Statement or the Prospectus or the transactions
contemplated by the Pooling and Servicing Agreement.
K. On or before the Closing Date, the Depositor shall cause the
computer records of the Depositor relating to the Receivables to show
the absolute ownership by the Trustee on behalf of the Trust of the
Receivables, and from and after the Closing Date the Depositor shall
not take any action inconsistent with the ownership by the Trustee on
behalf of the Trust of such Receivables, other than as permitted by
the Pooling and Servicing Agreement.
L. To the extent, if any, that any of the ratings provided with respect
to the Certificates by the rating agency or agencies that initially
rate any of the Certificates are conditional upon the furnishing of
documents or the taking of any other actions by the Depositor on or
prior to the Closing Date, the Depositor shall furnish such documents
and take any such other actions. A copy of any such document shall be
provided to the Underwriters at the time it is delivered to the rating
agencies.
SECTION 6 CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS. The obligations
of the Underwriters to purchase the Certificates pursuant to this Agreement are
subject to: (i) the accuracy on and as of the Closing Date of the
representations and warranties on the part of the Depositor and the Seller
herein contained; (ii) the performance by the Depositor of all of its
obligations hereunder; and (iii) the following conditions as of the Closing
Date:
A. The Underwriters shall have received confirmation of the
effectiveness of the Registration Statement. No stop order suspending
the effectiveness of the Registration Statement or any part thereof
shall have been issued and no proceeding for that purpose shall have
been initiated or threatened by the Commission. Any request of the
Commission for inclusion of additional information in the Registration
Statement or the Prospectus shall have been complied with.
B. The Underwriters shall not have discovered and disclosed to the
Depositor on or prior to the Closing Date that the Registration
Statement or the Prospectus or any amendment or supplement thereto
contains an untrue statement of a fact or omits to state a fact which,
in the opinion of Stroock & Stroock & Lavan LLP, counsel for the
Underwriters, is material and is required to be stated therein or is
necessary to make the statements therein not misleading.
C. All corporate proceedings and other legal matters relating to the
authorization, form and validity of this Agreement, the Pooling and
Servicing Agreement, the Certificates, the Registration Statement and
the Prospectus, and all other legal matters relating to this Agreement
and the transactions contemplated hereby shall be satisfactory in all
respects to the Underwriters and their counsel, and the Depositor
shall have furnished to such counsel all documents and information
that they may reasonably request to enable them to pass upon such
matters.
D. Stroock & Stroock & Lavan LLP, counsel to the Underwriters, shall
have furnished to the Underwriters their written opinion, addressed to
the Underwriters and dated the Closing Date, in form and substance
satisfactory to the Underwriters, to the effect that:
1. The conditions to the use by the Depositor of a registration
statement on Form S-3 under the Securities Act, as set forth in
the General Instructions to Form S-3, have been satisfied with
respect to the Registration Statement and the Prospectus.
2. The Registration Statement and any amendments thereto have
become effective under the 1933 Act; to the best of such
counsel's knowledge, no stop order suspending the effectiveness
of the Registration Statement has been issued and not withdrawn
and no proceedings for that purpose have been instituted or
threatened and not terminated; and the Registration Statement,
the Prospectus and each amendment or supplement thereto, as of
their respective effective or issue dates (other than the
financial and statistical information contained or incorporated
therein, as to which such counsel need express no opinion),
complied as to form in all material respects with the applicable
requirements of the Securities Act and the Rules and Regulations
thereunder.
3. To the best of such counsel's knowledge, there are no material
contracts, indentures or other documents of a character required
to be described or referred to in the Registration Statement or
the Prospectus or to be filed as exhibits to the Registration
Statement other than those described or referred to therein or
filed or incorporated by reference as exhibits thereto.
4. The statements set forth in the Prospectus and the Prospectus
Supplement under the captions "ERISA Considerations" and "Federal
Income Tax Consequences" to the extent that they constitute
matters of federal law or legal conclusions with respect thereto,
provide a fair and accurate summary of such law or conclusions.
5. The Pooling and Servicing Agreement conforms in all material
respects to the description thereof contained in the Prospectus
and is not required to be qualified under the Trust Indenture Act
of 1939, as amended.
6. Neither the Depositor nor the Trust is an "investment company"
or under the "control" of an "investment company" as such terms
are defined in the Investment Company Act of 1940, as amended.
7. The Receivables are chattel paper as defined in the UCC as in
effect in the State of New York.
8. The Certificates conform in all material respects to the
description thereof contained in the Prospectus.
9. The Certificates, when duly and validly executed,
authenticated and delivered by the Trustee in accordance with the
Pooling and Servicing Agreement and, delivered to the
Underwriters and paid for in accordance this Agreement, will be
validly issued and outstanding and will be entitled to the
benefits of the Pooling and Servicing Agreement.
10. Assuming the due authorization, execution and delivery of
this Agreement and the Pooling and Servicing Agreement by the
other parties thereto, such agreements constitute the valid and
binding obligations of each of the Depositor and Mellon Bank,
N.A. (the "Bank"); enforceable against each of the Depositor and
the Bank in accordance with their respective terms, subject as to
enforceability to (x) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally or rights of creditors of
an institution the deposits in which are insured by the Federal
Deposit Insurance Corporation and court decisions with respect
thereto, (y) general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law) and
(z) with respect to rights of indemnity under this Agreement,
limitations of public policy under applicable securities laws.
Such counsel shall also have furnished to the Underwriters a written
statement, addressed to the Underwriters and dated the Closing Date,
in form and substance satisfactory to the Underwriters to the effect
that no facts have come to the attention of such counsel which lead
them to believe that: (a) the Registration Statement, at the time such
Registration Statement became effective, contained an untrue statement
of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading (except as to financial or statistical data contained or
incorporated in the Registration Statement);or (b) the Prospectus, as
of its date and as of the Closing Date, contained or contains an
untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading (except as to financial or statistical data contained or
incorporated in the Prospectus).
E. The Underwriters shall have received the favorable opinion or
opinions, dated the Closing Date, of Stroock & Stroock & Lavan LLP,
counsel to the Underwriters, addressed to the Depositor, the Rating
Agencies, and the Underwriters, regarding the creation, attachment and
perfection of a first priority security interest in the Receivables
and the property held in the Reserve Account in favor of the Trustee
on behalf of the Certificateholders. Such opinion may contain such
assumptions, qualifications and limitations as are customary in
opinions of this type. In rendering such opinion, such counsel may
state that they express no opinion as to the laws of any jurisdiction
other than the federal law of the United States of America and the
laws of the State of New York. To the extent any portion of such
opinion is governed by the laws of the State of Delaware, such opinion
will be given by ___________________.
F. The Underwriters and the Depositor shall have received a favorable
opinion, dated the Closing Date, of Carl Krasik, Esq., Associate
General Counsel of Mellon Bank Corporation, with respect to certain
matters relating to the Bank, in its capacity as both Seller and
Servicer under the Pooling and Servicing Agreement, in form and
substance satisfactory to the Underwriters, to the effect that:
1. The Bank has been duly organized and is validly existing as a
national banking association in good standing under the laws of
the United States. The Bank has all power and authority necessary
to own or hold its properties and to conduct the business in
which it is engaged and to enter into and perform its obligations
under the Pooling and Servicing Agreement and this Agreement.
2. The Bank is not in violation of its charter or by-laws or in
default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which the Bank is a party or by which it or
its properties may be bound, which default might result in any
material adverse change in the financial condition, earnings,
affairs or business of the Bank or which might materially and
adversely affect the ability of the Bank to perform its
obligations under the Pooling and Servicing Agreement or this
Agreement.
3. This Agreement and the Pooling and Servicing Agreement have
been duly authorized, executed and delivered by the Bank.
4. The execution, delivery and performance of this Agreement and
the Pooling and Servicing Agreement by the Bank and the
consummation of the transactions contemplated hereby and thereby,
do not and will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Bank is a
party or by which the Bank is bound or to which any of the
property or assets of the Bank or any of its subsidiaries is
subject, which breach or violation would have a material adverse
effect on the business, operations or financial condition of the
Bank , nor will such actions result in a violation of the
provisions of the charter or by-laws of the Bank or any statute
or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Bank or any of its
properties or assets, which breach or violation would have a
material adverse effect on the business, operations or financial
condition of the Bank.
5. There are not, to the best of such counsel's knowledge, any
actions, proceedings or investigations pending before or,
threatened by any court, administrative agency or other tribunal
to which the Bank is a party or of which any of its properties is
the subject: (a) which if determined adversely to the Bank would
have a material adverse effect on the business, results of
operations or financial condition of the Bank (b) asserting the
invalidity of this Agreement, the Pooling and Servicing Agreement
or the Certificates; (c) seeking to prevent the issuance of the
Certificates or the consummation by the Bank of any of the
transactions contemplated by this Agreement or the Pooling and
Servicing Agreement; or (d) which might materially and adversely
affect the performance by the Bank of its obligations under, or
the validity or enforceability of, this Agreement, the Pooling
and Servicing Agreement, or the Certificates.
G. The Underwriters shall have received a favorable opinion, dated the
Closing Date, of Carl Krasik, Esq., Associate General Counsel of
Mellon Bank Corporation, with respect to certain matters relating to
the Depositor, in form and substance satisfactory to the Underwriters,
to the effect that:
1. The Depositor has been duly organized and is validly existing
as a corporation in good standing under the laws of the State of
Delaware and is in good standing as a foreign corporation in each
jurisdiction in which its ownership or lease of property or the
conduct of its business so requires. The Depositor has all power
and authority necessary to own or hold its properties and to
conduct the business in which it is engaged and to enter into and
perform its obligations under this Agreement and the Pooling and
Servicing Agreement, and to cause the Certificates to be issued.
2. The Depositor is not in violation of its certificate of
incorporation or by-laws or in default in the performance or
observance of any material obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the Depositor
is a party or by which it or its properties may be bound, which
default might result in any material adverse changes in the
financial condition, earnings, affairs or business of the
Depositor or which might materially and adversely affect the
properties or assets, taken as a whole, of the Depositor.
3. This Agreement and the Pooling and Servicing Agreement have
been duly authorized, executed and delivered by the Depositor.
4. The execution, delivery and performance of this Agreement and
the Pooling and Servicing Agreement by the Depositor, the
consummation of the transactions contemplated hereby and thereby,
and the issuance and delivery of the Certificates do not and will
not conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Depositor is a party or by
which the Depositor is bound or to which any of the property or
assets of the Depositor or any of its subsidiaries is subject,
which breach or violation would have a material adverse effect on
the business, operations or financial condition of the Depositor,
nor will such actions result in a violation of the provisions of
the certificate of incorporation or by-laws of the Depositor or
any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the
Depositor or any of its properties or assets, which breach or
violation would have a material adverse effect on the business,
operations or financial condition of the Depositor.
5. The direction by the Depositor to the Trustee to execute,
issue, authenticate and deliver the Certificates has been duly
authorized by the Depositor.
6. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body
of the United States is required for the issuance of the
Certificates, and the sale of the Certificates to the
Underwriters, or the consummation by the Depositor of the other
transactions contemplated by this Agreement and the Pooling and
Servicing Agreement, except such consents, approvals,
authorizations, registrations or qualifications as may be
required State securities or Blue Sky laws in connection with the
purchase and distribution of the Certificates by the Underwriters
or as have been previously obtained.
7. There are not, to the best of such counsel's knowledge, any
actions, proceedings or investigations pending with respect to
which the Depositor has received service of process before or,
threatened by any court, administrative agency or other tribunal
to which the Depositor is a party or of which any of its
properties is the subject: (a) which if determined adversely to
the Depositor would have a material adverse effect on the
business, results of operations or financial condition of the
Depositor; (b) asserting the invalidity of the Pooling and
Servicing Agreement, this Agreement or the Certificates; (c)
seeking to prevent the issuance of the Certificates or the
consummation by the Depositor of any of the transactions
contemplated by the Pooling and Servicing Agreement or this
Agreement; or (d) which might materially and adversely affect the
performance by the Depositor of its obligations under, or the
validity or enforceability of, the Pooling and Servicing
Agreement, this Agreement or the Certificates.
Such counsel shall also have furnished to the Underwriters a
written statement, addressed to the Underwriters and dated the
Closing Date, in form and substance satisfactory to the
Underwriters to the effect that no facts have come to the
attention of such counsel which lead them to believe that: (a)
the Registration Statement, at the time such Registration
Statement became effective, contained an untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading (except as to financial or statistical data contained
or incorporated in the Registration Statement); or (b) the
Prospectus, as of its date and as of the Closing Date, contained
or contains an untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading (except as to financial or
statistical data contained or incorporated in the Prospectus).
H. The Underwriters shall have received the favorable opinion or
opinions, dated the date of the Closing Date, of counsel for the
Underwriters, with respect to the issue and sale of the Certificates,
the Registration Statement, this Agreement, the Prospectus and such
other related matters as the Underwriters may reasonably require.
I. The Depositor and the Bank shall each have furnished to the
Underwriters a certificate, dated the Closing Date and signed by the
Chairman of the Board, the President or a Vice President of the
Depositor and the Bank, respectively, stating as it relates to each
such entity:
1. The representations and warranties made by such entity in this
Agreement and in the Pooling and Servicing Agreement are true and
correct as of the Closing Date; and such entity has complied with
all agreements contained herein which are to have been complied
with on or prior to the Closing Date.
2. The information contained in the Prospectus relating to such
entity and the Receivables is true and accurate in all material
respects and nothing has come to his or her attention that would
lead such officer to believe that the Registration Statement or
the Prospectus includes any untrue statement of a material fact
or omits to state a material fact necessary to make the
statements therein not misleading.
In addition to the foregoing, the certificate of the Bank shall state
that the representations and warranties set forth in Sections 1 D, E,
F, G, H, L, M, O, P, Q and R are made by the Bank instead of the
Depositor and, modified as appropriate, are true as to the Bank as
though such representations and warranties were fully set forth in
such certificate.
J. The Underwriters shall have received a favorable opinion of counsel
to the Trustee, dated the Closing Date and in form and substance
satisfactory to the Underwriters, to the effect that:
1. The Trustee is a _____________________________ duly
incorporated, validly existing and in good standing under the
laws of ___________________.
2. The Trustee has the full corporate trust power to execute,
deliver and perform its obligations under the Pooling and
Servicing Agreement.
3. The execution and delivery by the Trustee of the Pooling and
Servicing Agreement and the performance by the Trustee of its
obligations under the Pooling and Servicing Agreement have been
duly authorized by all necessary corporate action of the Trustee.
4. The Pooling and Servicing Agreement is a valid and legally
binding obligation of the Trustee enforceable against the
Trustee.
5. The Certificates have been duly authenticated, executed and
delivered by the Trustee.
6. If the Trustee were acting as Servicer under the Pooling and
Servicing Agreement as of the date of such opinion, the Trustee
would have the full corporate trust power to perform the
obligations of the Servicer under the Pooling and Servicing
Agreement.
K. The Certificates shall have been rated in the categories and by the
rating agencies set forth in the Prospectus Supplement.
L. Prior to the Closing Date, counsel for the Underwriters shall have
been furnished with such documents and opinions as they may reasonably
require for the purpose of enabling them to pass upon the issuance and
sale of the Certificates as herein contemplated and related
proceedings or in order to evidence the accuracy and completeness of
any of the representations and warranties, or the fulfillment of any
of the conditions, herein contained, and all proceedings taken by the
Depositor in connection with the issuance and sale of the Certificates
as herein contemplated shall be satisfactory in form and substance to
the Underwriters and counsel for the Underwriters.
M. Subsequent to the execution and delivery of this Agreement none of
the following shall have occurred: (i) trading in securities generally
on the New York Stock Exchange, the American Stock Exchange or the
over-the-counter market shall have been suspended or minimum prices
shall have been established on either of such exchanges or such market
by the Commission, by such exchange or by any other regulatory body or
governmental authority having jurisdiction; (ii) a banking moratorium
shall have been declared by federal or state authorities; (iii) the
United States shall have become engaged in hostilities, there shall
have been an escalation of hostilities involving the United States or
there shall have been a declaration of a national emergency or war by
the United States; or (iv) there shall have occurred such a material
adverse change in general economic, political or financial conditions
(or the effect of international conditions on the financial markets of
the United States shall be such) as to make it in each of the
instances set forth in clauses (i), (ii), (iii) and (iv) herein, in
the reasonable judgment of the Underwriters, impractical or
inadvisable to proceed with the public offering or delivery of the
Certificates on the terms and in the manner contemplated in the
Prospectus.
N. The Underwriters shall have received from KPMG Peat Marwick LLP,
certified public accountants, a letter dated the date of the
Prospectus Supplement and satisfactory in form and substance to the
Underwriters and their counsel, to the effect that they have performed
certain specified procedures, all of which have been agreed to by the
Underwriters, as a result of which they determined that certain
information of an accounting, financial or statistical nature set
forth in the Prospectus Supplement agrees with the records of the
Depositor or the Bank, as applicable, excluding any questions of legal
interpretation.
O. The Underwriters shall have received evidence satisfactory to them
and counsel for the Underwriters that, on or before the Closing Date,
UCC-1 financing statements shall have been submitted to the Trustee,
for filing in the appropriate filing offices reflecting (1) the
transfer of the interest in the Receivables, certain other property
and the proceeds thereof (A) from the Seller to the Depositor and (B)
from the Depositor to the Trust, and (2) the grant of the security
interest by the Trust in the Receivables, certain other property and
the proceeds thereof to the Trustee.
If any condition specified in this Section 6 shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the Underwriters by notice to the Depositor at any time at or prior to the
closing Date, and such termination shall be without liability of any party to
any other party except as provided in Section 7.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to the Underwriters and their counsel.
SECTION 7 PAYMENT OF EXPENSES. The Depositor agrees to pay: (a) the
costs incident to the authorization, issuance, sale and delivery of the
Certificates and any taxes payable in connection therewith; (b) the costs
incident to the preparation, printing and filing under the Securities Act of the
Registration Statement and any amendments and exhibits thereto; (c) the costs of
distributing the Registration Statement as originally filed and each amendment
thereto and any post-effective amendments thereof (including, in each case,
exhibits), the Prospectus and any amendment or supplement to the Prospectus or
any document incorporated by reference therein, all as provided in this
Agreement; (d) the costs of reproducing and distributing this Agreement; (e) the
fees and expenses of qualifying the Certificates under the securities laws of
the several jurisdictions designated by the Underwriters as provided in Section
5(G) hereof and of preparing, printing and distributing a Blue Sky Memorandum
and a Legal Investment Survey (including related fees and expenses of counsel to
the Underwriters); (f) any fees charged by securities rating services for rating
the Certificates; (g) the costs of the accountant's letter referred to in
Section 6(N) hereof; and (h) all other costs and expenses incident to the
performance of the obligations of the Depositor (including costs and expenses of
its counsel); provided that, except as provided in this Section 7, the
Underwriters shall pay their own costs and expenses, including the costs and
expenses of their counsel, any transfer taxes on the Certificates which they may
sell and the expenses of advertising any offering of the Certificates made by
the Underwriters, and the Underwriters shall pay the cost of any accountant's
letters relating to any Investor Materials (as defined in Section 5(E) hereof).
If this Agreement is terminated by the Underwriters in accordance with
the provisions of Section 6 or Section 11, the Depositor shall cause the
Underwriters to be reimbursed for all reasonable out-of-pocket expenses,
including fees and disbursements of Stroock & Stroock & Lavan LLP, counsel for
the Underwriters.
SECTION 8 INDEMNIFICATION AND CONTRIBUTION.
A. The Depositor agrees to indemnify and hold harmless the
Underwriters and each person, if any, who controls an Underwriter
within the meaning of Section 15 of the Securities Act from and
against any and all loss, claim, damage or liability, joint or
several, or any action in respect thereof (including, but not limited
to, any loss, claim, damage, liability or action relating to purchases
and sales of the Certificates), to which such Underwriter or any such
controlling person may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement, or any amendment thereof or supplement thereto, (ii) the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, (iii) any untrue statement or alleged untrue statement of
a material fact contained in the Prospectus, or any amendment thereof
or supplement thereto, or (iv) the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading and shall
reimburse such Underwriter and each such controlling person promptly
upon demand for any legal or other expenses reasonably incurred by
such Underwriter or such controlling person in connection with
investigating or defending or preparing to defend against any such
loss, claim, damage, liability or action as such expenses are
incurred; provided, however, that the Depositor shall not be liable in
any such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, any untrue
statement or alleged untrue statement or omission or alleged omission
made in the Prospectus, or any amendment thereof or supplement
thereto, or the Registration Statement, or any amendment thereof or
supplement thereto, in reliance upon and in conformity with written
information furnished to the Depositor by or on behalf of such
Underwriter specifically for inclusion therein. The foregoing
indemnity agreement is in addition to any liability which the
Depositor may otherwise have to any Underwriter or any controlling
person of any of such Underwriter. The only information furnished by
or on behalf of the Underwriters for use in connection with the
preparation of the Registration Statement or the Prospectus is
described in Section 8(I) hereof.
B. Each Underwriter severally, and not jointly, agrees to indemnify
and hold harmless the Depositor, each of its directors, each of its
officers who signed the Registration Statement, and each person, if
any, who controls the Depositor within the meaning of Section 15 of
the Securities Act against any and all loss, claim, damage or
liability, or any action in respect thereof, to which the Depositor or
any such director, officer or controlling person may become subject,
under the Securities Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, or any amendment thereof or
supplement thereto, (ii) the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, (iii) any untrue statement
or alleged untrue statement of a material fact contained in the
Prospectus, or any amendment thereof or supplement thereto, or (iv)
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, but in each case only to the extent that the untrue
statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written information
furnished to the Depositor by or on behalf of such Underwriter
specifically for inclusion therein, and shall reimburse the Depositor
and any such director, officer or controlling person for any legal or
other expenses reasonably incurred by the Depositor or any director,
officer or controlling person in connection with investigating or
defending or preparing to defend against any such loss, claim, damage,
liability or action as such expenses are incurred. The foregoing
indemnity agreement is in addition to any liability which any
Underwriter may otherwise have to the Depositor or any such director,
officer or controlling person. The only information furnished by or on
behalf of the Underwriters for use in connection with the preparation
of the Registration Statement or the Prospectus is described in
Section 8(I) hereof.
C. Promptly after receipt by any indemnified party under this Section
8 of notice of any claim or the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made
against any indemnifying party under this Section 8, notify the
indemnifying party in writing of the claim or the commencement of that
action; provided, however, that the failure to notify an indemnifying
party shall not relieve it from any liability which it may have under
this Section 8 except to the extent it has been materially prejudiced
by such failure and, provided further, that the failure to notify any
indemnifying party shall not relieve it from any liability which it
may have to any indemnified party otherwise than under this Section 8.
If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, except to the extent
provided in the next following paragraph, the indemnifying party shall not be
liable to the indemnified party under this Section 8 for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
Any indemnified party shall have the right to employ separate counsel
in any such action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless: (i) the employment thereof has been specifically authorized by the
indemnifying party in writing; (ii) such indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party and in the reasonable judgment of such counsel it is
advisable for such indemnified party to employ separate counsel; or (iii) the
indemnifying party has failed to assume the defense of such action and employ
counsel reasonably satisfactory to the indemnified party, in which case, if such
indemnified party notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such indemnified party, it being understood, however, the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to local counsel) at any time for all such indemnified parties, which
firm shall be designated in writing by the related Underwriter, if the
indemnified parties under this Section 8 consist of one or more Underwriters or
any of its or their controlling persons, or the Depositor, if the indemnified
parties under this Section 8 consist of the Depositor or any of the Depositor's
directors, officers or controlling persons.
Each indemnified party, as a condition of the indemnity agreements
contained in Section 8(A) and (B), shall use its best efforts to cooperate with
the indemnifying party in the defense of any such action or claim. No
indemnifying party shall be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with its written consent or if there be a final
judgment for the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any loss or
liability by reason of such settlement or judgment.
Notwithstanding the foregoing paragraph, if at any time an indemnified
party shall have requested an indemnifying party to reimburse the indemnified
party for fees and expenses of counsel, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in accordance
with such request prior to the date of such settlement.
D. Each Underwriter agrees to provide the Depositor no later than two
Business Days prior to the day on which the Prospectus Supplement is
required to be filed pursuant to Rule 424 with a copy of any Investor
Materials (as defined in Section 5(E) hereof) produced by such
Underwriter for filing with the Commission on Form 8-K.
E. Each Underwriter severally agrees, assuming all Seller Provided
Information is accurate and complete in all material respects, to
indemnify and hold harmless the Depositor, each of the Depositor's
directors, each of its officers who signed the Registration Statement,
and each person who controls the Depositor within the meaning of
Section 15 of the Securities Act against any and all losses, claims,
damages or liabilities, joint or several, to which they may become
subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement of a material fact
contained in the Investor Materials provided by such Underwriter and
agrees to reimburse each such indemnified party for any legal or other
expenses reasonably incurred by him, her or it in connection with
investigating or defending or preparing to defend any such loss,
claim, damage, liability or action as such expenses are incurred. The
obligations of an Underwriter under this Section 8(E) shall be in
addition to any liability which such Underwriter may otherwise have.
The procedures set forth in Section 8(C) shall be equally applicable
to this Section 8(E).
F. If the indemnification provided for in this Section 8 shall for any
reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 8(A), (B) or (E) in respect of any
loss, claim, damage or liability, or any action in respect thereof,
referred to therein, then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim,
damage or liability, or action in respect thereof, (i) in such
proportion as shall be appropriate to reflect the relative benefits
received by the Depositor on the one hand and the related Underwriter
on the other from the offering of the related Certificates or (ii) if
the allocation provided by clause (i) above is not permitted by
applicable law or if the indemnified party failed to give the notice
required under Section 8(C), in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above
but also the relative fault of the Depositor on the one hand and the
related Underwriter on the other with respect to the statements or
omissions which resulted in such loss, claim, damage or liability, or
action in respect thereof, as well as any other relevant equitable
considerations.
The relative benefits of the Depositor and an Underwriter shall be
deemed to be in such proportion as the total net proceeds from the offering
(before deducting expenses) received by the Depositor bear to the excess of (i)
the purchase price paid by investors to such Underwriter for the Certificates
sold by such Underwriter over (ii) the purchase price paid by such Underwriter
to the Depositor for such Offered Certificates (the "Spread").
The relative fault of the Depositor and an Underwriter shall be
determined by reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Depositor or by such Underwriter, the intent of
the parties and their relative knowledge, access to information and opportunity
to correct or prevent such statement or omission and other equitable
considerations.
The Depositor and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 8(F) were to be determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purposes) or by any other method of allocation which does not take into
account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section 8(F)
shall be deemed to include, for purposes of this Section 8(F), any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim.
For purposes of this Section 8, in no case shall any Underwriter be
responsible for any amount in excess of the Spread received by such Underwriter
in connection with the Offered Certificates purchased by it. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
G. For purposes of this Section 8, as to each Underwriter the term
"Investor Materials" means such portion, if any, of the information
delivered to the Depositor by such Underwriter pursuant to Section
8(D) for filing with the Commission on Form 8-K as:
(i) is not contained in the Prospectus without taking into account
information incorporated therein by reference through a Form 8-K
-- Investor Materials; and
(ii) does not constitute Seller-Provided Information.
"Seller-Provided Information" means any computer tape (or other
information) furnished to any Underwriter by or on behalf of the
Seller or Master Servicer concerning the assets comprising the
Trust.
H. The Bank agrees to indemnify each indemnified party referred to in
Section 8(A) hereof with respect to Seller Provided Information to the
same extent as the indemnity granted under such section. The
procedures set forth in Section 8(C) shall be equally applicable to
this Section 8(H).
I. Each Underwriter confirms that the information regarding such
Underwriter set forth in the last paragraph on the cover page of the
Prospectus Supplement, the information regarding such Underwriter set
forth under the caption "Underwriting" in the Prospectus Supplement
and such Underwriter's Investor Materials, if any (other than to the
extent such information is based on Seller Provided Information)
furnished by such Underwriter is correct, and the parties hereto
acknowledge that such information constitutes the only information
furnished in writing by or on behalf of any Underwriter for use in
connection with the preparation of the Registration Statement or the
Prospectus.
SECTION 9 REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties and agreements contained in this
Agreement or contained in certificates of officers of the Depositor submitted
pursuant hereto shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of the Underwriters or controlling
persons thereof, or by or on behalf of the Depositor and shall survive delivery
of any Certificates to the Underwriters.
SECTION 10 DEFAULT BY ONE OR MORE OF THE UNDERWRITERS. If one or more
of the Underwriters participating in the public offering of the Certificates
shall fail at the Closing Date to purchase the Certificates which it is (or they
are) obligated to purchase hereunder (the "Defaulted Certificates"), then the
non-defaulting Underwriters shall have the right, within 24 hours thereafter, to
make arrangements for one or more of the non-defaulting Underwriters, or any
other underwriters, to purchase all, but not less than all, of the Defaulted
Certificates in such amounts as may be agreed upon and upon the terms herein set
forth. If, however, the Underwriters have not completed such arrangements within
such 24-hour period, then:
(i) if the aggregate principal amount of Defaulted Certificates
does not exceed 10% of the aggregate principal amount of the
Certificates to be purchased pursuant to this Agreement, the
non-defaulting Underwriters named in this Agreement shall be
obligated to purchase the full amount thereof in the proportions
that their respective underwriting obligations hereunder bear to
the underwriting obligations of all such non-defaulting
Underwriters, or
(ii) if the aggregate principal amount of Defaulted Certificates
exceeds 10% of the aggregate principal amount of the Certificates
to be purchased pursuant to this Agreement, this Agreement shall
terminate, without any liability on the part of any
non-defaulting Underwriters.
No action taken pursuant to this Section 10 shall relieve any
defaulting Underwriter from the liability with respect to any default of such
Underwriter under this Agreement.
In the event of a default by any Underwriter as set forth in this
Section 10, each of the Underwriters and the Depositor shall have the right to
postpone the Closing Date for a period not exceeding five Business Days in order
that any required changes in the Registration Statement or Prospectus or in any
other documents or arrangements may be effected.
SECTION 11 TERMINATION OF AGREEMENT. The Underwriters may terminate
this Agreement immediately upon notice to the Depositor, at any time at or prior
to the Closing Date if any of the events or conditions described in Section 6(M)
of this Agreement shall occur and be continuing. In the event of any such
termination, the covenant set forth in Section 5(H), the provisions of Section
7, the indemnity agreement set forth in Section 8, and the provisions of
Sections 9, 12 and 15 shall remain in effect.
SECTION 12 OBLIGATIONS OF THE BANK. The Bank agrees with the
Underwriters, for the sole and exclusive benefit of each such Underwriter and
each person controlling such Underwriter within the meaning of the Securities
Act and not for the benefit of any assignee thereof or any other person or
persons dealing with such Underwriter, in consideration of and as an inducement
to their agreement to purchase the Certificates from the Depositor, to indemnify
and hold harmless each Underwriter against any failure by the Depositor to
perform its obligations to the Underwriters hereunder, including, without
limitation, any failure by the Depositor to honor any obligation to any
Underwriter pursuant to Section 8 hereof.
SECTION 13 NOTICES. All statements, requests, notices and agreements
hereunder shall be in writing, and:
A. if to the Underwriters, shall be delivered or sent by mail,
telex or facsimile transmission to:
[Names and Addresses of Underwriters]
________________________________
________________________________
________________________________
________________________________
B. if to the Depositor, shall be delivered or sent by mail, telex
or facsimile transmission to:
Mellon Auto Receivables Corporation
One Mellon Bank Center
Fourth Floor
Pittsburgh, Pennsylvania 15258
Attention: President
Fax: (412) 234-7142
SECTION 14 PERSONS ENTITLED TO THE BENEFIT OF THIS AGREEMENT. This
Agreement shall inure to the benefit of and be binding upon the Underwriters and
the Depositor, and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except that
the representations, warranties, indemnities and agreements contained in this
Agreement shall also be deemed to be for the benefit of the person or persons,
if any, who control any of the Underwriters within the meaning of Section 15 of
the Securities Act, and for the benefit of directors of the Depositor, officers
of the Depositor who have signed the Registration Statement and any person
controlling the Depositor within the meaning of Section 15 of the Securities
Act. Nothing in this Agreement is intended or shall be construed to give any
person, other than the persons referred to in this Section 14, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision contained herein.
SECTION 15 SURVIVAL. The respective indemnities, representations,
warranties and agreements of the Depositor and the Underwriters contained in
this Agreement, or made by or on behalf of them, respectively, pursuant to the
shall survive the delivery of and payment for the Certificates and shall remain
in full force and effect, regardless of any investigation made by or on behalf
of any of them or any person controlling any of them.
SECTION 16 DEFINITION OF THE TERM "BUSINESS DAY". For purposes of this
Agreement, "Business Day" means any day on which the New York Stock Exchange,
Inc. is open for trading.
SECTION 17 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without giving
effect to the conflict of law rules thereof.
SECTION 18 COUNTERPARTS. This Agreement may be executed in
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
SECTION 19 HEADINGS. The headings herein are inserted for convenience
of reference only and are not intended to be part of, or to affect the meaning
or interpretation of, this Agreement.
If the foregoing correctly sets forth the agreement between the
Depositor and the Underwriters, please indicate your acceptance in the space
provided for the purpose below.
Very truly yours,
MELLON AUTO RECEIVABLES CORPORATION
By:_________________________________
Name:
Title:
MELLON BANK, N.A.
By:_________________________________
Name:
Title:
CONFIRMED AND ACCEPTED, as
of the date first above written:
______________________________________
By: __________________________________
Name:
Title:
______________________________________
By: __________________________________
Name:
Title:
<PAGE>
SCHEDULE A
Initial Principal
Balance of
Underwriter Class A Certificates
- ----------- --------------------
____________________________...................... $
____________________________...................... $
Total............................................. $
Initial Principal
Balance of
Underwriter Class B Certificates
- ----------- --------------------
___________________________....................... $
___________________________....................... $
___________________________....................... $
Total............................................. $
Original
Principal
Security Balance $ Price % Price $ Rate %
- -------- --------- ------- ------- ------
Class A Certificates
Class B Certificates
Total Price to Public: $
Total Price to Depositor: $
Underwriting Discounts
and Commissions: $
Exhibit 3.1
CERTIFICATE OF INCORPORATION
OF
MELLON AUTO RECEIVABLES CORPORATION
THE UNDERSIGNED, in order to form a corporation for the purposes
hereinafter stated, under and pursuant to the provisions of the General
Corporation Law of the State of Delaware (the "GCL"), does hereby certify as
follows:
ARTICLE I
The name of the Corporation is Mellon Auto Receivables Corporation.
ARTICLE II
The registered office of the Corporation in the State of Delaware is
located at 1209 Orange Street, in the City of Wilmington, County of New Castle.
The name of the Corporation's registered agent in the State of Delaware at such
address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation is to engage solely in the following
activities:
(a) To acquire, own, hold, sell, transfer, pledge, dispose of or
otherwise deal with receivables under, and interests in,
loan agreements, chattel paper, promissory notes or other
evidences of indebtedness relating to the financing or
leasing of motor vehicles ("Auto Loans") or other personal
property;
(b) To act as settlor or depositor or trusts formed under a
trust agreement, pooling and servicing agreement or other
agreement to issue series (any of which series may be issued
in one or more classes) of trust certificates
("Certificates") representing interests in Auto Loans and/or
other property and/or to issue series (any of which series
may be issued in one or more classes) of bonds, notes or
other evidences of indebtedness ("Debt Obligations")
collateralized by Auto Loans and/or other property and to
enter into any other agreement in connection with the
authorization, issuance, sale and delivery of such Debt
Obligations;
(c) To acquire, own, hold, sell, transfer, pledge, dispose of or
otherwise deal with Certificates and Debt Obligations,
including Certificates or Debt Obligations representing a
subordinated interest in Auto Loans ("Subordinated
Interests") or a residual interest in Auto Loans ("Residual
Interests");
(d) To loan or invest or otherwise apply proceeds from Auto
Loans, funds received in respect of Certificates, Debt
Obligations, Subordinated Interests or Residual Interests
and any other income, as determined by the Corporation's
Board of Directors; and
(e) To engage in any lawful act or activity to exercise any
powers permitted to corporations organized under the GCL
that are incidental to and necessary or convenient for the
accomplishment of the foregoing purposes.
ARTICLE IV
The total number of shares of stock which the Corporation shall have
authority to issue is 100 shares of Common Stock, with a par value of $1.00 per
share.
ARTICLE V
Election of directors need not be by ballot unless the By-Laws of the
Corporation shall so provide.
ARTICLE VI
The Corporation's funds and other assets will not be commingled with
those of any of its stockholders or of any direct or indirect parent of the
Corporation or of any affiliate of any such parent.
ARTICLE VII
The Corporation shall not issue, assume or guarantee any debt
securities unless such debt securities are acceptable to the rating agencies
that have rated any Certificates or Debt Obligations without the termination or
lowering by such rating agencies of their ratings thereof.
ARTICLE VIII
The affairs of the Corporation shall be managed by a Board of
Directors (the "Board" or the "Board of Directors"), which shall at all times
include at least two Outside Directors. An "Outside Director" shall be an
individual who, for at least eighteen (18) months prior to being appointed by
the Board, shall not have been a director, officer or employee of, or indirect
beneficial owner of 5% or more of the voting securities of, or member of the
immediate family of any such director, officer, employee or beneficial owner of,
Mellon Bank Corporation ("Mellon") or any corporate affiliate of Mellon.
Notwithstanding the foregoing, an Outside Director may be a director or officer
of one or more other corporations that is an affiliate or are affiliates of
Mellon, provided that (i) each such corporation is or was formed with limited
purposes and (ii) such person does not earn, in the aggregate, material
compensation for serving in such positions. For the purposes of the foregoing,
an "affiliate" of an entity is an entity controlling, controlled by, or under
common control with such entity. Notwithstanding any other provision of this
Certificate of Incorporation or any other provision of law that so empowers the
Corporation, in the event of the death, incapacity, or resignation of an Outside
Director or such position is otherwise vacated, a successor Outside Director
shall be appointed by the remaining directors of the Corporation and no action
requiring the unanimous affirmative vote of the Board of Directors of the
Corporation shall be taken until a successor Outside Director is elected and
qualified and approves such action.
ARTICLE IX
Notwithstanding any other provision of this Certificate of
Incorporation and any provision of law that otherwise so empowers the
Corporation, the Corporation shall not, without the unanimous approval of the
Board of Directors of the Corporation, do any of the following:
(a) dissolve or liquidate, in whole or in part;
(b) merge or consolidate with or into any other entity or convey or
(except in a transaction of a type described in Article III hereof) transfer its
properties and assets substantially as an entirety to an entity, unless:
(i) the entity (if other than the Corporation) formed or
surviving the consolidation or merger or which acquires the
properties and assets of the Corporation is organized under
the laws of the State of Delaware, expressly assumes the due
and punctual payment of, and all obligations of the
Corporation in connection with, the indebtedness of the
Corporation, and has a Certificate of Incorporation
containing provisions substantially identical to the
provisions of Articles III, VI, VII, VIII and this Article
IX; and
(ii) immediately after giving effect to the transaction, no
default or event of default has occurred and is continuing
under any indebtedness of the Corporation or any agreements
relating to such indebtedness;
(c) institute proceedings to be adjudicated bankrupt or insolvent, or
consent to the institution of bankruptcy or insolvency proceedings against it,
or file a petition or answer or consent seeking reorganization or relief under
the federal bankruptcy laws, or consent to the filing of any such petition or to
the appointment of a receiver, liquidator, assignee, trustee, conservator,
sequestrator (or other similar official) of the Corporation or of any
substantial part of the Corporation's property, or make an assignment for the
benefit of creditors, or admit in writing its inability to pay its debts
generally as they become due, or take corporate action in furtherance of any
such action; or
(d) amend this Certificate of Incorporation to alter in any manner or
delete Articles III, VI, VII, VIII and this Article IX.
ARTICLE X
In furtherance and not in limitation of the power conferred upon the
Board of Directors by law, the Board of Directors shall have power to make,
adopt, alter, amend and repeal, from time to time, the By-Laws of the
Corporation, subject to the right of the stockholders entitled to vote with
respect thereto to alter and repeal By-Laws made by the Directors.
ARTICLE XI
The incorporator of the Corporation is Carol A. Soltes, whose mailing
address is 435 Sixth Avenue, Pittsburgh, Pennsylvania 15219.
ARTICLE XII
PERSONAL LIABILITY OF DIRECTORS.
(a) To the fullest extent that the laws of the State of Delaware, as
the same exist or may hereafter be amended, permit elimination of the personal
liability of directors, no director of this Corporation shall be personally
liable to this Corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director.
(b) The provisions of this Article shall be deemed to be a contract
with each director of this Corporation who serves as such at any time while this
Article is in effect, and each such director shall be deemed to be serving as
such in reliance on the provisions of this Article. Any amendment or repeal of
this Article or adoption of any By-Law of this Corporation or other provision of
the Certificate of Incorporation of this Corporation which has the effect of
increasing director liability shall operate prospectively only and shall not
affect any action taken, or any failure to act, by a director of this
Corporation prior to such amendment, repeal, By-Law or other provision becoming
effective.
ARTICLE XIII
INDEMNIFICATION OF, AND ADVANCEMENT OF
EXPENSES TO, DIRECTORS, OFFICERS AND OTHERS.
(a) RIGHT TO INDEMNIFICATION. Except as prohibited by law, every
director and officer of the Corporation shall be entitled as of right to be
indemnified by the Corporation against all expenses and liability (as those
terms are defined below in this Paragraph) incurred by such person in connection
with any actual or threatened claim, action, suit or proceeding, whether civil,
criminal, administrative, investigative or other, or whether brought by or
against such person or by or in the right of the Corporation or otherwise, in
which such person may be involved, as a party or otherwise, by reason of such
person being or having been a director or officer of the Corporation or a
subsidiary of the Corporation or by reason of the fact that such person is or
was serving at the request of the Corporation as a director, officer, employee,
fiduciary or other representative of another corporation, partnership, joint
venture, trust, employee benefit plan or other entity (such claim, action, suit
or proceeding hereinafter being referred to as an "Action"); PROVIDED, HOWEVER,
that no such right to indemnification shall exist with respect to an Action
brought by an indemnitee (as defined below) against the Corporation (an
"Indemnitee Action") except as provided in the last sentence of this Paragraph.
Persons who are not directors or officers of the Corporation may be similarly
indemnified in respect of service to the Corporation or a subsidiary of the
Corporation or to another such entity at the request of the Corporation to the
extent the Board of Directors of the Corporation at any time designates any of
such persons as entitled to the benefits of this Article. As used in this
Article, "indemnitee" includes each director and officer of the Corporation and
each other person designated by the Board of Directors of the Corporation as
entitled to the benefits of this Article; "expenses" means all expenses actually
and reasonably incurred, including fees and expenses of counsel selected by an
indemnitee; and "liability" means all liability incurred, including the amounts
of any judgments, excise taxes, fines or penalties and any amounts paid in
settlement. An indemnitee shall be entitled to be indemnified pursuant to this
Article against expenses incurred in connection with an Indemnitee Action if (i)
the Indemnitee Action is instituted under Paragraph (c) of this Article and the
indemnitee is successful in whole or in part in such Indemnitee Action, (ii) the
indemnitee is successful in whole or in part in another Indemnitee Action for
which expenses are claimed or (iii) the indemnification for expenses is included
in a settlement of, or is awarded by a court in, such other Indemnitee Action.
(b) RIGHT TO ADVANCEMENT OF EXPENSES. Every indemnitee shall be
entitled as of right to have the expenses of the indemnitee in defending any
Action or in bringing and pursuing any Indemnitee Action under Paragraph (c) of
this Article paid in advance by the Corporation prior to final disposition of
the Action or Indemnitee Action, provided that the Corporation receives a
written undertaking by or on behalf of the indemnitee to repay the amount
advanced if it should ultimately be determined that the indemnitee is not
entitled to be indemnified for the expenses.
(c) RIGHT OF INDEMNITEE TO BRING ACTION. If a written claim for
indemnification under Paragraph (a) of this Article or for advancement of
expenses under Paragraph (b) of this Article is not paid in full by the
Corporation within 30 days after the claim has been received by the Corporation,
the indemnitee may at any time thereafter bring an Indemnitee Action to recover
the unpaid amount of the claim and, if successful in whole or in part, the
indemnitee shall also be entitled to be paid the expense of bringing and
pursuing such Indemnitee Action. The only defense to an Indemnitee Action to
recover on a claim for indemnification under Paragraph (a) of this Article shall
be that the conduct of the indemnitee was such that under Delaware law the
Corporation is prohibited from indemnifying the indemnitee for the amount
claimed, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its Board of Directors,
independent legal counsel and stockholders) to have made a determination prior
to the commencement of such Indemnitee Action that indemnification of the
indemnitee is proper in the circumstances, nor an actual determination by the
Corporation (including its Board of Directors, independent legal counsel or
stockholders) that the conduct of the indemnitee was such that indemnification
is prohibited by Delaware law, shall be a defense to such Indemnitee Action or
create a presumption that the conduct of the indemnitee was such that
indemnification is prohibited by Delaware law. The only defense to an Indemnitee
Action to recover on a claim for advancement of expenses under Paragraph (b) of
this Article shall be failure by the indemnitee to provide the undertaking
required by Paragraph (b) of this Article.
(d) FUNDING AND INSURANCE. The Corporation may create a trust fund,
grant a security interest, cause a letter of credit to be issued or use other
means (whether or not similar to the foregoing) to ensure the payment of all
sums required to be paid by the Corporation to effect indemnification as
provided in this Article. The Corporation may purchase and maintain insurance to
protect itself and any indemnitee against any expenses or liability incurred by
the indemnitee in connection with any Action, whether or not the Corporation
would have the power to indemnify the indemnitee against the expenses or
liability by law or under the provisions of this Article.
(e) NON-EXCLUSIVITY; NATURE AND EXTENT OF RIGHTS. The rights to
indemnification and advancement of expenses provided for in this Article shall
(i) not be deemed exclusive of any other rights, whether now existing or
hereafter created, to which any indemnitee may be entitled under any agreement,
provision in the Certificate of Incorporation or By-Laws of the Corporation,
vote of stockholders or disinterested directors or otherwise, (ii) be deemed to
create contractual rights in favor of each indemnitee who serves at any time
while this Article is in effect (and each such indemnitee shall be deemed to be
serving in reliance on the provisions of this Article), (iii) continue as to
each indemnitee who has ceased to have the status pursuant to which the
indemnitee was entitled or was designated as entitled to indemnification under
this Article and inure to the benefit of the heirs and legal representatives of
each indemnitee and (iv) be applicable to Actions commenced after this Article
becomes effective, whether arising from acts or omissions occurring before or
after this Article becomes effective. Any amendment or repeal of this Article or
adoption of any By-Law of this Corporation or other provision of the Certificate
of Incorporation of this Corporation which has the effect of limiting in any way
the rights to indemnification or advancement of expenses provided for in this
Article shall operate prospectively only and shall not affect any action taken,
or any failure to act, by an indemnitee prior to such amendment, repeal, By-Law
or other provision becoming effective.
(f) PARTIAL INDEMNITY. If an indemnitee is entitled under any
provision of this Article to indemnification by the Corporation for some or a
portion of the expenses or liability incurred by the indemnitee in the
preparation, investigation, defense, appeal or settlement of any Action or
Indemnitee Action but not, however, for the total amount thereof, the
Corporation shall indemnify the indemnitee for the portion of such expenses or
liability to which the indemnitee is entitled.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 15th day
of September, 1998.
______________________________
Carol A. Soltes, Incorporator
Exhibt 3.2
BY-LAWS
OF
MELLON AUTO RECEIVABLES CORPORATION
(a Delaware corporation)
Adopted: September 15, 1998
<PAGE>
INDEX TO BY-LAWS
SECTION PAGE
ARTICLE I STOCKHOLDERS..................................................1
Section 1.01. Annual Meetings..................................1
Section 1.02. Special Meetings.................................1
Section 1.03. Notice of Annual and Special Meetings............1
Section 1.04. Quorum...........................................2
Section 1.05. Voting...........................................2
Section 1.06. Procedure at Stockholders' Meetings..............3
Section 1.07. Action Without Meeting...........................3
ARTICLE II DIRECTORS....................................................4
Section 2.01. Number, Election and Term of Office..............4
Section 2.02. Annual Meetings..................................4
Section 2.03. Regular Meetings.................................4
Section 2.04. Special Meetings.................................4
Section 2.05. Notice of Annual and Special Meetings............5
Section 2.06. Quorum and Manner of Acting......................5
Section 2.07. Action Without Meeting...........................6
Section 2.08. Participation by Conference Telephone............6
Section 2.09. Resignations.....................................6
Section 2.10. Removal of Directors.............................6
Section 2.11. Vacancies........................................7
Section 2.12. Compensation of Directors........................7
Section 2.13. Committees.......................................7
Section 2.14. Personal Liability of Directors..................8
Section 2.15. Indemnification of and Advancement of
Expenses to, Directors, Officers and Others............8
ARTICLE III OFFICERS AND EMPLOYEES.....................................12
Section 3.01. Executive Officers..............................12
Section 3.02. Additional Officers; Other Agents and
Employees........................................12
Section 3.03. The Chairman....................................12
Section 3.04. The President...................................12
Section 3.05. The Vice Presidents.............................13
Section 3.06. The Secretary and Assistant Secretaries.........13
Section 3.07. The Treasurer and Assistant Treasurers..........14
Section 3.08. Vacancies.......................................14
Section 3.09. Delegation of Duties............................14
ARTICLE IV SHARES OF CAPITAL STOCK.....................................15
Section 4.01. Share Certificates..............................15
Section 4.02. Transfer of Shares..............................15
Section 4.03. Transfer Agents and Registrars..................16
Section 4.04. Lost, Stolen, Destroyed or Mutilated
Certificates..........................................16
Section 4.05. Regulations Relating to Shares..................16
Section 4.06. Holders of Record...............................16
Section 4.07. Fixing of Record Date...........................17
ARTICLE V SIGNING AUTHORITY AND CORPORATE TRANSACTIONS................17
Section 5.01. Signing Authority...............................17
Section 5.02. Voting And Acting With Respect To Stock
And Other Securities Owned By The Corporation........18
ARTICLE VI GENERAL PROVISIONS..........................................18
Section 6.01. Offices.........................................18
Section 6.02. Corporate Seal..................................19
Section 6.03. Fiscal Year.....................................19
ARTICLE VII VALIDATION OF CERTAIN CONTRACTS............................19
ARTICLE VIII AMENDMENTS................................................20
<PAGE>
BY-LAWS
ARTICLE I
STOCKHOLDERS
SECTION 1.01. ANNUAL MEETINGS. Annual meetings of the stockholders
shall be held at such date, time and place as may be fixed by the Board of
Directors and as set forth in the notice of the meeting.
SECTION 1.02. SPECIAL MEETINGS. Special meetings of the stockholders
may be called at any time, for the purpose or purposes set forth in the call, by
the President, the Board of Directors or the holders of at least one-fifth of
all the shares of any class outstanding and entitled to vote thereat, by
delivering a written request to the Secretary. At any time, upon the written
request of any person or persons who have duly called a special meeting, it
shall be the duty of the Secretary to fix the date of the meeting, to be held
not more than 75 days after receipt of the request, and to give due notice
thereof. Special meetings shall be held at such place, either within or without
the State of Delaware, and at such time and date as the Board of Directors shall
determine and as set forth in the notice of the meeting.
SECTION 1.03. NOTICE OF ANNUAL AND SPECIAL MEETINGS. Except as
otherwise expressly required by law, notice of each meeting of stockholders,
whether annual or special, shall be given at least 10 and not more than 60 days
prior to the date on which the meeting is to be held to each stockholder of
record entitled to vote thereat by delivery of a notice thereof to him
personally or by sending a copy thereof through the mail or by telegram, charges
prepaid, to his address appearing on the records of the Corporation. Each such
notice shall specify the place, day and hour of the meeting and, in the case of
a special meeting, shall briefly state the purpose or purposes for which the
meeting is called. A written waiver of notice, signed by the person or persons
entitled to such notice, whether before or after the date and time fixed for the
meeting shall be deemed the equivalent of such notice. Neither the business to
be transacted at nor the purpose of the meeting need be specified in a waiver of
notice of such meeting.
SECTION 1.04. QUORUM. A stockholders' meeting duly called shall not be
organized for the transaction of business unless a quorum is present. At any
meeting the presence in person or by proxy of stockholders entitled to cast at
least a majority of the votes which all stockholders are entitled to cast on the
particular matter shall constitute a quorum for the purpose of considering such
matter, except as otherwise expressly provided by law or by the Certificate of
Incorporation or By-Laws of the Corporation. The stockholders present at a duly
organized meeting can continue to do business until adjournment, notwithstanding
the withdrawal of enough stockholders to leave less than a quorum. If a meeting
cannot be organized because a quorum has not attended, those present may adjourn
the meeting from time to time to such time (not more than 30 days after the next
previous adjourned meeting) and place as they may determine, without notice
other than by announcement at the meeting of the time and place of the adjourned
meeting; and in the case of any meeting called for the election of directors,
those who attend the second of such adjourned meetings, although entitled to
cast less than a majority of the votes entitled to be cast on any matter to be
considered at the meeting, shall nevertheless constitute a quorum for the
purpose of electing directors.
SECTION 1.05. VOTING. At every meeting of stockholders, each holder of
record of issued and outstanding stock of the Corporation entitled to vote at
such meeting shall be entitled to vote in person or by proxy and, except where a
date has been fixed as the record date for the determination of stockholders
entitled to notice of or to vote at such meeting, no holder of record of a share
of stock which has been transferred on the books of the Corporation within 10
days next preceding the date of such meeting shall be entitled to notice of or
to vote at such meeting in respect of such share so transferred. Resolutions of
the stockholders shall be adopted, and any action of the stockholders at a
meeting upon any matter shall be taken and be valid, only if at least a majority
of the votes cast with respect to such resolutions or matter are cast in favor
thereof, except as otherwise expressly provided by law or by the Certificate of
Incorporation or By-Laws of the Corporation. The Chairman of the Board (if one
has been elected and is present) shall be chairman, and the Secretary (if
present) shall act as secretary, at all meetings of the stockholders. In the
absence of the Chairman of the Board, the President shall be chairman; and in
the absence of both of them, the chairman shall be designated by the Board of
Directors or if not so designated shall be elected by the stockholders present;
and in the absence of the Secretary, an Assistant Secretary shall act as
secretary of the meeting.
SECTION 1.06. PROCEDURE AT STOCKHOLDERS' MEETINGS. The organization of
each meeting of the stockholders, the order of business thereat and all matters
relating to the manner of conducting the meetings shall be determined by the
chairman of the meeting, whose decisions may be overruled only by majority vote
(which shall not be by ballot) of the stockholders present and entitled to vote
at the meeting in person or by proxy. Meetings shall be conducted in a manner
designed to accomplish the business of the meeting in a prompt and orderly
fashion and to be fair and equitable to all stockholders, but it shall not be
necessary to follow Roberts' Rules of Order or any other manual of parliamentary
procedure.
SECTION 1.07. ACTION WITHOUT MEETING. Unless otherwise provided by the
Certificate of Incorporation, any action required to be taken at any annual or
special meeting of stockholders, or any action which may be taken at any annual
or special meeting, may be taken without a meeting, without prior notice and
without a vote, if a consent or consents in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted, and such written consent is delivered to the Corporation by delivery
to its registered office in Delaware, its principal place of business or an
officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing.
ARTICLE II
DIRECTORS
SECTION 2.01. NUMBER, ELECTION AND TERM OF OFFICE. The number of
directors which shall constitute the full Board of Directors shall be determined
by resolution of the board of directors or by the stockholders at the annual
meeting. A full Board of Directors shall be elected as each annual meeting of
the stockholders. Each director shall hold office for the term for which he is
elected and thereafter until his successor is duly elected or until his prior
death, resignation or removal. Directors need not be stockholders.
SECTION 2.02. ANNUAL MEETINGS. Annual Meetings of the Board of
Directors shall be held each year at the same place as and immediately after the
annual meeting of stockholders, or at such other place and time as shall
theretofore have been determined by the Board. At its regular annual meeting,
the Board of Directors shall organize itself and elect the officers of the
Corporation for the ensuing year, and may transact any other business.
SECTION 2.03. REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held at such intervals and at such time and place as shall from
time to time be determined by the Board. After there has been such determination
and notice thereof has been once given to each person then a member of the Board
of Directors, regular meetings may be held at such intervals and time and place
without further notice being given.
SECTION 2.04. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called at any time by the Board, by the Chairman of the Board,
by the President or by any three directors to be held on such day and at such
time and place as shall be specified by the person or persons calling the
meeting.
SECTION 2.05. NOTICE OF ANNUAL AND SPECIAL MEETINGS. Except as
otherwise expressly required by law, notice of the annual meeting of the Board
of Directors need not be given. Except as otherwise expressly required by law,
notice of every special meeting of the Board of Directors specifying the place,
date and time thereof shall be given to each director either by being mailed on
at least the third day prior to the date of the meeting or by being sent by
telegraph or given personally or by telephone at least 24 hours prior to the
time of the meeting. A written waiver of notice of a special meeting, signed by
the person or persons entitled to such notice, whether before or after the date
and time stated therein fixed for the meeting, shall be deemed the equivalent of
such notice, and attendance of a director at a meeting shall constitute a waiver
of notice of such meeting except when the director attends the meeting for the
express purpose of objecting, when he enters the meeting, to the transaction of
any business because the meeting is not lawfully called or convened.
SECTION 2.06. QUORUM AND MANNER OF ACTING. At all meetings of the
Board of Directors, except as otherwise expressly provided by law or by the
Certificate of Incorporation or By-Laws of the Corporation, the presence of a
majority of the full Board shall be necessary and sufficient to constitute a
quorum for the transaction of business. If a quorum is not present at any
meeting, the meeting may be adjourned from time to time by a majority of the
directors present until a quorum as aforesaid shall be present, but notice of
the time and place to which such a meeting is adjourned shall be given to any
directors not present either by being sent by telegraph or given personally or
by telephone at least eight hours prior to the date of reconvening. Resolutions
of the Board of Directors shall be adopted, and any action of the Board at a
meeting upon any matter shall be taken and be valid, only with the affirmative
vote of at least a majority of the directors present at the meeting, except as
otherwise provided herein. The Chairman of the Board (if one has been elected
and is present) shall be chairman, and the Secretary (if present) shall act as
secretary, at all meetings of the Board. In the absence of the Chairman of the
Board, the President shall be chairman, and in the absence of both of them the
directors present shall select a member of the Board of Directors to be
chairman; and in the absence of the Secretary, the chairman of the meeting shall
designate any person to act as secretary of the meeting.
SECTION 2.07. ACTION WITHOUT MEETING. Any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting if a consent in writing, setting forth the
actions so taken, shall be signed by all members of the Board or such committee,
as the case may be, and such written consent is filed with the minutes of
proceedings of the Board or committee.
SECTION 2.08. PARTICIPATION BY CONFERENCE TELEPHONE. Members of the
Board of Directors of the Corporation, or any committee designated by the Board,
may participate in a meeting of the Board or committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
by such means shall constitute presence in person at such meeting.
SECTION 2.09. RESIGNATIONS. A director may resign by submitting his
written resignation to the Chairman of the Board (if one has been elected) or
the Secretary. Unless otherwise specified therein, the resignation of a director
need not be accepted to make it effective and shall be effective immediately
upon its receipt by such officer or as otherwise specified therein. If the
resignation of a director specifies that it shall be effective at some time
later than receipt, until that time the resigning director shall be competent to
act on all matters before the Board of Directors, including filling the vacancy
caused by such resignation.
SECTION 2.10. REMOVAL OF DIRECTORS. The entire Board of Directors or
any individual director may be removed at any time for cause or without cause by
the holders of a majority of the shares then entitled to vote at an election of
directors. The vacancy or vacancies caused in the Board of Directors by such
removal may but need not be filled by such stockholders at the same meeting or
at a special meeting of the stockholders called for that purpose.
SECTION 2.11. VACANCIES. Any vacancy that shall occur in the Board of
Directors by reason of death, resignation, removal, increase in the number of
directors or any other cause whatever shall, unless filled as provided in
Section 2.10 of this Article II, be filled by a majority of the then members of
the Board, whether or not a quorum, and each person so elected shall be a
director until he or his successor is elected by the stockholders at a meeting
called for the purpose of electing directors, or until his prior death,
resignation or removal.
SECTION 2.12. COMPENSATION OF DIRECTORS. The Corporation may allow
compensation to its directors for their services, as determined from time to
time by resolution adopted by the Board of Directors.
SECTION 2.13. COMMITTEES. The Board of Directors may, by resolution
adopted by a majority of the full Board, designate one or more committees
consisting of directors to have and exercise such authority of the Board in the
management of the business and affairs of the Corporation as the resolution of
the Board creating such committee may specify and as is otherwise permitted by
law. The Board of Directors may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee. In the absence or disqualification of any member
of such committee or committees, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another director to act at the meeting in the
place of such absent or disqualified member.
SECTION 2.14. PERSONAL LIABILITY OF DIRECTORS.
(a) To the fullest extent that the laws of the State of Delaware, as
the same exist or may hereafter be amended, permit elimination of the personal
liability of directors, no director of this Corporation shall be personally
liable to this Corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director.
(b) The provisions of this Section 2.14 shall be deemed to be a
contract with each director of this Corporation who serves as such at any time
while this Section 2.14 is in effect, and each such director shall be deemed to
be serving as such in reliance on the provisions of this Section 2.14. Any
amendment or repeal of this Section 2.14 or adoption of any By-Law of this
Corporation or other provision of the Certificate of Incorporation of this
Corporation which has the effect of increasing director liability shall operate
prospectively only and shall not affect any action taken, or any failure to act,
by a director of this Corporation prior to such amendment, repeal, By-Law or
other provision becoming effective.
SECTION 2.15. INDEMNIFICATION OF AND ADVANCEMENT OF EXPENSES TO,
DIRECTORS, OFFICERS AND OTHERS.
(a) RIGHT TO INDEMNIFICATION. Except as prohibited by law, every
director and officer of the Corporation shall be entitled as of right to be
indemnified by the Corporation against all expenses and liability (as those
terms are defined below in this Paragraph) incurred by such person in connection
with any actual or threatened claim, action, suit or proceeding, whether civil,
criminal, administrative, investigative or other, or whether brought by or
against such person or by or in the right of the Corporation or otherwise, in
which such person may be involved, as a party or otherwise, by reason of such
person being or having been a director or officer of the Corporation or a
subsidiary of the Corporation or by reason of the fact that such person is or
was serving at the request of the Corporation as a director, officer, employee,
fiduciary or other representative of another corporation, partnership, joint
venture, trust, employee benefit plan or other entity (such claim, action, suit
or proceeding hereinafter being referred to as an "Action"); provided, however,
that no such right to indemnification shall exist with respect to an Action
brought by an indemnitee (as defined below) against the Corporation (an
"Indemnitee Action") except as provided in the last sentence of this Paragraph.
Persons who are not directors or officers of the Corporation may be similarly
indemnified in respect of service to the Corporation or a subsidiary of the
Corporation or to another such entity at the request of the Corporation to the
extent the Board of Directors of the Corporation at any time designates any of
such persons as entitled to the benefits of this Section. As used in this
Section, "indemnitee" includes each director and officer of the Corporation and
each other person designated by the Board of Directors of the Corporation as
entitled to the benefits of this Section; "expenses" means all expenses actually
and reasonably incurred, including fees and expenses of counsel selected by an
indemnitee; and "liability" means all liability incurred, including the amounts
of any judgments, excise taxes, fines or penalties and any amounts paid in
settlement. An indemnitee shall be entitled to be indemnified pursuant to this
Section against expenses incurred in connection with an Indemnitee Action if (i)
the Indemnitee Action is instituted under Paragraph (c) of this Section and the
indemnitee is successful in whole or in part in such Indemnitee Action, (ii) the
indemnitee is successful in whole or in part in another Indemnitee Action for
which expenses are claimed or (iii) the indemnification for expenses is included
in a settlement of, or is awarded by a court in, such other Indemnitee Action.
(b) RIGHT TO ADVANCEMENT OF EXPENSES. Every indemnitee shall be
entitled as of right to have the expenses of the indemnitee in defending any
Action or in bringing and pursuing any Indemnitee Action under Paragraph (c) of
this Section paid in advance by the Corporation prior to final disposition of
the Action or Indemnitee Action, provided that the Corporation receives a
written undertaking by or on behalf of the indemnitee to repay the amount
advanced if it should ultimately be determined that the indemnitee is not
entitled to be indemnified for the expenses.
(c) RIGHT OF INDEMNITEE TO BRING ACTION. If a written claim for
indemnification under Paragraph (a) of this Section or for advancement of
expenses under Paragraph (b) of this Section is not paid in full by the
Corporation within 30 days after the claim has been received by the Corporation,
the indemnitee may at any time thereafter bring an Indemnitee Action to recover
the unpaid amount of the claim and, if successful in whole or in part, the
indemnitee shall also be entitled to be paid the expense of bringing and
pursuing such Indemnitee Action. The only defense to an Indemnitee Action to
recover on a claim for indemnification under Paragraph (a) of this Section shall
be that the conduct of the indemnitee was such that under Delaware law the
Corporation is prohibited from indemnifying the indemnitee for the amount
claimed, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its Board of Directors,
independent legal counsel and stockholders) to have made a determination prior
to the commencement of such Indemnitee Action that indemnification of the
indemnitee is proper in the circumstances, nor an actual determination by the
Corporation (including its Board of Directors, independent legal counsel or
stockholders) that the conduct of the indemnitee was such that indemnification
is prohibited by Delaware law, shall be a defense to such Indemnitee Action or
create a presumption that the conduct of the indemnitee was such that
indemnification is prohibited by Delaware law. The only defense to an Indemnitee
Action to recover on a claim for advancement of expenses under Paragraph (b) of
this Section shall be failure by the indemnitee to provide the undertaking
required by Paragraph (b) of this Section.
(d) FUNDING AND INSURANCE. The Corporation may create a trust fund,
grant a security interest, cause a letter of credit to be issued or use other
means (whether or not similar to the foregoing) to ensure the payment of all
sums required to be paid by the Corporation to effect indemnification as
provided in this Section. The Corporation may purchase and maintain insurance to
protect itself and any indemnitee against any expenses or liability incurred by
the indemnitee in connection with any Action, whether or not the Corporation
would have the power to indemnify the indemnitee against the expenses or
liability by law or under the provisions of this Section.
(e) NON-EXCLUSIVITY; NATURE AND EXTENT OF RIGHTS. The rights to
indemnification and advancement of expenses provided for in this Section shall
(i) not be deemed exclusive of any other rights, whether now existing or
hereafter created, to which any indemnitee may be entitled under any agreement,
provision in the Certificate of Incorporation or By-Laws of the Corporation,
vote of stockholders or disinterested directors or otherwise, (ii) be deemed to
create contractual rights in favor of each indemnitee who serves at any time
while this Section is in effect (and each such indemnitee shall be deemed to be
serving in reliance on the provisions of this Section), (iii) continue as to
each indemnitee who has ceased to have the status pursuant to which the
indemnitee was entitled or was designated as entitled to indemnification under
this Section and inure to the benefit of the heirs and legal representatives of
each indemnitee and (iv) be applicable to Actions commenced after this Section
becomes effective, whether arising from acts or omissions occurring before or
after this Section becomes effective. Any amendment or repeal of this Section or
adoption of any other By-Law of this Corporation or other provision of the
Certificate of Incorporation of this Corporation which has the effect of
limiting in any way the rights to indemnification or advancement of expenses
provided for in this Section shall operate prospectively only and shall not
affect any action taken, or any failure to act, by an indemnitee prior to such
amendment, repeal, By-Law or other provision becoming effective.
(f) PARTIAL INDEMNITY. If an indemnitee is entitled under any
provision of this Section to indemnification by the Corporation for some or a
portion of the expenses or liability incurred by the indemnitee in the
preparation, investigation, defense, appeal or settlement of any Action or
Indemnitee Action but not, however, for the total amount thereof, the
Corporation shall indemnify the indemnitee for the portion of such expenses or
liability to which the indemnitee is entitled.
ARTICLE III
OFFICERS AND EMPLOYEES
SECTION 3.01. EXECUTIVE OFFICERS. The Executive Officers of the
Corporation shall be the President, a Secretary and a Treasurer, and may include
a Chairman of the Board, one or more Vice Presidents, and one or more Assistant
Treasurers, as the Board of Directors may from time to time determine, all of
whom shall be elected by the Board of Directors. Any two or more offices may be
held by the same person. Each Executive Officer shall hold office until the next
succeeding annual meeting of the Board of Directors and thereafter until his
successor is duly elected and qualifies, or until his earlier death, resignation
or removal.
SECTION 3.02. ADDITIONAL OFFICERS; OTHER AGENTS AND EMPLOYEES. The
Board of Directors may from time to time appoint or hire such additional
officers, assistant officers, agents, employees and independent contractors as
the Board deems advisable; and the Board or the President shall prescribe their
duties, conditions of employment and compensation. Subject to the power of the
Board of Directors, the President may employ from time to time such other
agents, employees, and independent contractors as he may deem advisable for the
prompt and orderly transaction of the business of the Corporation, and he may
prescribe their duties and the conditions of their employment, fix their
compensation and dismiss them, without prejudice to their contract rights, if
any.
SECTION 3.03. THE CHAIRMAN. If there shall be a Chairman of the Board,
he shall be elected from among the directors, shall preside at all meetings of
the stockholders and of the Board, and shall have such other powers and duties
as from time to time may be prescribed by the Board.
SECTION 3.04. THE PRESIDENT. The President shall be the chief
executive officer of the Corporation. Subject to the control of the Board of
Directors, the President shall have general policy supervision of and general
management and executive powers over all the property, business, operations and
affairs of the Corporation, and shall see that the policies and programs adopted
or approved by the Board are carried out. The President shall exercise such
further powers and duties as from time to time may be prescribed in these
By-Laws or by the Board of Directors.
SECTION 3.05. THE VICE PRESIDENTS. The Vice Presidents may be given by
resolution of the Board of Directors general executive powers, subject to the
control of the President, concerning one or more or all segments of the
operations of the Corporation. The Vice Presidents shall exercise such further
powers and duties as from time to time may be prescribed in these By-Laws or by
the Board of Directors or by the President. At the request of the President or
in his absence or disability, the senior Vice President shall exercise all the
powers and duties of the President.
SECTION 3.06. THE SECRETARY AND ASSISTANT Secretaries. It shall be the
duty of the Secretary (a) to keep or cause to be kept an original or duplicate
record of the proceedings of the stockholders and the Board of Directors, and a
copy of the Certificate of Incorporation and of the By-Laws; (b) to attend to
the giving of notices of the Corporation as may be required by law or these
By-Laws; (c) to be custodian of the corporate records and of the seal of the
Corporation and see that the seal is affixed to such documents as may be
necessary or advisable; (d) to have charge of the stock books of the
Corporation, and a share register, giving the names of the stockholders in
alphabetical order, and showing their respective addresses, the number and
classes of shares held by each, the number and date of certificates issued for
the shares, and the date of cancellation of every certificate surrendered for
cancellation; and (e) to exercise all powers and duties incident to the office
of Secretary, and such other powers and duties as may be prescribed by the Board
of Directors or by the President from time to time. The Secretary by virtue of
his office shall be an Assistant Treasurer. The Assistant Secretaries shall
assist the Secretary in the performance of his duties and shall also exercise
such further powers and duties as from time to time may be assigned to them by
the Board of Directors, the President or the Secretary. At the direction of the
Secretary or in his absence or disability, an Assistant Secretary shall perform
the duties of the Secretary.
SECTION 3.07. THE TREASURER AND ASSISTANT Treasurers. The Treasurer
shall have custody of all the funds and securities of the Corporation. He shall
collect all moneys due the Corporation and deposit such moneys to the credit of
the Corporation in such banks, trust companies, or other depositories as may
have been duly designated by the Board of Directors. He shall endorse for
collection on behalf of the Corporation, checks, notes, drafts and other
documents, and may sign and deliver receipts, vouchers and releases of liens
evidencing payments made to the Corporation. He shall cause to be disbursed the
funds of the Corporation by payment in cash or by checks or drafts upon the
authorized depositories of the Corporation. He shall have charge of the books
and accounts of the Corporation. He shall perform all acts incident to the
office of Treasurer and such other duties as may be assigned to him by the Board
of Directors. The Treasurer by virtue of his office shall be an Assistant
Secretary. The Assistant Treasurers shall assist the Treasurer in the
performance of his duties and shall also exercise such further powers and duties
as from time to time may be assigned to them by the Board of Directors, the
President or the Treasurer. At the direction of the Treasurer or in his absence
or disability, an Assistant Treasurer shall perform the duties of the Treasurer.
SECTION 3.08. VACANCIES. Vacancy in any office or position by reason
of death, resignation, removal, disqualification, disability or other cause,
shall be filled in the manner provided in this Article III for regular election
or appointment to such office.
SECTION 3.09. DELEGATION OF DUTIES. The Board of Directors may in its
discretion delegate for the time being the powers and duties, or any of them, of
any officer to any other person whom it may select.
ARTICLE IV
SHARES OF CAPITAL STOCK
SECTION 4.01. SHARE CERTIFICATES. Every holder of stock in the
Corporation shall be entitled to a certificate or certificates, to be in such
form as the Board of Directors may from time to time prescribe, signed by the
Chairman of the Board, the President or any Vice President and by the Treasurer
or any Assistant Treasurer or the Secretary or any Assistant Secretary. The
signatures of such officers may be facsimiles. Each such certificate shall set
forth the name of the registered holder thereof, the number and class of shares
and the designation of the series, if any, which the certificate represents. The
Board of Directors may, if it so determines, direct that certificates for shares
of stock of the Corporation be signed by a transfer agent or registered by a
registrar or both, in which case such certificates shall not be valid until so
signed or registered.
In case any officer of the Corporation who shall have signed, or whose
facsimile signature shall have been used on, any certificate for shares of stock
of the Corporation shall cease to be such officer, whether because of death,
resignation, removal or otherwise, before such certificate shall have been
delivered by the Corporation, such certificate shall nevertheless be deemed to
have been adopted by the Corporation and may be issued and delivered as though
the person who signed such certificate or whose facsimile signature shall have
been used thereon had not ceased to be such officer.
SECTION 4.02. TRANSFER OF SHARES. Transfers of shares of stock of the
Corporation shall be made only on the books of the Corporation by the registered
holder thereof or by his attorney thereunto authorized by an instrument duly
executed and filed with the Corporation, and on surrender of the certificate or
certificates for such shares properly endorsed or accompanied by properly
executed stock powers and evidence of the payment of all taxes imposed upon such
transfer. Except as provided in Section 4.04 of this Article IV, every
certificate surrendered for transfer shall be cancelled and no new certificate
or certificates shall be issued in exchange for any existing certificate until
such existing certificate shall have been so cancelled.
SECTION 4.03. TRANSFER AGENTS AND REGISTRARS. The Board of Directors
may appoint any one or more qualified banks, trust companies or other
corporations organized under any law of any state of the United States or under
the laws of the United States as agent or agents for the Corporation in the
transfer of the stock of the Corporation and likewise may appoint any one or
more such qualified banks, trust companies or other corporations as registrar or
registrars of the stock of the Corporation.
SECTION 4.04. LOST, STOLEN, DESTROYED OR MUTILATED CERTIFICATES. New
certificates for shares of stock may be issued to replace certificates lost,
stolen, destroyed or mutilated upon such terms and conditions, which may but
need not include the giving of a satisfactory bond or other indemnity, as the
Board of Directors may from time to time determine.
SECTION 4.05. REGULATIONS RELATING TO SHARES. The Board of Directors
shall have power and authority to make such rules and regulations not
inconsistent with these By-Laws or with law as it may deem expedient concerning
the issue, transfer and registration of certificates representing shares of
stock of the Corporation.
SECTION 4.06. HOLDERS OF RECORD. The Corporation shall be entitled to
treat the holder of record of any share or shares of stock as the holder and
owner in fact thereof and shall not be bound to recognize any equitable or other
claim to or interest in such shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise expressly
provided by the laws of the State of Delaware.
SECTION 4.07. FIXING OF RECORD DATE. The Board of Directors may fix a
record date which does not precede the date on which the resolution fixing such
record date is adopted, (a) in order to determine the stockholders entitled to
notice of or to vote at any meeting of stockholders provided such record date is
not less than ten or more than sixty days prior to the date of any such meeting;
(b) in order to determine the stockholders entitled to consent to corporate
action in writing without a meeting provided such record date is not more than
ten days after the date on which the resolution fixing such record date is
adopted; and (c) in order to determine the stockholders entitled to receive
payment of any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
provided such record date is not more than sixty days prior to such action.
In such case, only such stockholders as shall be stockholders of
record on the date so fixed shall be entitled to notice of, or to vote at, such
meeting or to receive payment of such dividend, or to receive such allotment of
rights, or to exercise such rights, as the case may be, notwithstanding any
transfer of any shares on the books of the Corporation after any record date
fixed as aforesaid.
ARTICLE V
SIGNING AUTHORITY AND CORPORATE TRANSACTIONS
SECTION 5.01. SIGNING AUTHORITY. The Chief Executive Officer, the
Chairman, the President, any senior officer or any Vice President of the
Corporation shall have full power and authority, in the name and on behalf of
the Corporation, under seal of the Corporation or otherwise, to execute,
acknowledge and deliver any and all agreements, instruments or other documents
relating to property or rights of all kinds held or owned by the Corporation or
to the operation of the Corporation, all as may be incidental to the operation
of the Corporation and subject to such limitations as the Board of Directors or
the Chief Executive Officer may impose. Any such agreement, instrument or
document may also be executed, acknowledged and delivered in the name and on
behalf of the Corporation, under seal of the Corporation or otherwise, by such
other officers, employees or agents of the Corporation as the Board of
Directors, the Chief Executive Officer or the delegate of either of them may
from time to time authorize. In each such case, the authority so conferred shall
be subject to such limitations as the Board of Directors, the Chief Executive
Officer or the delegate may impose. Any officer, employee or agent authorized
hereunder to execute, acknowledge and deliver any such agreement, instrument or
document is also authorized to cause the Secretary, any Assistant Secretary or
any other authorized person to affix the seal of the Corporation thereto and to
attest it.
SECTION 5.02. VOTING AND ACTING WITH RESPECT TO STOCK AND OTHER
SECURITIES OWNED BY THE CORPORATION. The Chief Executive Officer, the Chairman,
the President, any senior officer or any Vice President shall have the power and
authority to vote and act with respect to all stock and other securities in any
other corporation owned by this Corporation, subject to such limitations as the
Board of Directors or the Chief Executive Officer may impose. Such power and
authority may be conferred upon any other officer, employee or agent by the
Board, the Chief Executive Officer or the authorized delegate of either of them,
and such authority may be general or may be limited to specific instances. Any
person so authorized shall have the power to appoint an attorney or attorneys
with general power of substitution, as proxies for the Corporation with full
power to vote and act on behalf of the Corporation with respect to such stock
and other securities.
ARTICLE VI
GENERAL PROVISIONS
SECTION 6.01. OFFICES. The registered office of the Corporation shall
be at the location specified in the Certificate of Incorporation. The
Corporation may have other offices, within or without the State of Delaware, at
such place or places as the Board of Directors may from time to time determine
or the business of the Corporation may require.
SECTION 6.02. CORPORATE SEAL. The Board of Directors shall prescribe
the form of a suitable corporate seal, which shall contain the full name of the
Corporation and the year and state of incorporation. Such seal may be used by
causing it or a facsimile or reproduction thereof to be affixed to or placed
upon the document to be sealed.
SECTION 6.03. FISCAL YEAR. Unless otherwise determined by the Board of
Directors, the fiscal year of the Corporation shall be the calendar year.
ARTICLE VII
VALIDATION OF CERTAIN CONTRACTS
SECTION 7.01. No contract or other transaction between the Corporation
and another person shall be invalidated or otherwise adversely affected by the
fact that any one or more stockholders, directors or officers of the Corporation
(i) is pecuniarily or otherwise interested in, or is a stockholder, director,
officer, or member of, such other person, or (ii) is a party to, or is in any
other way pecuniarily or otherwise interested in, the contract or other
transaction, or (iii) is in any way connected with any person pecuniarily or
otherwise interested in such contract or other transaction, provided the fact of
such interest shall be disclosed or known to the Board of Directors or the
stockholders, as the case may be, and in any action of the stockholders or of
the Board authorizing or approving any such contract or other transaction, any
and every stockholder or director may be counted in determining the existence of
a quorum with like force and effect as though he were not so interested, or were
not such a stockholder, director, member or officer, or were not such a party,
or were not so connected. Such director, stockholder or officer shall not be
liable to account to the Corporation for any profit realized by him from or
through any such contract or transaction approved or authorized as aforesaid. As
used herein, the term "person" includes a corporation, partnership, firm,
association or other legal entity.
ARTICLE VIII
AMENDMENTS
SECTION 8.01. These By-Laws may be amended, altered and repealed, and
new by- laws may be adopted, by the stockholders or the Board of Directors of
the Corporation at any regular or special meeting. No provision of these By-Laws
shall vest any property or contract right in any stockholder.
EXHIBIT 4.1
FORM OF POOLING AND SERVICING
AGREEMENT
among
MELLON AUTO RECEIVABLES CORPORATION,
as Depositor,
MELLON BANK, N.A.,
as Servicer and Seller,
and
--------------------------,
as Trustee,
On behalf of the Certificateholders,
and as Collateral Agent
Dated as of ________ __, 199_
Mellon Auto Trust 199_-_
$_____________ Class A ____% Asset Backed Certificates
$_____________ Class B ____% Asset Backed Certificates
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
Definitions
SECTION 1.1. Definitions............................................... 1
SECTION 1.2. Other Definitional Provisions.............................19
SECTION 1.3. Calculations..............................................20
SECTION 1.4. References................................................20
SECTION 1.5. References to the Trust...................................20
SECTION 1.6. Action by or Consent of Certificateholders................20
ARTICLE II
The Trust Property
SECTION 2.1. Conveyance of Trust Property..............................20
SECTION 2.2. A. Representations and Warranties of the Seller...........21
SECTION 2.2. B. Representations and Warranties of Depositor............25
SECTION 2.3. Repurchase upon Breach....................................26
SECTION 2.4. Custody of Receivable Files...............................26
SECTION 2.5. Duties of Servicer as Custodian...........................27
SECTION 2.6. Instructions; Authority To Act............................27
SECTION 2.7. Custodian's Indemnification...............................27
SECTION 2.8. Effective Period and Termination..........................28
ARTICLE III
Administration and Servicing of the Trust Property
SECTION 3.1. Duties of Servicer........................................28
SECTION 3.2. Collection and Allocation of Receivable Payments..........29
SECTION 3.3. Realization upon Receivables..............................29
SECTION 3.4. Physical Damage Insurance; Other Insurance................30
SECTION 3.5. Maintenance of Security Interests in Financed Vehicles....30
SECTION 3.6. Covenants of Servicer.....................................31
SECTION 3.7. Purchase of Receivables upon Breach.......................31
SECTION 3.8. Servicing Fee.............................................31
SECTION 3.9. Servicer's Certificate....................................31
SECTION 3.10. Annual Statement as to Compliance; Notice of Default......32
SECTION 3.11. Annual Independent Certified Public Accountants' Report...32
SECTION 3.12. Access to Certain Documentation and Information
Regarding Receivables.....................................33
SECTION 3.13. Servicer Expenses.........................................33
SECTION 3.14. Appointment of Subservicers...............................33
ARTICLE IV
Distributions; Reserve Fund; Statements to Certificateholders
SECTION 4.1. Establishment of Accounts.................................33
SECTION 4.2. Collections...............................................37
SECTION 4.3. Additional Deposits.......................................37
SECTION 4.4. Net Deposits..............................................38
SECTION 4.5. Distributions.............................................38
SECTION 4.6. Reserve Fund..............................................39
SECTION 4.7. Statements to Certificateholders..........................41
SECTION 4.8. Advances..................................................42
ARTICLE V
[Intentionally Omitted]
ARTICLE VI
The Certificates
SECTION 6.1. The Certificates..........................................43
SECTION 6.2. Authentication and Delivery of Certificates...............43
SECTION 6.3. Registration of Transfer and Exchange of Certificates.....44
SECTION 6.4. Mutilated, Destroyed, Lost or Stolen Certificates.........45
SECTION 6.5. Persons Deemed Owners.....................................45
SECTION 6.6. Access to List of Certificateholders' Names
and Addresses.............................................45
SECTION 6.7. Maintenance of Office or Agency...........................45
SECTION 6.8. Book-Entry Certificates...................................46
SECTION 6.9. Notices to Clearing Agency................................47
SECTION 6.10. Definitive Certificates...................................47
ARTICLE VII
The Depositor
SECTION 7.1. Representations of Depositor..............................48
SECTION 7.2. Special Purpose Entity....................................49
SECTION 7.3. Corporate Existence.......................................49
SECTION 7.4. Liability of Depositor; Indemnities.......................50
SECTION 7.5. Merger or Consolidation of, or Assumption of
the Obligations of Depositor..............................51
SECTION 7.6. Limitation on Liability of Depositor and Others...........52
SECTION 7.7. Depositor May Own Certificates............................52
SECTION 7.8. Security Interest.........................................52
ARTICLE VIII
The Servicer and the Seller
SECTION 8.1. Representations of the Bank...............................52
SECTION 8.2. Indemnities of the Bank...................................54
SECTION 8.3. Merger or Consolidation of, or Assumption of
the Obligations of, the Bank..............................55
SECTION 8.4. Limitation on Liability of the Bank and Others............56
SECTION 8.5. The Bank Not To Resign as Servicer........................56
SECTION 8.6. Corporate Existence.......................................56
SECTION 8.7. Tax Accounting............................................57
ARTICLE IX
Servicing Termination
SECTION 9.1. Events of Servicing Termination...........................58
SECTION 9.2. Appointment of Successor..................................59
SECTION 9.3. Payment of Servicing Fee; Repayment of Advances...........59
SECTION 9.4. Notification to Certificateholders........................60
SECTION 9.5. Waiver of Past Events of Servicing Termination............60
ARTICLE X
The Trustee
SECTION 10.1. Acceptance by Trustee.....................................60
SECTION 10.2. Duties of Trustee.........................................60
SECTION 10.3. Trustee's Certificate.....................................62
SECTION 10.4. Trustee's Assignment of Purchased Receivables.............62
SECTION 10.5. Certain Matters Affecting the Trustee.....................62
SECTION 10.6. Trustee Not Liable for Certificates or Receivables........64
SECTION 10.7. Trustee May Own Certificates..............................65
SECTION 10.8. Trustee's Fees and Expenses...............................65
SECTION 10.9. Eligibility Requirements for Trustee......................65
SECTION 10.10. Resignation or Removal of Trustee.........................66
SECTION 10.11. Successor Trustee.........................................66
SECTION 10.12. Merger or Consolidation of Trustee........................67
SECTION 10.13. Appointment of Co-Trustee or Separate Trustee.............67
SECTION 10.14. Representations and Warranties of Trustee.................68
SECTION 10.15. Reports by Trustee........................................69
SECTION 10.16. Tax Accounting............................................69
SECTION 10.17. Trustee May Enforce Claims Without Possession
of Certificates..........................................69
ARTICLE XI
Termination
SECTION 11.1. Termination of the Trust..................................70
SECTION 11.2. Optional Purchase of All Receivables......................71
SECTION 11.3. Mandatory Sale of all Contracts...........................71
ARTICLE XII
Miscellaneous Provisions
SECTION 12.1. Amendment.................................................72
SECTION 12.2. Protection of Title to Trust..............................73
SECTION 12.3. Limitation on Rights of Certificateholders................75
SECTION 12.4. GOVERNING LAW.............................................76
SECTION 12.5. Notices...................................................76
SECTION 12.6. Severability of Provisions................................76
SECTION 12.7. Assignment................................................77
SECTION 12.8. Certificates Nonassessable and Fully Paid.................77
SECTION 12.9. Intention of Parties......................................77
SECTION 12.10. Counterparts..............................................77
SECTION 12.11. Collateral Agent Protection...............................78
SECTION 12.12. Limitation of Liability of Trustee and Collateral Agent...78
SECTION 12.13. Independence of the Servicer..............................78
SECTION 12.14. No Joint Venture..........................................78
SECTION 12.15. Headings..................................................78
SECTION 12.16. Limitations on Rights of Others...........................78
SCHEDULES
Schedule A - Schedule of Receivables
Schedule B - Location of Receivables
EXHIBITS
Exhibit A - Form of Class A Certificate
Exhibit B - Form of Class B Certificate
Exhibit C - Form of Monthly Statement to Certificateholders
Exhibit D - Form of Benefit Plan Affidavit
Exhibit E - Form of Trustee's Certificate
Exhibit F -Termination - Auction Procedures
<PAGE>
POOLING AND SERVICING AGREEMENT dated as of _________, 199 _
(the "Agreement"), among Mellon Auto Receivables Corporation, a
Delaware corporation, as depositor (the "Depositor"), Mellon Bank,
N.A., a national banking association (the "Bank"), as servicer (the
"Servicer") and seller (the "Seller") and _____________, as trustee
hereunder (the "Trustee") and as collateral agent with respect to the
Reserve Fund (the "Collateral Agent").
In consideration of the premises and of the mutual agreements herein
contained, and other good and valuable consideration, the receipt of which is
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, whenever
capitalized shall have the following meanings:
"ACCOUNTS" has the meaning specified in Section 4.1(a)(ii).
"ACCOUNT PROPERTY" means all amounts and investments held from time to
time in any Account, the Reserve Fund or the Payahead Account, as the case may
be (whether in the form of deposit accounts, Physical Property, book-entry
securities, uncertificated securities or otherwise), and all proceeds of the
foregoing.
"ACTUARIAL RECEIVABLE" means any Receivable under which the portion of
a payment allocable to principal and the portion of a payment allocable to
interest is determined in accordance with the Scheduled Payment.
"ADVANCE" means the amount, as of the close of business on the last
day of a Collection Period, which the Servicer is required to advance on the
related Actuarial Receivable pursuant to Section 4.8(a).
"ADVISOR" has the meaning specified in Section 11.3.
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"AGGREGATE NET LOSSES" means, with respect to a Collection Period, the
aggregate principal balance of all Receivables newly designated during such
Collection Period as Liquidated Receivables minus Liquidation Proceeds collected
during such Collection Period with respect to all Liquidated Receivables.
"AGREEMENT" means this Pooling and Servicing Agreement, as the same
may be amended and supplemented from time to time.
"AMOUNT FINANCED" means, with respect to any Receivable, the amount
advanced under such Receivable toward the purchase price of the related Financed
Vehicle and any related costs.
"ANNUAL PERCENTAGE RATE" or "APR" of a Receivable means the annual
rate of finance charges stated in the related Contract expressed as a
percentage.
"AUCTION" has the meaning specified in Section 11.3.
"AUCTION PROCEDURES" has the meaning specified in Section 11.3.
"AUCTION PROPERTY" has the meaning specified in Section 11.3.
"AUTHORIZED OFFICER" means, (i) with respect to the Trustee, any
officer within the Corporate Trust Office of the Trustee, including any vice
president, assistant vice president, managing director, secretary, assistant
secretary, assistant treasurer or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject and (ii) with respect to the Servicer,
any officer of the Servicer who is authorized to act for the Servicer in matters
relating to the Trust and who is identified on the list of Authorized Officers
delivered by the Servicer to the Trustee on the Closing Date (as such list may
be modified or supplemented from time to time thereafter).
"BALLOON LOAN" means a Receivable originated with a stated maturity of
less than the period of time of the corresponding amortization schedule.
"BALLOON PAYMENT" means the final payment required to be made under a
Balloon Loan.
"BANK" has the meaning specified in the preamble.
"BASIC DOCUMENTS" means the Depository Agreement and other documents
and certificates delivered in connection therewith.
"BOOK-ENTRY CERTIFICATES" mean beneficial interests in the definitive
Certificates described in Section 6.10, the ownership of which shall be
evidenced, and transfers of which shall be made, through book entries by a
Clearing Agency as described in Section 6.10.
"BUSINESS DAY" means a day other than a Saturday, a Sunday or a day on
which banking institutions or trust companies in New York, New York,
________________ or the city in which the Corporate Trust Office is located are
authorized by law, regulation, executive order or governmental decree to be
closed.
"CERTIFICATE" means any Class A Certificate or Class B Certificate.
"CERTIFICATE OWNER" means, with respect to a Book-Entry Certificate,
the Person who is the owner of such Book-Entry Certificate, as reflected on the
books of the Clearing Agency, or on the books of a Person maintaining an account
with such Clearing Agency (directly or as an indirect participant, in accordance
with the rules, regulations and procedures of such Clearing Agency).
"CERTIFICATE REGISTER" means the register maintained by the Trustee
for the registration of Certificates and of transfers and exchanges of
Certificates as provided in Section 6.3.
"CERTIFICATEHOLDER" or "HOLDER" means the Person in whose name a
Certificate shall be registered in the Certificate Register, EXCEPT THAT, solely
for the purpose of giving any consent, request or waiver pursuant to this
Agreement, the interest evidenced by any Certificate registered in the name of
the Depositor, the Servicer or any Person actually known to an Authorized
Officer of the Trustee to be an Affiliate of the Depositor or the Servicer,
shall not be taken into account in determining whether the requisite percentage
necessary to effect any such consent, request or waiver shall have been
obtained.
"CLASS A CERTIFICATE" means a certificate executed by the Trustee on
behalf of the Trust and authenticated by the Trustee, substantially in the form
of Exhibit A hereto.
"CLASS A CERTIFICATEHOLDER" or "CLASS A HOLDER" means the Person in
whose name a Class A Certificate shall be registered in the Certificate
Register, EXCEPT THAT, solely for the purpose of giving any consent, request or
waiver pursuant to this Agreement, the interest evidenced by any Class A
Certificate registered in the name of the Depositor, the Servicer or any Person
actually known to an Authorized Officer of the Trustee to be an Affiliate of the
Depositor or the Servicer, shall not be taken into account in determining
whether the requisite percentage necessary to effect any such consent, request
or waiver shall have been obtained.
"CLASS A DISTRIBUTION ACCOUNT" means the account established and
maintained as such pursuant to Section 4.1.
"CLASS A INTEREST CARRYOVER SHORTFALL" means, with respect to any
Distribution Date, the excess of Class A Monthly Interest for the preceding
Distribution Date and any outstanding Class A Interest Carryover Shortfall on
such preceding Distribution Date, over the amount in respect of interest that is
actually deposited in the Class A Distribution Account on such preceding
Distribution Date, plus 30 days of interest on such excess, to the extent
permitted by law, at the Class A Pass-Through Rate.
"CLASS A INTEREST DISTRIBUTION" means, with respect to any
Distribution Date, the sum of Class A Monthly Interest for such Distribution
Date and the Class A Interest Carryover Shortfall for such Distribution Date.
"CLASS A MONTHLY INTEREST" means, with respect to any Distribution
Date, one-twelfth (or, in the case of the first Distribution Date, a fraction,
the numerator of which is __ and the denominator of which is 360) of the product
of the Class A Pass-Through Rate and the Class A Principal Balance as of the
Distribution Date occurring in the preceding Collection Period (after giving
effect to any payments made on such Distribution Date) or, in the case of the
first Distribution Date, the Original Class A Principal Balance.
"CLASS A MONTHLY PRINCIPAL" means, with respect to any Distribution
Date, the Class A Percentage of Principal Collections for such Distribution Date
plus the Class A Percentage of Realized Losses with respect to Receivables which
became Liquidated Receivables during the related Collection Period.
"CLASS A PASS-THROUGH RATE" means ___% per annum, calculated on the
basis of a 360-day year consisting of twelve 30-day months.
"CLASS A PERCENTAGE" means __%.
"CLASS A POOL FACTOR" as of the close of business on a Distribution
Date means a seven-digit decimal figure equal to the Class A Principal Balance
(after giving effect to any distributions made on such Distribution Date)
divided by the Original Class A Principal Balance.
"CLASS A PRINCIPAL BALANCE" equals the Original Class A Principal
Balance, as reduced by all amounts allocable to principal on the Class A
Certificates previously distributed to Class A Certificateholders.
"CLASS A PRINCIPAL CARRYOVER SHORTFALL" means, with respect to any
Distribution Date, the excess of Class A Monthly Principal for the preceding
Distribution Date and any outstanding Class A Principal Carryover Shortfall on
such preceding Distribution Date over the amount in respect of principal that is
actually deposited in the Class A Distribution Account on such preceding
Distribution Date.
"CLASS A PRINCIPAL DISTRIBUTION" means, with respect to any
Distribution Date (including the Final Scheduled Distribution Date), the sum of
Class A Monthly Principal for such Distribution Date and the Class A Principal
Carryover Shortfall for such Distribution Date; PROVIDED, HOWEVER, that the
Class A Principal Distribution shall not exceed the Class A Principal Balance
immediately prior to such Distribution Date. In addition, on the Final Scheduled
Distribution Date, the principal required to be deposited in the Class A
Distribution Account will include the lesser of (a) any principal due and
remaining unpaid on each Receivable in the Trust as of the Final Scheduled
Maturity Date or (b) the portion of the amount required to be deposited under
clause (a) above that is necessary (after giving effect to the other amounts to
be deposited in the Class A Distribution Account on such Distribution Date and
allocable to principal) to reduce the Class A Principal Balance to zero.
"CLASS B CERTIFICATE" means a certificate executed by the Trustee on
behalf of the Trust and authenticated by the Trustee, substantially in the form
of Exhibit B hereto.
"CLASS B CERTIFICATEHOLDER" or "CLASS B HOLDER" means the Person in
whose name a Class B Certificate shall be registered in the Certificate
Register, EXCEPT THAT, solely for the purpose of giving any consent, request or
waiver pursuant to this Agreement, the interest evidenced by any Class B
Certificate registered in the name of the Depositor, the Servicer or any Person
actually known to an Authorized Officer of the Trustee to be an Affiliate of the
Depositor or the Servicer, shall not be taken into account in determining
whether the requisite percentage necessary to effect any such consent, request
or waiver shall have been obtained.
"CLASS B DISTRIBUTION ACCOUNT" means the account established and
maintained as such pursuant to Section 4.1.
"CLASS B INTEREST CARRYOVER SHORTFALL" means, with respect to any
Distribution Date, the excess of Class B Monthly Interest for the preceding
Distribution Date and any outstanding Class B Interest Carryover Shortfall on
such preceding Distribution Date, over the amount in respect of interest that is
actually deposited in the Class B Distribution Account on such preceding
Distribution Date, plus 30 days of interest on such excess, to the extent
permitted by law, at the Class B Pass-Through Rate.
"CLASS B INTEREST DISTRIBUTION" means, with respect to any
Distribution Date, the sum of Class B Monthly Interest for such Distribution
Date and the Class B Interest Carryover Shortfall for such Distribution Date.
"CLASS B MONTHLY INTEREST" means, with respect to any Distribution
Date, one-twelfth (or, in the case of the first Distribution Date, a fraction,
the numerator of which is __ and the denominator of which is 360) of the product
of the Class B Pass-Through Rate and the Class B Principal Balance as of the
Distribution Date occurring in the preceding Collection Period (after giving
effect to any payments made on such Distribution Date) or, in the case of the
first Distribution Date, the Original Class B Principal Balance.
"CLASS B MONTHLY PRINCIPAL" means, with respect to any Distribution
Date, the Class B Percentage of Principal Collections for such Distribution Date
plus the Class B Percentage of Realized Losses with respect to Receivables which
became Liquidated Receivables during the related Collection Period.
"CLASS B PASS-THROUGH RATE" means ___% per annum, calculated on the
basis of a 360-day year consisting of twelve 30-day months.
"CLASS B PERCENTAGE" means __%.
"CLASS B POOL FACTOR" as of the close of business on a Distribution
Date means a seven-digit decimal figure equal to the Class B Principal Balance
(after giving effect to any distributions made on such Distribution Date)
divided by the Original Class B Principal Balance.
"CLASS B PRINCIPAL BALANCE" equals the Original Class B Principal
Balance, as reduced by all amounts allocable to principal on the Class B
Certificates previously distributed to Class B Certificateholders.
"CLASS B PRINCIPAL CARRYOVER SHORTFALL" means, with respect to any
Distribution Date, the excess of Class B Monthly Principal for the preceding
Distribution Date and any outstanding Class B Principal Carryover Shortfall on
such preceding Distribution Date over the amount in respect of principal that is
actually deposited in the Class B Distribution Account on such preceding
Distribution Date.
"CLASS B PRINCIPAL DISTRIBUTION" means, with respect to any
Distribution Date (including the Final Scheduled Distribution Date), the sum of
Class B Monthly Principal for such Distribution Date and the Class B Principal
Carryover Shortfall for such Distribution Date; PROVIDED, HOWEVER, that the
Class B Principal Distribution shall not exceed the Class B Principal Balance
immediately prior to such Distribution Date. In addition, on the Final Scheduled
Distribution Date, the principal required to be distributed to Class B
Certificate-holders will include the lesser of (a) any principal due and
remaining unpaid on each Receivable in the Trust as of the Final Scheduled
Maturity Date or (b) the portion of the amount required to be deposited under
clause (a) above that is necessary (after giving effect to the other amounts to
be deposited in the Class B Distribution Account on such Distribution Date and
allocable to principal) to reduce the Class B Principal Balance to zero, and, in
the case of clauses (a) and (b), remaining after any required distribution of
the amount described in clause (a) to the Class A Distribution Account.
"CLEARING AGENCY" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended. The initial Clearing Agency shall be DTC.
"CLEARING AGENCY PARTICIPANT" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"CLOSING DATE" means ____________, 199_.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL AGENT" means __________________, a _____________ banking
corporation, in its capacity as collateral agent with respect to the Reserve
Fund and the Payahead Account for the Certificateholders.
"COLLECTION ACCOUNT" means the account or accounts established and
maintained as such pursuant to Section 4.1.
"COLLECTION PERIOD" means, a calendar month, except with respect to
the first Collection Period, which shall be the period from the Cutoff Date to
_________ __, 199_. Any amount stated "as of the close of business on the last
day of a Collection Period" shall give effect to the following calculations as
determined as of the end of the day on such last day: (1) all applications of
collections, (2) all current and previous Payaheads, (3) all applications of
Payahead Balances, (4) all Advances and reductions of Outstanding Advances and
(5) all distributions to be made on the immediately following Distribution Date.
"COLLECTIONS" mean, for a Distribution Date, the sum of the Interest
Collections and Principal Collections for such Distribution Date.
"COMPUTER TAPE" means the computer tape furnished to the Trustee
describing certain characteristics of the Receivables as of the Cutoff Date.
"CONTRACT" means a motor vehicle retail installment sale contract.
"CORPORATE TRUST OFFICE" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered,
which office at the date of execution of this Agreement is located at
_____________________ or at such other address as the Trustee may designate from
time to time by notice to the Certificateholders, the Depositor and the
Servicer, or the principal corporate trust office of any successor Trustee (the
address of which the successor Trustee will notify the Certificateholders, the
Depositor and the Servicer).
"CRAM DOWN LOSS" means, with respect to a Receivable if a court of
appropriate jurisdiction in a bankruptcy or insolvency proceeding shall have
issued an order reducing the amount owed on such Receivable or otherwise
modifying or restructuring the scheduled payments to be made on such Receivable,
an amount equal to (i) the excess of the principal balance of such Receivable
immediately prior to such order over the principal balance of such Receivable as
so reduced and/or (ii) if such court shall have issued an order reducing the
effective rate of interest on such Receivable, the net present value (using as
the discount rate the higher of the APR on such Receivable or the rate of
interest, if any, specified by the court in such order) of the scheduled
payments as so modified or restructured. A "Cram Down Loss" shall be deemed to
have occurred on the date of issuance of such order.
"CUMULATIVE NET LOSS RATIO" means, with respect to any Distribution
Date, a fraction, expressed as a percentage, the numerator of which is an amount
equal to the excess of (i) the cumulative amount of Realized Losses and Cram
Down Losses from the Cutoff Date through the last day of the related Collection
Period over (ii) the cumulative amount of Recoveries from the Cutoff Date
through the last day of the related Collection Period and the denominator of
which is the Initial Pool Balance.
"CUTOFF DATE" means ____________, 199_.
"CUTOFF DATE PRINCIPAL BALANCE" means, with respect to a Receivable,
the Principal Balance of such Receivable as of the Cutoff Date.
"DEALER" means a motor vehicle dealer who sold a Financed Vehicle and
who originated and assigned the respective Receivable to the Seller under an
existing agreement between such Dealer and the Seller.
"DEALER AGREEMENT" means any agreement between a Dealer and the Seller
relating to the acquisition of Receivables from a Dealer by the Seller.
"DEFINITIVE CERTIFICATES" shall have the meaning specified in Section
6.10.
"DELINQUENCY PERCENTAGE" means, with respect to a Collection Period
the ratio of (a) the outstanding principal balance of all outstanding
Receivables 60 days or more delinquent (which amount shall include Receivables
in respect of Financed Vehicles that have been repossessed but not yet sold or
otherwise liquidated) as of the last day of such Collection Period, determined
in accordance with the Servicer's normal practices, divided by (b) the
outstanding principal balance of all Receivables on the last day of such
Collection Period.
"DELIVERY" when used with respect to Account Property means:
(a) with respect to bankers' acceptances, commercial paper, negotiable
certificates of deposit and other obligations that constitute instruments and
are susceptible of physical delivery ("Physical Property"):
(i) transfer of possession thereof to the Trustee or
Collateral Agent (all references to the Collateral Agent, in
this definition relate to the Reserve Fund), as applicable,
endorsed to, or registered in the name of, the Trustee or
Collateral Agent as applicable, or their respective nominee or
endorsed in blank;
(b) with respect to a certificated security:
(i) delivery thereof in bearer form to the Trustee
or Collateral Agent, as applicable, or their respective
nominee or custodian; or
(ii) delivery thereof in registered form to the
Trustee or Collateral Agent, as applicable, or their
respective nominee or custodian and
(A) the certificate is endorsed to the
Trustee or Collateral Agent, as applicable, or their
respective nominee or custodian or in blank by effective
endorsement; or
(B) the certificate is registered in the
name of the Trustee or Collateral Agent, as applicable, or
their respective nominee or custodian, upon original issue or
registration of transfer by the Trust;
(c) with respect to an uncertificated security:
(i) the delivery of the uncertificated security to
the Trustee or Collateral Agent, as applicable, or their
respective nominee or custodian; or
(ii) the issuer has agreed that it will comply with
instructions originated by the Trustee or Collateral Agent, as
applicable, or their respective nominee or custodian without
further consent by the registered owner;
(d) with respect to any security issued by the U.S. Treasury that is a
book-entry security held through the Federal Reserve System pursuant to Federal
book-entry regulations:
(i) a Federal Reserve Bank by book entry credits the
book-entry security to the securities account (as defined in
31 CFR Part 357) of a participant (as defined in 31 CFR Part
357) which is also a securities intermediary; and
(ii) the participant indicates by book entry that the
book-entry security has been credited to the Trustee or
Collateral Agent, as applicable, or their respective nominee
or custodian securities account;
(e) with respect to a security entitlement:
(i) the Trustee or the Collateral Agent, as
applicable, or their respective nominee or custodian becomes
the entitlement holder; or
(ii) the securities intermediary has agreed that it
will comply with entitlement orders originated by the Trustee
or the Collateral Agent, as applicable, or their respective
nominee or custodian without further consent by the
entitlement holder;
(f) for the purpose of clauses (b) and (c) hereof "delivery" means:
(i) with respect to a certificated security:
(A) the Trustee or the Collateral Agent, as
applicable, or their respective nominee or custodian acquires
possession thereof;
(B) another person (other than a securities
intermediary) either acquires possession thereof on behalf of
the Trustee or the Collateral Agent, as applicable, or their
respective nominee or custodian or, having previously acquired
possession thereof, acknowledges that it holds for the Trustee
or the Collateral Agent, as applicable, or their respective
nominee or custodian; or
(C) a securities intermediary acting on
behalf of the Trustee or the Collateral Agent, as applicable,
or their respective nominee or custodian acquires possession
of thereof, only if the certificate is in registered form and
has been specially endorsed to the Trustee or the Collateral
Agent, as applicable, or their respective nominee or custodian
by an effective endorsement;
(ii) with respect to an uncertificated security:
(A) the issuer registers the Trustee or the
Collateral Agent, as applicable, or their respective nominee
or custodian as the registered owner, upon original issue or
registration of transfer; or
(B) another person (other than a securities
intermediary) either becomes the registered owner thereof on
behalf of the Trustee or the Collateral Agent, as applicable,
or their respective nominee or custodian or, having previously
become the registered owner, acknowledges that it holds for
the Trustee or the Collateral Agent, as applicable, or their
respective nominee or custodian;
(g) for purposes of this definition, except as otherwise indicated,
the following terms shall have the meaning assigned to each such term in the
UCC:
(i) "certificated security"
(ii) "effective endorsement"
(iii) "entitlement holder"
(iv) "instrument"
(v) "securities account"
(vi) "securities entitlement"
(vii) "securities intermediary"
(viii) "uncertificated security"
(h) in each case of Delivery contemplated herein, the Trustee or the
Collateral Agent, as applicable, or their respective nominee or custodian shall
make appropriate notations on its records, and shall cause same to be made on
the records of their respective nominees, indicating that securities are held in
trust pursuant to and as provided in this Agreement.
"DEPOSITOR" means Mellon Auto Receivables Corporation, as the
depositor of the Receivables, and each successor to Mellon Auto Receivables
Corporation (in the same capacity) to the extent permitted hereunder.
"DEPOSITORY AGREEMENT" means the agreement among the Depositor, the
Servicer, the Trustee and DTC, dated __________, 199_.
"DETERMINATION DATE" means, with respect to any Distribution Date, the
earlier of the eighth Business Day of the month in which a Distribution Date
occurs and the fourth Business Day preceding such Distribution Date.
"DISTRIBUTION DATE" means, with respect to each Collection Period, the
fifteenth day of the following month, or if such day is not a Business Day, the
immediately following Business Day, commencing in _________.
"DISTRIBUTION DATE STATEMENT" means, the statement described in
Section 4.7
"DTC" means The Depository Trust Company.
"ELIGIBLE DEPOSIT ACCOUNT" means either (a) a segregated account with
an Eligible Institution or (b) a segregated trust account with the corporate
trust department of a depository institution (other than the Depositor or any
affiliate of the Depositor) organized under the laws of the United States of
America or any one of the states thereof or the District of Columbia (or any
domestic branch of a foreign bank), having corporate trust powers and acting as
trustee for funds deposited in such account, so long as any of the securities of
such depository institution shall have a credit rating from each Rating Agency
in one of its generic rating categories which signifies investment grade.
"ELIGIBLE INSTITUTION" means (a) the corporate trust department of the
Trustee, or (b) a depository institution organized under the laws of the United
States of America or any one of the states thereof or the District of Columbia
(or any domestic branch of a foreign bank), which (i) has either (A) a long-term
senior unsecured debt rating acceptable to the Rating Agencies or (B) a
short-term senior unsecured debt rating or certificate of deposit rating
acceptable to the Rating Agencies and (ii) whose deposits are insured by the
Federal Deposit Insurance Corporation.
"ELIGIBLE INVESTMENTS" mean book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence:
(a) direct obligations of, and obligations fully guaranteed as to
timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of any
depository institution (including the Depositor or any Affiliate of the
Depositor) or trust company incorporated under the laws of the United States of
America or any state thereof or the District of Columbia (or any domestic branch
of a foreign bank) and subject to supervision and examination by federal or
state banking or depository institution authorities (including depository
receipts issued by any such institution or trust company as custodian with
respect to any obligation referred to in clause (a) above or portion of such
obligation for the benefit of the holders of such depository receipts);
PROVIDED, HOWEVER, that at the time of the investment or contractual commitment
to invest therein (which shall be deemed to be made again each time funds are
reinvested following each Distribution Date), the commercial paper or other
short-term senior unsecured debt obligations (other than such obligations the
rating of which is based on the credit of a Person other than such depository
institution or trust company) of such depository institution or trust company
shall have a credit rating from Standard & Poor's of A-1+ and from Moody's of
P-1;
(c) commercial paper (including commercial paper of the Depositor or
any Affiliate of the Depositor) having, at the time of the investment or
contractual commitment to invest therein, a rating from Standard & Poor's of
A-1+ and from Moody's of P-1;
(d) investments in money market funds (including funds for which the
Depositor or the Trustee or any of their respective Affiliates is investment
manager or advisor) having a rating from Standard & Poor's of AAA-m or AAAm-G
and from Moody's of Aaa;
(e) bankers' acceptances issued by any depository institution or trust
company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States of America or
any agency or instrumentality thereof the obligations of which are backed by the
full faith and credit of the United States of America, in either case entered
into with a depository institution or trust company (acting as principal)
referred to in clause (b) above; and
(g) any other investment which would not cause either Rating Agency to
downgrade or withdraw its then current rating of either the Class A Certificates
or the Class B Certificates.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA ENTITY" means (i) an employee benefit plan, retirement
arrangement, individual retirement account or Keogh subject to either Title I of
ERISA or Section 4975 of the Code, or (ii) an entity whose source of funds to be
used for the purchase of a Class B Certificate includes the assets of any such
plan, arrangement or account.
"EVENT OF SERVICING TERMINATION" means an event specified in Section
9.1.
"EXCHANGE ACT" means the Securities and Exchange Act of 1934, as
amended.
"FINAL SCHEDULED DISTRIBUTION DATE" means the ______________
Distribution Date.
"FINAL SCHEDULED MATURITY DATE" means ___________.
"FINANCED VEHICLE" means a new or used automobile, (including
passenger car, minivan, sport/utility vehicle or light truck) together with all
accessions thereto, securing an Obligor's indebtedness under the respective
Receivable.
"INDEPENDENT COUNSEL" means, when used with respect to any specified
Person, that the Person (a) is in fact independent of the Servicer, the Trust,
the Depositor, the Seller and any Affiliate of any of the foregoing Persons and
(b) is not an officer or employee of the Servicer, the Trust, the Depositor, the
Seller or any Affiliate of any of the foregoing Persons.
"INSOLVENCY EVENT" means, with respect to a specified Person, (a) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a receiver
(including any receiver appointed under the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as amended), liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or ordering the winding-up or liquidation of
such Person's affairs, and such decree or order shall remain unstayed and in
effect for a period of 60 consecutive days; or (b) the commencement by such
Person of a voluntary case under any applicable federal or state bankruptcy,
insolvency or other similar law now or hereafter in effect, or the consent by
such Person to the entry of an order for relief in an involuntary case under any
such law, or the consent by such Person to the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official for such Person or for any substantial part of its property,
or the making by such Person of any general assignment for the benefit of
creditors, or the failure by such Person generally to pay its debts as such
debts become due, or the taking of action by such Person in furtherance of any
of the foregoing.
"INTEREST COLLECTIONS" means, with respect to any Distribution Date,
the sum of the following amounts without duplication: (a) that portion of all
collections on the Receivables allocable to interest in respect of the preceding
Collection Period using (x) in the case of a Simple Interest Receivable, the
Simple Interest Method and (y) in the case of an Actuarial Receivable, the
actuarial method (including, with respect to Actuarial Receivables, amounts
withdrawn from the Payahead Account and allocable to interest, and excluding
amounts deposited into the Payahead Account and allocable to interest, in each
case in respect of the preceding Collection Period); (b) Liquidation Proceeds
attributable to interest on the Receivables which became Liquidated Receivables
during the preceding Collection Period in accordance with the Servicer's
customary servicing procedures; (c) all Advances made by the Servicer of
interest due on the Actuarial Receivables; (d) the Purchase Amount of each
Receivable repurchased by the Seller or purchased by the Servicer as of the
close of business on the last day of the preceding Collection Period to the
extent attributable to accrued interest on such Receivable; (e) Recoveries for
such Collection Period and (f) Investment Earnings for such Distribution Date;
PROVIDED, HOWEVER, that in calculating the Interest Collections (i) all payments
and proceeds (including Liquidation Proceeds) of any Receivables repurchased by
the Seller or purchased by the Servicer the Purchase Amount of which has been
included in the Interest Collections on a prior Distribution Date, and (ii)
distributed to the Servicer with respect to such Distribution Date, as
reimbursement for Outstanding Advances in accordance with Section 4.8 shall all
be excluded.
"INVESTMENT EARNINGS" means, with respect to any Distribution Date,
the investment earnings (net of losses and investment expenses) on amounts on
deposit in the Accounts and the Reserve Fund to be deposited into the Collection
Account on such Distribution Date pursuant to Section 4.1.
"LIEN" means a security interest, lien, charge, pledge or encumbrance
of any kind, other than tax liens, mechanics' liens and any liens which attach
to the respective Receivable by operation of law as a result of any act or
omission by the related Obligor.
"LIQUIDATED RECEIVABLES" means, Receivables (i) which have been
liquidated by the Servicer through the sale of the related Financed Vehicle,
(ii) as to which all or a portion representing 10% or more of a scheduled
payment due is 150 or more days delinquent or (iii) with respect to which
proceeds have been received which, in the Servicer's judgment, constitute the
final amounts recoverable in respect of such Receivable.
"LIQUIDATION DISTRIBUTION DATE" has the meaning specified in Section
11.3.
"LIQUIDATION PROCEEDS" means, with respect to any Liquidated
Receivable, the moneys collected in respect thereof, from whatever source (other
than any proceeds from any Dealer commission) on a Liquidated Receivable during
the Collection Period in which such Receivable became a Liquidated Receivable,
net of the sum of any amounts expended by the Servicer in connection with such
liquidation and any amounts required by law to be remitted to the Obligor on
such Liquidated Receivable.
"MOODY'S" means Moody's Investors Service, Inc., or its successors in
interest.
"NET LOSSES" means the sum of Realized Losses and Cram Down Losses
minus Recoveries for any Collection Period.
"OBLIGOR" on a Receivable means the purchaser or co-purchasers of the
Financed Vehicle and any other Person who owes payments under the Receivable.
"OFFICERS' CERTIFICATE" means a certificate signed by (a) the
president, any senior vice president or any vice president and (b) a secretary
or assistant secretary of the Depositor, the Seller or the Servicer, as
appropriate, provided that no one person may sign in a capacity fulfilling both
clause (a) and clause (b).
"OPINION OF COUNSEL" means one or more written opinions of counsel who
may, except as otherwise expressly provided in this Agreement, be employees of
or counsel to the Depositor, the Seller or the Servicer, and which opinion or
opinions shall be addressed to the Trustee as Trustee; provided, however, that
any opinion regarding the status of the Trust as a grantor trust for federal
income tax purposes shall be delivered by Independent Counsel.
"ORIGINAL CLASS A PRINCIPAL BALANCE" means $-------------.
"ORIGINAL CLASS B PRINCIPAL BALANCE" means $-------------.
"ORIGINAL POOL BALANCE" means the aggregate Cutoff Date Principal
Balance of the Receivables, which is $-------------.
"ORIGINAL PRINCIPAL BALANCE" means the sum of the Original Class A
Principal Balance and the Original Class B Principal Balance.
"OUTSTANDING ADVANCES" on the Actuarial Receivables means the sum, as
of the close of business on the last day of a Collection Period, of all Advances
as reduced as provided in Section 4.8(a).
"PAYAHEAD" on an Actuarial Receivable means the amount, as of the
close of business on the last day of a Collection Period, computed in accordance
with Section 4.2(b) with respect to such Receivable.
"PAYAHEAD ACCOUNT" means the account designated as such, established
and maintained pursuant to Section 4.1(b)(i).
"PAYAHEAD BALANCE" on an Actuarial Receivable means the sum, as of the
close of business on the last day of a Collection Period, of all Payaheads made
by or on behalf of the Obligor with respect to such Actuarial Receivable, as
reduced by applications of previous Payaheads with respect to such Actuarial
Receivable, pursuant to Sections 4.1 and 4.8.
"PERSON" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust (including any beneficiary
thereof), unincorporated organization or government or any agency or political
subdivision thereof.
"PHYSICAL PROPERTY" has the meaning assigned to such term in the
definition of "Delivery" above.
"PLAN" has the meaning specified in Section 6.3.
"POOL BALANCE" as of the close of business on the last day of a
Collection Period means the aggregate Principal Balance of the Receivables
(excluding Purchased Receivables and Liquidated Receivables).
"PRINCIPAL BALANCE" of a Receivable, as of the close of business on
the last day of a Collection Period, means the Amount Financed minus the sum of
(i)(a) with respect to a Simple Interest Receivable, that portion of all
payments made by or on behalf of the related Obligor on or prior to such day and
allocable to principal using the Simple Interest Method and (b) in the case of
an Actuarial Receivable, that portion of all Scheduled Payments due on or prior
to such day allocable to principal using the actuarial method, (ii) any refunded
portion of extended warranty protection plan costs or of physical damage, theft,
credit life, credit accident or health insurance premiums included in the Amount
Financed, (iii) any payment of the Purchase Amount with respect to the
Receivable allocable to principal, (iv) any prepayment in full or any partial
prepayments applied to reduce the Principal Balance of the Receivable and (v)
Cram Down Losses in respect of such Receivable.
"PRINCIPAL COLLECTIONS" means, with respect to any Distribution Date,
the sum of (i) (a) with respect to Simple Interest Receivables, that portion of
all collections on the Receivable allocable to principal in respect of the
preceding Collection Period and (b) with respect to Actuarial Receivables, the
sum of (x) the amount of all Scheduled Payments allocable to principal due
during the preceding Collection Period and (y) the portion of all prepayments in
full allocable to principal received during the preceding Collection Period, in
the case of both (a) and (b), without regard to any extensions or modifications
thereof effected after the Cutoff Date, other than with respect to any
extensions or modifications required in connection with Cram Down Losses during
such Collection Period; (ii) the principal balance of each Receivable that was
repurchased by the Seller or purchased by the Servicer, in each case, as of the
close of business on the last day of the preceding Collection Period (except to
the extent included in (i) above; (iii) the principal balance of each Liquidated
Receivable which became such during the preceding Collection Period (except to
the extent included in (i) above); (iv) partial prepayments on Receivables in
respect of the preceding Collection Period relating to refunds of extended
service contracts, or of physical damage, credit life, credit accident or heath
insurance premium, disability insurance policy premiums, but only if such costs
or premiums were financed by the respective Obligor and only to the extent not
included in clause (i) above; and (v) the aggregate amount of Cram Down Losses
during such Collection Period.
"PURCHASE AMOUNT" means the amount, as of the close of business on the
last day of a Collection Period, required to prepay in full the respective
Receivable under the terms thereof including interest at the APR to the end of
the month of purchase (without giving effect to Outstanding Advances).
"PURCHASED RECEIVABLE" means a Receivable purchased as of the close of
business on the last day of a Collection Period by (i) the Servicer pursuant to
Section 3.7 or (ii) repurchased by the Seller pursuant to Section 2.3.
"RATING AGENCY" means ___________________________________. If no such
organization or successor is any longer in existence, "Rating Agency" shall be a
nationally recognized statistical rating organization or other comparable Person
designated by the Depositor, notice of which designation shall be given to the
Trustee, the Collateral Agent and the Servicer.
"RATING AGENCY CONDITION" means, with respect to any action, that each
Rating Agency shall have been given 10 days' prior notice thereof (or such
shorter period as shall be acceptable to the Rating Agencies) and that neither
of the Rating Agencies shall have notified the Depositor, the Servicer or the
Trustee in writing that such action will, in and of itself, result in a
reduction or withdrawal of the then current rating of either class of
Certificates. With respect to Section 4.2, the Rating Agency Condition shall be
deemed to be satisfied on the Closing Date after receipt of a letter from each
Rating Agency dated such date stating that the Class A Certificates are rated in
the highest investment rating category and the Class B Certificates are rated at
least "A" or its equivalent.
"REALIZED LOSSES" means the excess of the Principal Balance of any
Liquidated Receivable over Liquidation Proceeds to the extent allocable to
principal.
"RECEIVABLE" means any Contract listed on Schedule A (which Schedule
may be in the form of microfiche), but excluding Liquidated Receivables and
Purchased Receivables.
"RECEIVABLE FILES" means the documents specified in Section 2.4.
"RECORD DATE" means, in respect of each Collection Period and the
related Distribution Date, the last day of the calendar month immediately
preceding such Distribution Date.
"RECOVERIES" means, with respect to any Liquidated Receivable, monies
collected in respect thereof, from whatever source (other than any proceeds from
any Dealer commission), during any Collection Period following the Collection
Period in which such Receivable became a Liquidated Receivable, net of the sum
of any amounts expended by the Servicer for the account of the Obligor and any
amounts required by law to be remitted to the Obligor.
"RELATED FINANCED VEHICLE" means a Financed Vehicle securing the
Obligor's indebtedness under a Receivable.
"RESERVE FUND" means the fund established and maintained as such
pursuant to Section 4.1(b).
"RESERVE FUND DEPOSIT" means, with respect to the Closing Date,
$___________.
"SCHEDULED PAYMENT" on an Actuarial Receivable means that portion of
the payment required to be made by the Obligor during the respective Collection
Period sufficient to amortize the Principal Balance under the actuarial method
over the term of the Actuarial Receivable (except, in the case a Balloon Loan,
to the extent necessary to amortize the Principal Balance to the amount of the
Balloon Payment over the life of the Actuarial Receivable) and to provide
interest at the APR.
"SCHEDULE OF RECEIVABLES" means each list attached hereto as Schedule
A identifying the Receivables conveyed by the Depositor or at the Depositor's
direction, which list may be in the form of microfiche, or computer readable
tape or diskette.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLER" has the meaning specified in the preamble.
"SERVICER" means the Bank, the Servicer of the Receivables, and each
successor to the Bank (in the same capacity) pursuant to Section 7.5 or 8.3.
"SERVICER'S CERTIFICATE" has the meaning specified in Section 3.9.
"SERVICING FEE" means, with respect to any Distribution Date, the fee
payable to the Servicer for services rendered during such Collection Period,
determined pursuant to Section 3.8.
"SERVICING FEE RATE" shall be ___% per annum, calculated on the basis
of a 360-day year consisting of twelve 30-day months.
"SIMPLE INTEREST METHOD" means the method of allocating a fixed level
payment to principal and interest, pursuant to which the portion of such payment
that is allocated to interest is equal to the product of the fixed rate of
interest multiplied by the unpaid principal balance multiplied by the period of
time elapsed since the preceding payment of interest was made and the remainder
of such payment is allocable to principal.
"SIMPLE INTEREST RECEIVABLE" means any Receivable under which the
portion of a payment allocable to principal and the portion of a payment
allocable to interest is determined in accordance with the Simple Interest
Method.
"SPECIFIED RESERVE BALANCE" means, with respect to any Distribution
Date, the greater of (a) ____% of the sum of the Class A Principal Balance and
the Class B Principal Balance on such Distribution Date (after giving effect to
all distributions with respect to the Certificates to be made on such
Distribution Date) except that, if on any Distribution Date (x) the Cumulative
Net Loss Ratio exceeds the Trigger Percentage for such Distribution Date or (y)
the average of the Delinquency Percentages for the three preceding Collection
Periods exceeds ____%, then the Specified Reserve Balance shall be an amount
equal to the greater of ___% of the sum of the Class A Principal Balance and the
Class B Principal Balance on such Distribution Date (after giving effect to all
distributions with respect to the Certificates to be made on such Distribution
Date) and the amount specified in clause (b) below or (b) ____% of the sum of
the Original Class A Principal Balance and the Original Class B Principal
Balance. In no circumstances will the Depositor be required to deposit any
amounts in the Reserve Fund other than the Reserve Fund Deposit.
"STAMP" has the meaning specified in Section 6.3.
"STANDARD & POOR'S" or "S&P" means Standard & Poor's, a division of
the McGraw-Hill Companies, Inc., or its successor.
"TRANSFER DATE" means, with respect to any Distribution Date, the
Business Day preceding such Distribution Date.
"TRIGGER PERCENTAGE" means (i) in the case of any Distribution Date
prior to ___ Distribution Date, ___%, (ii) in the case of any Distribution Date
on and after the ___ Distribution Date but prior to the ___ Distribution Date,
___%, (iii) in the case of any Distribution Date on and after the ___
Distribution Date but prior to the ___ Distribution Date, ___%, (iv) in the case
of any Distribution Date on and after the ___ Distribution Date but prior to the
___ Distribution Date, ___% and (v) in the case of any Distribution Date on and
after the ___ Distribution Date, ___%.
"TRUST" means the Mellon Auto Trust 199_-_ created by this Agreement.
"TRUSTEE" means ____________________, as Trustee under this Agreement,
or any successor, and any successor Trustee appointed and acting pursuant to
Sections 10.10 and 10.11.
"TRUST PROPERTY" means:
(a) all right, title and interest of the Seller in and to the
Receivables, and all moneys received thereon (other than any proceeds from any
Dealer commission), on or after the Cutoff Date and, with respect to Receivables
which are Actuarial Receivables, all monies received thereon prior to the Cutoff
Date that are due on or after the Cutoff Date;
(b) all right, title and interest of the Seller in the security
interests in the Financed Vehicles granted by Obligors pursuant to the
Receivables and any other interest of the Seller in the Financed Vehicles;
(c) all right, title and interest of the Seller in and to any proceeds
from claims on any physical damage, repossession, loss, skip, credit life and
credit accident, vendor's single interest and health insurance policies or
certificates relating to the Financed Vehicles or the Obligors;
(d) all right, title and interest of the Seller in and to refunds for
the costs of extended service contracts with respect to Financed Vehicles,
refunds of unearned premiums with respect to credit life and credit accident and
health insurance policies or certificates covering an Obligor or Financed
Vehicle or his or her obligations with respect to a Financed Vehicle and any
recourse to Dealers for any of the foregoing;
(e) the interest of the Seller in any proceeds from any Receivable
repurchased by a Dealer, pursuant to a Dealer Agreement, as a result of a breach
of representation or warranty in the related Dealer Agreement or a default by an
Obligor resulting in the repossession of the Financed Vehicle under such Dealer
Agreement; and
(f) the proceeds of any and all of the foregoing. "UCC" means the
Uniform Commercial Code as in effect in the relevant jurisdiction.
SECTION 1.2. OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Agreement shall have the defined
meanings when used in any instrument governed hereby and in any certificate or
other document made or delivered pursuant hereto unless otherwise defined
therein.
(b) As used in this Agreement, in any instrument governed hereby and
in any certificate or other document made or delivered pursuant hereto or
thereto, accounting terms not defined in this Agreement or in any such
instrument, certificate or other document, and accounting terms partly defined
in this Agreement or in any such instrument, certificate or other document to
the extent not defined, shall have the respective meanings given to them under
generally accepted accounting principles as in effect on the date of this
Agreement or any such instrument, certificate or other document, as applicable.
To the extent that the definitions of accounting terms in this Agreement or in
any such instrument, certificate or other document are inconsistent with the
meanings of such terms under generally accepted accounting principles, the
definitions contained in this Agreement or in any such instrument, certificate
or other document shall control.
(c) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; Article, Section, Schedule
and Exhibit references contained in this Agreement are references to Articles,
Sections, Schedules and Exhibits in or to this Agreement unless otherwise
specified; and the term "including" shall mean "including without limitation."
(d) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
SECTION 1.3. CALCULATIONS. Except as otherwise specifically provided
herein, all calculations of the amount of interest accrued on the Certificates
during any Collection Period and all calculations of the amount of the Servicing
Fee payable with respect to a Collection Period shall be made on the basis of a
360-day year consisting of twelve 30-day months.
SECTION 1.4. REFERENCES. All references to the first day of a
Collection Period shall refer to the opening of business on such day. All
references to the last day of a Collection Period shall refer to the close of
business on such day.
SECTION 1.5. REFERENCES TO THE TRUST. Whenever any provision of this
Agreement refers to actions to be taken by the Trust, matters to be consented to
by the Trust, or deliveries or notices to the Trust, such provision shall be
deemed to refer to actions to be taken by the Trustee, matters to be consented
to by the Trustee, or deliveries or notices to the Trustee.
SECTION 1.6. ACTION BY OR CONSENT OF CERTIFICATEHOLDERS. Whenever any
provision of this Agreement refers to action to be taken or consented to by
Certificateholders, such provision shall be deemed to refer to
Certificateholders of record as of the Record Date immediately preceding the
date on which such action is to be taken, or consented to by Certificateholders.
ARTICLE II
THE TRUST PROPERTY
SECTION 2.1. CONVEYANCE OF TRUST PROPERTY. (a) The Seller,
concurrently with the execution and delivery hereof, does hereby sell, transfer,
assign and convey to the Depositor, at a purchase price previously agreed to by
the Seller and Depositor, the Trust Property, without recourse (subject to the
obligations herein). (b) In consideration of the Trustee's delivery to, or upon
the written order of the Depositor of authenticated Certificates, in authorized
denominations, in an aggregate amount equal to the Original Principal Balance,
the Depositor does hereby sell, transfer, assign and convey to the Trustee
without recourse (subject to the obligations herein) upon the terms and
conditions hereof, the Trust Property together with the Depositor's right to
require the Seller to cure any breach of a representation or warranty made
herein by the Seller or to repurchase or substitute for any affected Receivable
in accordance herewith.
SECTION 2.2.A. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The
Seller makes the following representations and warranties as to the Receivables
on which each of the Depositor and the Trustee is deemed to have relied in
acquiring the Receivables. Unless otherwise indicated, such representations and
warranties are being made as of the execution and delivery of the Agreement, but
shall survive the sale, transfer and assignment of the Receivables and the other
Trust Property to the Trustee.
(a) TITLE. Immediately prior to the transfer and assignment to the
Depositor herein contemplated, the Seller had good and marketable title to each
Receivable conveyed by it to the Depositor, free and clear of all Liens and,
immediately upon the transfer thereof, the Depositor shall have good and
marketable title to each Receivable, free and clear of all Liens; and the
transfer of the Receivables to the Depositor has been perfected under the UCC.
It is the intention of the Seller that the transfer and assignment herein
contemplated constitute a sale of the Receivables from the Seller to the
Depositor and that the beneficial interest in and title to such Receivables not
be part of the debtor's estate in the event of the filing of a petition for
receivership by or against the Seller. No Receivable has been sold, transferred,
assigned or pledged by the Seller to any Person other than the Depositor.
(b) ALL FILINGS MADE. All filings (including UCC filings) necessary in
any jurisdiction to give the Seller a first priority perfected security interest
in the Receivables to give the Depositor a first priority perfected ownership
interest in the Receivables, and to give the Trustee a first priority perfected
security interest therein, shall have been presented to the Trustee for filing
in the appropriate filing offices. Upon such filing by the Servicer, the Trustee
will have a first priority perfected security interest in the Trust Property.
(c) CHARACTERISTICS OF RECEIVABLES. Each Receivable (A) has been
either originated by a Dealer in the regular course of such Dealer's business
and purchased from such Dealer by the Seller in the ordinary course of the
Seller's business or otherwise originated by the Seller in the ordinary course
of the Seller's business, and each Obligor was approved in accordance with the
Seller's standard underwriting procedures in effect at the time such Receivable
was originated or purchased, (B) was conveyed by the Seller to the Depositor,
(C) has created or shall create a valid, subsisting and enforceable first
priority security interest in favor of the Seller in the Financed Vehicle, which
security interest has been assigned by the Seller to the Depositor, which is
assignable by the Depositor to the Trustee, (D) contains customary and
enforceable provisions under the laws of the State governing such Receivable
such that the rights and remedies of the holder thereof are adequate for
realization against the collateral of the benefits of the security; and (E)
provides for level monthly payments that fully amortizes the Amount Financed by
maturity (except for the last payment, which may be different from the level
payment and except, with respect to a Balloon Loan, to the extent of the Balloon
Payment).
(d) SCHEDULE OF RECEIVABLES. The information set forth in Schedule A
to this Agreement is true and correct in all material respects as of the opening
of business on the Cutoff Date and no selection procedures believed by the
Seller to be adverse to the Certificateholders were utilized in selecting the
Receivables. The Computer Tape regarding the Receivables is true and correct in
all material respects as of the Cutoff Date.
(e) COMPLIANCE WITH LAW. Each Receivable, the sale of the Financed
Vehicle and the sale of any physical damage and credit life and credit accident
and health insurance and any extended service contracts complied in all material
respects at the time it was originated or made and at the Closing Date (after
giving effect to the transactions contemplated by the Basic Documents) complies
in all material respects with all requirements of applicable federal, state and
local laws and regulations thereunder, including usury laws, the Federal
Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit
Reporting Act, the Fair Debt Collection Practices Act, the Federal Trade
Commission Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board's
Regulations B and Z, the Soldier's and Sailor's Civil Relief Act of 1940, state
adaptations of the National Consumer Act and the Uniform Consumer Credit Code,
and other consumer credit laws and equal credit opportunity and disclosure laws.
(f) BINDING OBLIGATION. Each Receivable represents the legal, valid
and binding payment obligation in writing of the Obligor thereunder, enforceable
by the holder thereof in accordance with its terms except as such enforceability
may be limited by applicable bankruptcy, insolvency, moratorium, fraudulent
conveyance, reorganization and similar laws now or hereafter in effect related
to or affecting creditors' rights generally and subject to general principles of
equity (whether applied in a proceeding at law or in equity) and all parties to
such Receivable had full legal capacity to execute and deliver such Receivable
and all other documents related thereto and to grant the security interest
purported to be granted thereby.
(g) NO GOVERNMENT OBLIGOR. None of the Receivables is due from the
United States of America or any state or from any agency, department or
instrumentality of the United States of America or any state.
(h) SECURITY INTEREST IN FINANCED VEHICLE. Immediately prior to the
sale, assignment, and transfer thereof under the Agreement, (i) each Receivable
shall be secured by a validly perfected first priority security interest in the
Financed Vehicle in favor of the Seller as secured party or (ii) application has
been made with the appropriate governmental authority for a valid perfected
first priority security interest in the Financed Vehicle in favor of the Seller,
and such security interest is or shall be prior to all other Liens upon and
security interests in such Financed Vehicle which now exist or may hereafter
arise or be created (except, as to priority, for any tax liens or mechanics'
liens which may arise after the Closing Date).
(i) RECEIVABLES IN FORCE. No Receivable has been satisfied,
subordinated or rescinded, nor has any Financed Vehicle been released from the
Lien granted by the related Receivable in whole or in part unless another
vehicle has been substituted as collateral securing the Receivable without any
other modification to such Receivable.
(j) NO WAIVER. No provision of a Receivable has been modified or
waived except as reflected in the Receivable File relating to such Receivable.
(k) NO AMENDMENTS. No Receivable has been amended, except as permitted
pursuant to Section 3.2.
(l) NO DEFENSES. No right of rescission, setoff, counterclaim or
defense has been asserted or threatened with respect to any Receivable. The
operation of the terms of any Receivable or the exercise of any right thereunder
will not render such Receivable unenforceable in whole or in part or subject to
any such right of rescission, setoff, counterclaim, or defense.
(m) NO LIENS. As of the Cutoff Date, there are no Liens or claims,
including Liens for work, labor, materials or unpaid state or federal taxes
relating to any Financed Vehicle securing the related Receivable, that are or
may be prior to or equal to the Lien granted by such Receivable.
(n) NO DEFAULT. Except for payment delinquencies continuing for a
period of not more than thirty days as of the Cutoff Date and, except as
permitted in this paragraph, no default, breach, violation or event (in any such
case) permitting acceleration under the terms of any Receivable has occurred;
and no continuing condition that with notice or the lapse of time would
constitute a default, breach, violation or event (in any such case) permitting
acceleration under the terms of any Receivable has arisen; and the Seller has
not waived and shall not waive any of the foregoing.
(o) MATURITY OF RECEIVABLES. Each Receivable has an original maturity
of not more than ___ months; the weighted average original maturity of the
Receivables is ___ months as of the Cutoff Date; the remaining term of each
Receivable is ___ months or less as of the Cutoff Date; the weighted average
remaining term of the Receivables is ___ months as of the Cutoff Date; and the
latest scheduled maturity of any Receivable shall be no later than the Final
Scheduled Maturity Date.
(p) NO BANKRUPTCIES. No Obligor on any Receivable was noted in the
related Receivable File as having filed for bankruptcy in a proceeding which
remained undischarged as of the Cutoff Date.
(q) NO REPOSSESSIONS. As of the Cutoff Date, no Financed Vehicle
securing any Receivable is in repossession status.
(r) CHATTEL PAPER. Each Receivable constitutes "chattel paper" as
defined in the UCC.
(s) APR. The weighted average Annual Percentage Rate of the
Receivables as of the Cutoff Date is approximately ___%.
(t) PRINCIPAL BALANCE. Each Receivable has an outstanding principal
balance as of the Cutoff Date of not less than ___ or more than $____. The
average principal balance of the Receivables as of the Cutoff Date is $___. The
aggregate principal balance of the Receivables as of the Cutoff Date is $___.
(u) FINANCING. Approximately ___% of the aggregate principal balance
of the Receivables, constituting approximately ___% of the number of
Receivables, as of the Cutoff Date, represents financing of new vehicles; the
remainder of the Receivables represents financing of used vehicles.
Approximately ___% of the aggregate principal balance of the Receivables,
constituting approximately ___% of the number of Receivables, as of the Cutoff
Date, represents financing of Balloon Loans. Approximately ___% of the aggregate
Principal Balance of the Receivables, constituting approximately ___% of the
number of Receivables, as of the Cutoff Date, represents financing of Simple
Interest Receivables; the remainder of the Receivables represents financing of
Actuarial Receivables.
(v) PAID-AHEAD. Approximately ___% of the aggregate Principal Balance
of the Receivables, constituting approximately ___% of the number of Receivables
are paid-ahead for a period of one to six months. No Receivable is paid-ahead
more than ___ months.
(w) INSURANCE; OTHER. The Servicer, in accordance with its customary
procedures, has confirmed (A) that each Obligor has obtained insurance covering
the Financed Vehicle as of the date of execution of the related Receivable
insuring against loss and damage due to fire, theft, collision and other risks
generally covered by comprehensive and collision coverage and that each
Receivable requires the Obligor to maintain such insurance naming the Seller and
its successors and assigns as a loss payee, (B) each Receivable that finances
the cost of premiums for credit life and credit accident and health insurance is
covered by an insurance policy or certificate of insurance naming the Seller as
loss payee (lienholder) under each such insurance policy and certificate of
insurance and (C) as to each Receivable that finances the cost of an extended
service contract, the respective Financed Vehicle which secures the Receivable
is covered by an extended service contract.
(x) LAWFUL ASSIGNMENT. No Receivable has been originated in, or as of
the Closing Date is subject to the laws of, any jurisdiction under which the
sale, transfer and assignment of such Receivable under this Agreement or the
pledge of such Receivable to the Trustee under the Indenture (i) is unlawful,
void, voidable or unenforceable in accordance with its terms or (ii) would
render such Receivable void, voidable or unenforceable in accordance with its
terms. The Seller has not entered into any agreement with any account debtor
that prohibits, restricts or conditions the assignment of all or any portion of
the Receivable.
(y) NO INSURANCE PREMIUMS. As of the Cutoff Date, no portion of the
principal balance of any Receivable included amounts attributable to the payment
of any physical damage or theft insurance premium.
(z) ONE ORIGINAL. There is only one manually executed original copy of
each Receivable.
(aa) ORIGINATION OF RECEIVABLES. Based on the billing address of the
Obligors and the principal balance of Receivables as of the Cutoff Date,
approximately ___% of the Receivables were originated in ___, approximately ___%
of the Receivables were originated in ___ and approximately ___% of the
Receivables were originated in ___, each Obligor has been approved by the Seller
based on the Seller's standard underwriting procedures as in effect at the time
the related Receivable was entered into. Based on the billing address of the
Obligors and the principal balance of the Receivables as of the Cutoff Date, not
more than 10% of the Receivables were originated in any one state other than
___, ___ and ___.
(bb) RECEIVABLE FILES. The Receivable Files are kept at the locations
listed in Schedule B.
(cc) COMPUTER RECORDS. As of the Closing Date, the accounting and
computer records relating to the Receivables of the Seller have been marked to
indicate the Depositor's ownership interest therein.
SECTION 2.2.B. REPRESENTATIONS AND WARRANTIES OF DEPOSITOR. The
Depositor makes the following representations and warranties as to each
Receivable conveyed by the Depositor to the Trustee hereunder on which the
Trustee shall conclusively rely in accepting the Trust Property in trust and
authenticating the Certificates. Unless otherwise indicated, such
representations and warranties are being made as of the execution and delivery
of the Agreement, but shall survive the sale, transfer and assignment of the
Receivables and the other Trust Property to the Trustee.
(a) TITLE. It is the intention of the Depositor that the transfer and
assignment herein contemplated constitute a sale of the Receivables from the
Depositor to the Trustee and that the beneficial interest in and title to such
Receivables not be part of the debtor's estate in the event of the filing of a
petition for receivership by or against the Depositor. No Receivable has been
sold, transferred, assigned or pledged by the Depositor to any Person other than
the Trustee. Immediately prior to the transfer and assignment herein
contemplated, the Depositor had good and marketable title to each Receivable,
free and clear of all Liens and, immediately upon the transfer thereof, the
Trustee shall have good and marketable title to each such Receivable, free and
clear of all Liens; and the transfer of the Receivables to the Trustee has been
perfected under the UCC.
(b) ALL FILINGS MADE. All filings (including UCC filings) necessary in
any jurisdiction to give the Depositor a first priority perfected security
interest in the Receivables, to give the Trustee a first priority perfected
ownership interest in the Receivables, to give the Trustee a first priority
perfected ownership interest in the Receivables, and to give the Trustee a first
priority perfected security interest therein, shall have been presented to the
Trustee for filing in the appropriate filing offices. Upon such filing by the
Servicer, the Trustee will have a first priority perfected security interest in
the Trust Property.
(c) LAWFUL ASSIGNMENT. No Receivable has been originated in, or as of
the Closing Date is subject to the laws of, any jurisdiction under which the
sale, transfer and assignment of such Receivable under this Agreement (i) is
unlawful, void, voidable or unenforceable in accordance with its terms or (ii)
would render such Receivable void, voidable or unenforceable in accordance with
its terms. The Depositor has not entered into any agreement with any account
debtor that prohibits, restricts or conditions the assignment of all or any
portion of the Receivable.
(d) COMPUTER RECORDS. As of the Closing Date, the accounting and
computer records relating to the Receivables of the Depositor have been marked
to show the absolute ownership by the Trustee on behalf of the Trust of the
Receivables.
SECTION 2.3. REPURCHASE UPON BREACH. (a) The Seller, the Depositor,
the Servicer or the Trustee, as the case may be, shall inform the other parties
to this Agreement and the Trustee promptly, in writing, upon its discovery of
any breach of Seller's or the Depositor's representations and warranties made
pursuant to Section 2.2. Unless any such breach shall have been cured by the
last day of the first Collection Period following the discovery thereof by the
Trustee or receipt by the Trustee of written notice from the Seller, the
Depositor or the Servicer of such breach, the Seller shall be obligated to
repurchase any Receivable in which the interests of the Certificateholders are
materially and adversely affected by any such breach as of the last day of such
Collection Period. In consideration of and simultaneously with the repurchase of
the Receivable, the Seller shall remit to the Collection Account the Purchase
Amount in the manner specified in Section 4.3 and the Trustee shall execute such
assignments and other documents reasonably requested by the Seller in order to
effect such repurchase.
(b) The sole remedy of the Trust, the Trustee or the
Certificateholders with respect to a breach of representations and warranties
pursuant to Section 2.2 and the agreement contained in this Section shall be to
require the Seller to repurchase Receivables pursuant to this Section, subject
to the conditions contained herein. The Trustee shall not have any duty to
conduct any affirmative investigation as to the occurrence of any conditions
requiring the repurchase of any Receivable pursuant to this Section.
SECTION 2.4. CUSTODY OF RECEIVABLE FILES. To assure uniform quality in
servicing the Receivables and to reduce administrative costs, the Trustee hereby
revocably appoints the Servicer, and the Servicer hereby accepts such
appointment, to act as the agent of the Trustee as custodian of the following
documents or instruments (the "Receivable Files") with respect to each
Receivable:
(i) the original of the Receivable;
(ii) a record of the information supplied by the Obligor in
the original credit application;
(iii) the original certificate of title or such documents
that the Servicer shall keep on file, in accordance with its customary
procedures, evidencing the security interest of the Depositor in the
Financed Vehicle (it being understood that the original certificates
of title generally are not delivered to the Servicer for 90 days but
that promptly upon delivery they shall be delivered to the Servicer as
custodian hereunder); and
(iv) any and all other documents that the Servicer shall keep
on file, in accordance with its customary procedures, relating to a
Receivable, an Obligor or a Financed Vehicle.
SECTION 2.5. DUTIES OF SERVICER AS CUSTODIAN. (a)
SAFEKEEPING. The Servicer shall hold the Receivable Files on
behalf of the Trustee for the benefit of all present and future
Certificateholders and maintain such accurate and complete accounts, records and
computer systems pertaining to each Receivable File as shall enable the Servicer
and Trustee to comply with this Agreement. In performing its duties as custodian
the Servicer shall act with reasonable care, using that degree of skill and
attention that the Servicer exercises with respect to the receivable files
relating to all comparable automotive receivables that the Servicer services for
itself or others. The Servicer shall conduct, or cause to be conducted, periodic
audits of the Receivable Files held by it under this Agreement and of the
related accounts, records and computer systems, in such a manner as shall enable
the Trustee to verify the accuracy of the Servicer's record keeping. The
Servicer shall promptly report to the Trustee any failure on its part to hold
the Receivable Files and maintain its accounts, records and computer systems as
herein provided and promptly take appropriate action to remedy any such failure.
(b) MAINTENANCE OF AND ACCESS TO RECORDS. The Servicer shall maintain
each Receivable File at one of its offices specified in Schedule B to this
Agreement or at such other office as shall be specified to the Trustee by
written notice not later than 90 days after any change in location. Upon
reasonable prior notice, the Servicer shall make available to the Trustee or its
respective duly authorized representatives, attorneys or auditors a list of
locations of the Receivable Files and records and computer systems maintained by
the Servicer at such times during normal business hours as the Trustee shall
instruct.
(c) RELEASE OF DOCUMENTS. Upon written instruction from the Trustee,
the Servicer shall release or shall cause to be released any Receivable File to
the Trustee, the Trustee's agent, or the Trustee's designee, as the case may be,
at such place or places as the Trustee may designate, as soon as practicable and
upon the release and delivery of any such document in accordance with the
instructions of the Trustee, the Servicer shall be released from any further
liability and responsibilities under this Section 2.5 with respect to such
documents unless and until such time as such document may be returned to the
Servicer.
SECTION 2.6. INSTRUCTIONS; AUTHORITY TO ACT. The Servicer shall be
deemed to have received proper instructions with respect to the Receivable Files
upon its receipt of written instructions signed by an Authorized Officer of the
Trustee.
SECTION 2.7. CUSTODIAN'S INDEMNIFICATION. The Servicer as custodian
shall indemnify and hold harmless the Trustee and its officers, directors,
employees and agents for any and all liabilities, obligations, losses,
compensatory damages, payments, costs or expenses (including reasonable
attorneys' fees and expenses) that may be imposed on, incurred by or asserted
against the Trustee or any of its officers, directors, employees and agents as
the result of any improper act or omission in any way relating to the
maintenance and custody by the Servicer or any subservicer, as custodian of the
Receivable Files where the final determination that any such improper act or
omission by the Servicer, which resulted in such liability, obligation, loss,
damage, payment, cost or expense is established by a court of law, by an
arbitrator or by way of settlement agreed to by the Servicer; PROVIDED, HOWEVER,
that the Servicer shall not be liable for any portion of any such amount
resulting from the willful misfeasance, bad faith or negligence of the Trustee.
This provision shall not be considered to limit the Servicer's or any other
party's rights, obligations, liabilities, claims or defenses which arise as a
matter of law or pursuant to any other provision of this Agreement.
SECTION 2.8. EFFECTIVE PERIOD AND TERMINATION. The Servicer's
appointment as custodian shall become effective as of the Cutoff Date and shall
continue in full force and effect until terminated pursuant to this Section. If
the Bank shall resign as Servicer in accordance with the provisions of this
Agreement or if all of the rights and obligations of any Servicer shall have
been terminated under Section 9.1, the appointment of such Servicer as custodian
shall be terminated by the Trustee or by Holders of Certificates evidencing not
less than a majority of the aggregate outstanding principal balance of the Class
A Certificates and the Class B Certificates taken together as a single class, in
the same manner as the Trustee or such Holders may terminate the rights and
obligations of the Servicer under Section 9.1. The Trustee may terminate the
Servicer's appointment as custodian, with cause, at any time upon written
notification to the Servicer, and without cause upon 30 days' prior written
notification to the Servicer and the Rating Agencies. As soon as practicable
after any termination of such appointment, the Servicer shall deliver, or cause
to be delivered, the Receivable Files to the Trustee or the Trustee's agent at
such place or places as the Trustee may reasonably designate in writing. If the
Servicer shall be terminated as custodian hereunder for any reason but shall
continue to serve as Servicer, the Trustee shall, or shall cause its agent to,
make the Receivable Files available to the Servicer (or, if designated by the
Servicer, a permitted subservicer) during normal business hours upon reasonable
notice so as to permit the Servicer to perform its obligations as Servicer
hereunder.
ARTICLE III
ADMINISTRATION AND SERVICING OF THE TRUST PROPERTY
SECTION 3.1. DUTIES OF SERVICER . The Servicer, as agent for the Trust
(to the extent provided herein), shall manage, service, administer and make
collections on the Receivables (other than Purchased Receivables) with
reasonable care, using that degree of skill and attention that the Servicer
exercises with respect to all comparable automotive receivables that it services
for itself or others. The Servicer's duties shall include collection and posting
of all payments, responding to inquiries of Obligors on such Receivables,
investigating delinquencies, sending payment coupons or periodic statements or
invoices to Obligors, reporting any tax information to Obligors, accounting for
collections and furnishing monthly and annual statements to the Trustee with
respect to distributions and making Advances pursuant to Section 4.8(a). Subject
to the provisions of Section 3.2, the Servicer shall follow its customary
standards, policies and procedures in performing its duties as Servicer. Without
limiting the generality of the foregoing, the Servicer is authorized and
empowered to execute and deliver, on behalf of itself, the Trust, the Trustee
and the Certificateholders or any of them, any and all instruments of
satisfaction or cancellation, or partial or full release or discharge, and all
other comparable instruments, with respect to such Receivables or to the
Financed Vehicles securing such Receivables. If the Servicer shall commence a
legal proceeding to enforce a Receivable, the Trustee (in the case of a
Receivable other than a Purchased Receivable) shall thereupon be deemed to have
automatically assigned, solely for the purpose of collection, such Receivable to
the Servicer. If in any enforcement suit or legal proceeding it shall be held
that the Servicer may not enforce a Receivable on the ground that it shall not
be a real party in interest or a holder entitled to enforce such Receivable the
Trustee shall, at the Servicer's expense and direction, take steps to enforce
such Receivable, including bringing suit in its name or the name of the Trustee
or the Certificateholders. The Trustee shall upon the written request of the
Servicer, furnish the Servicer with any powers of attorney and other documents
reasonably necessary or appropriate (as certified to the Trustee by the
Servicer) to enable the Servicer to carry out its servicing and administrative
duties hereunder.
SECTION 3.2. COLLECTION AND ALLOCATION OF RECEIVABLE PAYMENTS. (a) The
Servicer shall make reasonable efforts to collect all payments called for under
the terms and provisions of the Receivables as and when the same shall become
due and shall follow such collection procedures as it follows with respect to
all comparable automotive receivables that it services for itself or others. The
Servicer shall allocate collections between principal and interest in accordance
with the customary servicing procedures it follows with respect to all
comparable automotive receivables that it services for itself or others.
(b) The Servicer may not grant extensions or modify the original due
dates of a Receivable; PROVIDED, HOWEVER, that the Servicer may (i) grant one
extension with respect to a Receivable of one month in any rolling twelve month
period and may change the original due date once during the term of a Receivable
to a new due date within 20 days of the original scheduled due date of such
Receivable and (ii) grant extensions or modify the original due dates of a
Receivable with respect to a Receivable for which a court of appropriate
jurisdiction in a bankruptcy or insolvency proceeding shall have issued an order
reducing the amount owed on such Receivable or otherwise modifying or
restructuring the scheduled payments or other terms on such Receivable;
provided, however, that the Servicer may not extend the date for final payment
by the Obligor of any Receivable beyond the last day of the Collection Period
preceding the Certificate Final Scheduled Distribution Date. The Servicer may in
its discretion waive any late payment charge or any other fees that may be
collected in the ordinary course of servicing a Receivable. The Servicer shall
not voluntarily agree to any reduction of (i) the original interest rate, (ii)
the amount of any Scheduled Payment on an Actuarial Receivable or the original
regular scheduled payment on a Simple Interest Receivable, or (iii) the
Principal Balance of any Receivable.
SECTION 3.3. REALIZATION UPON RECEIVABLES. On behalf of the Trust, the
Servicer shall use all reasonable efforts, consistent with its customary
servicing procedures, to repossess or otherwise convert the ownership of the
Financed Vehicle securing any Receivable as to which the Servicer shall have
determined eventual payment in full is unlikely. From time to time, as
appropriate for servicing or foreclosing upon any Receivable, the Trustee shall,
upon written request of the Servicer, execute such documents as shall be
necessary to prosecute any such proceedings. The Servicer shall follow such
customary and usual practices and procedures as it shall deem necessary or
advisable in its servicing of automotive receivables, which may include
reasonable efforts to realize proceeds from Receivables repurchased by a Dealer,
pursuant to a Dealer Agreement, as a result of a breach of a representation or
warranty in the related Dealer Agreement or a default by an Obligor resulting in
the repossession of the Financed Vehicle under such Dealer Agreement. The
foregoing shall be subject to the provision that, in any case in which the
Financed Vehicle shall have suffered damage, the Servicer shall not expend funds
in connection with the repair or the repossession of such Financed Vehicle
unless it shall determine in its reasonable discretion that such repair and/or
repossession will increase the Liquidation Proceeds by an amount greater than
the amount of such expenses.
SECTION 3.4. PHYSICAL DAMAGE INSURANCE; OTHER INSURANCE. (a) The
Servicer shall, in accordance with its customary servicing procedures, verify
(i) that each Obligor shall have obtained insurance covering the Financed
Vehicle, as of the date of the execution of the Receivable, insuring against
loss and damage due to fire, theft, collision and other risks generally covered
by comprehensive and collision coverage and that each Receivable requires the
Obligor to maintain such physical loss and damage insurance naming the Seller
and its successors and assigns as a loss payee, (ii) that each Receivable that
finances the cost of premiums for credit life and credit accident and health
insurance is covered by an insurance policy or certificate naming the Seller as
policyholder (creditor) and (iii) as to each Receivable that finances the cost
of an extended service contract, the respective Financed Vehicle which secures
the Receivable is covered by an extended service contract.
(b) To the extent applicable, the Servicer shall not take any action
which would result in noncoverage under any of the insurance policies referred
to in Section 3.4(a) which, but for the actions of the Servicer, would have been
covered thereunder. The Servicer, on behalf of the Trustee shall take such
reasonable action as shall be necessary to permit recovery under any of the
foregoing insurance policies. Any amounts collected by the Servicer under any of
the foregoing insurance policies, shall be deposited in the Collection Account
pursuant to Section 4.2. The parties hereto acknowledge that the Servicer shall
not be required to force place any insurance coverage referred to in Section
3.4(a)(i) above, or any other insurance coverage.
SECTION 3.5. MAINTENANCE OF SECURITY INTERESTS IN FINANCED VEHICLES.
The Servicer shall, in accordance with its customary servicing procedures, take
such steps as are necessary to maintain perfection of (i) the security interest
created by each Receivable in the related Financed Vehicle and (ii) the interest
of the Trust in the Receivables created by this Agreement, including but not
limited to obtaining the execution by the Obligors and the recording,
registering, filing, re-recording, re-registering and refiling of all security
agreements, financing statements and continuation statements or instruments as
are necessary to maintain the security interest granted by Obligors under the
respective Receivables, each of the Seller and the Depositor hereunder. The
Servicer is hereby authorized to take such steps as are necessary to re-perfect
such security interest on behalf of the Trust and the Trustee in the event of
the relocation of a Financed Vehicle or for any other reason.
SECTION 3.6. COVENANTS OF SERVICER. The Servicer shall not release the
Financed Vehicle securing any Receivable from the security interest granted by
such Receivable in whole or in part except in the event of payment in full by
the Obligor thereunder or repossession or except as may be required by an
insurer in order to receive proceeds from insurance covering such Financed
Vehicle, nor shall the Servicer impair the rights of the Trustee or the
Certificateholders in such Receivables (it being understood that no action of
the Servicer taken in compliance with the terms of this Agreement shall be
deemed to impair such rights), nor shall the Servicer increase the number of
scheduled payments due under a Receivable. Notwithstanding the foregoing, the
Servicer may, as described in Section 3.2(b), grant extensions or modify the
original due dates of a Receivable or make such other changes with respect to a
Receivable for which a court of appropriate jurisdiction in a bankruptcy or
insolvency proceeding shall have issued an order reducing the amount owed on
such Receivable or otherwise modifying or restructuring the scheduled payments
on such Receivable; provided, however, that the Servicer may not extend the date
for final payment by the Obligor of any Receivable beyond the last day of the
Collection Period preceding the Final Scheduled Distribution Date.
SECTION 3.7. PURCHASE OF RECEIVABLES UPON BREACH. The Servicer or the
Trustee shall inform the other party and the Depositor promptly, in writing,
upon the discovery of any breach pursuant to Section 3.2(b), 3.5 or 3.6. Unless
the breach shall have been cured by the last day of the second Collection Period
following such discovery thereof by the Trustee or the receipt by the Trustee of
notice of such breach, the Servicer shall be obligated to purchase any
Receivable in which the interests of the Certificateholders are materially and
adversely affected by such breach as of the last day of such second Collection
Period (or, at the Servicer's option, the last day of the first Collection
Period following the discovery). In consideration of the purchase of any such
Receivable pursuant to the preceding sentence, the Servicer shall remit the
Purchase Amount in the manner specified in Section 4.3. The sole remedy of the
Trustee or the Certificateholders with respect to a breach of Section 3.2(b),
3.5 or 3.6 shall be to require the Servicer to purchase Receivables pursuant to
this Section. The Trustee shall have no duty to conduct any affirmative
investigation as to the occurrence of any condition requiring the purchase of
any Receivable pursuant to this Section.
SECTION 3.8. SERVICING FEE. The servicing fee for (a) the
___Distribution Date shall equal $___ and (b) for each Distribution Date
thereafter shall equal the product of (i) one-twelfth, (ii) the Servicing Fee
Rate and (iii) the Pool Balance as of the first day of the related Collection
Period (the "Servicing Fee"). In addition, the "Servicing Fee" described in (a)
and (b) above shall include late fees, prepayment charges and other similar
charges allowed by applicable law with respect to Receivables collected (from
whatever source) on the Receivables.
SECTION 3.9. SERVICER'S CERTIFICATE. Not later than 11:00 a.m. (New
York time) on each Determination Date, the Servicer shall deliver to the Trustee
and the Depositor, with a copy to the Rating Agencies, a Servicer's Certificate
containing all information necessary to make the distributions pursuant to
Sections 4.5 and 4.6 (including, if required, withdrawals from or deposits to
the Payahead Account and Advances by the Servicer pursuant to Section 4.8) for
the Collection Period preceding the date of such Servicer's Certificate.
Receivables to be purchased by the Servicer or to be repurchased by the Seller
shall be identified by the Servicer by account number with respect to such
Receivable (as specified in Schedule A).
SECTION 3.10. ANNUAL STATEMENT AS TO COMPLIANCE; NOTICE OF DEFAULT.
(a) The Servicer shall deliver to the Trustee, on or before October 31 of each
year beginning October 31, 199_ ,an Officers' Certificate, dated as of June 30
of the preceding fiscal year, stating that (i) a review of the activities of the
Servicer during the preceding 12-month period (or, in the case of the first such
report, during the period from the Closing Date to June 30, 199_) and of its
performance under this Agreement has been made under such officers' supervision
and (ii) to the best of such officers' knowledge, based on such review, the
Servicer has fulfilled all its obligations under this Agreement throughout such
year (or, in the case of the first such certificate, such longer period) or, if
there has been a default in the fulfillment of any such obligation, specifying
each such default known to such officers and the nature and status thereof. The
Trustee shall send a copy of such certificate and the report referred to in
Section 3.11 to the Rating Agencies. A copy of such certificate and the report
referred to in Section 3.11 may be obtained by any Certificateholder by a
request in writing to the Trustee addressed to the Corporate Trust Office.
(b) The Servicer shall deliver to the Trustee and the Rating Agencies,
promptly after having obtained knowledge thereof, but in no event later than
five (5) Business Days thereafter, written notice in an Officers' Certificate of
any event which with the giving of notice or lapse of time, or both, would
become an Event of Servicing Termination under Section 9.1(a) or (b).
SECTION 3.11. ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' REPORT.
The Servicer shall cause a firm of independent certified public accountants,
which may also render other services to the Servicer or the Depositor, to
deliver to the Depositor and the Trustee on or before October 31 of each year as
of June 30 of the preceding fiscal year, beginning October 31, 199_, (1) a
report addressed to the Board of Directors of the Servicer, to the effect that
such firm has examined the financial statements of the Servicer and issued its
report and therefor and that such examination was made in accordance with
generally accepted auditing standards (except as otherwise noted therein), and
accordingly included such tests of the accounting records and such other
auditing procedures as such firm considered necessary in the circumstances; and
(2) a report on description of lease and loan servicing operations and tests of
operating effectiveness in form and substance as is currently prepared on an
annual basis with respect to Servicer. The Servicer shall also concurrently
cause the accountants to deliver a report addressed to the Servicer and Trustee
to the effect that (1) a review in accordance with agreed upon procedures was
made of three randomly selected Servicer Certificates; (2) except as disclosed
in the report, no exceptions or errors in the Servicer Certificates were found;
and (3) the delinquencies and loss information, relating to the Receivables
contained in the Servicer Certificates were found to be accurate.
Such report will also indicate that the firm is independent of the
Servicer within the meaning of the Code of Professional Ethics of the American
Institute of Certified Public Accountants.
SECTION 3.12. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING RECEIVABLES. The Servicer shall provide to the Certificateholders
access to the Receivable Files in such cases where the Certificateholders shall
be required by applicable statutes or regulations to review such documentation
as demonstrated by evidence satisfactory to the Servicer in its reasonable
judgment. Access shall be afforded without charge, but only upon reasonable
request (not less than seventy-two hours) and during normal business hours at
the offices of the Servicer. Nothing in this Section shall affect the obligation
of the Servicer, to observe any applicable law prohibiting disclosure of
information regarding the Obligors and the failure of the Servicer to provide
access to information as a result of such obligation shall not constitute a
breach of this Section.
SECTION 3.13. SERVICER EXPENSES. The Servicer shall be required to pay
all expenses incurred by it in connection with its activities hereunder,
including fees and disbursements of independent accountants, taxes imposed on
the Servicer and expenses incurred in connection with distributions and reports
to Certificateholders.
SECTION 3.14. APPOINTMENT OF SUBSERVICERS. The Servicer may at any
time appoint a subservicer to perform all or any portion of its obligations as
Servicer hereunder; PROVIDED, HOWEVER, that the Rating Agency Condition shall
have been satisfied in connection therewith; PROVIDED FURTHER that the Servicer
shall remain obligated and be liable to the Trustee, and the Certificateholders
for the servicing and administering of the Receivables in accordance with the
provisions hereof without diminution of such obligation and liability by virtue
of the appointment of such subservicer and to the same extent and under the same
terms and conditions as if the Servicer alone were servicing and administering
the Receivables. The fees and expenses of the subservicer shall be as agreed
between the Servicer and its subservicer from time to time and none of the
Trustee or the Certificateholders shall have any responsibility therefor.
ARTICLE IV
DISTRIBUTIONS; RESERVE FUND; STATEMENTS TO CERTIFICATEHOLDERS
SECTION 4.1. ESTABLISHMENT OF ACCOUNTS. (a) (i) The Servicer, for the
benefit of the Certificateholders, shall establish and maintain in the name of
the Trustee an Eligible Deposit Account (the "Collection Account"), bearing a
designation clearly indicating that the funds deposited therein are held for the
benefit of the Certificateholders. The Servicer shall establish and maintain in
the name of the Trustee an Eligible Deposit Account (the "Class A Distribution
Account"), bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Class A Certificateholders. The Servicer
shall establish and maintain in the name of the Trustee an Eligible Deposit
Account (the "Class B Distribution Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Class B Certificateholders.
(ii) Funds on deposit in the Collection Account, the Class A
Distribution Account and the Class B Distribution Account
(collectively, the "Accounts") shall be established and maintained
with the Trustee and shall be invested by the Trustee in Eligible
Investments selected in writing by the Servicer (pursuant to standing
instructions delivered to an Authorized Officer of the Trustee or
other written notice so delivered); PROVIDED, HOWEVER, it is
understood and agreed that the Trustee shall not be liable for any
loss arising from such investment in Eligible Investments. All such
Eligible Investments shall be held by the Trustee for the benefit of
the beneficiaries of the applicable Account; PROVIDED, that on each
Distribution Date all interest and other investment income (net of
losses and investment expenses) on funds on deposit therein shall be
withdrawn from the Accounts at the written direction of the Servicer
and shall be paid to the Servicer. Funds on deposit in the Accounts
shall be invested in Eligible Investments that will mature so that
such funds will be available at the close of business on the Transfer
Date preceding the following Distribution Date. Funds deposited in an
Account on a Transfer Date which immediately precedes a Distribution
Date or upon the maturity of any Eligible Investments are not required
to be invested overnight.
(iii) The Trustee shall possess all right, title and interest
in all funds on deposit from time to time in the Accounts and in all
proceeds thereof (including all income thereon) and all such funds,
investments, proceeds and income shall be part of the Trust Property.
Except as otherwise provided herein, the Accounts shall be under the
sole dominion and control of the Trustee for the benefit of the
Certificateholders. If, at any time, any of the Accounts ceases to be
an Eligible Deposit Account, the Trustee (or the Servicer on its
behalf) shall within 10 Business Days (or such longer period, as to
which each Rating Agency may consent) establish a new Account as an
Eligible Deposit Account and shall transfer any cash and/or any
investments to such new Account. In connection with the foregoing, the
Servicer agrees that, in the event that any of the Accounts are not
accounts with the Trustee, the Servicer shall notify the Trustee in
writing promptly upon any of such Accounts ceasing to be an Eligible
Deposit Account.
(iv) The Servicer shall have the power, revocable by the
Trustee, to instruct the Trustee in writing to make withdrawals and
payments from the Accounts for the purpose of permitting the Servicer
to carry out its duties hereunder or permitting the Trustee to carry
out its duties.
(b) (i) The Servicer shall establish and maintain in the name
of _______________, as Collateral Agent, an Eligible Deposit Account (the
"Reserve Fund") bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Certificateholders. The
Servicer shall establish and maintain in the name of _______________, as
Collateral Agent, an Eligible Deposit Account (the "Payahead Account ") bearing
a designation clearly indicating that the funds deposited therein are held for
the benefit of the Certificateholders. Neither the Reserve Fund nor the Payahead
Account shall be property of the Trust.
(ii) Funds on deposit in the Reserve Fund and the Payahead
Account shall be invested by the Collateral Agent in Eligible
Investments selected in writing by the Servicer; PROVIDED, HOWEVER, it
is understood and agreed that the Collateral Agent shall not be liable
for any loss arising from such investment in Eligible Investments. All
such Eligible Investments shall be held by the Collateral Agent for
the benefit of the beneficiaries of the Reserve Fund; PROVIDED, that
on each Distribution Date all interest and other investment income
(net of losses and investment expenses) on funds on deposit therein
shall be withdrawn from the Reserve Fund and the Payahead Account at
the written direction of the Servicer and shall be paid to the
Servicer for distribution to the Servicer. Funds on deposit in the
Reserve Fund and the Payahead Account shall be invested in Eligible
Investments that will mature so that such funds will be available at
the close of business on the Transfer Date preceding the following
Distribution Date. Funds deposited in the Reserve Fund and the
Payahead Account on a Transfer Date which immediately precedes a
Distribution Date or upon the maturity of any Eligible Investments are
not required to be (but may be) invested overnight. Neither the
Servicer nor the Trustee shall be liable for any investment losses.
The Depositor will treat these funds, Eligible Investments and other
assets in the Reserve Fund and the Payahead Account as its own for
federal, state and local income tax and franchise tax purposes and
will report on its tax returns all income, gain and loss from the
Reserve Fund and the Payahead Account.
(iii) The Reserve Fund and the Payahead Account shall be
under the sole dominion and control of the Collateral Agent. If, at
any time, the Reserve Fund or the Payahead Account, as the case may
be, ceases to be an Eligible Deposit Account, the Servicer shall
within 10 Business Days (or such longer period, as to which each
Rating Agency may consent) establish a new Reserve Fund or the
Payahead Account, as the case may be, as an Eligible Deposit Account
and shall transfer any cash and/or any investments to such new Reserve
Fund or the Payahead Account, as the case may be. In connection with
the foregoing, the Servicer agrees that, in the event that the Reserve
Fund or the Payahead Account is not an account with the Trustee, the
Servicer shall notify the Trustee in writing promptly upon the Reserve
Fund or the Payahead Account ceasing to be an Eligible Deposit
Account.
(iv) The Servicer shall have the power, revocable by the
Trustee, to instruct the Collateral Agent in writing to make
withdrawals and payments from the Reserve Fund or the Payahead Account
for the purpose of permitting the Servicer to carry out its duties
hereunder or permitting the Collateral Agent to carry out its duties.
(c) With respect to the Account Property in respect of the Reserve
Fund or the Payahead Account, the Collateral Agent agrees and with respect to
the remainder of the Account Property, the Trustee agrees, that:
(i) any Account Property that is held in deposit accounts
shall be held solely in Eligible Deposit Accounts subject to the
penultimate sentence of Section 4.1(b)(iii); and, except as otherwise
provided herein, each such Eligible Deposit Account shall be subject
to the exclusive custody and control of the Collateral Agent or the
Trustee, as the case may be, and the Collateral Agent or the Trustee,
as the case may be, shall have sole signature authority with respect
thereto;
(ii) any Account Property shall be Delivered to the
Collateral Agent or the Trustee, as the case may be, in accordance
with the definition of "Delivery" and shall be held, pending maturity
or disposition, solely by the Collateral Agent or the Trustee, as the
case may be, or such other Person acting solely for the Collateral
Agent or the Trustee, as the case may be, as required for Delivery;
and
(iii) in the event that the Collateral Agent or the Trustee,
as the case may be, in its capacity as securities intermediary has or
subsequently obtains by agreement, operation of law or otherwise a
security interest in the Accounts or any security entitlement credited
thereto, the Collateral Agent or the Trustee, as the case may be, in
its capacity as securities intermediary hereby agrees that such
security interest shall be subordinate to the security interest of the
Collateral Agent or the Trustee, as the case may be. The financial
assets and other items deposited to the Accounts will not be subject
to deduction, set off, banker's lien, or any other right in favor of
any person (except that the Collateral Agent or the Trustee, as the
case may be, in its capacity as securities intermediary may set off
the face amount of any checks which have been credited to the Accounts
but are subsequently returned unpaid because of uncollected or
insufficient funds).
(d) (i) On the Closing Date, the Depositor shall cause to be deposited
$___in the Payahead Account representing all collected funds received in
connection with the Actuarial Receivables prior to the Cutoff Date that are due
on or after the Cutoff Date, consisting of all or a portion of the Scheduled
Payments due on the Actuarial Receivables in any Collection Period following the
first Collection Period.
(ii) The Servicer shall on or prior to each Distribution Date
(and prior to deposits to the Class A Distribution Account or the
Class B Distribution Account) transfer from the Collection Account to
the Payahead Account all Payaheads as described in Section 4.2
received by the Servicer during the Collection Period. Notwithstanding
the foregoing and the first sentence of Section 4.2, for so long as
the Servicer is permitted to make monthly remittances to the
Collection Account pursuant to Section 4.2, Payaheads need not be
remitted to and deposited in the Payahead Account but instead may be
remitted to and held by the Servicer. So long as such condition is
met, the Servicer shall not be required to segregate or otherwise hold
separate any Payaheads remitted to the Servicer as aforesaid but shall
be required to remit Payaheads to the Collection Account in accordance
with Section 4.5(a).
SECTION 4.2. COLLECTIONS. (a) On the Closing Date, the Depositor shall
cause to be deposited $___in the Collection Account representing all collected
funds received on the Receivables after the Cutoff Date and prior to the Closing
Date. The Servicer shall remit within two Business Days of receipt thereof to
the Collection Account all collected funds received from payments by or on
behalf of the Obligors with respect to the Receivables, and all Liquidation
Proceeds, both as collected during the Collection Period. Notwithstanding the
foregoing, for so long as (i) the Servicer is the Bank, (ii) no Event of
Servicing Termination shall have occurred and be continuing, (iii) if the
Servicer does not have a short term debt rating or deposit rating as applicable,
of at least A-1 from Standard & Poor's and P-1 from Moody's, a guaranty, letter
of credit, surety bond or other similar instrument is issued covering
collections, any amounts referred to in clause (e) of the definition of
Available Principal and Liquidation Proceeds held by the Bank, which is
acceptable to the Rating Agencies and issued by an entity, which has a short-
term debt or deposit rating, as applicable, of at least A-1 from Standard &
Poor's and P-1 from Moody's; and (iv) the Rating Agency Condition shall have
been satisfied (and any conditions or limitations imposed by the Rating Agencies
in connection therewith are complied with), the Servicer shall remit such
collections to the Collection Account on the related Transfer Date. For purposes
of this Article IV the phrase "payments by or on behalf of Obligors" shall mean
payments made with respect to the Receivables by Persons other than the
Servicer, the Seller or the Depositor.
(b) All collections for the Collection Period shall be applied by the
Servicer as follows: with respect to each Actuarial Receivable (other than a
Purchased Receivable), payments by or on behalf of the Obligor shall be applied
first to reduce Outstanding Advances as described in Section 4.8(a). Next, any
excess shall be applied, in the case of Actuarial Receivables, to the Scheduled
Payment and, shall be applied in the case of Simple Interest Receivables, to
interest and principal in accordance with the Simple Interest Method. With
respect to Actuarial Receivables, any remaining excess shall be added to the
Payahead Balance, and shall be applied to prepay the Actuarial Receivable, but
only if the sum of such excess and the previous Payahead Balance shall be
sufficient to prepay the Actuarial Receivable in full. Otherwise, any such
remaining excess payments shall constitute a Payahead and shall increase the
Payahead Balance.
(c) All Liquidation Proceeds shall be applied to the related
Receivable in accordance with the Servicer's customary servicing procedures.
SECTION 4.3. ADDITIONAL DEPOSITS. The Servicer shall deposit in the
Collection Account the aggregate Advances pursuant to Section 4.8. The Servicer
and the Seller shall deposit or cause to be deposited in the Collection Account
the aggregate Purchase Amount with respect to any Purchased Receivables and the
Servicer shall deposit therein any amounts to be paid under Section 11.1. The
Servicer will deposit or cause to be deposited the aggregate Purchase Amount
with respect to Purchased Receivables within two Business Days after such
obligations become due, unless the Servicer shall not be required to make
deposits within two Business Days of receipt pursuant to Section 4.2(a) (in
which case such deposit will be made by the related Transfer Date). All such
other deposits shall be made on the Transfer Date following the end of the
related Collection Period.
SECTION 4.4. NET DEPOSITS. As an administrative convenience, if the
Servicer is not required to remit collected funds within two Business Days of
receipt thereof, the Servicer will be permitted to make the deposit of such
funds, aggregate Advances and Purchase Amounts for or with respect to the
Collection Period net of distributions to be made to the Servicer with respect
to the Collection Period. Similarly, the Servicer may cause to be made a single,
net transfer, from the Collection Account to the Payahead Account, or vice
versa. The Servicer, however, will account to the Trustee and the
Certificateholders as if all deposits, distributions and transfers were made
individually.
SECTION 4.5. DISTRIBUTIONS. (a) On each Distribution Date, the Trustee
shall cause to be transferred from the Payahead Account, or from the Servicer in
the event the provisions of Section 4.1(d)(ii) are applicable, (i) to the
Collection Account, in immediately available funds, the aggregate previous
Payaheads to be applied to Scheduled Payments on Actuarial Receivables for the
related Collection Period or prepayments for the related Collection Period,
pursuant to Sections 4.2 and 4.8, in the amounts set forth in the Servicer's
Certificate for such Distribution Date and (ii) to the Depositor, in immediately
available funds, the investment earnings, net of losses on the Payaheads for the
related Collection Period. A single, net transfer may be made.
(b) The Servicer shall instruct the Trustee (based on the information
contained in the Servicer's Certificate delivered on the related Determination
Date pursuant to Section 3.9) to make, and the Trustee shall make, a
distribution from the Collection Account to the Servicer by 11:00 a.m. (New York
time), amounts in respect of Outstanding Advances to the extent that the
Servicer is entitled to reimbursement in respect thereof in accordance with
Section 4.8. On each Determination Date, the Servicer shall calculate all
amounts required to determine the amounts to be deposited in the Class A
Distribution Account and the Class B Distribution Account.
(c) Subject to the last paragraph of this Section 4.5(b), on each
Distribution Date, the Servicer shall instruct the Trustee in writing (based on
the information contained in the Servicer's Certificate delivered on the related
Determination Date pursuant to Section 3.9) to make the following deposits and
distributions for receipt by the Servicer or deposit in the applicable Account
by 12:00 P.M. (New York City time):
(i) to the extent of Interest Collections for such
Distribution Date (and, in the case of shortfalls occurring under
clause (B) below in the Class A Interest Distribution, the Class B
Percentage of Principal Collections for such Distribution Date to the
extent of such shortfalls):
(A) to the Servicer, the Servicing Fee for such Distribution
Date and all unpaid Servicing Fees from prior Collection
Periods (to the extent such amounts have not been
retained pursuant to Section 4.4);
(B) to the Class A Distribution Account, after the
application of clause (A), the Class A Interest
Distribution for such Distribution Date; and
(C) to the Class B Distribution Account, after the
application of clauses (A) and (B), the Class B Interest
Distribution for such Distribution Date; and
(ii) to the extent of the portion of Principal Collections and
Interest Collections for such Distribution Date remaining after the
application of clauses (i)(A), (B) and (C) above:
(A) to the Class A Distribution Account, the Class A
Principal Distribution for such Distribution Date;
(B) to the Class B Distribution Account, after the
application of clause (A), the Class B Principal
Distribution for such Distribution Date; and
(C) to the Reserve Fund, any amounts remaining after the
application of clauses (i)(A) through (C) and (ii) (A)
and (B).
In the event that the Collection Account is maintained with an institution other
than the Trustee, the Servicer shall instruct and cause such institution to make
all deposits and distributions pursuant to this Section 4.5(b) on the related
Transfer Date. The Trustee shall be entitled to conclusively rely on the
Servicer's instructions and any Servicer's Certificate without investigation.
(d) On each Distribution Date, in accordance with the written
direction of the Servicer, all amounts on deposit in the Class A Distribution
Account, after application of Section 4.6 below, will be distributed to the
Class A Certificateholders by the Trustee and all amounts on deposit in the
Class B Distribution Account, after application of Section 4.6 below, will be
distributed to the Class B Certificateholders by the Trustee. Payments under
this Section 4.5(c) shall be made to the Certificateholders either by wire
transfer, in immediately available funds, to the account of such Holder at a
bank or other entity having appropriate facilities therefor, if such
Certificateholder shall have provided to the Certificate Registrar appropriate
written instructions at least ten Business Days prior to such Distribution Date
and such Holder's Certificates in the aggregate evidence a denomination of not
less than $__________ or by check mailed by the Trustee to each Holder's
respective address of record (or, in the case of Certificates registered in the
name of a Clearing Agency, or its nominee, by wire transfer of immediately
available funds).
SECTION 4.6. RESERVE FUND. (a) On the Closing Date, the Reserve Fund
Deposit shall be deposited into the Reserve Fund from the net proceeds from the
sale of the Certificates. The Depositor hereby grants to the Collateral Agent a
security interest in and to the Reserve Fund and any and all property credited
thereto from time to time, including but not limited to Eligible Investments, to
secure payment of the Certificates according to their terms. Amounts held from
time to time in the Reserve Fund will continue to be held by the Collateral
Agent for the benefit of Class A Certificateholders and the Class B
Certificateholders but the Reserve Fund shall not be an asset of the Trust. By
acceptance of their Certificates, Certificateholders shall be deemed to have
appointed ________________ as Collateral Agent. _________________ hereby accepts
such appointment as Collateral Agent.
(b) On each Distribution Date, the Servicer shall instruct the
Collateral Agent in writing (based on the information contained in the
Servicer's Certificate delivered on the related Determination Date pursuant to
Section 3.9) to withdraw from the Reserve Fund on such Distribution Date, to the
extent of funds available therein, the amounts specified below, in the order of
priority specified below, and deposit such amounts in the Class A Distribution
Account or the Class B Distribution Account, as specified below, on such
Distribution Date:
(i) an amount equal to the excess, if any, of the Class A
Interest Distribution for such Distribution Date over the sum of
Interest Collections for such Distribution Date and the Class B
Percentage of Principal Collections for such Distribution Date will be
deposited into the Class A Distribution Account;
(ii) an amount equal to the excess, if any, of the Class B
Interest Distribution for such Distribution Date over the portion of
Interest Collections for such Distribution Date remaining after the
distribution of the Class A Interest Distribution for such
Distribution Date will be deposited into the Class B Distribution
Account;
(iii) an amount equal to the excess, if any, of the Class A
Principal Distribution for such Distribution Date over the portion of
Principal Collections and Interest Collections for such Distribution
Date remaining after the distribution of the Class A Interest
Distribution and the Class B Interest Distribution for such
Distribution Date will be deposited into the Class A Distribution
Account; and
(iv) an amount equal to the excess, if any, of the Class B
Principal Distribution for such Distribution Date over the portion of
Principal Collections and Interest Collections for such Distribution
Date remaining after the distribution of the Class A Interest
Distribution, the Class B Interest Distribution and the Class A
Principal Distribution for such Distribution Date will be deposited
into the Class B Distribution Account.
The Collateral Agent shall be entitled to conclusively rely on the Servicer's
instruction and the Servicer's Certificate without investigation.
(c) If the amount on deposit in the Reserve Fund on any Distribution
Date (after giving effect to all other deposits thereto and withdrawals
therefrom to be made on such Distribution Date) is greater than the Specified
Reserve Balance for such Distribution Date, the Servicer shall instruct the
Collateral Agent in writing to distribute the amount of the excess to the
Depositor on such Distribution Date. On the date on which the Trust terminates,
any funds remaining in the Reserve Fund (after all other distributions to be
made from the Reserve Fund pursuant to this Section 4.6 have been made) shall be
distributed to the Servicer upon written request. Amounts properly distributed
to the Servicer for distribution to the Servicer pursuant to Section 4.1(b)(ii)
or this Section 4.6(c) shall not be available under any circumstances to the
Trust, the Trustee or the Certificateholders and the Servicer shall in no event
thereafter be required to refund any such distributed amounts.
SECTION 4.7. STATEMENTS TO CERTIFICATEHOLDERS. (a) On each
Determination Date, the Servicer shall provide to the Trustee (with a copy to
the Rating Agencies) for the Trustee to forward to each Certificateholder of
record a statement, substantially in the form of Exhibit C (each a "Distribution
Date Statement") setting forth with respect to the related Collection Period at
least the following information as to the Certificates to the extent applicable:
(i) the amount of the distribution allocable to principal of
the Class A Certificates and the Class B Certificates;
(ii) the amount of the distribution allocable to interest on
the Class A Certificates and the Class B Certificates;
(iii) the Pool Balance as of the close of business on the
last day of such Collection Period, after giving effect to payments
allocated to principal reported under (i) and (ii) above;
(iv) the amount of the Servicing Fee paid to the Servicer
with respect to such Collection Period and the Class A Percentage and
Class B Percentage of the Servicing Fee paid to the Servicer with
respect to such Collection Period;
(v) the amount of any Class A Interest Carryover Shortfall,
Class A Principal Carryover Shortfall, Class B Interest Carryover
Shortfall and Class B Principal Carryover Shortfall on the
Distribution Date immediately following such Collection Period and the
change in such amounts from those with respect to the immediately
preceding Distribution Date;
(vi) the Class A Pool Factor and the Class B Pool Factor as
of such Distribution Date, after giving effect to payments allocated
to principal reported under clause (i) above;
(vii) the amount of the aggregate Realized Losses, net of
Recoveries if any, for such Collection Period;
(viii) the aggregate Principal Balance of all Receivables
which were more than 60 days delinquent as of the close of business on
the last day of such Collection Period;
(ix) the amount on deposit in the Reserve Fund on such
Distribution Date, after giving effect to distributions made on such
Distribution Date;
(x) the Class A Principal Balance and the Class B Principal
Balance as of such Distribution Date, after giving effect to payments
allocated to principal reported under clause (i) above;
(xi) the amount otherwise distributable to the Class B
Certificateholders that is being distributed to the Class A
Certificateholders on such Distribution Date;
(xii) the aggregate Purchase Amount of Receivables
repurchased by the Seller or purchased by the Servicer with respect to
such Collection Period;
(xiii) the amounts collected by the Servicer;
(xiv) the amounts received by the Trust from the Servicer;
(xv) delinquency information relating to the Receivables
which are 30, 60 and 90 days delinquent; and
Each amount set forth pursuant to clauses (i), (ii), (iv) and (v) above shall be
expressed in the aggregate and as a dollar amount per $1,000 of original
denomination of a Certificate.
(b) Within a reasonable period of time after the end of each calendar
year, but not later than the latest date permitted by law, the Trustee shall
mail, to each Person who at any time during such calendar year shall have been a
Certificateholder, a statement provided by the Servicer containing the sum of
the amounts described in clauses (i), (ii), (iv) and (v) above for such calendar
year or, in the event such Person shall have been a Certificateholder during a
portion of such calendar year, for the applicable portion of such year, for the
purposes of such Certificateholder's preparation of federal income tax returns.
In addition, the Servicer shall furnish to the Trustee for distribution to such
Person at such time any other information necessary under applicable law for the
preparation of such income tax returns.
(c) The Servicer, at its own expense, shall cause a firm of nationally
recognized accountants to prepare any state tax returns required to be filed by
the Trust, and the Trustee shall execute and file such returns if requested to
do so by the Servicer. The Trustee, upon written request, will promptly furnish
the Servicer with all such information known to the Trustee as may be reasonably
required in connection with the preparation of any state tax returns of the
Trust.
SECTION 4.8. ADVANCES. (a) As of the close of business on the last day
of each Collection Period, if the payments by or on behalf of the Obligor on an
Actuarial Receivable (other than a Purchased Receivable) shall be less than the
Scheduled Payment, the Payahead Balance shall be applied by the Servicer to the
extent of the shortfall and such Payahead Balance shall be reduced accordingly.
Next, the Servicer shall advance any remaining shortfall (such amount an
"Advance"), to the extent that the Servicer, at its sole discretion, shall
determine that the Advance shall be recoverable from the Obligor, the Purchase
Amount, Liquidation Proceeds or proceeds of any other Actuarial Receivables.
With respect to each Actuarial Receivable, the Advance shall increase
Outstanding Advances. Outstanding Advances shall be reduced by subsequent
payments by or on behalf of the Obligor, collections of Liquidation Proceeds in
respect of the related Receivable or payments of the Purchase Amount of the
related Receivable.
If the Servicer shall determine that an Outstanding Advance with
respect to any Actuarial Receivable shall not be recoverable as aforesaid, the
Servicer shall be reimbursed from any collections (including Liquidation
Proceeds) on other Actuarial Receivables in the Trust and Outstanding Advances
with respect to such Actuarial Receivables shall be reduced accordingly.
(b) The Servicer shall not make any advance with respect to interest
on or principal of Simple Interest Receivables.
ARTICLE V
[Intentionally Omitted]
ARTICLE VI
THE CERTIFICATES
SECTION 6.1. THE CERTIFICATES. The Certificates shall be issued as
Class A Certificates and Class B Certificates, substantially in the form of
Exhibits A and B hereto, respectively. The Certificates shall be issued in
minimum denominations of $25,000 and integral multiples of $1,000 in excess
thereof; PROVIDED, HOWEVER, that one Class A Certificate and one Class B
Certificate may be issued in a denomination that represents any remaining
portion of the Original Class A Principal Balance and the Original Class B
Principal Balance, as the case may be. The Certificates shall be executed by the
Trustee on behalf of the Trust by manual or facsimile signature of an Authorized
Officer of the Trustee. Certificates bearing the manual or facsimile signatures
of individuals who were, at the time when such signatures shall have been
affixed, authorized to sign on behalf of the Trustee, shall be valid and binding
obligations of the Trust, notwithstanding that such individuals shall have
ceased to be so authorized prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of such Certificates.
SECTION 6.2. AUTHENTICATION AND DELIVERY OF CERTIFICATES. The Trustee
shall cause to be authenticated and delivered to or upon the written order of
the Depositor, in exchange for the Receivables and other Trust Property,
simultaneously with the sale, assignment and transfer to the Trustee of the
Receivables, and the constructive delivery to the Trustee of the Receivables
Files and the other components of the Trust existing as of the Closing Date,
Certificates in authorized denominations equaling in the aggregate the sum of
the Original Class A Principal Balance and the Original Class B Principal
Balance, and evidencing the entire ownership of the Trust. No Certificate shall
entitle the Holder thereof to any benefit under this Agreement, or shall be
valid for any purpose, unless there shall appear on such Certificate a
certificate of authentication, substantially in the form set forth in the form
of Certificates attached hereto as Exhibit A and Exhibit B respectively,
executed by the Trustee by manual signature. Such authentication shall
constitute conclusive evidence, and the only evidence, that such Certificate has
been duly authenticated and delivered hereunder. All Certificates issued on the
Closing Date shall be dated the Closing Date. Any Certificates issued thereafter
shall be dated the date of their authentication.
SECTION 6.3. REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.
The Trustee shall maintain, or cause to be maintained, at the office or agency
to be maintained by it in accordance with Section 6.9, a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. Upon surrender for registration of
transfer of any Class A Certificate or Class B Certificate at such office or
agency, the Trustee shall execute, authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Class A Certificates or
Class B Certificates, as the case may be, in authorized denominations of a like
aggregate amount. At the option of a Certificateholder, Class A Certificates or
Class B Certificates may be exchanged for other Class A Certificates or Class B
Certificates, as the case may be, of authorized denominations of a like
aggregate amount at the office or agency maintained by the Trustee in accordance
with Section 6.9. Every Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer
duly executed by the Holder and in a form satisfactory to the Trustee. No
service charge shall be made for any registration of transfer or exchange of
Certificates, but the Trustee may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
transfer or exchange of Certificates. All Certificates surrendered for
registration of transfer or exchange shall be canceled and disposed of in a
commercially reasonable manner approved by the Trustee.
A Class B Certificate may not be directly or indirectly sold or
transferred to, or purchased or acquired by, or on behalf of (1) any employee
benefit plan, retirement arrangement, individual retirement account or keogh
plan which is subject to either Title I of ERISA, or Section 4975 of the Code
(each, a "Plan"), or (2) any entity whose source of funds to be used for the
purchase of such Class B Certificate includes the assets of any such Plan, other
than an "Insurance Company General Account" as defined in, and which complies
with the provisions of, Prohibited Transaction Exemption 95-60 issued by the
United States Department of Labor. Every transferee of a Class B Certificate
represented by a Book-Entry Certificate shall be deemed to have represented and
warranted to the Depositor and the Trustee that it is not an entity described in
either clause (1) or (2) above. Each transferee of a Definitive Certificate
shall deliver a Benefit Plan Affidavit to the Depositor and the Trustee in the
form of Exhibit D. Neither the Servicer nor the Trustee will incur any liability
for any transfers made in accordance with this Section 6.3.
Every Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer in
form satisfactory to the Trustee duly executed by the Certificateholder or his
attorney duly authorized in writing, with such signature guaranteed by an
"eligible guarantor institution" meeting the requirements of the Trustee, which
requirements include membership or participation in the Securities Transfer
Agent's Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Trustee in addition to, or in substitution for,
STAMP, all in accordance with the Exchange Act.
SECTION 6.4. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. If (a)
any mutilated Class A Certificate or Class B Certificate shall be surrendered to
the Trustee, or if the Trustee shall receive evidence to its satisfaction of the
destruction, loss or theft of any Class A Certificate or Class B Certificate and
(b) there shall be delivered to the Trustee such security or indemnity as may be
required to save the Trustee harmless, then in the absence of notice that such
Class A Certificate or Class B Certificate shall have been acquired by a bona
fide purchaser, the Trustee shall execute, authenticate and deliver, in exchange
for or in lieu of any such mutilated, destroyed, lost or stolen Class A
Certificate or Class B Certificate, a new Class A Certificate or Class B
Certificate of like tenor and denomination. In connection with the issuance of
any new Certificate under this Section 6.4, the Trustee may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith. Any replacement Certificate issued pursuant to
this Section 6.4 shall constitute conclusive evidence of ownership in the Trust,
as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.
SECTION 6.5. PERSONS DEEMED OWNERS. Prior to due presentation of a
Certificate for registration of transfer, the Trustee may treat the Person in
whose name any Certificate shall be registered as the owner of such Certificate
for the purpose of receiving distributions pursuant to Section 4.5 and for all
other purposes, and the Trustee shall not be bound by any notice to the
contrary.
SECTION 6.6. ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND
ADDRESSES. The Trustee shall furnish or cause to be furnished to the Servicer,
within 15 days after receipt by the Trustee of a request therefor from the
Servicer in writing, a list of the names and addresses of the Certificateholders
as of the most recent Record Date. If Definitive Certificates have been issued,
the Trustee, upon written request by holders of Class A Certificates or Class B
Certificates evidencing not less than 25% of the aggregate outstanding principal
balance of either the Class A Certificates or the Class B Certificates, as the
case may be, will, within fifteen days after the receipt of such request, afford
such Class A Certificateholders or Class B Certificateholders access during
normal business hours to the most current list of Certificateholders for
purposes of communicating with other Certificateholders with respect to their
rights under the Agreement. Each Certificateholder, by receiving and holding a
Certificate, shall be deemed to have agreed that none of the Depositor, the
Servicer or the Trustee is accountable by reason of the disclosure of its name
and address, regardless of the source from which such information was derived.
SECTION 6.7. MAINTENANCE OF OFFICE OR AGENCY. The Trustee shall
maintain, or cause to be maintained, at its expense, in the Borough of
Manhattan, The City of New York, an office or agency where Certificates may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Trustee in respect of the Certificates and this Agreement
may be served. The Trustee initially designates ___________________________ or
by mail to the Corporate Trust Office as its office for such purposes. The
Trustee shall give prompt written notice to the Servicer and to
Certificateholders of any change in the location of any such office or agency.
SECTION 6.8. BOOK-ENTRY CERTIFICATES. Upon original issuance, the
Class A Certificates and the Class B Certificates shall be issued in the form of
one or more typewritten Certificates representing the Book-Entry Certificates,
to be delivered to DTC or its custodian, by, or on behalf of the Depositor. Such
Certificates shall initially be registered on the Certificate Register in the
name of Cede & Co., the nominee of DTC, and no Certificate Owner will receive a
definitive certificate representing such Certificate Owner's interest in the
Class A Certificates or the Class B Certificates, as the case may be, except as
provided in Section 6.10. Unless and until definitive, fully-registered
Certificates ("Definitive Certificates") have been issued to Class A
Certificateholders or Class B Certificateholders, as the case may be, pursuant
to Section 6.10:
(i) the provisions of this Section 6.8 shall be in full force
and effect;
(ii) the Depositor, the Servicer and the Trustee may deal
with the Clearing Agency for all purposes (including the making of
distributions on the Certificates and the taking of actions by the
Certificateholders) as the authorized representative of the
Certificate Owners;
(iii) to the extent that the provisions of this Section 6.8
conflict with any other provisions of this Agreement, the provisions
of this Section 6.8 shall control;
(iv) the rights of Certificate Owners shall be exercised only
through the Clearing Agency and shall be limited to those established
by law, the rules, regulations and procedures of the Clearing Agency
and agreements between such Certificate Owners and the Clearing Agency
and all references in this Agreement to actions by Certificateholders
shall refer to actions taken by the Clearing Agency upon instructions
from the Clearing Agency Participants, and all references in this
Agreement to distributions, notices, reports and statements to
Certificateholders shall refer to distributions, notices, reports and
statements to the Clearing Agency or its nominee, as registered holder
of the Certificates, as the case may be, for distribution to
Certificate Owners in accordance with the rules, regulations and
procedures of the Clearing Agency;
(v) pursuant to the Depository Agreement, DTC will make
book-entry transfers among the Clearing Agency Participants and
receive and transmit distributions of principal and interest on the
Certificates to the Clearing Agency Participants, for distribution by
such Clearing Agency Participants to the Certificate Owners or their
nominees; and
(vi) Certificate Owners may own beneficial interest in
Certificates representing original denominations of $25,000 and
integral multiples of $1,000 in excess thereof except for any residual
amount of Original Class A Principal Balance or Original Class B
Principal Balance.
For purposes of any provision of this Agreement requiring or
permitting actions with the consent of, or at the direction of, Holders of
Certificates evidencing specified percentages of the aggregate outstanding
principal balance of such Certificates, such direction or consent may be given
by Certificate Owners having interests in the requisite percentage, acting
through the Clearing Agency.
SECTION 6.9. NOTICES TO CLEARING AGENCY. Whenever notice or other
communication to the Certificateholders is required under this Agreement unless
and until Definitive Certificates shall have been issued to Certificate Owners
pursuant to Section 6.10, the Trustee shall give all such notices and
communications specified herein to be given to Certificateholders to the
Clearing Agency.
SECTION 6.10. DEFINITIVE CERTIFICATES. If (i) (A) the Depositor
advises the Trustee in writing that the Clearing Agency is no longer willing or
able properly to discharge its responsibilities under the Depository Agreement
and (B) the Trustee or the Servicer is unable to locate a qualified successor,
(ii) the Depositor, at its option, advises the Trustee in writing that it elects
to terminate the book-entry system through the Clearing Agency or (iii) after
the occurrence of an Event of Servicing Termination, Holders of Certificates
evidencing not less than a majority of the aggregate outstanding principal
balance of the Class A Certificates and the Class B Certificates, taken together
as a single Class, advise the Trustee and the Clearing Agency through the
Clearing Agency Participants in writing, and the Clearing Agency shall so notify
the Trustee, that the continuation of a book-entry system through the Clearing
Agency is no longer in their best interests, the Trustee shall notify the
Clearing Agency which shall be responsible to notify the Certificate Owners of
the occurrence of any such event and of the availability of Definitive
Certificates to Certificate Owners, requesting the same. Upon surrender to the
Trustee by the Clearing Agency of the Certificates registered in the name of the
nominee of the Clearing Agency, accompanied by re-registration instructions from
the Clearing Agency for registration, the Trustee shall execute, on behalf of
the Trust, authenticate and deliver Definitive Certificates in accordance with
such instructions. The Servicer shall arrange for, and will bear all costs of,
the printing and issuance of such Definitive Certificates. Neither the
Depositor, the Servicer nor the Trustee shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be fully
protected in relying on, such instructions. Upon the issuance of Definitive
Certificates, the Trustee shall recognize the Holders of the Definitive
Certificates as Certificateholders hereunder. Definitive Certificates shall be
printed, lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to the Trustee, as evidenced by its execution thereof.
Neither the Trust, the Depositor, the Servicer nor the Trustee will have any
responsibility or obligation to any Clearing Agency Participants or the Persons
for whom they act as nominees with respect to (1) the accuracy of any records
maintained by DTC or any Clearing Agency Participants, (2) the payment by DTC or
any Clearing Agency Participant of any amount due to any beneficial owner in
respect of the Principal Balance of, or interest on, the Certificates, (3) the
delivery by any Clearing Agency Participant of any notice to any Certificate
Owner which is required or permitted hereunder to be given to Certificateholders
or (4) any other action taken by DTC or its nominee as the Certificateholder.
ARTICLE VII
THE DEPOSITOR
SECTION 7.1. REPRESENTATIONS OF DEPOSITOR . The Depositor makes the
following representations on which the Trustee is deemed to have relied in
accepting the Receivables and other Trust Property in trust and in executing and
authenticating the Certificates. The representations are being made as of the
execution and delivery of this Agreement and shall survive the sale and
assignment of the Receivables and other Trust Property to the Trustee.
(a) ORGANIZATION AND GOOD STANDING. The Depositor is duly organized
and validly existing as a corporation in good standing under the laws of the
State of Delaware with the corporate power and authority to own its properties
and to conduct its business as such properties are currently owned and such
business is presently conducted, and had at all relevant times, and has, the
power, authority and legal right to acquire and own the Receivables.
(b) DUE QUALIFICATION. The Depositor is duly qualified to do business
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or lease of
property or the conduct of its business shall require such qualifications.
(c) POWER AND AUTHORITY OF THE DEPOSITOR. The Depositor has the
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder and under each of the Basic Documents to which
the Depositor is a party; the Depositor has full corporate power and authority
to sell and assign the property to be sold and assigned to and deposited with
the Trustee and the Depositor has duly authorized such sale and assignment to
the Trustee by all necessary corporate action; and the execution, delivery and
performance of this Agreement and under each of the Basic Documents to which the
Depositor is a party have been duly authorized by the Depositor by all necessary
corporate action.
(d) BINDING OBLIGATION. This Agreement and each of the Basic Documents
to which the Depositor is a party constitutes legal, valid and binding
obligations of the Depositor, enforceable in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, moratorium, fraudulent
conveyance, reorganization and similar laws now or hereafter in effect relating
to creditors' rights generally and subject to general principles of equity
(whether applied in a proceeding at law or in equity).
(e) NO VIOLATION. The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof do not result in any
breach of any of the terms and provisions of, nor constitute (with or without
notice or lapse of time or both) a default under, the certificate of
incorporation or by-laws of the Depositor, or any material indenture, agreement
or other instrument to which the Depositor is a party or by which it shall be
bound; nor result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement or other
instrument (other than pursuant to the Basic Documents); nor violate any law or,
to the best of its knowledge, any order, rule or regulation applicable to the
Depositor of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over the Depositor or its properties.
(f) NO PROCEEDINGS. There are no proceedings or investigations pending
against the Depositor or, to its best knowledge, threatened against the
Depositor, before any court, regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Depositor or its
properties: (i) asserting the invalidity of this Agreement or any of the Basic
Documents, or the Certificates, (ii) seeking to prevent the issuance of the
Certificates or the consummation of any of the transactions contemplated by this
Agreement or any of the Basic Documents, (iii) seeking any determination or
ruling that could reasonably be expected to have a material and adverse effect
on the performance by the Depositor of its obligations under, or the validity or
enforceability of the Basic Documents, or the Certificates or (iv) seeking to
affect adversely the Federal or state income tax or ERISA attributes of the
Trust or the Certificates.
(g) ALL CONSENTS. All authorizations, licenses, consents, orders or
approvals of or registrations or declarations with any court, regulatory body,
administrative agency or other government instrumentality required to be
obtained, effected or given by the Depositor in connection with the execution
and delivery by the Depositor of this Agreement or any of the Basic Documents to
which it is a party and the performance by the Depositor of the transactions
contemplated by this Agreement or any of the Basic Documents to which it is a
party, have been duly obtained, effected or given and are in full force and
effect, except where failure to obtain the same would not have a material
adverse effect upon the rights of the Trust or the Certificateholders.
SECTION 7.2. SPECIAL PURPOSE ENTITY. The Depositor has been formed as
a special purpose entity whose business shall be limited to those activities
specified in its articles of incorporation. The Depositor agrees that it shall
not, under any circumstances, seek the protection of federal bankruptcy laws or
any similar state or local laws providing for the relief of debtors.
SECTION 7.3. CORPORATE EXISTENCE. (a) During the term of this
Agreement, subject to Section 7.5, the Depositor will keep in full force and
effect its existence, rights and franchises as a corporation under the laws of
the jurisdiction of its incorporation and will obtain and preserve its
qualification to do business in each jurisdiction in which such qualification is
or shall be necessary to protect the validity and enforceability of this
Agreement, the Basic Documents and each other instrument or agreement necessary
or appropriate to the proper administration of this Agreement and the
transactions contemplated hereby.
(b) During the term of this Agreement, the Depositor shall observe the
applicable legal requirements for the recognition of the Depositor as a legal
entity separate and apart from its affiliates, including as follows:
(i) the Depositor shall maintain corporate records and books
of account separate from those of its affiliates;
(ii) except as otherwise provided in this Agreement, the
Depositor shall not commingle its assets and funds with those of its
affiliates;
(iii) the Depositor shall hold such appropriate meetings of
its Board of Directors as are necessary to authorize all the
Depositor's corporate actions required by law to be authorized by the
Board of Directors, shall keep minutes of such meetings and of
meetings of its stockholder(s) and observe all other customary
corporate formalities (and any successor Depositor not a corporation
shall observe similar procedures in accordance with its governing
documents and applicable law);
(iv) the Depositor shall at all times hold itself out to the
public under the Depositor's own name as a legal entity separate and
distinct from its affiliates; and
(v) all transactions and dealings between the Depositor and
its affiliates will be conducted on an arm's-length basis
SECTION 7.4. LIABILITY OF DEPOSITOR; INDEMNITIES. The Depositor shall
be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Depositor under this Agreement and the
representations made by the Depositor in this Agreement.
(a) The Depositor shall indemnify, defend and hold harmless the Trust
and the Trustee and their respective officers, directors, employees and agents
from and against any taxes that may at any time be asserted against any such
Person with respect to the transactions contemplated in this Agreement and any
of the Basic Documents (except any income taxes arising out of fees paid to the
Trustee and except any taxes to which the Trustee may otherwise be subject to),
including any sales, gross receipts, general corporation, tangible personal
property, privilege or license taxes (but, in the case of the Trust, not
including any taxes asserted with respect to, and as of the date of, the
issuance and original sale of the Certificates or asserted with respect to
ownership of the Receivables or federal or other income taxes arising out of
distributions on the Certificates) and reasonable costs and expenses in
defending against the same or in connection with any application relating to the
Certificates under any state securities laws.
(b) The Depositor shall indemnify, defend and hold harmless the Trust,
the Trustee and the Certificateholders and the officers, directors, employees
and agents of the Trustee from and against any and all costs, expenses, losses,
claims, damages and liabilities to the extent arising out of, or imposed upon
such Person through (i) the Depositor's willful misfeasance, bad faith or
negligence in the performance of its duties under this Agreement, or by reason
of reckless disregard of its obligations and duties under this Agreement and
(ii) the Depositor's or the Trust's violation of federal or state securities
laws in connection with the offering and sale of the Certificates or in
connection with any application relating to the Certificates under any state
securities laws.
(c) The Depositor shall be liable as primary obligor for, and shall
indemnify, defend and hold harmless the Trustee and its officers, directors,
employees and agents from and against any and all losses, claims, damages and
liabilities and reasonable costs and expenses arising out of, or incurred in
connection with, this Agreement or any of the Basic Documents, the Trust
Property, the acceptance or performance of the trusts and duties set forth
herein or the action or the inaction of the Trustee hereunder except to the
extent that such cost, expense, loss, claim, damage or liability: (i) shall be
due to the willful misfeasance, bad faith or negligence of the Trustee or (ii)
shall arise from any breach by the Trustee of its covenants, representations or
warranties under this Agreement. Such liability shall survive the termination of
the Trust. In the event of any claim, action or proceeding for which indemnity
will be sought pursuant to this paragraph, the Trustee's choice of legal counsel
shall be subject to the approval of the Depositor, which approval shall not be
unreasonably withheld.
(d) The Depositor shall pay any and all taxes levied or assessed upon
all or any part of the Trust Property (other than those taxes expressly excluded
from the Depositor's responsibilities pursuant to the parentheticals in
paragraph (a) above).
Indemnification under this Section shall survive the resignation or
removal of the Trustee and the termination of this Agreement and shall include
reasonable fees and expenses of counsel and other reasonable expenses of
litigation. If the Depositor shall have made any indemnity payments pursuant to
this Section and the Person to or on behalf of whom such payments are made
thereafter shall collect any of such amounts from others, such Person shall
promptly repay such amounts to the Depositor, without interest.
SECTION 7.5. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF DEPOSITOR. Any Person (a) into which the Depositor may be merged
or consolidated, (b) which may result from any merger or consolidation to which
the Depositor shall be a party or (c) which may succeed to the properties and
assets of the Depositor substantially as a whole, shall be the successor to the
Depositor without the execution or filing of any document or any further act by
any of the parties to this Agreement; PROVIDED, HOWEVER, that the Depositor
hereby covenants that it will not consummate any of the foregoing transactions
except upon satisfaction of the following: (i) the surviving Depositor if other
than Mellon Auto Receivables Corporation, executes an agreement of assumption to
perform every obligation of the Depositor under this Agreement; (ii) immediately
after giving effect to such transaction, no representation or warranty made
pursuant to Section 2.2 or 7.1 shall have been breached and no Event of
Servicing Termination, and no event that, after notice or lapse of time, or both
would become an Event of Servicing Termination shall have happened and be
continuing, (iii) the Depositor shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that such consolidation,
merger or succession and such agreement of assumption, comply with this Section
and that all conditions precedent, if any, provided for in this Agreement
relating to such transaction have been complied with, and that the Rating Agency
Condition shall have been satisfied with respect to such transaction, (iv) the
surviving Depositor shall have a consolidated net worth at least equal to that
of the predecessor Depositor, (v) such transaction will not result in a material
adverse federal or state tax consequence to the Trust or the Certificateholders
and (vi) unless Mellon Auto Receivables Corporation is the surviving entity, the
Depositor shall have delivered to the Trustee an Opinion of Counsel either (A)
stating that, in the opinion of such counsel, all financing statements and
continuation statements and amendments thereto have been executed and filed that
are necessary fully to preserve and protect the interest of the Trustee in the
Receivables and reciting the details of such filings, or (B) stating that, in
the opinion of such counsel, no such action shall be necessary to preserve and
protect such interests.
SECTION 7.6. LIMITATION ON LIABILITY OF DEPOSITOR AND OTHERS. The
Depositor and any director or officer or employee or agent of the Depositor may
rely in good faith on the advice of counsel or on any document of any kind,
prima facie properly executed and submitted by any Person respecting any matters
arising under this Agreement or any Basic Document (provided that such reliance
shall not limit in any way the Depositor's obligations under Section 2.2).
Except as provided in this Agreement, the Depositor shall not be under any
obligation to appear in, prosecute or defend any legal action that shall not be
incidental to its obligations under this Agreement, and that in its opinion may
involve it in any expense or liability.
SECTION 7.7. DEPOSITOR MAY OWN CERTIFICATES. The Depositor and any
Affiliate thereof may in its individual or any other capacity become the owner
or pledgee of Certificates with the same rights as it would have if it were not
the Depositor or an Affiliate thereof, except as expressly provided herein or in
any Basic Document.
SECTION 7.8. SECURITY INTEREST. During the term of this Agreement, the
Depositor will not take any action to assign the security interest in any
Financed Vehicles other than pursuant to this Agreement.
ARTICLE VIII
THE SERVICER AND THE SELLER
SECTION 8.1. REPRESENTATIONS OF THE BANK. The Bank makes the following
representations on which each of the Depositor and the Trustee is deemed to have
relied in accepting the Receivables and other Trust Property in trust and, in
the case of the Trustee, authenticating the Certificates. The representations
speak as of the execution and delivery of this Agreement and shall survive the
sale and assignment of the Receivables and other Trust Property to the Trustee.
(a) ORGANIZATION AND GOOD STANDING. The Bank is duly organized and
validly existing as a national banking association in good standing under the
laws of the United States of America with the power and authority to own its
properties and to conduct its business as such properties are currently owned
and such business is presently conducted, and had at all relevant times, and
has, the power, authority and legal right to acquire, own and service the
Receivables.
(b) DUE QUALIFICATION. The Bank is duly qualified to do business and
has obtained all necessary licenses and approvals in all jurisdictions in which
the ownership or lease of property or the conduct of its business (including the
servicing of the Receivables as required by this Agreement) shall require such
qualifications.
(c) POWER AND AUTHORITY OF THE BANK. The Bank has the power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder; the Bank has full power and authority to sell and assign the property
to be sold and assigned to and deposited with the Depositor; the Bank has duly
authorized such sale and assignment to the Depositor by all necessary action;
and the execution, delivery and performance of this Agreement have been duly
authorized by the Bank by all necessary action.
(d) BINDING OBLIGATION. This Agreement constitutes a legal, valid and
binding obligation of the Bank, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, moratorium, fraudulent conveyance,
reorganization and similar laws now or hereafter in effect relating to
creditors' rights generally, and the rights of creditors of national banking
associations and depository institutions, the accounts of which are insured by
the FDIC, and subject to general principles of equity (whether applied in a
proceeding of law or in equity).
(e) NO VIOLATION. The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof do not result in any
breach of any of the terms and provisions of, nor constitute (with or without
notice or lapse of time or both) a default under articles of association or
by-laws of the Bank, or any material indenture, agreement or other instrument to
which the Bank is a party or by which it shall be bound; nor result in the
creation or imposition of any Lien upon any of its properties pursuant to the
terms of any such indenture, agreement or other instrument (other than pursuant
to this Agreement); nor violate any law or, to the best of its knowledge, any
order, rule or regulation applicable to the Bank of any court or of any federal
or state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Bank or its properties.
(f) NO PROCEEDINGS. There are no proceedings or investigations pending
against the Bank, or, to its best knowledge, threatened against the Bank, before
any court, regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Bank or its properties: (i)
asserting the invalidity of this Agreement or the Certificates, (ii) seeking to
prevent the issuance of the Certificates or the consummation of any of the
transactions contemplated by this Agreement, (iii) seeking any determination or
ruling that could reasonably be expected to have a material and adverse effect
on the performance by the Bank of its obligations under, or the validity or
enforceability of this Agreement or the Certificates or (iv) seeking to affect
adversely the federal or state income tax or ERISA attributes of the Trust or
the Certificates.
(g) NO AMENDMENT OR WAIVER. No provision of any Receivable has been
waived, altered or modified in any respect, except pursuant to a document,
instrument or writing included in the relevant Receivable File, and no such
amendment, waiver, alteration or modification causes such Receivable not to
conform to the other warranties contained in this Section or those of the Seller
contained in Section 2.2.
(h) APPROVALS. All approvals, licenses, authorizations, consents,
orders or other actions of any person, corporation or other organization, or of
any court, governmental agency or body or official, required in connection with
the execution and delivery of this Agreement have been or will be taken or
obtained on or prior to the Closing Date.
(i) LOCATION OF RECEIVABLE FILES. The Receivable Files are kept in the
offices of the Bank, specified in Schedule B, or at such other office specified
in accordance with Section 2.4.
(j) ALL CONSENTS. All authorizations, consents, orders or approvals of
or registrations or declarations with any court, regulatory body, administrative
agency or other government instrumentality required to be obtained, effected or
given by the Bank in connection with the execution and delivery by the Bank of
this Agreement and the performance by the Bank of the transactions contemplated
by this Agreement, have been duly obtained, effected or given and are in full
force and effect, except where failure to obtain the same would not have a
material adverse effect upon the rights of the Certificateholders.
SECTION 8.2. INDEMNITIES OF THE BANK. The Bank shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by the Bank, in its capacities as Seller or Servicer, as applicable,
under this Agreement.
The Bank shall indemnify, defend and hold harmless the Trust, the
Trustee, the Depositor and the Certificateholders and any of the officers,
directors, employees and agents of the Trustee or the Depositor from any and all
losses, claims, damages, liabilities and reasonable costs and expenses
(including reasonable attorneys' fees and expenses) to the extent arising out
of, or imposed upon any such Person through, the gross negligence, willful
misfeasance or bad faith of the Bank in the performance of its obligations and
duties under this Agreement or in the performance of the obligations and duties
of any subservicer under any subservicing agreement or by reason of the reckless
disregard of its obligations and duties under this Agreement or by reason of the
reckless disregard of the obligations of any subservicer under any subservicing
agreement, where the final determination that any such cost, expense, loss,
claim, damage or liability arose out of, or was imposed upon any such Person
through, any such gross negligence, willful misfeasance, bad faith or
recklessness on the part of the Bank or any subservicer, is established by a
court of law, by an arbitrator or by way of settlement agreed to by the Bank.
Notwithstanding the foregoing, if the Bank is rendered unable, in whole or in
part, by virtue of an act of God, act of war, fires, earthquake or other natural
disasters, to satisfy its obligations under this Agreement, the Bank shall not
be deemed to have breached any such obligation upon the sending of written
notice of such event to the other parties hereto, for so long as the Bank
remains unable to perform such obligation as a result of such event. This
provision shall not be construed to limit the Bank's, or any other party's
rights, obligations, liabilities, claims or defenses which arise as a matter of
law or pursuant to any other provision of this Agreement.
The Bank shall indemnify, defend and hold harmless the Trust, the
Trustee, the Depositor, the Certificateholders or any of the officers,
directors, employees and agents of the Trustee or the Depositor from any and all
losses, claims, damages, liabilities and reasonable costs and expenses
(including reasonable attorneys' fees and expenses) to the extent arising out of
or imposed upon any such Person as a result of any compensation payable to any
subcustodian or subservicer (including any fees payable in connection with the
release of any Receivable File from the custody of such subservicer or in
connection with the termination of the servicing activities of such subservicer
with respect to any Receivable) whether pursuant to the terms of any
subservicing agreement or otherwise.
The Bank shall indemnify, defend and hold harmless the Trust, the
Trustee, the Depositor, or the Certificateholders from and against any taxes
that may at any time be asserted against the Trust, the Trustee, the Depositor
or the Certificateholders, (other than any taxes based upon the income of any
such person), with respect to the transactions contemplated herein including,
without limitation, any sales, gross receipts, general corporation, tangible
personal property, privilege, or license taxes and costs and expenses in
defending against the same.
The Bank shall indemnify, defend, and hold harmless the Trust and
Trustee and each of its agents, officers, employees and other persons employed
by each of them from and against all reasonable costs and expenses, losses,
claims, damages, and liabilities arising out of or incurred in connection with
the acceptance or performance of the trusts and duties herein contained, if any,
except to the extent that such reasonable cost or expense, reasonable loss,
claim, damage or liability: (a) shall be due to the willful misfeasance, bad
faith, or negligence (except for errors in judgment) of the Trustee; or (b)
relates to any tax other than the taxes with respect to which the Servicer shall
be required to indemnify the Trustee.
Indemnification under this Section shall survive the resignation and
removal of the Trustee or the termination of this Agreement.
SECTION 8.3. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, THE BANK. Any Person (a) into which the Bank may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Bank shall be a party or (c) which may succeed to the properties and assets of
the Bank, substantially as a whole, shall be the successor to the Bank without
the execution or filing of any document or any further act by any of the parties
to this Agreement; PROVIDED, HOWEVER, that the Bank hereby covenants that it
will not consummate any of the foregoing transactions except upon satisfaction
of the following: (i) the surviving Servicer if other than the Bank executes an
agreement of assumption to perform every obligation of the Servicer under this
Agreement, (ii) immediately after giving effect to such transaction, no
representation or warranty made pursuant to Section 8.1 shall have been breached
and no Event of Servicing Termination, and no event that, after notice or lapse
of time, or both, would become an Event of Servicing Termination shall have
occurred and be continuing, (iii) the Bank shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel each stating that such
consolidation, merger or succession and such agreement of assumption, if any,
comply with this Section and that all conditions precedent, if any, provided for
in this Agreement relating to such transaction have been complied with, and that
the Rating Agency Condition shall have been satisfied with respect to such
transaction, (iv) the surviving Servicer shall have a consolidated net worth at
least equal to that of the predecessor Servicer, and (v) such transaction will
not result in a material adverse federal or state tax consequence to the Trust
or the Certificateholders.
SECTION 8.4. LIMITATION ON LIABILITY OF THE BANK AND OTHERS. Neither
the Bank nor any of its directors, officers, employees or agents shall be under
any liability to the Trust or the Certificateholders, except as provided under
this Agreement, for any action taken or for refraining from the taking of any
action by the Bank or any subservicer pursuant to this Agreement or for errors
in judgment; PROVIDED, HOWEVER, that this provision shall not protect the Bank
or any such person against any liability that would otherwise be imposed by
reason of willful misfeasance, bad faith or gross negligence in the performance
of duties or by reason of reckless disregard of obligations and duties under
this Agreement. The Bank or any subservicer and any of their respective
directors, officers, employees or agents may rely in good faith on any document
of any kind prima facie properly executed and submitted by any Person respecting
any matters arising under this Agreement.
Except as provided in this Agreement, the Bank shall not be under any
obligation to appear in, prosecute or defend any legal action that shall be
incidental to its duties to service the Receivables in accordance with this
Agreement, and that in its opinion may involve it in any expense or liability;
PROVIDED, HOWEVER, that the Bank, may (but shall not be required to) undertake
any reasonable action that it may deem necessary or desirable in respect of this
Agreement to protect the interests of the Certificateholders under this
Agreement.
SECTION 8.5. THE BANK NOT TO RESIGN AS SERVICER. Subject to the
provisions of Section 8.3, the Bank, hereby agrees not to resign from the
obligations and duties hereby imposed on it as Servicer under this Agreement
except upon determination that the performance of its duties hereunder shall no
longer be permissible under applicable law or if such resignation is required by
regulatory authorities. Notice of any such determination permitting the
resignation of the Bank as Servicer shall be communicated to the Trustee at the
earliest practicable time (and, if such communication is not in writing, shall
be confirmed in writing at the earliest practicable time) and any such
determination shall be evidenced by an Opinion of Counsel to such effect
delivered to the Trustee concurrently with or promptly after such notice. No
such resignation shall become effective until the earlier of the Trustee or a
successor Servicer having assumed the responsibilities and obligations of the
resigning Servicer in accordance with Section 9.2 or the date upon which any
regulatory authority requires such resignation.
SECTION 8.6. CORPORATE EXISTENCE. (a) During the term of this
Agreement, subject to Section 8.3, the Bank will keep in full force and effect
its existence, rights and franchises as a national banking association under the
laws of the United States of America and will obtain and preserve its
qualification to do business in each jurisdiction in which such qualification is
or shall be necessary to protect the validity and enforceability of this
Agreement and each other instrument or agreement necessary or appropriate to the
proper administration of this Agreement and the transactions contemplated
hereby.
(b) During the term of this Agreement, the Bank shall observe the
applicable legal requirements for the recognition of the Bank as a legal entity
separate and apart from its Affiliates, including as follows:
(i) the Bank shall maintain corporate records and books of
account separate from those of its Affiliates;
(ii) except as otherwise provided in this Agreement, the Bank
shall not commingle its assets and funds with those of its Affiliates;
(iii) the Bank shall hold such appropriate meetings of its
Board of Directors as are necessary to authorize all the Bank's
corporate actions required by law to be authorized by the Board of
Directors, shall keep minutes of such meetings and of meetings of its
stockholder(s) and observe all other customary corporate formalities
(and any successor Servicer not a corporation shall observe similar
procedures in accordance with its governing documents and applicable
law);
(iv) the Bank shall at all times hold itself out to the
public under the Bank's own name as a legal entity separate and
distinct from its Affiliates; and
(v) all transactions and dealings between the Bank and its
Affiliates will be conducted on an arm's-length basis.
SECTION 8.7. TAX ACCOUNTING. The Servicer shall prepare any federal
tax returns of the Trust in accordance with the Code and any regulations
(including, to the extent applicable by their terms, proposed regulations)
thereunder. To the extent not inconsistent with any such regulations, such
returns shall be prepared in a manner consistent with the following rules:
(a) The Class A Certificateholders shall be treated as owning the
Class A Percentage of Interest Collections (but limited to the Class A
Certificate Rate plus the Servicing Fee Rate) and Principal Collections and the
Class B Certificateholders shall be treated as owning the Class B Percentage of
Interest Collections (but limited to the Class B Certificate Rate plus the
Servicing Fee Rate) and Principal Collections. The Depositor shall be treated as
having retained the stripped coupons on the Class A Percentage and the Class B
Percentage of each Receivable equal to the difference between the APR of such
Receivable and the portion owned by the Class A and Class B Certificateholders,
respectively, pursuant to this paragraph.
(b) To the extent that as a result of the subordination provisions of
this Agreement, actual cash distributions to the Class B Certificateholders are
less than the amount set forth in subsection (a), the Class B Certificateholders
shall be deemed to have (i) received the amount set forth in subsection (a),
(ii) paid such difference to the Class A Certificateholders pursuant to a
guaranty of the Class A Certificates, and (iii) become subrogated to the rights
of the Class A Certificateholders to recovery of the amounts so paid.
ARTICLE IX
SERVICING TERMINATION
SECTION 9.1. EVENTS OF SERVICING TERMINATION. If any one of the
following events ("Events of Servicing Termination") shall occur and be
continuing:
(a) any failure by the Servicer to deliver to the Trustee for deposit
in any of the Accounts, the Reserve Fund or the Payahead Account any required
payment or to direct the Trustee or the Collateral Agent, as applicable, to make
any required distributions therefrom that shall continue unremedied for a period
of three Business Days after written notice of such failure is received by the
Servicer from the Trustee or the Collateral Agent, as applicable, or after
discovery of such failure by an Authorized Officer of the Servicer; or
(b) failure on the part of the Servicer duly to observe or to perform
in any material respect any other covenants or agreements of the Servicer set
forth in this Agreement, which failure shall (i) materially and adversely affect
the rights of either the Class A Certificateholders or the Class B
Certificateholders and (ii) continue unremedied for a period of 30 days after
the date on which written notice of such failure, requiring the same to be
remedied, shall have been given (A) to the Servicer by the Trustee or (B) to the
Servicer and to the Trustee by Holders of Certificates evidencing not less than
25% of the aggregate outstanding principal balance of the Class A Certificates
and Class B Certificates taken together as a single class (or for such longer
period, not in excess of 120 days, as may be reasonably necessary to remedy such
default; provided that such default is capable of remedy within 120 days and the
Servicer delivers an Officers' Certificate to the Trustee to such effect and to
the effect that the Servicer has commenced or will promptly commence, and will
diligently pursue, all reasonable efforts to remedy such default); or
(c) an Insolvency Event occurs with respect to the Servicer or any
successor; then, and in each and every case, so long as the Event of Servicing
Termination shall not have been remedied, either the Trustee, or the Holders of
Certificates evidencing not less than 25% of the aggregate outstanding principal
balance of the Class A Certificates and the Class B Certificates taken together
as a single class, by notice then given in writing to the Servicer and the
Trustee may terminate all the rights and obligations (other than the obligations
set forth in Section 8.2) of the Servicer under this Agreement. On or after the
receipt by the Servicer of such written notice, all authority and power of the
Servicer under this Agreement, whether with respect to the Certificates or the
Receivables or otherwise, shall, without further action, pass to and be vested
in the Trustee or such successor Servicer as may be appointed under Section 9.2;
and, without limitation, the Trustee is hereby authorized and empowered to
execute and deliver, on behalf of the predecessor Servicer, as attorney-in-fact
or otherwise, any and all documents and other instruments, and to do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement of the Receivables and related documents, or otherwise. The
predecessor Servicer shall cooperate with the successor Servicer and the Trustee
in effecting the termination of the responsibilities and rights of the
predecessor Servicer under this Agreement, including the transfer to the
successor Servicer for administration by it of all cash amounts that shall at
the time be held by the predecessor Servicer for deposit, or shall thereafter be
received by it with respect to a Receivable. All reasonable costs and expenses
(including reasonable attorneys' fees) incurred in connection with transferring
the Receivable Files to the successor Servicer and amending this Agreement to
reflect such succession as Servicer pursuant to this Section shall be paid by
the predecessor Servicer upon presentation of reasonable documentation of such
costs and expenses. Upon receipt of notice of the occurrence of an Event of
Servicing Termination, the Trustee shall give notice thereof to the Rating
Agencies.
SECTION 9.2 APPOINTMENT OF SUCCESSOR. (a) Upon the Servicer's receipt
of notice of termination, pursuant to Section 9.1 or the Servicer's resignation
in accordance with the terms of this Agreement, the predecessor Servicer shall
continue to perform its functions as Servicer under this Agreement, in the case
of termination, only until the date specified in such termination notice or, if
no such date is specified in a notice of termination, until receipt of such
notice and, in the case of resignation, until the earlier of (x) the date 45
days from the delivery to the Trustee of written notice of such resignation (or
written confirmation of such notice) in accordance with the terms of this
Agreement and (y) the date upon which the predecessor Servicer shall become
unable to act as Servicer, as specified in the notice of resignation and
accompanying Opinion of Counsel. In the event of the Servicer's termination
hereunder, the Trustee shall appoint a successor Servicer, and the successor
Servicer shall accept its appointment by a written assumption in form acceptable
to the Trustee. In the event that a successor Servicer has not been appointed at
the time when the predecessor Servicer has ceased to act as Servicer in
accordance with this Section, the Trustee without further action shall
automatically be appointed the successor Servicer and the Trustee shall be
entitled to the Servicing Fee. Notwithstanding the above, the Trustee shall, if
it shall be unwilling or unable so to act, appoint or petition a court of
competent jurisdiction to appoint, any established institution, having a net
worth of not less than $50,000,000 and whose regular business shall include the
servicing of automotive receivables, as the successor to the Servicer under this
Agreement.
(b) Upon appointment, the successor Servicer (including the Trustee
acting as successor Servicer) shall be the successor in all respects to the
predecessor Servicer and shall be subject to all the responsibilities, duties
and liabilities arising thereafter relating thereto placed on the predecessor
Servicer and shall be entitled to the Servicing Fee and all the rights granted
to the predecessor Servicer by the terms and provisions of this Agreement. No
successor Servicer shall be liable for any acts or omissions of any predecessor
Servicer.
SECTION 9.3. PAYMENT OF SERVICING FEE; REPAYMENT OF ADVANCES. If the
Servicer shall change, the predecessor Servicer shall be entitled to (i) receive
any accrued and unpaid Servicing Fees through the date of the successor
Servicer's acceptance hereunder in accordance with Section 4.8. and (ii)
reimbursement for Outstanding Advances pursuant to Sections 4.2 and 4.8 with
respect to all Advances made by the predecessor Servicer.
SECTION 9.4. NOTIFICATION TO CERTIFICATEHOLDERS. Upon receipt by an
Authorized Officer of the Trustee of written notice of any termination of, or
appointment of a successor to, the Servicer pursuant to this Article IX, the
Trustee shall give prompt written notice thereof to Certificateholders and the
Rating Agencies subject to the Rating Agency Condition.
SECTION 9.5. WAIVER OF PAST EVENTS OF SERVICING TERMINATION. The
Holders of Certificates evidencing not less than a majority of the aggregate
outstanding principal balance of the Class A Certificates and the Class B
Certificates taken together as a single class, may, on behalf of all
Certificateholders, waive in writing any default by the Servicer in the
performance of its obligations hereunder and its consequences, except a default
in making any required deposits to or payments from any of the Accounts, the
Reserve Fund or the Payahead Account in accordance with this Agreement. Upon any
such waiver of a past default, such default shall cease to exist, and any Events
of Servicing Termination arising therefrom shall be deemed to have been remedied
for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereto.
ARTICLE X
THE TRUSTEE
SECTION 10.1. ACCEPTANCE BY TRUSTEE. The Trustee, by its execution of
this Agreement, accepts all consideration conveyed by the Depositor pursuant to
Section 2.1 and the Trust created hereunder and declares that it shall hold such
consideration in trust upon the terms hereof set forth for the benefit of the
Certificateholders.
SECTION 10.2. DUTIES OF TRUSTEE. (a) The Trustee, both prior to and
after the curing of an Event of Servicing Termination, undertakes to perform
only such duties as are specifically set forth in this Agreement and no implied
covenants or obligations shall be read into this Agreement against the Trustee.
If an Event of Servicing Termination shall have occurred and shall not have been
cured (the appointment of a successor Servicer (including the Trustee) to
constitute a cure for the purposes of this Article), of which an Authorized
Officer of the Trustee has actual knowledge the Trustee shall exercise such of
the rights and powers vested in it by this Agreement, and shall use the same
degree of care and skill in their exercise, as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs; PROVIDED,
HOWEVER, that if the Trustee assumes the duties of the Servicer pursuant to
Section 9.2, the Trustee in performing such duties shall use the degree of skill
and attention required by Section 3.1.
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee that are required specifically to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
reasonably conform to the requirements of this Agreement. No provision of this
Agreement shall be construed to relieve the Trustee from liability for its own
negligent action, its own negligent failure to act, its own bad faith or its own
willful misconduct; PROVIDED, HOWEVER, that:
(i) Prior to the occurrence of an Event of Servicing
Termination, and after the curing of all such Events of Servicing
Termination that may have occurred, the duties and obligations of the
Trustee shall be determined solely by the express provisions of this
Agreement, the Trustee shall not be liable except for the performance
of such duties and obligations as are specifically set forth in this
Agreement, no implied covenants or obligations shall be read into this
Agreement against the Trustee, the permissible right of the Trustee
(solely in its capacity as such) to do things enumerated in this
Agreement shall not be construed as a duty and, in the absence of bad
faith on the part of the Trustee, or manifest error, the Trustee
(solely in its capacity as such) may conclusively rely on the truth of
the statements and the correctness of the opinions expressed upon any
certificates or opinions furnished to the Trustee and conforming to
the requirements of this Agreement;
(ii) The Trustee shall not be liable for an error of judgment
made in good faith by an officer of the Trustee, unless it shall be
proved that the Trustee shall have been negligent in ascertaining the
pertinent facts; and
(iii) The Trustee shall not be liable with respect to any
action taken, suffered, or omitted to be taken in good faith in
accordance with the direction of the Holders of Certificates
evidencing not less than a majority of the aggregate outstanding
principal balance of the Class A Certificates and the Class B
Certificates taken together as a single class, as set forth in Section
9.1, relating to the time, method and place of conducting any
proceeding or any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under this Agreement.
(c) The Trustee (solely in its capacity as such) shall not be required
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that the
repayment of such funds or indemnity satisfactory to it against such risk or
liability shall not be assured to it, and none of the provisions contained in
this Agreement shall in any event require the Trustee to perform, or be
responsible for the manner of performance of, any of the obligations of the
Servicer under this Agreement except during such time, if any, as the Trustee
shall be the successor to, and be vested with the rights, duties, powers and
privileges of, the Servicer in accordance with the terms of this Agreement.
(d) Except for actions expressly authorized by this Agreement, the
Trustee shall take no action reasonably likely to impair the security interests
created or existing under any Receivable or Financed Vehicle or to impair the
value of any Receivable or Financed Vehicle.
(e) The Trustee shall have no power to vary the corpus of the Trust
including (i) accepting any substitute obligation for a Receivable initially
assigned to the Trustee under this Agreement, (ii) adding any other investment,
obligation or security except for investments of moneys in the Accounts as
permitted in this Agreement, or (iii) withdrawing any Receivable, except for a
withdrawal permitted under this Agreement.
SECTION 10.3. TRUSTEE'S CERTIFICATE. As soon as practicable after each
Transfer Date on which Receivables shall be assigned to the Depositor pursuant
to Section 2.3 or 11.2, as applicable, or to the Servicer pursuant to Section
3.7, the Trustee shall execute a certificate, prepared by the Servicer,
substantially in the form of Exhibit E hereto, including its date and the date
of the Agreement, and accompanied by a copy of the Servicer's Certificate for
the related Collection Period. The Trustee's certificate shall operate, as of
such Transfer Date, as an assignment pursuant to Section 10.4.
SECTION 10.4. TRUSTEE'S ASSIGNMENT OF PURCHASED RECEIVABLES. With
respect to all Receivables repurchased by the Seller pursuant to Section 2.3 or
11.2, or purchased by the Servicer pursuant to Section 3.7, the Trustee shall
assign, without recourse, representation or warranty, to the Seller or to the
Servicer, as the case may be, all the Trustee's right, title and interest in and
to such Receivables, and all security and documents and all other Trust Property
conveyed pursuant to Section 2.1 with respect to such Receivables. Such
assignment shall be a sale and assignment outright, and not for security. If, in
any enforcement suit or legal proceeding, it is held that the Seller or the
Servicer, as the case may be, may not enforce any such Receivable on the ground
that it shall not be a real party in interest or a holder entitled to enforce
the Receivable, the Trustee shall, at the expense of the Seller or the Servicer,
as the case may be, take such steps as the Seller or the Servicer, as the case
may be, deems necessary to enforce the Receivable, including bringing suit in
the Trustee's name or the names of the Certificateholders.
SECTION 10.5. CERTAIN MATTERS AFFECTING THE TRUSTEE. Except as
otherwise provided in Section 10.2:
(i) The Trustee may conclusively rely and shall be protected
in acting or refraining from acting upon any resolution, certificate
of auditors or accountants or any other certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, appraisal, bond, note or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party
or parties.
(ii) The Trustee may consult with counsel and any Opinion of
Counsel or any advice of such counsel shall be full and complete
authorization and protection in respect of any action taken or
suffered or omitted by it under this Agreement in good faith and in
accordance with such Opinion of Counsel or any advice of such counsel.
(iii) The Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Agreement, or to
institute, conduct or defend any litigation under this Agreement or in
relation to this Agreement, at the request, order or direction of any
of the Certificateholders pursuant to the provisions of this
Agreement, unless such Certificateholders shall have offered to the
Trustee security or indemnity satisfactory to it against the costs,
expenses, and liabilities that may be incurred therein or thereby.
(iv) The Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion, rights or powers conferred upon
it by this Agreement; PROVIDED, HOWEVER, that the Trustee's conduct
does not constitute willful misfeasance or negligence.
(v) Prior to the occurrence of an Event of Servicing
Termination and after the curing of all Events of Servicing
Termination that may have occurred, the Trustee shall not be bound to
make any investigation into the facts of any matters stated in any
resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, direction, order, approval, bond, note or
other paper or document, unless requested in writing so to do by
Holders of Certificates evidencing not less than a majority of the
aggregate outstanding principal balance of the Class A Certificates
and the Class B Certificates taken together as a single class;
PROVIDED, HOWEVER, that if the payment within a reasonable time to the
Trustee of the costs, expenses, or liabilities likely to be incurred
by it in the making of an investigation requested by the
Certificateholders is, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to it by the terms of
this Agreement, the Trustee may require indemnity satisfactory to it
against such cost, expense, or liability as a condition to so
proceeding. The reasonable expense of every such examination shall be
paid by the Servicer, or, if paid by the Trustee, shall be reimbursed
by the Servicer upon demand. Nothing in this clause (v) shall affect
the obligation of the Servicer to observe any applicable law
prohibiting disclosure of information regarding the Obligors;
PROVIDED, FURTHER, that the Trustee shall be entitled to make such
further inquiry or investigation into such facts or matter as it may
reasonably see fit, and if the Trustee shall determine to make such
further inquiry or investigation it shall be entitled to examine the
books and records of the Servicer or the Depositor, personally or by
agent or attorney, at the sole cost and expense of the Servicer or
Depositor, as the case may be.
(vi) The Trustee may execute any of the trusts or powers
hereunder or perform any duties under this Agreement either directly
or by or through agents, attorneys, nominees or a custodian, and shall
not be liable for the acts of such agents, attorneys, nominees or
custodians provided that they have been appointed with due care.
(vii) The Trustee shall not be required to make any initial
or periodic examination of any documents or records related to the
Receivables or Financed Vehicles for the purpose of establishing the
presence or absence of defects, the compliance by the Depositor with
their representations and warranties or for any other purpose.
SECTION 10.6. TRUSTEE NOT LIABLE FOR CERTIFICATES OR RECEIVABLES. The
Trustee assumes no responsibility for the correctness of the recitals contained
herein and in the Certificates (other than the Trustee's execution of, and the
certificate of authentication on, the Certificates). Except as expressly
provided herein, the Trustee makes no representations as to the validity or
sufficiency of this Agreement or of the Certificates (other than the Trustee's
execution of, and the authentication of the Certificates), or of any Receivable
or related document, or for the validity of the execution by the Depositor, the
Seller and the Servicer of this Agreement or of any supplements hereto or
instruments of further assurance, or for the sufficiency of the Trust Property
hereunder, and the Trustee shall not be bound to ascertain or inquire as to the
performance or observance of any covenants, conditions or agreements on the part
of the Depositor, the Seller or the Servicer under this Agreement except as
herein set forth; but the Trustee may require the Depositor, the Seller or the
Servicer to provide full information and advice as to the performance of the
aforesaid covenants, conditions and agreements. The Trustee (solely in its
capacity as such) shall have no obligation to perform any of the duties of the
Depositor, the Seller or the Servicer, except as explicitly set forth in this
Agreement. The Trustee shall have no liability in connection with compliance of
the Servicer, the Seller or the Depositor with statutory or regulatory
requirements related to the Receivables. The Trustee shall not make or be deemed
to have made any representations or warranties with respect to the Receivables
or the validity or sufficiency of any assignment of the Receivables to the Trust
or the Trustee. The Trustee (solely in its capacity as such) shall at no time
have any responsibility or liability for, or with respect to, the legality,
validity or enforceability of any security interest in any Financed Vehicle or
(prior to the time, if any, that the Servicer is terminated as custodian
hereunder) any Receivable, or the perfection and priority of such a security
interest or the maintenance of any such perfection and priority, the efficacy of
the Trust or its ability to generate funds sufficient to provide for the
payments to be distributed to Certificateholders under this Agreement, the
existence, condition, location and ownership of any Financed Vehicle, the
existence and contents of any Receivable or any computer or other record
thereof, the validity of the assignment of any Receivable to the Trust or of any
intervening assignment, the completeness of any Receivable, the performance or
enforcement of any Receivable, the compliance by the Depositor or the Seller
with any representation or warranty made under this Agreement or in any related
document and the accuracy of any such representation or warranty, prior to the
Trustee's receipt of notice or other discovery of any noncompliance therewith or
any breach thereof, any investment of monies by the Servicer or any loss
resulting therefrom (it being understood that the Trustee, on behalf of the
Trust shall remain responsible for any Trust Property that it may hold), the
acts or omissions of the Depositor, the Seller, the Servicer, or any Obligor,
any action of the Servicer taken in the name of the Trustee, or any action by
the Trustee taken at the instruction of the Servicer (PROVIDED that such
instruction is not in express violation of the terms and provisions of this
Agreement); PROVIDED, HOWEVER, that the foregoing shall not relieve the Trustee
of its obligation to perform its duties under this Agreement. Except with
respect to a claim based on the failure of the Trustee to perform its duties
under this Agreement (whether in its capacity as Trustee or as successor
Servicer) or based on the Trustee's willful misfeasance, negligence or bad
faith, or based on the Trustee's breach of a representation and warranty
contained in Section 10.14, no recourse shall be had to the Trustee (whether in
its individual capacity or as Trustee) for any claim based on any provision of
this Agreement, the Certificates or any Receivable or assignment thereof against
the Trustee in its individual capacity; the Trustee shall not have any personal
obligation, liability, or duty whatsoever to any Certificateholder or any other
Person with respect to any such claim. The Trustee shall not be accountable for
the use or application by the Depositor of the proceeds of such Certificates, or
for the use or application of any funds paid to the Servicer in respect of the
Receivables prior to the time such amounts are deposited in the Collection
Account (whether or not the Collection Account is maintained with the Trustee).
The Trustee shall have no liability for any losses from the investment or
reinvestment in Eligible Investments made in accordance with Section 4.1.
SECTION 10.7. TRUSTEE MAY OWN CERTIFICATES. The Trustee in its
individual or any other capacity may become the owner or pledgee of Certificates
with the same rights as it would have if it were not Trustee.
SECTION 10.8. TRUSTEE'S FEES AND EXPENSES. The Servicer agrees to pay
to the Trustee, and the Trustee shall be entitled to, reasonable compensation as
is agreed upon in writing between the Trustee and the Servicer (which shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust) for all services rendered by it in the execution of the trusts
created by this Agreement and in the exercise and performance of any of the
powers and duties under this Agreement as Trustee, and the Servicer shall pay or
reimburse the Trustee upon its request for all reasonable expenses (including,
without limitation, expenses incurred in connection with notices or other
communications to Certificateholders), disbursements and advances (including the
reasonable compensation and the reasonable expenses and disbursements of its
counsel and of all persons not regularly in its employ) incurred or made by the
Trustee in accordance with any of the provisions of this Agreement (including
the reasonable fees and expenses of its agents, any co-trustee and counsel) or
in defense of any action brought against it in connection with this Agreement
except any such expense, disbursement, or advance as may arise from its
negligence, willful misfeasance or bad faith. The Servicer shall indemnify the
Trustee, its officers, directors, agents and employees for, and hold it, and its
officers, directors, agents and employees harmless against, any loss, liability,
cost or expense, arising out of or in connection with the transactions
contemplated by this Agreement PROVIDED, that such loss, liability, cost, or
expense is not caused by the Trustee's negligence, willful misconduct or bad
faith. The Servicer's covenant to pay the expenses, disbursements and advances
provided for in the second preceding sentence, the Servicer's indemnification of
the Trustee provided for in the preceding sentence and the Servicer's indemnity
pursuant to Section 8.2 shall survive the termination of this Agreement.
SECTION 10.9. ELIGIBILITY REQUIREMENTS FOR TRUSTEE. The trustee shall
be organized and doing business under the banking laws of such state or of the
United States, shall be authorized under such laws to exercise corporate trust
powers, shall have a combined capital and surplus of at least $50,000,000, shall
have a credit rating of at least Baa3 from Moody's and shall be subject to
supervision or examination by federal or state banking authorities. If such
corporation shall publish reports of condition at least annually, pursuant to
law or to the requirements of the aforesaid supervising or examining authority,
then for the purpose of this Section 10.9, the consolidated net worth of such
corporation shall be deemed to be its consolidated capital and surplus as set
forth in its most recent consolidated report of condition so published. In case
at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 10.9, the Trustee shall resign immediately in the
manner and with the effect specified in Section 10.10.
SECTION 10.10. RESIGNATION OR REMOVAL OF TRUSTEE. (a) The Trustee may
at any time resign and be discharged from the trusts hereby created by giving 30
days' prior written notice thereof to the Servicer. Upon receiving such notice
of resignation, the Servicer shall promptly appoint a successor Trustee, by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Trustee and one copy to the successor Trustee. If no
successor Trustee shall have been so appointed and have accepted appointment
within 30 days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment of
a successor Trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 10.9 and shall fail to resign after
written request therefor by the Servicer, or if at any time the Trustee shall be
legally unable to act, or shall be adjudged bankrupt or insolvent, or a
receiver, conservator or liquidator of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Servicer may remove the Trustee. If the Trustee is removed
under the authority of the immediately preceding sentence, the Servicer shall
promptly appoint a successor trustee by written instrument, in duplicate, one
copy of which instrument shall be delivered to the Trustee so removed, the
successor Trustee, the Certificateholders at their respective addresses of
record and the Rating Agencies.
(c) Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 10.10 shall
not become effective until acceptance of appointment by the successor Trustee
pursuant to Section 10.11.
(d) The respective obligations of the Depositor, the Seller and the
Servicer described in this Agreement shall survive the removal or resignation of
the Trustee as provided in this Agreement. The Trustee shall be paid all amounts
outstanding upon its resignation or removal.
SECTION 10.11. SUCCESSOR TRUSTEE. (a) Any successor Trustee appointed
pursuant to Section 10.10 shall execute, acknowledge, and deliver to the
Servicer and to its predecessor Trustee an instrument accepting such appointment
under this Agreement, and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor Trustee, without
any further act, deed or conveyance, shall become fully vested with all rights,
powers, duties and obligations of its predecessor under this Agreement, with
like effect as if originally named as Trustee. The predecessor Trustee shall
deliver to the successor Trustee all documents and statements held by it under
this Agreement, and the Servicer and the predecessor Trustee shall execute and
deliver such instruments and do such other things as may reasonably be required
for fully and certainly vesting and confirming in the successor Trustee all such
rights, powers, duties and obligations.
(b) No successor Trustee shall accept appointment as provided in this
Section 10.11 unless at the time of such acceptance such successor Trustee shall
be eligible pursuant to Section 10.9.
(c) Upon acceptance of appointment by a successor Trustee pursuant to
this Section 10.11, the Servicer shall mail notice of such acceptance by the
successor Trustee under this Agreement to all Certificateholders at their
respective addresses of record and to the Rating Agencies. If the Servicer shall
fail to mail such notice within ten days after acceptance of appointment by the
successor Trustee, the successor Trustee shall cause such notice to be mailed at
the expense of the Servicer.
SECTION 10.12. MERGER OR CONSOLIDATION OF TRUSTEE. Any corporation or
banking association which is eligible to be a successor Trustee under Section
10.9 (i) into which the Trustee may be merged or consolidated, (ii) that may
result from any merger, conversion, or consolidation to which the Trustee shall
be a party, or (iii) that may succeed by purchase and assumption to the business
of the Trustee, where the Trustee is not the surviving entity, which corporation
or banking association executes an agreement of assumption to perform every
obligation of the Trustee under this Agreement, shall be the successor of the
Trustee hereunder, without the execution or filing of any instrument or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding. The Trustee shall promptly notify the Servicer and the
Rating Agencies of any such merger, conversion, consolidation or purchase and
assumption where the Trustee is not the surviving entity.
SECTION 10.13. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE. (a)
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Property or any Financed Vehicle may at the time be located, the
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee to act as co-trustee, jointly with the Trustee, or separate trustee or
separate trustees, of all or any part of the Trust, and to vest in such Person,
in such capacity and for the benefit of the Certificateholders, such title to
the Trust, or any part thereof, and, subject to the other provisions of this
Section 10.13, such powers, duties, obligations, rights and trusts as the
Servicer and the Trustee may consider necessary or desirable. If the Servicer
shall not have joined in such appointment within 15 days after the receipt by it
of a request so to do, or in case an Event of Servicing Termination shall have
occurred and be continuing, the Trustee alone shall have the power to make such
appointment. No co-trustee or separate trustee under this Agreement shall be
required to meet the terms of eligibility as a successor trustee pursuant to
Section 10.9 and no notice to Certificateholders of the appointment of any
co-trustee or separate trustee shall be required pursuant to Section 10.11.
Notwithstanding the appointment of a co-trustee or separate trustee hereunder,
the Trustee shall not be relieved of any of its obligations under this
Agreement.
(b) Each separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) All rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred upon and exercised or
performed by the Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-
trustee, is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trustee under this Agreement or as successor to the
Servicer under this Agreement), the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding of title to the
Trust Property or any portion thereof in any such jurisdiction) shall
be exercised and performed singly by such separate trustee or
co-trustee, but solely at the direction of the Trustee.
(ii) No trustee under this Agreement shall be liable by
reason of any act or omission of any other trustee under this
Agreement.
(iii) The Servicer and the Trustee acting jointly may at any
time accept the resignation of or remove any separate trustee or
co-trustee.
(c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and in particular
to the provisions of this Article. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Trustee. Each such instrument shall be filed with the Trustee and a copy
thereof given to the Servicer.
(d) Any separate trustee or co-trustee may, at any time, appoint the
Trustee its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee. The Trustee shall promptly notify the Servicer and the Rating
Agencies of any appointment made pursuant to this Section 10.13.
SECTION 10.14. REPRESENTATIONS AND WARRANTIES OF TRUSTEE. The Trustee
makes the following representations and warranties on which the Depositor, the
Seller, the Servicer, and Certificateholders may rely:
(i) ORGANIZATION AND GOOD STANDING. The Trustee is a
corporation duly organized, validly existing, and in good standing
under the laws of ___________________; and
(ii) Power and Authority. The Trustee has full power,
authority and legal right to execute, deliver, and perform this
Agreement and has taken all necessary action to authorize the
execution, delivery, and performance by it of this Agreement.
SECTION 10.15. REPORTS BY TRUSTEE. The Trustee shall provide to any
Certificateholder or Certificate Owner who so requests in writing (addressed to
the Corporate Trust Office) a copy of any Servicer's Certificate, the annual
statement described in Section 3.10, and the annual accountant's examination
described in Section 3.11. The Trustee may require any Certificateholder or
Certificate Owner requesting such report to pay a reasonable sum to cover the
cost of the Trustee's complying with such request.
SECTION 10.16. TAX ACCOUNTING. The Servicer shall prepare any federal
tax returns of the Trust in accordance with the Code and any regulations
(including, to the extent applicable by their terms, proposed regulations)
thereunder. In no event shall the Trustee in its individual capacity be liable
for any liabilities, costs or expenses of the Trust, the Certificateholders, the
Depositor, the Seller or the Servicer arising under any tax law or regulation,
including, without limitation, federal, state or local income or excise taxes or
any tax imposed on or measured by income (or any interest or penalty with
respect thereto or arising from any failure to comply therewith).
Notwithstanding the foregoing, in no event shall the Trustee be liable hereunder
for any liabilities, costs or expenses incurred from any information furnished
to it by the Servicer or failure to furnish information by the Servicer in a
timely manner.
SECTION 10.17. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
CERTIFICATES. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as Trustee. Any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Certificateholders in respect of which such judgment has
been obtained.
ARTICLE XI
TERMINATION
SECTION 11.1. TERMINATION OF THE TRUST. (a) The Trust, and the
respective obligations and responsibilities of the Depositor, the Seller, the
Servicer and the Trustee hereunder shall terminate (except as otherwise
expressly provided herein) upon the earliest of: (i) the Distribution Date next
succeeding the purchase by the Servicer at its option, pursuant to Section 11.2,
of the Receivables remaining in the Trust, (ii) the Distribution Date next
succeeding the sale through Auction, pursuant to Section 11.3 of the Receivables
remaining in the Trust, (iii) the payment to Certificateholders of all amounts
required to be paid to them pursuant to this Agreement or (iv) the Distribution
Date next succeeding the month following the maturity or the liquidation of the
last Receivable held in the Trust and the disposition of any amounts received
upon liquidation of any property remaining in the Trust; PROVIDED, HOWEVER, in
no event shall the Trust created hereby continue beyond the expiration of 21
years from the death of the last survivor of the descendants of Joseph P.
Kennedy, the late Ambassador of the United States to the Court of St. James's,
living on the date of this Agreement. The Servicer shall promptly notify the
Trustee of any prospective termination pursuant to this Section 11.1.
(b) Upon receipt of written notice of termination by the Servicer,
notice of any termination, specifying the Distribution Date upon which the
Certificateholders may surrender the Certificates to the Trustee for payment of
the final distribution and cancellation, shall be given promptly by the Trustee
by letter to Certificateholders and the Rating Agencies mailed not earlier than
the 15th day and not later than the 25th day of the month next preceding the
specified Distribution Date stating the amount of any such final payment and
that the Record Date otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation and surrender of the
Certificates at the office of the Trustee therein specified. Upon presentation
and surrender of the Certificates, the Trustee shall cause to be distributed to
Certificateholders amounts distributable on such Distribution Date pursuant to
Section 4.5. Amounts remaining after distribution, or providing for
distribution, to the Certificateholders shall be distributed to the Depositor
upon written request.
(c) In the event that all of the Certificateholders shall not
surrender their Certificates for cancellation within six months after the date
specified in the above-mentioned written notice, the Trustee shall give a second
written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. The Trustee shall after giving such notice deliver or cause to be
delivered to the Servicer the Certificate Register. If within one year after the
second notice all the Certificates shall not have been surrendered for
cancellation, the Servicer may take appropriate steps, or may appoint an agent
to take appropriate steps, to contact the remaining Certificateholders
concerning surrender of their Certificates, and the cost thereof shall be paid
out of the funds and other assets that shall remain subject to this Agreement.
Any such funds held pending such distribution shall be held uninvested. Any
funds remaining in the Trust after exhaustion of such remedies shall be
distributed by the Trustee to the Depositor upon written request.
SECTION 11.2. OPTIONAL PURCHASE OF ALL RECEIVABLES. On the last day of
any Collection Period immediately preceding a Determination Date as of which the
then outstanding Pool Balance is 5% or less of the Initial Pool Balance, the
Servicer shall have the option to purchase the corpus of the Trust. To exercise
such option, the Servicer shall deposit pursuant to Section 4.3 the sum of the
Class A Principal Balance and the Class B Principal Balance plus accrued and
unpaid interest thereon into the Collection Account for the Distribution Date
occurring in the month in which such repurchase is to be effected. The payment
shall be made in the manner specified in Section 4.3, and shall be distributed
pursuant to Section 4.5. Upon such payment the Servicer shall succeed to and own
all interests in and to the Trust and the Trust Property.
SECTION 11.3. MANDATORY SALE OF ALL CONTRACTS. In accordance with the
procedures and schedule set forth in Exhibit F hereto (the "Auction
Procedures"), the Trustee shall conduct or shall cause to be conducted an
auction (the "Auction") of the Receivables remaining in the Trust (such
Receivables hereinafter referred to as the "Auction Property") in order to
effect a termination of the Trust pursuant to Section 11.1 on the second
Distribution Date succeeding the Record Date on which the Pool Balance is 5% or
less of the Original Pool Balance and at such time as the Depositor shall have
not exercised its option contained in Section 11.2. Such Auction shall be
conducted within 10 days following the Distribution Date following the Record
Date on which the Pool Balance is 5% or less of the Original Pool Balance. The
Depositor, the Seller, or the Servicer may, but shall not be required to, bid at
the Auction. The Trustee shall sell or shall cause the sale and transfer of the
Auction Property to the highest bidder therefor at the Auction provided that;
(i) the Auction has been conducted in accordance with the
Auction Procedures;
(ii) the Trustee has received good faith bids for the Auction
Property from two prospective purchasers that are considered by the
Trustee, in its sole discretion, to be competitive participants in the
market for motor vehicle retail installment sale contracts and other
motor vehicle installment sale contracts;
(iii) a financial advisor, as advisor to the Trustee (in such
capacity, the "Advisor"), shall have advised the Trustee in writing
that at least two of such bidders (including the winning bidder) are
participants in the market for motor vehicle retail installment sale
contracts and other motor vehicle installment sale contracts willing
and able to purchase the Auction Property;
(iv) the highest bid in respect of the Auction Property is
not less than the aggregate fair market value of the Auction Property
(as determined by the Trustee in its sole discretion);
(v) any bid submitted by the Depositor, the Seller, the
Servicer or any Affiliate of any of them shall reasonably represent
the fair market value of the Auction Property, as independently
verified and represented in writing by a qualified independent third
party evaluator (which may include the Advisor or an investment bank
firm) selected by the Trustee; and
(vi) the highest bid would result in proceeds from the sale
of the Auction Property which will be at least equal to the sum of (A)
the greater of (1) the aggregate Purchase Price for the Receivables
(including defaulted Receivables), plus the appraised value of any
other property held by the Trust (less liquidation expenses) or (2) an
amount that, when added to amounts on deposit in the Collection
Account and available for distribution to Certificateholders on the
second Distribution Date following the consummation of such sale (the
"Liquidation Distribution Date"), would result in proceeds sufficient
to distribute to Certificateholders the amounts of interest due to the
Certificateholders for such Distribution Date and any unpaid interest
payable to the Certificateholders with respect to one or more prior
Distribution Dates and the outstanding principal amount of the
Certificate Balance, and (B) the Total Servicing Fee payable on such
second Distribution Date.
Provided that all of the conditions set forth in clauses (i) through
(vi) have been met, the Trustee shall sell and transfer the Auction Property,
without representation, warranty or recourse, to such highest bidder in
accordance with and upon completion of the Auction Procedures. The Trustee shall
deposit the purchase price for the Auction Property in the Collection Account at
least one Business Day prior to such second succeeding Distribution Date. In
addition, the Auction must stipulate that the Servicer be retained to service
the Receivables on terms substantially similar to those in the Agreement. In the
event that any of such conditions are not met or such highest bidder fails or
refuses to comply with any of the Auction Procedures, the Trustee shall decline
to consummate such sale and transfer. In the event such sale and transfer is not
consummated in accordance with the foregoing, however, the Trustee may from time
to time in the future, but shall not be under any further obligation to, solicit
bids for sale of the assets of the Trust upon the same terms and conditions as
set forth above.
If any of the foregoing conditions are not met, the Trustee shall
decline to consummate such sale and shall not be under any obligation to solicit
any further bids or otherwise negotiate any further sale of Receivables
remaining in the Trust. In such event, however, the Trustee may from time to
time solicit bids in the future for the purchase of such Receivables pursuant to
this Section 11.3.
ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.1. AMENDMENT. (a) This Agreement may be amended by the
Depositor, the Seller, the Servicer and the Trustee, but without the consent of
any of the Certificateholders, to cure any ambiguity or defect, to correct or
supplement any provision in this Agreement or for the purpose of adding any
provision to or changing in any manner or eliminating any of the provisions of
this Agreement, or of modifying in any manner the rights of the
Certificateholders; PROVIDED, that such action shall not, as evidenced by an
Opinion of Counsel delivered to the Trustee, adversely affect the interests of
any Certificateholder and receipt of an opinion pursuant to Section 12.2(i);
PROVIDED FURTHER, that any amendment within the scope of Section 12.1(b)(i) or
(ii) shall be deemed to materially and adversely affect the interests of the
Certificateholders, as evidenced by an Officer's Certificate of the Servicer
delivered to the Trustee.
(b) This Agreement may also be amended from time to time by the
Depositor, the Seller, the Servicer and the Trustee, with the consent of the
Holders of Certificates evidencing not less than a majority of the aggregate
outstanding principal balance of the Class A Certificates and the Class B
Certificates taken together as a single class, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement, or of modifying in any manner the rights of the
Certificateholders; PROVIDED, HOWEVER, that no such amendment shall (i) increase
or reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on Receivables or distributions that shall be required
to be made on any Certificate, without the consent of all adversely affected
Certificateholders or (ii) reduce the percentage of the aggregate outstanding
principal balance of the Certificates, the holders of which are required to
consent to any such amendment, without the consent of all Certificateholders.
(c) Prior to its execution of any such amendment or consent, the
Trustee shall furnish written notification of the substance of such amendment or
consent to the Rating Agencies. Promptly after its execution of any such
amendment or consent, the Trustee shall furnish written notification of the
substance of such amendment or consent to each Rating Agency.
(d) It shall not be necessary for the consent of Certificateholders
pursuant to Section 12.1(b) to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent shall approve
the substance thereof.
(e) Prior to the execution of any amendment to this Agreement, the
Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating
that the execution of such amendment is authorized or permitted by this
Agreement and that all conditions precedent to the execution and delivery of
such amendment have been satisfied and the Opinion of Counsel referred to in
Section 12.2(i) has been delivered. The Trustee may, but shall not be obligated
to, enter into any such amendment which affects the Trustee's own rights, duties
or immunities under this Agreement or otherwise.
SECTION 12.2. PROTECTION OF TITLE TO TRUST. (a) The Depositor shall
execute and file such financing statements and cause to be executed and filed
such continuation statements, all in such manner and in such places as may be
required by law fully to preserve, maintain and protect the interest of the
Certificateholders and the Trustee under this Agreement in the Trust Property
and in the proceeds thereof. The Depositor shall deliver (or cause to be
delivered) to the Trustee file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such filing.
(b) None of the Depositor, the Seller nor the Servicer shall change
its name, identity or corporate structure in any manner that would, could or
might make any financing statement or continuation statement filed in accordance
with paragraph (a) above seriously misleading within the meaning of Section
9-402(7) of the UCC, unless it shall have given the Trustee at least five days'
prior written notice thereof and shall have promptly filed appropriate
amendments to all previously filed financing statements or continuation
statements.
(c) Each of the Depositor, the Seller and the Servicer shall have an
obligation to give the Trustee at least 60 days' prior written notice of any
relocation of its principal executive office if, as a result of such relocation,
the applicable provisions of the UCC would require the filing of any amendment
of any previously filed financing or continuation statement or of any new
financing statement and shall promptly file any such amendment. The Servicer
shall at all times maintain each office from which it shall service Receivables,
and its principal executive office, within the United States of America.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader thereof
to know at any time the status of such Receivable, including payments and
recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Collection Account
and Payahead Account in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables to the Trustee,
the Servicer's master computer records (including any backup archives) that
refer to a Receivable shall indicate clearly that such Receivable is owned by
the Trust. Indication of the Trust's ownership of a Receivable shall be deleted
from or modified on the Servicer's computer systems when, and only when, the
Receivable shall have been paid in full or repurchased by the Seller or
purchased by the Servicer.
(f) If at any time the Seller, the Depositor or the Servicer shall
propose to sell, grant a security interest in or otherwise transfer any interest
in automotive receivables to any prospective purchaser, lender or other
transferee, the Servicer, shall give or cause to be given to such prospective
purchaser, lender or other transferee computer tapes, records or printouts
(including any restored from backup archives) that, if they shall refer in any
manner whatsoever to any Receivable, shall indicate clearly that such Receivable
has been sold and is owned by the Trust.
(g) The Servicer shall permit the Trustee and its agents at any time
during normal business hours to inspect, audit and make copies of and abstracts
from the Servicer's or any subservicer's records regarding any Receivable.
(h) Upon request at any time the Trustee shall have reasonable grounds
to believe that such request is necessary in connection with the performance of
its duties under this Agreement, the Servicer shall furnish to the Trustee,
within five Business Days, a list of all Receivables (by contract number and
name of Obligor) then held as part of the Trust, together with a reconciliation
of such list to the Schedule of Receivables and to each of the Servicer's
Certificates furnished before such request indicating removal of Receivables
from the Trust.
(i) The Servicer shall deliver to the Trustee:
(1) promptly after the execution and delivery of this
Agreement and of each amendment thereto, an Opinion of Counsel either
(A) stating that, in the opinion of such counsel, all financing
statements and continuation statements have been executed and filed
that are necessary fully to preserve and protect the interest of the
Trustee and the Trustee in the Receivables, and reciting the details
of such filings or referring to prior Opinions of Counsel in which
such details are given, or (B) stating that, in the opinion of such
counsel, no such action shall be necessary to preserve and protect
such interest; and
(2) within 120 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three
months after the Cutoff Date, an Opinion of Counsel, dated as of a
date during such 120-day period, either (A) stating that, in the
opinion of such counsel, all financing statements and continuation
statements have been executed and filed that are necessary fully to
preserve and protect the interest of the Trustee in the Receivables,
and reciting the details of such filings or referring to prior
Opinions of Counsel in which such details are given, or (B) stating
that, in the opinion of such counsel, no such action shall be
necessary to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (l) or (2) above shall
specify any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
(j) The Depositor shall, to the extent required by applicable law,
cause the Certificates to be registered with the Securities and Exchange
Commission pursuant to Section 12(b) or Section 12(g) of the Exchange Act within
the time periods specified in such sections.
SECTION 12.3. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS. (a) The
death or incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, or entitle the Certificateholder's legal representatives
or heirs to claim an accounting or to take any action or commence any proceeding
in any court for a partition or winding up of the Trust, or otherwise affect the
rights, obligations and liabilities of the parties to this Agreement or any of
them.
(b) No Certificateholder shall have any right to vote (except as
expressly provided herein) or in any manner otherwise control the operation and
management of the Trust, or the obligations of the parties to this Agreement,
nor shall anything set forth in this Agreement, or contained in the terms of the
Certificates, be construed so as to constitute the Holders as partners or
members of an association; nor shall any Certificateholder be under any
liability to any third party by reason of any action taken pursuant to any
provision of this Agreement.
(c) No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Agreement,
unless such Holder previously shall have given to the Trustee a written notice
of default and of the continuance thereof, as hereinbefore provided, and unless
the Holders of the Certificates evidencing not less than a majority of the
aggregate outstanding principal balance of the Class A Certificates and the
Class B Certificates taken together as a single class shall have made written
request upon the Trustee to institute such action, suit or proceeding in its own
name as Trustee under the Agreement and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses, and
liabilities to be incurred therein or thereby, and the Trustee, for 30 days
after its receipt of such notice, request, and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding; no one or
more Holders of Certificates shall have any right in any manner whatever by
virtue or by availing itself or themselves of any provisions of this Agreement
to affect, disturb or prejudice the rights of the Holders of any other of the
Certificates, or to obtain or seek to obtain priority over or preference to any
other such Holder or to enforce any right, under this Agreement, except in the
manner provided in this Agreement and for the equal, ratable, and common benefit
of all Class A Certificateholders or Class B Certificateholders, as the case may
be. For the protection and enforcement of the provisions of this Section 12.3,
each Certificateholder and the Trustee shall be entitled to such relief as can
be given either at law or in equity.
SECTION 12.4. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE
PARTIES UNDER THIS AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 12.5. NOTICES. All demands, notices and communications upon or
to the Depositor, the Servicer, the Trustee or the Rating Agencies under this
Agreement shall be in writing, personally delivered, sent by overnight courier
or mailed by certified mail, return receipt requested, and shall be deemed to
have been duly given upon receipt (a) in the case of the Depositor to Mellon
Auto Receivables Corporation, One Mellon Bank Center, Fourth Floor, Pittsburgh,
Pennsylvania 15758, Attention: Stephen Cobain, (b) in the case of the Seller or
the Servicer, to Mellon Bank, N.A., One Mellon Bank Center, 500 Grant Street,
Pittsburgh, Pennsylvania 15258, Attention: Patrick Ryan, (c) in the case of the
Trustee, at the Corporate Trust Office, (d) in the case of __________________,
to ______________________ and (e) in the case of ______________________, to
___________________________________; or, as to each of the foregoing, at such
other address as shall be designated by written notice to the other parties. All
demands, notices and communications upon or to the Certificateholders under this
Agreement shall be in writing, sent by first class mail.
SECTION 12.6. SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, provisions or terms shall be
deemed severable from the remaining covenants, provisions or terms of this
Agreement, and shall in no way affect the validity or enforceability of the
other provisions of this Agreement or of the Certificates or the rights of the
Holders thereof.
SECTION 12.7. ASSIGNMENT. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 7.5, 8.3 and 8.5, this
Agreement may not be assigned by the Depositor or the Servicer. This Agreement
may not be assigned by the Trustee except as provided by Sections 10.10 through
10.13 hereof.
SECTION 12.8. CERTIFICATES NONASSESSABLE AND FULLY PAID. The interests
represented by the Certificates shall be nonassessable for any losses or
expenses of the Trust or for any reason whatsoever, and, upon authentication
thereof by the Trustee pursuant to Section 6.1, each Certificate shall be deemed
fully paid.
SECTION 12.9. INTENTION OF PARTIES. (a) The execution and delivery of
this Agreement shall constitute an acknowledgment by the Depositor, the Seller
and the Trustee, on behalf of the Certificateholders, that it is intended that
each of the assignments and transfers herein contemplated constitute a sale and
assignment outright, and not for security, of the Receivables and the other
Trust Property, conveying good title thereto free and clear of any liens, from
the Seller to the Depositor and from the Depositor to the Trustee, and that the
Receivables and the other Trust Property shall not be a part of the estate of
either the Seller or the Depositor in the event of the insolvency, receivership,
conservatorship or the occurrence of another similar event, of, or with respect
to, the Seller or the Depositor, as applicable. In the event that either such
conveyance is determined to be made as security for a loan made by the
Depositor, the Trustee or the Certificateholders, as applicable, to the Seller
or the Depositor, as applicable, the parties intend that the Seller shall have
granted to the Depositor and the Depositor shall have granted to the Trustee a
security interest in all of the Seller's or the Depositor's, as applicable,
right, title and interest in and to the Trust Property conveyed to the Trustee
pursuant to Section 2.1 in order to secure the obligations under the
Certificates, and that this Agreement shall constitute a security agreement
under applicable law.
(b) The execution and delivery of this Agreement shall constitute an
acknowledgment by the Depositor on behalf of the Certificateholders that they
intend that the Trust be classified (for federal tax purposes) as a grantor
trust under Subpart E, Part I of Subchapter J of the Code of which the
Certificateholders are owners, rather than as an association taxable as a
corporation. The powers granted and obligations undertaken in this Agreement
shall be construed so as to further such intent.
SECTION 12.10. COUNTERPARTS. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 12.11. COLLATERAL AGENT PROTECTION. Notwithstanding anything
contained herein to the contrary, the Collateral Agent shall have the same
rights and protection afforded to the Trustee hereunder.
SECTION 12.12. LIMITATION OF LIABILITY OF TRUSTEE AND COLLATERAL
AGENT. Notwithstanding anything contained herein to the contrary (i) this
Agreement has been accepted by ________________ as Trustee and as Collateral
Agent with respect to the Reserve Fund and in no event shall __________ have any
liability for the representations, warranties, covenants, agreements or other
obligations of the Seller or the Depositor hereunder or in any of the
certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Seller or the Depositor,
as applicable, and (ii) under no circumstances shall _______________ be liable
for the payment of any indebtedness or expenses of the Trust; PROVIDED, HOWEVER,
nothing contained herein shall relieve _________________ of its obligations
contained herein in its capacity as Trustee and as Collateral Agent.
SECTION 12.13. INDEPENDENCE OF THE SERVICER. For all purposes of this
Agreement, the Servicer shall be an independent contractor and shall not be
subject to the supervision of the Trustee with respect to the manner in which it
accomplishes the performance of its obligations hereunder. Unless expressly
authorized by the Trustee, the Servicer shall have no authority to act for or
represent the Trustee in any way and shall not otherwise be deemed an agent of
the Trustee.
SECTION 12.14. NO JOINT VENTURE. Nothing contained in this Agreement
(i) shall constitute the Servicer and the Trustee as members of any partnership,
joint venture, association, syndicate, unincorporated business or other separate
entity, (ii) shall be construed to impose any liability as such on any of them
or (iii) shall be deemed to confer on any of them any express, implied or
apparent authority to incur any obligation or liability on behalf of the others.
SECTION 12.15. HEADINGS. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 12.16. LIMITATIONS ON RIGHTS OF OTHERS. The provisions of this
Agreement are solely for the benefit of the Depositor, the Seller, the Servicer,
the Trust, the Trustee and for the benefit of the Certificateholders nothing in
this Agreement, whether express or implied, shall be construed to give to any
other Person any legal or equitable right, remedy or claim in the Trust Property
or under or in respect of this Agreement or any covenants, conditions or
provisions contained herein.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
MELLON AUTO RECEIVABLES
CORPORATION,
as Depositor
By:_________________________________
Name:
Title:
MELLON BANK, N.A.,
as Servicer and Seller
By:_________________________________
Name:
Title:
_______________________________,
as Trustee and Collateral Agent
By:_________________________________
Name:
Title:
<PAGE>
SCHEDULE A
SCHEDULE OF RECEIVABLES
(delivered to the Trustee at Closing)
<PAGE>
SCHEDULE B
LOCATION OF RECEIVABLES
<PAGE>
EXHIBIT A
FORM OF CLASS A CERTIFICATE
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
DISTRIBUTIONS IN REDUCTION OF THE PRINCIPAL BALANCE OF THIS
CERTIFICATE WILL BE MADE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE AT ANY TIME MAY BE LESS THAN
THE AMOUNT BALANCE ON THE FACE HEREOF.
NUMBER A- $_______________ (of
CUSIP NO. ______________ $____________ issued)
MELLON AUTO TRUST 199_-_
CLASS A _____% ASSET BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined below, the
property of which includes a pool of motor vehicle retail installment sale
contracts and other motor vehicle installment chattel paper secured by new or
used automobiles (including passenger cars, minivans, sport/utility vehicles and
light trucks).
(This Certificate does not represent an interest in or obligation of Mellon Auto
Receivables Corporation or any of its Affiliates, except to the extent described
below.)
THIS CERTIFIES THAT _________________ is the registered owner of a
$____________________ nonassessable, fully-paid, fractional undivided interest
in Mellon Auto Trust 199_-_ (the "Trust") formed pursuant to the Pooling and
Servicing Agreement (the "Agreement") dated as of ______________ among Mellon
Auto Receivables Corporation, as depositor (the "Depositor"), Mellon Bank, N.A.,
as servicer (the "Servicer") and seller (the "Seller") and ______________, a
__________________, as Trustee and Collateral Agent, a summary of certain of the
pertinent provisions of which is set forth below. To the extent not otherwise
defined herein, the capitalized terms used herein have the meanings assigned to
them in the Agreement.
This Certificate is one of the duly authorized Certificates,
designated as the Class A ____% Asset Backed Certificates (herein called the
"Class A Certificates"), issued under the Agreement. Also issued under the
Agreement are Certificates designated as the Class B ____% Asset Backed
Certificates (the "Class B Certificates"). The Class A Certificates and the
Class B Certificates are hereinafter collectively called the "Certificates." The
aggregate beneficial ownership interests in the Trust evidenced by all Class A
Certificates is ___%. This Class A Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement to which Agreement
reference is hereby made for a statement of the respective rights and
obligations thereunder of the Depositor, the Seller, the Servicer, the Trustee
and Holders of the Class A Certificates.
The property of the Trust includes a pool of motor vehicle retail
installment sale contracts and other motor vehicle retail installment chattel
paper secured by new or used automobiles (including passenger cars, minivans,
sport/utility vehicles or light trucks) (collectively, the "Receivables"), all
monies received under the Receivables on or after the related Cutoff Date and
with respect to Receivables which are Actuarial Receivables, all monies received
thereon prior to the Cutoff Date that are due on or after the Cutoff Date,
security interests in the vehicles financed thereby, certain bank accounts, the
rights to proceeds from certain insurance proceeds, the rights of the Trust
under the Agreement, the right to receive certain payments from funds deposited
in the Reserve Fund and all proceeds of the foregoing.
Under the Agreement, there will be distributed on the 15th day of each
month or, if such 15th day is not a Business Day, the next Business Day (each, a
"Distribution Date"), commencing on ______________, to the Person in whose name
this Certificate is registered at the close of business on the last day of the
calendar month preceding such Distribution Date (the "Record Date"), such
Certificateholder's fractional undivided interest in the amount to be
distributed to Certificateholders on such Distribution Date.
It is the intent of the Seller, the Depositor, the Trustee and the
Certificateholders that the Trust be classified (for federal tax purposes) as a
grantor trust under Subpart E, Part I of Subchapter J of the Code of which the
Class A Certificateholders are owners, rather than as an association taxable as
a corporation. The Depositor, the Seller, the Servicer, the Trustee and the
Certificateholders, by acceptance of a Class A Certificate, agree to treat, and
to take no action inconsistent with the treatment of, the Certificates for such
tax purposes as interests in a grantor trust.
Distributions on this Certificate will be made as provided in the
Agreement by the Trustee by check mailed or wire to the Certificateholder of
record in the Certificate Register without the presentation or surrender of this
Certificate or the making of any notation hereon, except that with respect to
Certificates registered on the Record Date in the name of the nominee of the
Clearing Agency (initially, such nominee to be Cede & Co.), payments will be
made by wire transfer in immediately available funds to the account designated
by such nominee. Except as otherwise provided in the Agreement and
notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
maintained for that purpose by the Trustee in the Borough of Manhattan, the City
of New York.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Trustee, by manual signature, this
Certificate shall not entitle the Holder hereof to any benefit under the
Agreement or be valid for any purpose.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
<PAGE>
IN WITNESS WHEREOF, the Trustee, on behalf of the Trust and not in its
individual capacity, has caused this Certificate to be duly executed.
Date:
__________________________________,
as Trustee
By:________________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates referred to in the within-mentioned
Agreement.
Date:
__________________________________,
as Trustee
By:________________________________
Authorized Signatory
<PAGE>
(REVERSE OF CLASS A CERTIFICATE)
The Class A Certificates do not represent an obligation of, or an
interest in, any of the Depositor, the Servicer, the Trustee or any affiliates
of any of them, and no recourse may be had against such parties or their assets
except as expressly set forth or contemplated herein or in the Agreement. In
addition, this Certificate is limited in right of payment to certain collections
and recoveries with respect to the Receivables (and certain other amounts), all
as more specifically set forth herein and in the Agreement. A copy of the
Agreement may be examined by any Certificateholder upon written request during
normal business hours at the principal office of the Depositor and at such other
places, if any, designated by the Depositor.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Seller, the Servicer and the Trustee and the rights of the
Certificateholders at any time by the Depositor, the Seller, the Servicer and
the Trustee with the consent of the Holders of Certificates evidencing not less
than a majority of the aggregate outstanding principal balance of the Class A
Certificates and the Class B Certificates taken together as a single class. Any
such consent by the Holder of this Certificate shall be conclusive and binding
on such Holder and on all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof, whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registerable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies maintained by the Trustee in the Borough of
Manhattan, The City of New York, accompanied by a written instrument of transfer
in form satisfactory to the Trustee and duly executed by the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more new
Class A Certificates of authorized denominations evidencing the same aggregate
interest in the Trust will be issued to the designated transferee.
Except as provided in the Agreement, the Class A Certificates are
issuable only as registered certificates without coupons in minimum
denominations of $25,000 and integral multiples of $1,000 in excess thereof;
provided, however, that one Class A Certificate may be issued in a denomination
that represents any remaining portion of the Original Class A Principal Balance.
As provided in the Agreement and subject to certain limitations therein set
forth, Class A Certificates are exchangeable for new Class A Certificates of
authorized denominations evidencing the same aggregate denomination, as
requested by the Holder surrendering the same. No service charge will be made
for any such registration of transfer or exchange, but the Trustee may require
payment of a sum sufficient to cover any tax or governmental charge payable in
connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the Trustee or any such agent shall be affected by any notice to the
contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the payment to Certificateholders of
all amounts required to be paid to them pursuant to the Agreement and the
disposition of all property held by the Trust. The Servicer may at its option
purchase the corpus of the Trust at a price specified in the Agreement, and such
purchase of the Receivables and other property of the Trust will effect early
retirement of the Certificates; however, such right of purchase is exercisable,
subject to certain restrictions, only as of the last day of any Collection
Period as of which the Pool Balance is 5% or less of the Original Pool Balance.
In addition, within ten days following a Distribution Date as of which the Pool
Balance is 5% or less of the Original Pool Balance, and if the Depositor has not
exercised its option to repurchase the Receivable an auction sale shall be
conducted (as described in the Agreement) and such auction shall effect early
retirement of the Certificates.
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
_______________________________________________________________________________
Please print or type name and address, including postal zip code, of
assignee)
_______________________________________________________________________________
the within Class A Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing ____________________________ to transfer said Class
A Certificate on the books of the Trustee, with full power of substitution in
the premises.
Dated:
___________________________________________*/
Medallion:
____________________________*/
_______________________
*/ NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears upon the face of the within Class A Certificate
in every particular, without alteration, enlargement or any change whatever.
Such signature must be guaranteed by an "eligible guarantor institution" meeting
the requirements of the Trustee, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Trustee in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
<PAGE>
EXHIBIT B
FORM OF CLASS B CERTIFICATE
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
THIS CERTIFICATE MAY NOT BE DIRECTLY OR INDIRECTLY SOLD OR TRANSFERRED
TO, OR PURCHASED OR ACQUIRED BY, OR ON BEHALF OF (1) ANY EMPLOYEE BENEFIT PLAN,
RETIREMENT ARRANGEMENT, INDIVIDUAL RETIREMENT ACCOUNT OR KEOGH PLAN WHICH IS
SUBJECT TO EITHER TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED, OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED (EACH, A "PLAN"), OR (2) ANY ENTITY WHOSE SOURCE OF FUNDS TO BE USED FOR
THE PURCHASE OF THIS CLASS B CERTIFICATE INCLUDES THE ASSETS OF ANY SUCH PLAN,
OTHER THAN AN "INSURANCE COMPANY GENERAL ACCOUNT" AS DEFINED IN, AND WHICH
COMPLIES WITH THE PROVISIONS OF, PROHIBITED TRANSACTION EXEMPTION 95-60.
DISTRIBUTIONS IN REDUCTION OF THE PRINCIPAL BALANCE OF THIS
CERTIFICATE WILL BE MADE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE AT ANY TIME MAY BE LESS THAN
THE AMOUNT BALANCE ON THE FACE HEREOF.
NUMBER B- $_______________ (of
CUSIP NO. ____________ $___________ issued)
MELLON AUTO TRUST 199_-_
CLASS B ____% ASSET BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined below, the
property of which includes a pool of motor vehicle retail installment sale
contracts and other motor vehicle installment chattel paper secured by new or
used automobiles (including passenger cars, minivans, sport/utility vehicles and
light trucks).
(This Certificate does not represent an interest in or obligation of Mellon
Auto Receivables Corporation or any of its affiliates, except to the extent
described below.)
THIS CERTIFIES THAT _________________ is the registered owner of a
$____________________ nonassessable, fully-paid, fractional undivided interest
in Mellon Auto Trust 199__ (the "Trust") formed pursuant to the Pooling and
Servicing Agreement (the "Agreement") dated as of ________________ _______ __,
199_ among Mellon Auto Receivables Corporation, as depositor (the "Depositor"),
Mellon Bank, N.A., as servicer (the "Servicer") and seller (the "Seller") and
______________, a ___________, as Trustee and Collateral Agent, a summary of
certain of the pertinent provisions of which is set forth below. To the extent
not otherwise defined herein, the capitalized terms used herein have the
meanings assigned to them in the Agreement.
This Certificate is one of the duly authorized Certificates,
designated as the Class B ____% Asset Backed Certificates (herein called the
"Class B Certificates"), issued under the Agreement. Also issued under the
Agreement are Certificates designated as the Class A ____% Asset Backed
Certificates (the "Class A Certificates"). The Class A Certificates and the
Class B Certificates are hereinafter collectively called the "Certificates." The
aggregate beneficial ownership interests in the Trust evidenced by all Class B
Certificates is ___%. This Class B Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement to which Agreement
reference is hereby made for a statement of the respective rights and
obligations thereunder of the Depositor, the Seller, the Servicer, the Trustee
and Holders of the Class B Certificates.
The property of the Trust includes a pool of simple interest motor
vehicle retail installment sale contracts and other motor vehicle retail
installment chattel paper secured by new or used automobiles (including
passenger cars, minivans, sport/utility vehicles or light trucks) (collectively,
the "Receivables"), all monies received under the Receivables on or after the
Cutoff Date and, with respect to Receivables which are Actuarial Receivables,
all monies received thereon prior to the Cutoff Date that are due on or after
the Cutoff Date, security interests in the vehicles financed thereby, certain
bank accounts, the rights to proceeds from certain insurance proceeds, the
rights of the Trust under the Agreement, the right to receive certain payments
from funds deposited in the Reserve Fund and all proceeds of the foregoing.
Under the Agreement, there will be distributed on the 15th day of each
month or, if such 15th day is not a Business Day, the next Business Day (each, a
"Distribution Date"), commencing on _____________, to the Person in whose name
this Certificate is registered at the close of business on the last day of the
calendar month preceding such Distribution Date (the "Record Date"), such
Certificateholder's fractional undivided interest in the amount to be
distributed to Certificateholders on such Distribution Date.
It is the intent of the Seller, the Depositor, the Trustee and the
Certificateholders that the Trust be classified (for Federal tax purposes) as a
grantor trust under Subpart E, Part I of Subchapter J of the Code of which the
Class B Certificateholders are owners, rather than as an association taxable as
a corporation. The Depositor, the Servicer and the Certificateholders, by
acceptance of a Class B Certificate, agree to treat, and to take no action
inconsistent with the treatment of, the Certificates for such tax purposes as
interests in a grantor trust.
Distributions on this Certificate will be made as provided in the
Agreement by the Trustee by check mailed or wire to the Certificateholder of
record in the Certificate Register without the presentation or surrender of this
Certificate or the making of any notation hereon, except that with respect to
Certificates registered on the Record Date in the name of the nominee of the
Clearing Agency (initially, such nominee to be Cede & Co.), payments will be
made by wire transfer in immediately available funds to the account designated
by such nominee. Except as otherwise provided in the Agreement and
notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
maintained for that purpose by the Trustee in the Borough of Manhattan, the City
of New York.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Trustee, by manual signature, this
Certificate shall not entitle the Holder hereof to any benefit under the
Agreement or be valid for any purpose.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
<PAGE>
IN WITNESS WHEREOF, the Trustee, on behalf of the Trust and not in its
individual capacity, has caused this Certificate to be duly executed.
Date:
___________________________________,
as Trustee
By:________________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class B Certificates referred to in the within-mentioned
Agreement.
Date:
__________________________________,
as Trustee
By:________________________________
Authorized Signatory
<PAGE>
(REVERSE OF CLASS B CERTIFICATE)
The Class B Certificates do not represent an obligation of, or an
interest in, any of the Depositor, the Servicer, the Trustee or any affiliates
of any of them, and no recourse may be had against such parties or their assets
except as expressly set forth or contemplated herein or in the Agreement. In
addition, this Certificate is limited in right of payment to certain collections
and recoveries with respect to the Receivables (and certain other amounts), all
as more specifically set forth herein and in the Agreement. A copy of the
Agreement may be examined by any Certificateholder upon written request during
normal business hours at the principal office of the Depositor and at such other
places, if any, designated by the Depositor.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Seller, the Servicer and the Trustee and the rights of the
Certificateholders at any time by the Depositor, the Seller, the Servicer and
the Trustee with the consent of the Holders of Certificates evidencing not less
than a majority of the aggregate outstanding principal balance of the Class A
Certificates and the Class B Certificates taken together as a single class. Any
such consent by the Holder of this Certificate shall be conclusive and binding
on such Holder and on all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof, whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registerable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies maintained by the Trustee in the Borough of
Manhattan, The City of New York, accompanied by a written instrument of transfer
in form satisfactory to the Trustee and duly executed by the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more new
Class B Certificates of authorized denominations evidencing the same aggregate
interest in the Trust will be issued to the designated transferee.
Except as provided in the Agreement, the Class B Certificates are
issuable only as registered certificates without coupons in minimum
denominations of $25,000 and integral multiples of $1,000 in excess thereof;
PROVIDED, HOWEVER, that one Class B Certificate may be issued in a denomination
that represents any remaining portion of the Original Class B Principal Balance.
As provided in the Agreement and subject to certain limitations therein set
forth, Class B Certificates are exchangeable for new Class B Certificates of
authorized denominations evidencing the same aggregate denomination, as
requested by the Holder surrendering the same. No service charge will be made
for any such registration of transfer or exchange, but the Trustee may require
payment of a sum sufficient to cover any tax or governmental charge payable in
connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the Trustee or any such agent shall be affected by any notice to the
contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the payment to Certificateholders of
all amounts required to be paid to them pursuant to the Agreement and the
disposition of all property held by the Trust. The Servicer may at its option
purchase the corpus of the Trust at a price specified in the Agreement, and such
purchase of the Receivables and other property of the Trust will effect early
retirement of the Certificates; however, such right of purchase is exercisable,
subject to certain restrictions, only as of the last day of any Collection
Period as of which the Pool Balance is 5% or less of the Original Pool Balance.
In addition, within ten days following a Distribution Date as of which the Pool
Balance is 5% or less of the Original Pool Balance, and if the Depositor has not
exercised its option to repurchase the Receivable an auction sale shall be
conducted (as described in the Agreement) and such auction shall effect early
retirement of the Certificates.
[By accepting and holding this Class B Certificate, the Holder hereof
shall be deemed to have represented and warranted that it is it is not acquiring
Class B Certificates, directly or indirectly, for or on behalf of an ERISA
Entity other than an "insurance company general account" as defined in, and
which complies with the provisions of, Prohibited Transaction Exemption 95-60.]
[The transferee hereof of this Class B Definitive Certificate will
represent that it is not either (1) an employee benefit plan, retirement
arrangement, individual retirement account or keogh plan which is subject to
either Title I of ERISA, or Section 4975 of the Code, or (2) any entity whose
source of funds to be used for the purchase of the Class B Certificate includes
the assets of any such Plan, other than an "Insurance Company General Account"
as defined in, and which complies with the provisions of, Prohibited Transaction
Exemption 95-60 issued by the United States Department of Labor.]
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
_______________________________________________________________________________
(Please print or type name and address, including postal zip code, of assignee)
_______________________________________________________________________________
the within Class B Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing ____________________________ to transfer said Class
B Certificate on the books of the Trustee, with full power of substitution in
the premises.
Dated:
___________________________________________*/
Medallion:
____________________________*/
_______________________
*/ NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears upon the face of the within Class B Certificate
in every particular, without alteration, enlargement or any change whatever.
Such signature must be guaranteed by an "eligible guarantor institution" meeting
the requirements of the Trustee, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Trustee in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
<PAGE>
EXHIBIT D
FORM OF BENEFIT PLAN AFFIDAVIT
STATE OF ___________ )
ss:
COUNTY OF __________ )
Under penalties of perjury, I, the undersigned, declare that, to the
best of my knowledge and belief, the following representations are true,
correct, and complete.
1. That I am a duly authorized officer of _____________ (the
"PURCHASER"), whose taxpayer identification number is _________, and on behalf
of which I have the authority to make this affidavit.
2. That the Purchaser is acquiring a Class B Certificate (the
"CERTIFICATE") representing an interest in the Trust.
3. That the Purchaser is not either (1) an employee benefit plan,
retirement arrangement, individual retirement account or keogh plan which is
subject to either Title I of ERISA, or Section 4975 of the Code, or (2) any
entity whose source of funds to be used for the purchase of the Class B
Certificate includes the assets of any such Plan, other than an "Insurance
Company General Account" as defined in, and which complies with the provisions
of, Prohibited Transaction Exemption 95-60 issued by the United States
Department of Labor.
Capitalized terms used in and not otherwise defined herein shall have
the meaning assigned to them in the Pooling and Servicing Agreement dated as of
______ __, 199__ among Mellon Auto Receivables Corporation, as depositor, Mellon
Bank, N.A., as servicer and seller and _______________, as trustee.
<PAGE>
IN WITNESS WHEREOF, the Purchaser has caused this instrument to be
duly executed on its behalf, by its duly authorized officer this ____ day of
___________, 19__.
___________________________________
By:________________________________
Its:_______________________________
Personally appeared before me ____________, known or proved to me to
be the same person who executed the foregoing instrument and to be a
________________ of the Purchaser, and acknowledged to me that he or she
executed the same as his or her free act and deed and as the free act and deed
of the Purchaser.
Subscribed and sworn before me
this ____ day of ____________, 19__
_______________________________________
Notary Public
My commission expires the ____ day
of ___________________, 19__.
<PAGE>
EXHIBIT E-1
FORM OF TRUSTEE'S CERTIFICATE - ASSIGNMENT TO SELLER
Trustee's Certificate pursuant to Section 10.3 of the Pooling and
Servicing Agreement.
_________________, a ______________ corporation, as trustee (the
"Trustee") of Mellon Auto Trust 199_-_, created pursuant to the Pooling and
Servicing Agreement, dated as of ___________ (the "Pooling and Servicing
Agreement"), among Mellon Auto Receivables Corporation, as depositor (the
"Depositor"), Mellon Bank, N.A., as servicer (the "Servicer") and Seller (the
"Seller") and the Trustee, does hereby sell, transfer, assign and otherwise
convey to the Seller, without recourse, representation or warranty, all of the
Trustee's right, title and interest in and to all of the Receivables (as defined
in the Pooling and Servicing Agreement) identified in the attached Servicer's
Certificate as "Purchased Receivables," which are to be retransferred to the
Seller pursuant to Section [2.3] [11.2] of the Pooling and Servicing Agreement,
and all security and documents relating thereto.
IN WITNESS WHEREOF, I have hereunto set my hand this _______ day of
______________________, 199___.
_____________________________________
<PAGE>
EXHIBIT E-2
FORM OF TRUSTEE'S CERTIFICATE - ASSIGNMENT TO
SERVICER Trustee's Certificate pursuant to Section 10.3 of the Pooling
and Servicing Agreement.
________________, a _______________ corporation (the "Trustee") of
Mellon Auto Trust 199_-_, created pursuant to the Pooling and Servicing
Agreement, dated as of _____________ (the "Pooling and Servicing Agreement"),
among Mellon Auto Receivables Corporation, as depositor (the "Depositor"),
Mellon Bank, N.A., as servicer (the "Servicer") and seller (the "Seller") and
the Trustee does hereby sell, transfer, assign and otherwise convey to the
Servicer, without recourse, representation or warranty, all of the Trustee's
right, title and interest in and to all of the Receivables (as defined in the
Pooling and Servicing Agreement) identified in the attached Servicer's
Certificate as "Purchased Receivables," which are to be transferred by the
Trustee to the Servicer pursuant to Section 3.7 of the Pooling and Servicing
Agreement, and all security and documents relating thereto.
IN WITNESS WHEREOF, I have hereunto set my hand this _______ day of
__________________________, 199___.
_________________________________
<PAGE>
EXHIBIT F
TERMINATION - AUCTION PROCEDURES
The following sets forth the auction procedures to be followed in
connection with a sale effected pursuant to Section 11.3 of the Pooling and
Servicing Agreement dated as of _________, 199__ (the "Agreement"), among Mellon
Auto Receivables Corporation, a Delaware corporation, as depositor (the
"Depositor"), Mellon Bank, N.A., a national banking association (the "Bank"), as
servicer (the "Servicer") and seller (the "Seller") and _____________, as
trustee hereunder (the "Trustee") and as collateral agent with respect to the
Reserve Fund (the "Collateral Agent"). Capitalized terms used herein that are
not otherwise defined shall have the meanings ascribed thereto in the Agreement.
PRE-AUCTION PROCESS
(a) Upon receiving notice of the Auction, the Advisor will initiate
its general Auction procedures consisting of the following: (i) with the
assistance of the Servicer, prepare a general solicitation package along with a
confidentiality agreement; (ii) derive a list of qualified bidders, in a
commercially reasonable manner; (iii) initiate contact with all qualified
bidders; (iv) send a confidentiality agreement to all qualified bidders; (v)
upon receipt of a signed confidentiality agreement, send solicitation packages
to all interested bidders on behalf of the applicable Trustee; and (vi) notify
the Servicer of all potential bidders and anticipated timetable.
(b) The general solicitation package will include: (i) the prospectus
from the public offering of the Certificates; (ii) a copy of all monthly
servicing reports or a copy of all annual servicing reports and the prior year's
monthly servicing reports; (iii) a form of a Purchase Agreement and Pooling and
Servicing Agreement; (iv) a description of the minimum purchase price required
to cause the Trustee to sell the Auction Property as set forth in Section 11.3
of the Agreement; (v) a formal bidsheet; (vi) a detailed timetable; and (vii) a
preliminary data tape of the Pool Balance as of the related Distribution Date
reflecting the same data attributes used to create the Cutoff Date tables for
the Prospectus Supplement dated ________ __, 199_ relating to the offering of
the Certificates.
(c) The Trustee, with the assistance of the Servicer and the Advisor,
will maintain an auction package beginning at the time of closing of the
transaction, which will contain terms (i)-(iii) listed in the preceding
paragraph. If the Advisor is unable to perform its role as advisor to the
Trustee, the Servicer acting in its capacity under the Agreement will select a
successor Advisor and inform the Trustee of its actions.
(d) The Advisor will send solicitation packages to all bidders at
least 15 business days before the date of the Auction. Bidders will be required
to submit any due diligence questions in writing to the Advisor for
determination of their relevancy, no later than 10 business days before the date
of the Auction. The Servicer and the Advisor will be required to satisfy all
relevant questions at least five Business Days prior to the date of the Auction
and distribute the questions and answers to all bidders.
AUCTION PROCESS
(a) _______________________, in its role as Advisor to the Trustee,
will be allowed to bid in the Auction, but will not be required to do so.
(b) The Servicer will also be allowed to bid in the Auction if it
deems appropriate, but will not be required to do so.
(c) On the date of the Auction, all bids will be due by facsimile to
the offices of the applicable Trustee by 1:00 p.m. New York City time, with the
winning bidder to be notified by 2:00 p.m. New York City time. All acceptable
bids (as described in Section 11.3 of the Agreement) will be due on a conforming
basis on the bid sheet contained in the solicitation package.
(d) If the Trustee receives fewer than two market value bids from
participants in the market for motor vehicle retail installment sale contracts
and other motor vehicle installment sale contracts willing and able to purchase
the Auction Property, the Trustee shall decline to consummate the sale.
(e) Upon notification to the winning bidder, a good faith deposit
equal to one percent (1%) of the Pool Balance will be required to be wired to
the Trustee upon acceptance of the bid. This deposit, along with any interest
income attributable to it, will be credited to the purchase price but will not
be refundable. The Trustee will establish a separate account for the acceptance
of the good faith deposit, until such time as the account is fully funded and
all monies are transferred into the Collection Account, such time not to exceed
one Business Day before the related Distribution Date (as described above).
(f) The winning bidder will receive on the date of the Auction a copy
of the draft Purchase Agreement, Pooling and Servicing Agreement and Servicer's
Representations and Warranties (which shall be substantially identical to the
representations and warranties set forth in Section 8.1 of the Agreement).
(g) ______________, in its capacity as Advisor to the Trustee, will
provide to the Trustee a letter concluding whether or not the winning bid is a
fair market value bid. __________________ will also provide such letter if it is
the winning bidder. In the case where _____________ or the Servicer is the
winning bidder it will in its letter provide for market comparable valuations.
(h) The Auction will stipulate that the Servicer be retained to
service the Receivables sold pursuant to the terms of the Purchase and Sale
Agreement and the Pooling and Servicing Agreement.
EXHIBIT 4.3
MELLON AUTO TRUST 199_-_
__% Asset Backed Notes
--------------------------------
FORM OF INDENTURE
Dated as of _________ __, 199_
--------------------------------
----------------------
Trustee
<PAGE>
CROSS REFERENCE TABLE1
TIA Indenture
Section Section
310 (a) (1) ............................................... 6.11
(a) (2) ............................................... 6.11
(a) (3) ............................................... 6.10
(a) (4) ............................................... N.A.2
(a) (5) ............................................... 6.11
(b) ............................................... 6.8; 6.11
(c) ............................................... N.A.
311 (a) ............................................... 6.12
(b) ............................................... 6.12
(c) ............................................... N.A.
312 (a) ............................................... 7.1
(b) ............................................... 7.2
(c) ............................................... 7.2
(d) ............................................... 7.4
313 (a) ............................................... 7.4
(b) (1) ............................................... 7.4
(b) (2) .............................................. 11.5
(c) ............................................... 7.4
(d) ............................................... 7.3
314 (a) ............................................... 3.9; 11.15
(b) .............................................. 11.1
(c) (1) .............................................. 11.1
(c) (2) .............................................. 11.1
(c) (3) .............................................. 11.1
(d) .............................................. 11.1
(e) .............................................. 11.1
(f) .............................................. 11.1
315 (a) ............................................... 6.1
(b) .............................................. 6.5; 11.5
(c) .............................................. 6.1
(d) .............................................. 6.1
(e) .............................................. 5.13
316 (a) (last sentence)...................................... 2.7
(a) (1) (A).............................................. 5.11
(a) (1) (B).............................................. 5.12
(a) (2) .............................................. N.A.
(b) .............................................. 5.7
(c) .............................................. N.A
317 (a) (1) .............................................. 5.3
(a) (2) .............................................. 5.3
(b) .............................................. 3.3
318 (a) .............................................. 11.7
- --------
1 Note: This Cross Reference Table shall not, for any purpose, be deemed to be
part of this Indenture.
2 N.A. means Not Applicable.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.1 Definitions..................................................2
SECTION 1.2 Incorporation by Reference of Trust Indenture Act............8
SECTION 1.3 Rules of Construction........................................8
ARTICLE II
The Notes
SECTION 2.1 Form.........................................................9
SECTION 2.2 Execution, Authentication and Delivery.......................9
SECTION 2.3 Temporary Notes..............................................9
SECTION 2.4 Registration; Registration of Transfer and Exchange.........10
SECTION 2.5 Mutilated, Destroyed, Lost or Stolen Notes..................11
SECTION 2.6 Persons Deemed Owner........................................12
SECTION 2.7 Payment of Principal and Interest; Defaulted Interest.......12
SECTION 2.8 Cancellation................................................13
SECTION 2.9 Release of Collateral.......................................13
SECTION 2.10 Book-Entry Notes............................................13
SECTION 2.11 Notices to Clearing Agency..................................14
SECTION 2.12 Definitive Notes............................................14
ARTICLE III
Covenants
SECTION 3.1 Payment of Principal and Interest...........................15
SECTION 3.2 Maintenance of Office or Agency.............................15
SECTION 3.3 Money for Payments To Be Held in Trust......................15
SECTION 3.4 Existence...................................................17
SECTION 3.5 Protection of Trust Estate..................................17
SECTION 3.6 Opinions as to Trust Estate.................................17
SECTION 3.7 Performance of Obligations; Servicing of Receivables........18
SECTION 3.8 Negative Covenants..........................................20
SECTION 3.9 Annual Statement as to Compliance...........................20
SECTION 3.10 Issuer May Consolidate, Etc. Only on Certain Terms..........21
SECTION 3.11 Successor or Transferee.....................................22
SECTION 3.12 No Other Business...........................................23
SECTION 3.13 No Borrowing................................................23
SECTION 3.14 Servicer's Obligations......................................23
SECTION 3.15 Guarantees, Loans, Advances and Other Liabilities...........23
SECTION 3.16 Capital Expenditures........................................23
SECTION 3.17 [Reserved]..................................................23
SECTION 3.18 Restricted Payments.........................................23
SECTION 3.19 Notice of Events of Default.................................23
SECTION 3.20 Further Instruments and Acts................................24
ARTICLE IV
Satisfaction and Discharge
SECTION 4.1 Satisfaction and Discharge of Indenture.....................24
SECTION 4.2 Application of Trust Money..................................25
SECTION 4.3 Repayment of Moneys Held by Paying Agent....................25
SECTION 4.4 Notice......................................................25
ARTICLE V
Remedies
SECTION 5.1 Events of Default...........................................25
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment..........27
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement
by Trustee..................................................27
SECTION 5.4 Remedies; Priorities........................................29
SECTION 5.5 Optional Preservation of the Receivables....................30
SECTION 5.6 Limitation of Suits.........................................31
SECTION 5.7 Unconditional Rights of Noteholders To Receive Principal
and Interest................................................31
SECTION 5.8 Restoration of Rights and Remedies..........................31
SECTION 5.9 Rights and Remedies Cumulative..............................32
SECTION 5.10 Delay or Omission Not a Waiver..............................32
SECTION 5.11 Control by Noteholders......................................32
SECTION 5.12 Waiver of Past Defaults.....................................33
SECTION 5.13 Undertaking for Costs.......................................33
SECTION 5.14 Waiver of Stay or Extension Laws............................33
SECTION 5.15 Action on Notes.............................................33
SECTION 5.16 Performance and Enforcement of Certain Obligations..........34
ARTICLE VI
The Trustee
SECTION 6.1 Duties of Trustee...........................................34
SECTION 6.2 Rights of Trustee...........................................35
SECTION 6.3 Individual Rights of Trustee................................36
SECTION 6.4 Trustee's Disclaimer........................................36
SECTION 6.5 Notice of Defaults; Notice of Event of Default..............36
SECTION 6.6 Reports by Trustee to Holders...............................36
SECTION 6.7 Compensation and Indemnity..................................36
SECTION 6.8 Replacement of Trustee......................................37
SECTION 6.9 Successor Trustee by Merger.................................38
SECTION 6.10 Appointment of Co-Trustee or Separate Trustee...............38
SECTION 6.11 Eligibility; Disqualification...............................39
SECTION 6.12 Preferential Collection of Claims Against Issuer............39
ARTICLE VII
Noteholders' Lists and Reports
SECTION 7.1 Issuer To Furnish Trustee Names and Addresses
of Noteholders..............................................40
SECTION 7.2 Preservation of Information; Communications to Noteholders..40
SECTION 7.3 Reports by Issuer...........................................40
SECTION 7.4 Reports by Trustee..........................................41
ARTICLE VIII
Accounts, Disbursements and Releases
SECTION 8.1 Collection of Money.........................................41
SECTION 8.2 Trust Accounts..............................................41
SECTION 8.3 General Provisions Regarding Accounts.......................42
SECTION 8.4 Release of Trust Estate.....................................43
SECTION 8.5 Opinion of Counsel..........................................43
ARTICLE IX
Supplemental Indentures
SECTION 9.1 Supplemental Indentures without Consent of Noteholders......44
SECTION 9.2 Supplemental Indentures with Consent of Noteholders.........45
SECTION 9.3 Execution of Supplemental Indentures........................46
SECTION 9.4 Effect of Supplemental Indenture............................47
SECTION 9.5 Conformity with Trust Indenture Act.........................47
SECTION 9.6 Reference in notes to Supplemental Indentures...............47
ARTICLE X
Redemption of Notes
SECTION 10.1 Redemption..................................................47
SECTION 10.2 Form of Redemption Notice...................................48
SECTION 10.3 Notes Payable on Redemption Date............................48
ARTICLE XI
Miscellaneous
SECTION 11.1 Compliance Certificates and Opinions, etc...................49
SECTION 11.2 Form of Documents Delivered to Trustee......................50
SECTION 11.3 Acts of Noteholders.........................................51
SECTION 11.4 Notices, etc., to Trustee, Issuer and Rating Agencies.......51
SECTION 11.5 Notices to Noteholders; Waiver..............................52
SECTION 11.6 Alternate Payment and Notice Provisions.....................53
SECTION 11.7 Conflict with Trust Indenture Act...........................53
SECTION 11.8 Effect of Headings and Table of Contents....................53
SECTION 11.9 Successors and Assigns......................................53
SECTION 11.10 Separability................................................53
SECTION 11.11 Benefits of Indenture.......................................53
SECTION 11.12 Legal Holidays..............................................53
SECTION 11.13 Governing Law...............................................54
SECTION 11.14 Counterparts................................................54
SECTION 11.15 Recording of Indenture......................................54
SECTION 11.16 Trust Obligation............................................54
SECTION 11.17 No Petition.................................................54
SECTION 11.18 Inspection..................................................55
Testimonium, Signatures and Seals
Exhibit A Schedule of Receivables
Exhibit B Form of Sale and Servicing Agreement
Exhibit C Form of Note Depository Agreement
Exhibit D Form of Note
<PAGE>
INDENTURE dated as of _________ __,
199_, between MELLON AUTO TRUST 199_- _, a Delaware
business trust (the "Issuer"), and ________________,
a ________________, as trustee and not in its
individual capacity (the "Trustee").
Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the Holders of the Issuer's __% Asset
Backed Notes (the "Notes"):
GRANTING CLAUSE
The Issuer hereby Grants to the Trustee at the Closing Date, as
Trustee for the benefit of the Holders of the Notes, a security interest in and
to all of the Issuer's right, title and interest in and to (a) the Receivables,
and all moneys received thereon (other than any proceeds from any Dealer
commission), on or after the Cutoff Date and, with respect to Receivables which
are Actuarial Receivables, all monies received thereon prior to the Cutoff Date
that are due on or after the Cutoff Date; (b) the security interests in the
Financed Vehicles granted by Obligors pursuant to the Receivables and any other
interest of the Issuer in the Financed Vehicles; (c) any proceeds with respect
to claims or any physical damage, repossession, loss, skip, credit life and
credit accident, vendor's single interest and health insurance policies or
certificates relating to the Financed Vehicles or the Obligors; (d) any refunds
for the costs of extended service contracts with respect to Financed Vehicles,
refunds of unearned premiums with respect to credit life and credit accident and
health insurance policies covering Financed Vehicles or Obligors; (e) any
proceeds with respect to any Receivable repurchased by a Dealer, pursuant to a
Dealer Agreement, as a result of a breach of representation or warranty in the
related Dealer Agreement or a default by an Obligor resulting in the
repossession of the Financed Vehicle under such Dealer Agreement; (f) all funds
on deposit from time to time in the Trust Accounts, including the Reserve
Account Initial Deposit, and in all investments and proceeds thereof (including
all income thereon); (g) the Sale and Servicing Agreement; and (h) the proceeds
of any and all of the foregoing (collectively, the "Collateral").
The foregoing Grant is made in trust to secure the payment of
principal of and interest on, and any other amounts owing in respect of, the
Notes, equally and ratably without prejudice, priority or distinction except as
set forth herein, and to secure compliance with the provisions of this
Indenture, all as provided in this Indenture.
The Trustee, as Trustee on behalf of the Holders of the Notes,
acknowledges such Grant, accepts the trusts under this Indenture in accordance
with the provisions of this Indenture and agrees to perform its duties required
in this Indenture to the best of its ability to the end that the interests of
the Holders of the Notes may be adequately and effectively protected.
<PAGE>
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 DEFINITIONS. Except as otherwise specified herein, the
following terms have the respective meanings set forth below for all purposes of
this Indenture.
"ACT" has the meaning specified in Section 11.3(a).
"AFFILIATE" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"AUTHORIZED OFFICER" means, with respect to the Issuer and the
Servicer, any officer or agent acting under a power of attorney of the Owner
Trustee or the Servicer, as applicable, who is authorized to act for the Owner
Trustee or the Servicer, as applicable, in matters relating to the Issuer and
who is identified on the list of Authorized Officers delivered by each of the
Owner Trustee and the Servicer to the Trustee on the Closing Date (as such list
may be modified or supplemented from time to time thereafter).
"BASIC DOCUMENTS" means the Certificate of Trust, the Trust Agreement,
the Sale and Servicing Agreement, the Depository Agreements and other documents
and certificates delivered in connection therewith.
"BOOK ENTRY NOTES" means a beneficial interest in the Notes, ownership
and transfers of which shall be made through book entries by a Clearing Agency
as described in Section 2.10.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a day
on which banking institutions or trust companies in the City of New York,
Wilmington, Delaware or ______________ are authorized or obligated by law,
regulation or executive order to remain closed.
"CERTIFICATE OF TRUST" means the certificate of trust of the Issuer
substantially in the form of Exhibit B to the Trust Agreement.
"CLEARING AGENCY" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"CLEARING AGENCY PARTICIPANT" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time, and Treasury Regulations promulgated thereunder.
"COLLATERAL" has the meaning specified in the Granting Clause of this
Indenture.
"CORPORATE TRUST OFFICE" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be principally
administered which office at date of the execution of this Agreement is located
at ____________________________, Attention: Corporate Trust Asset Backed Unit
(Telephone: ____________; Facsimile: ___________ or at such other address as the
Trustee may designate from time to time by notice to the Noteholders, the
Servicer and the Issuer, or the principal corporate trust office of any
successor Trustee (the address of which the successor Trustee will notify the
Noteholders and the Issuer).
"DEFAULT" means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
"DEFINITIVE NOTES" has the meaning specified in Section 2.10.
"EVENT OF DEFAULT" has the meaning specified in Section 5.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXECUTIVE OFFICER" means, with respect to any corporation, the
President, Executive Vice President, any Vice President, the Secretary or the
Treasurer of such corporation; and with respect to any partnership, any general
partner thereof.
"GRANT" means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create, grant a lien upon and a
security interest in and right of set-off against, deposit, set over and confirm
pursuant to this Indenture. A Grant of the Collateral or of any other agreement
or instrument shall include all rights, powers and options (but none of the
obligations) of the Granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of the Collateral and all other moneys payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
proceedings in the name of the Granting party or otherwise and generally to do
and receive anything that the Granting party is or may be entitled to do or
receive thereunder or with respect thereto.
"HOLDER" or "NOTEHOLDER" means the Person in whose name a Note is
registered on the Note Register.
"INDENTURE" means this Indenture as amended and supplemented from time
to time.
"INDEPENDENT" means, when used with respect to any specified Person,
that the person (a) is in fact independent of the Issuer, any other obligor upon
the Notes, the Depositor and any Affiliate of any of the foregoing persons, (b)
does not have any direct financial interest or any material indirect financial
interest in the Issuer, any such other obligor, the Depositor or any Affiliate
of any of the foregoing Persons and (c) is not connected with the Issuer, any
such other obligor, the Depositor or any Affiliate of any of the foregoing
Persons as an officer, employee, promoter, underwriter, trustee, partner,
director or Person performing similar functions.
"INDEPENDENT CERTIFICATE" means a certificate or opinion to be
delivered to the Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.1, made by an
Independent appraiser or other expert appointed by an Issuer Order and such
opinion or certificate shall state that the signer has read the definition of
"Independent" in this Indenture and that the signer is Independent within the
meaning thereof.
"INTEREST RATE" means __% per annum (computed on the basis of a
360-day year of twelve 30-day months).
"ISSUER" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor and, for purposes of
any provision contained herein and required by the TIA, each other obligor on
the Notes.
"ISSUER ORDER" and "ISSUER REQUEST" means a written order or request
signed in the name of the Issuer by any one of its Authorized Officers and
delivered to the Trustee.
"NOTES" means the __% Asset Backed Notes, substantially in the form of
Exhibit D.
"NOTE DEPOSITORY AGREEMENT" means the agreement among the Issuer, the
Trustee, the Servicer and The Depository Trust Company, as the initial Clearing
Agency, dated one Business Day prior to Closing Date, substantially in the form
of Exhibit C.
"NOTE OWNER" means, with respect to a Book-Entry Note, the person who
is the owner of such Book-Entry Note, as reflected on the books of the Clearing
Agency, or on the books of a Person maintaining an account with such Clearing
Agency (directly as a Clearing Agency Participant or as an indirect participant,
in each case in accordance with the rules of such Clearing Agency).
"NOTE REGISTER" and "NOTE REGISTRAR" have the respective meanings
specified in Section 2.4.
"OFFICER'S CERTIFICATE" means a certificate signed by any Authorized
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.1 and TIA ss. 314, and
delivered to the Trustee. Unless otherwise specified, any reference in this
Indenture to an Officer's Certificate shall be to an Officer's Certificate of
any Authorized Officer of the Issuer.
"OPINION OF COUNSEL" means one or more written opinions of counsel who
may, except as otherwise expressly provided in this Indenture, be employees of
or counsel to the Issuer and who shall be satisfactory to the Trustee, and which
opinion or opinions shall be addressed to the Trustee as Trustee, shall comply
with any applicable requirements of Section 11.1, and shall be in form and
substance satisfactory to the Trustee.
"OUTSTANDING" means, as of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture except:
(i) Notes theretofore canceled by the Note Registrar or delivered
to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in the
necessary amount has been theretofore deposited with the Trustee or
any Paying Agent in trust for the Holders of such Notes (provided,
however, that if such Notes are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision
therefor, satisfactory to the Trustee); and
(iii) Notes in exchange for or in lieu of other Notes which have
been authenticated and delivered pursuant to this Indenture unless
proof satisfactory to the Trustee is presented that any such Notes are
held by a bona fide purchaser;
PROVIDED that in determining whether the Holders of the requisite Outstanding
Amount of the Notes have given any request, demand, authorization, direction,
notice, consent or waiver hereunder or under any Basic Document, Notes owned by
the Issuer, any other obligor upon the Notes, the Depositor or any Affiliate of
any of the foregoing Persons shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Notes that a Responsible Officer of the Trustee either
actually knows to be so owned or has received written notice thereof shall be so
disregarded. Notes so owned that have been pledged in good faith may be regarded
as Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Notes and that the pledgee is not
the Issuer, any other obligor upon the Notes, the Depositor or any Affiliate of
any of the foregoing Persons.
"OUTSTANDING AMOUNT" means the aggregate principal amount of all Notes
Outstanding at the date of determination.
"PAYING AGENT" means the Trustee or any other Person that meets the
eligibility standards for the Trustee specified in Section 6.11 and is
authorized by the Issuer to make the payments to and distributions from the
Collection Account and the Note Distribution Account, including payment of
principal of or interest on the Notes on behalf of the Issuer.
"PAYMENT DATE" means a Distribution Date.
"PREDECESSOR NOTE" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.5 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"PROCEEDING" means any suit in equity, action at law or other judicial
or administrative proceeding.
"RECORD DATE" means, with respect to a Distribution Date or Redemption
Date the day immediately preceding the related Distribution Date or Redemption
Date or, in the event Definitive Securities have been issued, the last day of
the month immediately preceding the month in which such Distribution Date
occurs.
"REDEMPTION DATE" means (a) in the case of a redemption of the Notes
pursuant to Section 10.1(a) or a payment to Noteholders pursuant to Section
10.1(b), the Distribution Date specified by the Servicer or the Issuer pursuant
to Section 10.1(a) or (b) as applicable.
"REDEMPTION PRICE" means (a) in the case of a redemption of the Notes
pursuant to Section 10.1(a), an amount equal to the unpaid principal amount of
the then outstanding Notes plus accrued and unpaid interest thereon to but
excluding the Redemption Date, or (b) in the case of a payment made to
Noteholders pursuant to Section 10.1(b), the amount on deposit in the Note
Distribution Account, but not in excess of the amount specified in clause (a)
above.
"RESPONSIBLE OFFICER" means, with respect to the Trustee, any officer
within the Corporate Trust Office of the Trustee, including any Vice President,
Assistant Vice President, Assistant Treasurer, Assistant Secretary, or any other
officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also, with respect to a
particular matter, any other officer to whom such matter is referred because of
such officer's knowledge of and familiarity with the particular subject.
"SALE AND SERVICING AGREEMENT" means the Sale and Servicing Agreement
dated as of _________ __, 199_-_, among the Issuer, the Depositor, the Seller
and the Servicer, substantially in the form of Exhibit B as the same may be
amended or supplemented from time to time.
"SCHEDULE OF RECEIVABLES" means the listing of the Receivables set
forth in Exhibit A (which Exhibit may be in the form of microfiche).
"STATE" means any one of the 50 states of the United States of America
or the District of Columbia.
"SUCCESSOR SERVICER" has the meaning specified in Section 3.7(e).
"TRUST ESTATE" means all money, instruments, rights and other property
that are subject or intended to be subject to the lien and security interest of
this Indenture for the benefit of the Noteholders (including all property and
interests Granted to the Trustee), including all proceeds thereof.
"TRUST INDENTURE ACT" or "TIA" means the Trust Indenture Act of 1939
as in force on the date hereof, unless otherwise specifically provided.
"TRUSTEE" means ________________, a ______________, not in its
individual capacity but as trustee under this Indenture, or any successor
trustee under this Indenture.
"UCC" means, unless the context otherwise requires, the Uniform
Commercial Code, as in effect in the relevant jurisdiction, as amended from time
to time.
(a) Except as otherwise specified herein, the following terms
have the respective meanings set forth in the Sale and Servicing Agreement as in
effect on the Closing Date for all purposes of this Indenture, and the
definitions of such terms are equally applicable both to the singular and plural
forms of such terms:
SECTION OF SALE AND
TERM SERVICING AGREEMENT
Annual Percentage Rate or APR................................... Section 1.1
Certificateholders.............................................. Section 1.1
Closing Date ................................................... Section 1.1
Collection Account.............................................. Section 1.1
Collection Period............................................... Section 1.1
Contract........................................................ Section 1.1
Depositor....................................................... Section 1.1
Depository Agreements........................................... Section 1.1
Distribution Date............................................... Section 1.1
Eligible Deposit Account........................................ Section 1.1
Eligible Investments............................................ Section 1.1
Final Scheduled Distribution Date............................... Section 1.1
Final Scheduled Maturity Date................................... Section 1.1
Financed Vehicle................................................ Section 1.1
Initial Pool Balance............................................ Section 1.1
Note Distribution Account....................................... Section 1.1
Noteholders' Distributable Amount............................... Section 1.1
Noteholders' Percentage......................................... Section 1.1
Obligor......................................................... Section 1.1
Owner Trustee................................................... Section 1.1
Person.......................................................... Section 1.1
Pool Balance.................................................... Section 1.1
Purchased Receivable............................................ Section 1.1
Rating Agency .................................................. Section 1.1
Rating Agency Condition......................................... Section 1.1
Receivable...................................................... Section 1.1
Reserve Account................................................. Section 1.1
Servicer........................................................ Section 1.1
Servicer Default................................................ Section 1.1
Specified Reserve Account Balance............................... Section 1.1
Total Distribution Amount ...................................... Section 1.1
Trust Accounts.................................................. Section 1.1
Trust Agreement................................................. Section 1.1
(b) Capitalized terms used herein and not otherwise defined herein or
in the Sale and Servicing Agreement have the meanings assigned to them in the
Trust Agreement.
SECTION 1.2 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission rule
have the meaning assigned to them by such definitions.
SECTION 1.3 RULES OF CONSTRUCTION. Unless the context otherwise
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation; and
(v) words in the singular include the plural and words in the
plural include the singular.
ARTICLE II
THE NOTES
SECTION 2.1 FORM. The Notes, together with the Trustee's certificate
of authentication, shall be in substantially the form set forth in Exhibit D,
with such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by this Indenture and may have such letters,
numbers or other marks of identification and such legends or endorsements placed
thereon as may, consistently herewith, be determined by the officers executing
such Notes, as evidenced by their execution of the Notes. Any portion of the
text of any Note may be set forth on the reverse thereof, with an appropriate
reference thereto on the face of the Note.
The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods (with or without steel
engraved borders), all as determined by the officers executing such Notes, as
evidenced by their execution of such Notes.
Each Note shall be dated the date of its authentication. The terms of
the Notes set forth in Exhibit D are part of the terms of this Indenture.
SECTION 2.2 EXECUTION, AUTHENTICATION AND DELIVERY. The Notes shall be
executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile.
Notes bearing the manual or facsimile signature of individuals who
were at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Trustee shall upon Issuer Order authenticate and deliver Notes for
original issue in an aggregate principal amount of $___________. The aggregate
principal amount of Notes outstanding at any time may not exceed such amount
except as provided in Section 2.5.
Each Note shall be dated the date of its authentication. The Notes
shall be issuable as registered Notes in the minimum denomination of $25,000 and
in integral multiples of $1,000 in excess thereof (except for one Note which may
be issued in a denomination other than an integral multiple of $1,000).
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its authorized
signatories, and such certificate upon any Note shall be conclusive evidence,
and the only evidence, that such Note has been duly authenticated and delivered
hereunder.
SECTION 2.3 TEMPORARY NOTES. Pending the preparation of Definitive
Notes, the Issuer may execute, and upon receipt of an Issuer Order the Trustee
shall authenticate and deliver, temporary Notes which are printed, lithographed,
typewritten, mimeographed or otherwise produced, of the tenor of the Definitive
Notes in lieu of which they are issued and with such variations not inconsistent
with the terms of this Indenture as the officers executing such Notes may
determine, as evidenced by their execution of such Notes.
If temporary Notes are issued, the Issuer will cause Definitive Notes
to be prepared without unreasonable delay. After the preparation of Definitive
Notes, the temporary Notes shall be exchangeable for Definitive Notes upon
surrender of the temporary Notes at the office or agency of the Issuer to be
maintained as provided in Section 3.2, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Notes, the Issuer shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
like principal amount of Definitive Notes of authorized denominations. Until so
exchanged, the temporary Notes shall in all respects be entitled to the same
benefits under this Indenture as Definitive Notes.
SECTION 2.4 REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE. The
Issuer shall cause to be kept a register (the "Note Register") in which, subject
to such reasonable regulations as it may prescribe, the Issuer shall provide for
the registration of Notes and the registration of transfers of Notes. The
Trustee shall be "Note Registrar" for the purpose of registering Notes and
transfers of Notes as herein provided. The Note Registrar may resign as such
only upon written notice delivered to an Authorized Officer of the Issuer, and
upon any resignation of any Note Registrar, the Issuer shall promptly appoint a
successor or, if it elects not to make such an appointment, assume the duties of
Note Registrar.
If a Person other than the Trustee is appointed by the Issuer as Note
Registrar, the Issuer will give the Trustee prompt written notice of the
appointment of such Note Registrar and of the location, and, upon one of its
Authorized Officers receiving written notice thereof, any change in the
location, of the Note Register, and the Trustee shall have the right to inspect
the Note Register at all reasonable times and to obtain copies thereof, and the
Trustee shall have the right to rely upon a certificate executed on behalf of
the Note Registrar by an Executive Officer thereof as to the names and addresses
of the Holders of the Notes and the principal amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office
or agency of the Issuer to be maintained as provided in Section 3.2, if the
requirements of Section 8-401(a) of the UCC are met the Issuer shall execute and
upon its request the Trustee shall authenticate and the Noteholder shall obtain
from the Trustee, in the name of the designated transferee or transferees, one
or more new Notes, in any authorized denominations, of the same class and a like
aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes in
any authorized denominations, of the same class and a like aggregate principal
amount, upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, if the requirements of
Section 8-401(a) of the UCC are met the Issuer shall execute and upon its
request the Trustee shall authenticate and the Noteholder shall obtain from the
Trustee, the Notes which the Noteholder making the exchange is entitled to
receive.
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be (i) duly endorsed by, or be accompanied by a written
instrument of transfer in form satisfactory to the Trustee duly executed by, the
Holder thereof or such Holder's attorney duly authorized in writing, with such
signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar which requirements include membership or
participation in Securities Transfer Agents Medallion Program ("Stamp") or such
other "signature guarantee program" as may be determined by the Note Registrar
in addition to, or in substitution for, Stamp, all in accordance with the
Exchange Act, and (ii) accompanied by such other documents as the Trustee may
require.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 2.3 or 9.6 not involving any transfer.
The preceding provisions of this section notwithstanding, the Issuer
shall not be required to make and the Note Registrar need not register transfers
or exchanges of Notes selected for redemption or of any Note for a period of 15
days preceding the due date for any payment with respect to the Note.
SECTION 2.5 MUTILATED, DESTROYED, LOST OR STOLEN Notes. If (i) any
mutilated Note is surrendered to the Trustee, or the Trustee receives evidence
to its satisfaction of the destruction, loss or theft of any Note, and (ii)
there is delivered to the Trustee such security or indemnity as may be required
by it to hold the Issuer and the Trustee harmless, then, in the absence of
notice to the Issuer, the Note Registrar or the Trustee that such Note has been
acquired by a bona fide purchaser, and provided that the requirements of Section
8-405 of the UCC are met, the Issuer shall execute and upon its request the
Trustee shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Note, a replacement Note; PROVIDED,
HOWEVER, that if any such destroyed, lost or stolen Note, but not a mutilated
Note, shall have become or within seven days shall be due and payable, or shall
have been called for redemption, instead of issuing a replacement Note, the
Issuer may pay such destroyed, lost or stolen Note when so due or payable or
upon the Redemption Date without surrender thereof. If, after the delivery of
such replacement Note or payment of a destroyed, lost or stolen Note pursuant to
the proviso to the preceding sentence, a bona fide purchaser of the original
Note in lieu of which such replacement Note was issued presents for payment such
original Note, the Issuer and the Trustee shall be entitled to recover such
replacement Note (or such payment) from the Person to whom it was delivered or
any Person taking such replacement Note from such Person to whom such
replacement Note was delivered or any assignee of such Person, except a bona
fide purchaser, and shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expense incurred by
the Issuer or the Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section, the
Issuer may require the payment by the Holder of such Note of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses (including the fees and expenses of
the Trustee) connected therewith.
Every replacement Note issued pursuant to this Section in replacement
of any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.6 PERSONS DEEMED OWNER. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Trustee and any agent of
the Issuer or the Trustee may treat the Person in whose name any Note is
registered (as of the day of determination) as the owner of such Note for the
purpose of receiving payments of principal of and interest, if any, on such Note
and for all other purposes whatsoever, whether or not such Note be overdue, and
neither the Issuer, the Trustee nor any agent of the Issuer or the Trustee shall
be affected by notice to the contrary.
SECTION 2.7 PAYMENT OF PRINCIPAL AND INTEREST; DEFAULTED INTEREST. (a)
The Notes shall accrue interest as provided in the form of the Notes, set forth
in Exhibit D, and such interest shall be payable on each Distribution Date as
specified therein. Any installment of interest or principal, if any, payable on
any Note which is punctually paid or duly provided for by the Issuer on the
applicable Distribution Date shall be paid to the Person in whose name such Note
(or one or more Predecessor Notes) is registered on the Record Date, by check
mailed first-class, postage prepaid, to such Person's address as it appears on
the Note Register on such Record Date, except that, unless Definitive Notes have
been issued pursuant to Section 2.12, with respect to Notes registered on the
Record Date in the name of the nominee of the Clearing Agency (initially, such
nominee to be Cede & Co.), payment will be made by wire transfer in immediately
available funds to the account designated by such nominee and except for the
final installment of principal payable with respect to such Note on a
Distribution Date or on the Final Scheduled Distribution Date (and except for
the Redemption Price for any Note called for redemption pursuant to Section
10.1(a)) which shall be payable as provided below. The funds represented by any
such checks returned undelivered shall be held in accordance with Section 3.3.
(b) The principal of each Note shall be payable in installments on
each Distribution Date as provided in the form of the Notes, set forth in
Exhibit D. Notwithstanding the foregoing, the entire unpaid principal amount of
the Notes shall be due and payable, if not previously paid, on the date on which
an Event of Default shall have occurred and be continuing, if the Trustee or the
Holders of the Notes representing not less than 66 2/3% of the Outstanding
Amount of the Notes have declared the Notes to be immediately due and payable in
the manner provided in Section 5.2. All principal payments on the Notes shall be
made pro rata to the Noteholders. The Trustee shall notify the Person in whose
name a Note is registered at the close of business on the Record Date preceding
the Distribution Date on which the Issuer expects that the final installment of
principal of and interest on such Note will be paid. Such notice shall be mailed
or transmitted by facsimile prior to such final Distribution Date and shall
specify that such final installment will be payable only upon presentation and
surrender of such Note and shall specify the place where such Note may be
presented and surrendered for payment of such installment. Notices in connection
with redemptions of Notes shall be mailed to Noteholders as provided in Section
10.2.
(c) If the Issuer defaults in a payment of interest on the Notes, the
Issuer shall pay defaulted interest (plus interest on such defaulted interest to
the extent lawful) at the Interest Rate in any lawful manner. The Issuer may pay
such defaulted interest to the Persons who are Noteholders on a subsequent
special record date, which date shall be at least five Business Days prior to
the payment date. The Issuer shall fix or cause to be fixed any such special
record date and payment date, and, at least 15 days before any such special
record date, the Issuer shall mail to each Noteholder and the Trustee a notice
that states the special record date, the payment date and the amount of
defaulted interest to be paid.
SECTION 2.8 CANCELLATION. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee and shall be promptly
canceled by the Trustee. The Issuer may at any time deliver to the Trustee for
cancellation any Notes previously authenticated and delivered hereunder which
the Issuer may have acquired in any manner whatsoever, and all Notes so
delivered shall be promptly canceled by the Trustee. No Notes shall be
authenticated in lieu of or in exchange for any Notes canceled as provided in
this Section, except as expressly permitted by this Indenture. All canceled
Notes may be held or disposed of by the Trustee in accordance with its standard
retention or disposal policy as in effect at the time unless the Issuer shall
direct by an Issuer Order that they be returned to it; PROVIDED that such Issuer
Order is timely and the Notes have not been previously disposed of by the
Trustee.
SECTION 2.9 RELEASE OF COLLATERAL. Subject to Section 11.1, the
Trustee shall release property from the lien of this Indenture only upon receipt
of an Issuer Request accompanied by an Officer's Certificate, an Opinion of
Counsel and Independent Certificates in accordance with TIA ss. 314(c) and
314(d)(l) or an Opinion of Counsel in lieu of such Independent Certificates to
the effect that the TIA does not require any such Independent Certificates.
SECTION 2.10 BOOK-ENTRY NOTES. The Notes, upon original issuance, will
be issued in the form of typewritten Notes representing the Book-Entry Notes, to
be delivered to ________________, as agent for The Depository Trust Company, the
initial Clearing Agency, by, or on behalf of, the Issuer. Such Notes shall
initially be registered on the Note Register in the name of Cede & Co., the
nominee of the initial Clearing Agency, and no Note Owner will receive a
Definitive Note representing such Note Owner's interest in such Note, except as
provided in Section 2.12. Unless and until definitive, fully registered Notes
(the "Definitive Notes") have been issued to Note Owners pursuant to Section
2.12:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Note Registrar and the Trustee shall be entitled to deal
with the Clearing Agency for all purposes of this Indenture (including
the payment of principal of and interest on the Notes and the giving
of instructions or directions hereunder) as the sole Holder of the
Notes, and shall have no obligation to the Note Owners;
(iii) to the extent that the provisions of this Section conflict
with any other provisions of this Indenture, the provisions of this
Section shall control;
(iv) the rights of Note Owners shall be exercised only through
the Clearing Agency and shall be limited to those established by law
and agreements between such Note Owners and the Clearing Agency and/or
the Clearing Agency Participants. Pursuant to the Note Depository
Agreement, unless and until Definitive Notes are issued pursuant to
Section 2.12, the initial Clearing Agency will make book-entry
transfers among the Clearing Agency Participants and receive and
transmit payments of principal of and interest on the Notes to such
Clearing Agency Participants; and
(v) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Holders of Notes
evidencing a specified percentage of the Outstanding Amount of the
Notes, the Clearing Agency shall be deemed to represent such
percentage only to the extent that it has received instructions to
such effect from Note Owners and/or Clearing Agency Participants
owning or representing, respectively, such required percentage of the
beneficial interest in the Notes and has delivered such instructions
to the Trustee.
SECTION 2.11 NOTICES TO CLEARING AGENCY. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to Note Owners pursuant to Section
2.12, the Trustee shall give all such notices and communications specified
herein to be given to Holders of the Notes to the Clearing Agency, and shall
have no obligation to the Note Owners.
SECTION 2.12 DEFINITIVE NOTES. If (i) the Servicer advises the Trustee
in writing that the Clearing Agency is no longer willing or able to properly
discharge its responsibilities with respect to the Notes, and the Servicer is
unable to locate a qualified successor, (ii) the Servicer at its option advises
the Trustee in writing that it elects to terminate the book-entry system through
the Clearing Agency or (iii) after the occurrence of an Event of Default, Note
Owners representing beneficial interests aggregating at least a majority of the
Outstanding Amount of the Notes advise the Trustee through the Clearing Agency
in writing that the continuation of a book entry system through the Clearing
Agency is no longer in the best interests of the Note Owners, then the Clearing
Agency shall notify all Note Owners and the Trustee of the occurrence of any
such event and of the availability of Definitive Notes to Note Owners requesting
the same. Upon surrender to the Trustee of the typewritten Note or Notes
representing the Book-Entry Notes by the Clearing Agency, accompanied by
registration instructions, the Issuer shall execute and the Trustee shall
authenticate the Definitive Notes in accordance with the instructions of the
Clearing Agency. None of the Issuer, the Note Registrar or the Trustee shall be
liable for any delay in delivery of such instructions and may conclusively rely
on, and shall be protected in relying on, such instructions. Upon the issuance
of Definitive Notes, the Trustee shall recognize the Holders of the Definitive
Notes as Noteholders.
ARTICLE III
COVENANTS SECTION
3.1 PAYMENT OF PRINCIPAL AND INTEREST. The Issuer will duly and
punctually pay the principal of and interest on the Notes in accordance with the
terms of the Notes and this Indenture. Without limiting the foregoing, subject
to Section 8.2(c), the Issuer will cause to be distributed all amounts on
deposit in the Note Distribution Account on a Distribution Date deposited
therein pursuant to the Sale and Servicing Agreement for the benefit of the
Notes, to the Noteholders. Amounts properly withheld under the Code by any
Person from a payment to any Noteholder of interest and/or principal shall be
considered as having been paid by the Issuer to such Noteholder for all purposes
of this Indenture.
SECTION 3.2 MAINTENANCE OF OFFICE OR AGENCY. The Issuer will maintain
in the Borough of Manhattan, The City of New York, an office or agency where
Notes may be surrendered for registration of transfer or exchange, and where
notices and demands to or upon the Issuer in respect of the Notes and this
Indenture may be served. The Issuer hereby initially appoints the Trustee to
serve as its agent for the foregoing purposes. The Issuer will give prompt
written notice to the Trustee of the location, and of any change in the
location, of any such office or agency. If at any time the Issuer shall fail to
maintain any such office or agency or shall fail to furnish the Trustee with the
address thereof, such surrenders, notices and demands may be made or served at
the Corporate Trust Office, and the Issuer hereby appoints the Trustee as its
agent to receive all such surrenders, notices and demands.
SECTION 3.3 MONEY FOR PAYMENTS TO BE HELD IN TRUST. As provided in
Sections 8.2(a) and (b), all payments of amounts due and payable with respect to
any Notes that are to be made from amounts withdrawn from the Collection Account
and the Note Distribution Account pursuant to Section 8.2(c) shall be made on
behalf of the Issuer by the Trustee or by another Paying Agent, and no amounts
so withdrawn from the Collection Account and the Note Distribution Account for
payments of Notes shall be paid over to the Issuer except as provided in this
Section.
At least one Business Day prior to each Distribution Date and
Redemption Date, the Issuer shall deposit or cause to be deposited in the Note
Distribution Account an aggregate sum sufficient to pay the amounts then
becoming due under the Notes, such sum to be held in trust for the benefit of
the Persons entitled thereto and (unless the Paying Agent is the Trustee) shall
promptly notify the Trustee of its action or failure so to act.
The Issuer will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee (and if the Trustee acts as Paying Agent, it hereby
so agrees), subject to the provisions of this Section, that such Paying Agent
will:
(i) hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and pay such sums to such Persons as
herein provided;
(ii) give the Trustee notice of any default by the Issuer of
which it has actual knowledge (or any other obligor upon the Notes) in
the making of any payment required to be made with respect to the
Notes;
(iii) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to
the Trustee all sums held by it in trust for the payment of Notes if
at any time it ceases to meet the standards required to be met by a
Paying Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Paying Agent to pay to the Trustee all sums held in trust by
such Paying Agent, such sums to be held by the Trustee upon the same trusts as
those upon which the sums were held by such Paying Agent; and upon such a
payment by any Paying Agent to the Trustee, such Paying Agent shall be released
from all further liability with respect to such money.
Subject to applicable laws with respect to the escheat of funds, any
money held by the Trustee or any Paying Agent in trust for the payment of any
amount due with respect to any Note and remaining unclaimed for two years after
such amount has become due and payable shall be discharged from such trust and
be paid to the Issuer on Issuer Request; and the Holder of such Note shall
thereafter, as an unsecured general creditor, look only to the Issuer for
payment thereof (but only to the extent of the amounts so paid to the Issuer),
and all liability of the Trustee or such Paying Agent with respect to such trust
money shall thereupon cease; PROVIDED, HOWEVER, that the Trustee or such Paying
Agent, before being required to make any such repayment, shall at the expense of
the Issuer cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general circulation
in The City of New York, notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Issuer. The Trustee shall also adopt and employ, at the
expense of the Issuer, any other reasonable means of notification of such
repayment (including, but not limited to, mailing notice of such repayment to
Holders whose Notes have been called but have not been surrendered for
redemption or whose right to or interest in moneys due and payable but not
claimed is determinable from the records of the Trustee or of any Paying Agent,
at the last address of record for each such Holder).
SECTION 3.4 EXISTENCE. Except as otherwise permitted by the provisions
of Section 3.10, the Issuer will keep in full effect its existence, rights and
franchises as a business trust under the laws of the State of Delaware (unless
it becomes, or any successor Issuer hereunder is or becomes, organized under the
laws of any other state or of the United States of America, in which case the
Issuer will keep in full effect its existence, rights and franchises under the
laws of such other jurisdiction) and will obtain and preserve its qualification
to do business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Indenture, the
Notes, the Collateral and each other instrument or agreement included in the
Trust Estate.
SECTION 3.5 PROTECTION OF TRUST ESTATE. The Issuer will from time to
time prepare (or shall cause to be prepared), execute and deliver all such
supplements and amendments hereto and all such financing statements,
continuation statements, instruments of further assurance and other instruments,
and will take such other action necessary or advisable to:
(i) maintain or preserve the lien and security interest and the
priority thereof) of this Indenture or carry out more effectively the
purposes hereof;
(ii) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture;
(iii) enforce any of the Collateral; or
(iv) preserve and defend title to the Trust Estate and the rights
of the Trustee and the Noteholders in such Trust Estate against the
claims of all persons and parties.
The Issuer hereby designates the Trustee its agent and attorney-in-fact to
execute any financing statement, continuation statement or other instrument
required to be executed pursuant to this Section; it being understood that the
Trustee has no duty to determine whether any filing or recording is necessary
hereunder.
SECTION 3.6 OPINIONS AS TO TRUST ESTATE. (a) On the Closing Date, the
Issuer shall furnish to the Trustee an Opinion of Counsel either stating that,
in the opinion of such counsel, such action has been taken with respect to the
recording and filing of this Indenture, any indentures supplemental hereto, and
any other requisite documents, and with respect to the execution and filing of
any financing statements and continuation statements, as are necessary to
perfect and make effective the lien and security interest of this Indenture and
reciting the details of such action, or stating that, in the opinion of such
counsel, no such action is necessary to make such lien and security interest
effective.
(b) Within 120 days after the beginning of each calendar year,
beginning with the first calendar year beginning more than three months after
the Cutoff Date, the Issuer shall furnish to the Trustee an Opinion of Counsel
either stating that, in the opinion of such counsel, such action has been taken
with respect to the recording, filing, re-recording and refiling of this
Indenture, any indentures supplemental hereto and any other requisite documents
and with respect to the execution and filing of any financing statements and
continuation statements as are necessary to maintain the lien and security
interest created by this Indenture and reciting the details of such action or
stating that in the opinion of such counsel no such action is necessary to
maintain such lien and security interest. Such Opinion of Counsel shall also
describe the recording, filing, re-recording and refiling of this Indenture, any
indentures supplemental hereto and any other requisite documents and the
execution and filing of any financing statements and continuation statements
that will, in the opinion of such counsel, be required to maintain the lien and
security interest of this Indenture until April 30 in the following calendar
year.
SECTION 3.7 PERFORMANCE OF OBLIGATIONS; SERVICING OF RECEIVABLES. (a)
The Issuer will not take any action and will use its best efforts not to permit
any action to be taken by others that would release any Person from any of such
Person's material covenants or obligations under any instrument or agreement
included in the Trust Estate or that would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or agreement, except as
ordered by any bankruptcy or other court or as expressly provided in this
Indenture, the Basic Documents or such other instrument or agreement.
(b) The Issuer may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such duties
by a Person identified to the Trustee in an Officer's Certificate of the Issuer
shall be deemed to be action taken by the Issuer. Initially, the Issuer has
contracted with the Servicer to assist the Issuer in performing its duties under
this Indenture.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Basic Documents and
in the instruments and agreements included in the Trust Estate, including but
not limited to preparing (or causing to prepared) and filing (or causing to be
filed) all UCC financing statements and continuation statements required to be
filed by the terms of this Indenture and the Sale and Servicing Agreement in
accordance with and within the time periods provided for herein and therein.
Except as otherwise expressly provided therein, the Issuer shall not waive,
amend, modify, supplement or terminate any Basic Document or any provision
thereof without the consent of the Trustee or the Holders of at least a majority
of the Outstanding Amount of the Notes.
(d) If the Issuer shall have knowledge of the occurrence of a Servicer
Default under the Sale and Servicing Agreement, the Issuer shall promptly notify
the Trustee and the Rating Agencies thereof in accordance with Section 11.4, and
shall specify in such notice the action, if any, the Issuer is taking in respect
of such default. If a Servicer Default of which the Issuer has knowledge shall
arise from the failure of the Servicer to perform any of its duties or
obligations under the Sale and Servicing Agreement with respect to the
Receivables, the Issuer shall take all reasonable steps available to it to
remedy such failure.
(e) As promptly as possible after the giving of notice of termination
to the Servicer of the Servicer's rights and powers pursuant to Section 8.1 of
the Sale and Servicing Agreement, the Issuer shall appoint a successor servicer
(the "Successor Servicer"), and such Successor Servicer shall accept its
appointment by a written assumption in a form acceptable to the Trustee. In the
event that a Successor Servicer has not been appointed and accepted its
appointment at the time when the Servicer ceases to act as Servicer, the Trustee
without further action shall automatically be appointed the Successor Servicer
in accordance with Section 8.2 of the Sale and Servicing Agreement. The Trustee
may resign as the Servicer by giving written notice of such resignation to the
Issuer and in such event will be released from such duties and obligations, such
release not to be effective until the date a new servicer enters into a
servicing agreement with the Issuer as provided below. Upon delivery of any such
notice to the Issuer, the Issuer shall obtain a new servicer as the Successor
Servicer under the Sale and Servicing Agreement. Any Successor Servicer other
than the Trustee shall (i) be an established financial institution having a net
worth of not less than $50,000,000 and whose regular business includes the
servicing of Contracts and (ii) enter into a servicing agreement with the Issuer
having substantially the same provisions as the provisions of the Sale and
Servicing Agreement applicable to the Servicer. If within 30 days after the
delivery of the notice referred to above, the Issuer shall not have obtained
such a new servicer, the Trustee may appoint, or may petition a court of
competent jurisdiction to appoint, a Successor Servicer. In connection with any
such appointment, the Trustee may make such arrangements for the compensation of
such successor as it and such successor shall agree, subject to the limitations
set forth below and in the Sale and Servicing Agreement, and in accordance with
Section 8.2 of the Sale and Servicing Agreement, the Issuer shall enter into an
agreement with such successor for the servicing of the Receivables (such
agreement to be in form and substance satisfactory to the Trustee). If the
Trustee shall succeed to the Servicer's duties as servicer of the Receivables as
provided herein, it shall do so in its individual capacity and not in its
capacity as Trustee and, accordingly, the provisions of Article VI hereof shall
be inapplicable to the Trustee in its duties as the successor to the Servicer
and the servicing of the Receivables. In case the Trustee shall become successor
to the Servicer under the Sale and Servicing Agreement, the Trustee shall be
entitled to appoint as Servicer any one of its Affiliates, or delegate any of
its responsibilities as Servicer to agents, subject to the terms of the Sale and
Servicing Agreement, provided that such appointment or delegation shall not
affect or alter in any way the liability of the Trustee as a successor for the
performance of the duties and obligations of the Servicer in accordance with the
terms hereof.
(f) Upon an Authorized Officer of the Issuer acquiring actual
knowledge of any termination of the Servicer's rights and powers pursuant to the
Sale and Servicing Agreement, the Issuer shall promptly notify the Trustee. As
soon as a Successor Servicer (other than the Trustee) is appointed, the Issuer
shall notify the Trustee of such appointment, specifying in such notice the name
and address of such Successor Servicer.
(g) Without derogating from the absolute nature of the assignment
granted to the Trustee under this Indenture or the rights of the Trustee
hereunder, the Issuer agrees that, unless such action is specifically permitted
hereunder or under the Basic Documents, it will not, without the prior written
consent of the Trustee or the Holders of at least a majority in Outstanding
Amount of the Notes, amend, modify, waive, supplement, terminate or surrender,
or agree to any amendment, modification, supplement, termination, waiver or
surrender of, the terms of any Collateral or the Basic Documents, or waive
timely performance or observance by the Servicer, the Sponsor or the Depositor
under the Sale and Servicing Agreement; PROVIDED, HOWEVER, that no such
amendment shall (i) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, distributions that are required to be made
for the benefit of the Noteholders, or (ii) reduce the aforesaid percentage of
the Notes which are required to consent to any such amendment, without the
consent of the Holders of all the Outstanding Notes. If any such amendment,
modification, supplement or waiver shall be so consented to by the Trustee or
such Holders, the Issuer agrees, promptly following a request by the Trustee to
do so, to execute and deliver, in its own name and at its own expense, such
agreements, instruments, consents and other documents as the Trustee may deem
necessary or appropriate in the circumstances.
SECTION 3.8 NEGATIVE COVENANTS. So long as any Notes are Outstanding,
the Issuer shall not:
(i) except as expressly permitted by this Indenture or the Basic
Documents, sell, transfer, exchange or otherwise dispose of any of the
properties or assets of the Issuer, including those included in the
Trust Estate, unless directed to do so by the Trustee;
(ii) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes (other than
amounts properly withheld from such payments under the Code) or assert
any claim against any present or former Noteholder by reason of the
payment of the taxes levied or assessed upon any part of the Trust
Estate; or
(iii) (A) permit the validity or effectiveness of this Indenture
to be impaired, or permit the lien of this Indenture to be amended,
hypothecated, subordinated, terminated or discharged, or permit any
Person to be released from any covenants or obligations with respect
to the Notes under this Indenture except as may be expressly permitted
hereby, (B) permit any lien, charge, excise, claim, security interest,
mortgage or other encumbrance (other than the lien of this Indenture)
to be created on or extend to or otherwise arise upon or burden the
Trust Estate or any part thereof or any interest therein or the
proceeds thereof (other than tax liens, mechanics' liens and other
liens that arise by operation of law, in each case on a Financed
Vehicle and arising solely as a result of an action or omission of the
related Obligor) or (C) permit the lien of this Indenture not to
constitute a valid first priority (other than with respect to any such
tax, mechanics' or other lien) security interest in the Trust Estate.
SECTION 3.9 ANNUAL STATEMENT AS TO COMPLIANCE. The Issuer will deliver
to the Trustee, within 120 days after the end of each fiscal year of the Issuer
(commencing with the fiscal year 199_), and otherwise in compliance with the
requirements of TIA Section 314(a)(4) an Officer's Certificate stating, as to
the Authorized Officer signing such Officer's Certificate, that
(i) a review of the activities of the Issuer during such year and
of performance under this Indenture has been made under such
Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based on
such review, the Issuer has complied with all conditions and covenants
under this Indenture throughout such year, or, if there has been a
default in the compliance of any such condition or covenant,
specifying each such default known to such Authorized Officer and the
nature and status thereof.
SECTION 3.10 ISSUER MAY CONSOLIDATE, ETC. ONLY ON CERTAIN TERMS.
(a) The Issuer shall not consolidate or merge with or into any other Person,
unless
(i) the Person (if other than the Issuer) formed by or surviving
such consolidation or merger shall be a Person organized and existing
under the laws of the United States of America or any state and shall
expressly assume, by an indenture supplement hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee, the due
and punctual payment of the principal of and interest on all Notes and
the performance or observance of every agreement and covenant of this
Indenture on the part of the Issuer to be performed or observed, all
as provided herein;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to the Trustee) to the effect that
such transaction will not have any material adverse tax consequence to
the Trust, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and security
interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel each stating that such
consolidation or merger and such supplemental indenture comply with
this Article III and that all conditions precedent herein provided for
relating to such transaction have been complied with (including any
filing required by the Exchange Act).
(b) The Issuer shall not convey or transfer all or substantially
all of its properties or assets, including those included in the Trust Estate,
to any Person, unless
(i) the Person that acquires by conveyance or transfer the
properties and assets of the Issuer the conveyance or transfer of
which is hereby restricted shall (A) be a United States citizen or a
Person organized and existing under the laws of the United States of
America or any state, (B) expressly assume, by an indenture supplement
hereto, executed and delivered to the Trustee, in form satisfactory to
the Trustee, the due and punctual payment of the principal of and
interest on all Notes and the performance or observance of every
agreement and covenant of this Indenture on the part of the Issuer to
be performed or observed, all as provided herein, (C) expressly agree
by means of such supplemental indenture that all right, title and
interest so conveyed or transferred shall be subject and subordinate
to the rights of Holders of the Notes, (D) unless otherwise provided
in such supplemental indenture, expressly agree to indemnify, defend
and hold harmless the Issuer against and from any loss, liability or
expense arising under or related to this Indenture and the Notes and
(E) expressly agree by means of such supplemental indenture that such
Person (or if a group of persons, then one specified Person) shall
prepare (or cause to be prepared) and make all filings with the
Commission (and any other appropriate Person) required by the Exchange
Act in connection with the Notes;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to the Trustee) to the effect that
such transaction will not have any material adverse tax consequence to
the Trust, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and security
interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that such
conveyance or transfer and such supplemental indenture comply with
this Article III and that all conditions precedent herein provided for
relating to such transaction have been complied with (including any
filing required by the Exchange Act).
SECTION 3.11 SUCCESSOR OR TRANSFEREE. (a) Upon any consolidation or
merger of the Issuer in accordance with Section 3.10(a), the Person formed by or
surviving such consolidation or merger (if other than the Issuer) shall succeed
to, and be substituted for, and may exercise every right and power of, the
Issuer under this Indenture with the same effect as if such Person had been
named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties of
the Issuer pursuant to Section 3.10 (b), Mellon Auto Trust 199_-_ will be
released from every covenant and agreement of this Indenture to be observed or
performed on the part of the Issuer with respect to the Notes immediately upon
the delivery of written notice to the Trustee stating that Mellon Auto Trust
199_-_ is to be so released.
SECTION 3.12 NO OTHER BUSINESS. The Issuer shall not engage in any
business other than financing, purchasing, owning, selling and managing the
Receivables in the manner contemplated by this Indenture and the Basic Documents
and activities incidental thereto.
SECTION 3.13 NO BORROWING. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the Notes.
SECTION 3.14 SERVICER'S OBLIGATIONS. The Issuer shall cause the
Servicer to comply with Sections 4.9, 4.10, 4.11 and 5.8 of the Sale and
Servicing Agreement.
SECTION 3.15 GUARANTEES, LOANS, ADVANCES AND OTHER LIABILITIES. Except
as contemplated by the Sale and Servicing Agreement or this Indenture, the
Issuer shall not make any loan or advance or credit to, or guarantee (directly
or indirectly or by an instrument having the effect of assuring another's
payment or performance on any obligation or capability of so doing or
otherwise), endorse or otherwise become contingently liable, directly or
indirectly, in connection with the obligations, stocks or dividends of, or own,
purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, or any other interest in, or make any
capital contribution to, any other Person.
SECTION 3.16 CAPITAL EXPENDITURES. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
SECTION 3.17 [Reserved]
SECTION 3.18 RESTRICTED PAYMENTS. The Issuer shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or security
in or of the Issuer or to the Servicer, (ii) redeem, purchase, retire or
otherwise acquire for value any such ownership or equity interest or security or
(iii) set aside or otherwise segregate any amounts for any such purpose;
provided, HOWEVER, that the Issuer may make, or cause to be made, distributions
to the Servicer, the Owner Trustee, the Trustee and the Certificateholders as
permitted by, and to the extent funds are available for such purpose under, the
Sale and Servicing Agreement or Trust Agreement. The Issuer will not, directly
or indirectly, make payments to or distributions from the Collection Account
except in accordance with this Indenture and the Basic Documents.
SECTION 3.19 NOTICE OF EVENTS OF DEFAULT. The Issuer agrees to give
the Trustee and the Rating Agencies prompt written notice of each Event of
Default hereunder and each default on the part of the Servicer or the Depositor
of its obligations under the Sale and Servicing Agreement of which an Authorized
Officer of the Issuer acquires actual knowledge.
SECTION 3.20 FURTHER INSTRUMENTS AND ACTS. Upon request of the
Trustee, the Issuer will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1 SATISFACTION AND DISCHARGE OF INDENTURE. This Indenture
shall cease to be of further effect with respect to the Notes except as to (i)
rights of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal thereof and interest thereon, (iv) Sections 3.3, 3.4, 3.5, 3.8,
3.10, 3.12 and 3.13, (v) the rights, obligations and immunities of the Trustee
hereunder (including the rights of the Trustee under Section 6.7 and the
obligations of the Trustee under Section 4.2) and (vi) the rights of Noteholders
as beneficiaries hereof with respect to the property so deposited with the
Trustee payable to all or any of them, and the Trustee, on demand of and at the
expense of the Issuer, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture with respect to the Notes, when
(A) either
(1) all Notes theretofore authenticated and delivered (other than
(i) Notes that have been destroyed, lost or stolen and that have been
replaced or paid as provided in Section 2.5 and (ii) Notes for whose
payment money has theretofore been deposited in trust or segregated
and held in trust by the Issuer and thereafter repaid to the Issuer or
discharged from such trust, as provided in Section 3.3) have been
delivered to the Trustee for cancellation; or
(2) all Notes not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable,
(ii) will become due and payable at the Final Scheduled
Distribution Date within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Issuer, and the Issuer, in the case of (i), (ii) or (iii) above, has
irrevocably deposited or caused to be irrevocably deposited with the
Trustee cash or direct obligations of or obligations guaranteed by the
United States of America (which will mature prior to the date such
amounts are payable), in trust for such purpose, in an amount
sufficient to pay and discharge the entire indebtedness on such Notes
not theretofore delivered to the Trustee for cancellation when due to
the Final Scheduled Distribution Date or Redemption Date (if Notes
shall have been called for redemption pursuant to Section 10.1(a)), as
the case may be;
(B) the Issuer has paid or caused to be paid all other sums
payable hereunder by the Issuer; and
(C) the Issuer has delivered to the Trustee an Officer's
Certificate, an Opinion of Counsel and (if required by the TIA or the
Trustee) an Independent Certificate from a firm of certified public
accountants, each meeting the applicable requirements of Section
11.1(a) and each stating that all conditions precedent herein provided
for relating to the satisfaction and discharge of this Indenture have
been complied with.
SECTION 4.2 APPLICATION OF TRUST MONEY. All moneys deposited with the
Trustee pursuant to Section 4.1 hereof shall be held in trust and applied by it,
in accordance with the provisions of the Notes and this Indenture, to the
payment, either directly or through any Paying Agent, as the Trustee may
determine, to the Holders of the particular Notes for the payment or redemption
of which such moneys have been deposited with the Trustee, of all sums due and
to become due thereon for principal and interest; but such moneys need not be
segregated from other funds except to the extent required herein or in the Sale
and Servicing Agreement or required by law.
SECTION 4.3 REPAYMENT OF MONEYS HELD BY PAYING Agent. In connection
with the satisfaction and discharge of this Indenture with respect to the Notes,
all moneys then held by any Paying Agent other than the Trustee under the
provisions of this Indenture with respect to such Notes shall, upon demand of
the Issuer, be paid to the Trustee to be held and applied according to Section
3.3 and thereupon such Paying Agent shall be released from all further liability
with respect to such moneys.
SECTION 4.4 NOTICE. Upon the satisfaction and discharge of this
Indenture with respect to the Notes, the Trustee shall notify each Rating Agency
of such satisfaction and discharge.
ARTICLE V
REMEDIES
SECTION 5.1 EVENTS OF DEFAULT. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) default in the payment of any interest on any Note when the
same becomes due and payable, and such default shall continue for a
period of five days; or
(ii) default in the payment of the principal of or any
installment of the principal of any Note when the same becomes due and
payable; or
(iii) default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture (other than a covenant
or agreement, a default in the observance or performance of which is
elsewhere in this Section specifically dealt with), or any
representation or warranty of the Issuer made in this Indenture or in
any certificate or other writing delivered pursuant hereto or in
connection herewith proving to have been incorrect in any material
respect as of the time when the same shall have been made, and such
default shall continue or not be cured, or the circumstance or
condition in respect of which such misrepresentation or warranty was
incorrect shall not have been eliminated or otherwise cured, for a
period of 30 days after there shall have been given, by registered or
certified mail, to the Issuer by the Trustee or to the Issuer and the
Trustee by the Holders of at least 25% of the Outstanding Amount of
the Notes, a written notice specifying such default or incorrect
representation or warranty and requiring it to be remedied and stating
that such notice is a "Notice of Default" hereunder; or
(iv) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer or any
substantial part of the Trust Estate in an involuntary case under any
applicable Federal or state bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the
Issuer or for any substantial part of the Trust Estate, or ordering
the winding-up or liquidation of the Issuer's affairs, and such decree
or order shall remain unstayed and in effect for a period of 30
consecutive days; or
(v) the commencement by the Issuer of a voluntary case under any
applicable Federal or state bankruptcy, insolvency or other similar
law now or hereafter in effect, or the consent by the Issuer to the
entry of an order for relief in an involuntary case under any such
law, or the consent by the Issuer to the appointment or taking
possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Issuer or for any substantial
part of the Trust Estate, or the making by the Issuer of any general
assignment for the benefit of creditors, or the failure by the Issuer
generally to pay its debts as such debts become due, or the taking of
action by the Issuer in furtherance of any of the foregoing.
The Issuer shall deliver to the Trustee, within five days after the
occurrence thereof, written notice in the form of an Officer's Certificate of
any event of which an Authorized Officer of the Issuer has acquired actual
knowledge which with the giving of notice and the lapse of time would become an
Event of Default under clause (iii), its status and what action the Issuer is
taking or proposes to take with respect thereto.
SECTION 5.2 ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If an
Event of Default should occur and be continuing, then and in every such case the
Trustee or the Holders of Notes representing not less than a majority of the
Outstanding Amount of the Notes may declare all the Notes to be immediately due
and payable, by a notice in writing to the Issuer (and to the Trustee if given
by Noteholders), and upon any such declaration the unpaid principal amount of
such Notes, together with accrued and unpaid interest thereon through the date
of acceleration, shall become immediately due and payable.
At any time after such declaration of acceleration of maturity has
been made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter in this Article V provided, the Holders
of Notes representing 66 2/3% of the Outstanding Amount of the Notes, by written
notice to the Issuer and the Trustee, may rescind and annul such declaration and
its consequences if:
(i) the Issuer has paid or deposited with the Trustee a sum
sufficient to pay
(A) all payments of principal of and interest on all
Notes and all other amounts that would then be due hereunder
or upon such Notes if the Event of Default giving rise to such
acceleration had not occurred; and
(B) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agents and
counsel; and
(ii) all Events of Default, other than the nonpayment of the
principal of the Notes that has become due solely by such
acceleration, have been cured or waived as provided in Section 5.12.
No such rescission shall affect any subsequent default or impair any
right consequent thereto.
SECTION 5.3 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE. (a) The Issuer covenants that if (i) default is made in the payment of
any interest on any Note when the same becomes due and payable, and such default
continues for a period of five days, or (ii) default is made in the payment of
the principal of or any installment of the principal of any Note when the same
becomes due and payable, the Issuer will, upon demand of the Trustee, pay to it,
for the benefit of the Holders of the Notes, the whole amount then due and
payable on such Notes for principal and interest, with interest upon the overdue
principal, and, to the extent payment at such rate of interest shall be legally
enforceable, upon overdue installments of interest, at the rate borne by the
Notes and in addition thereto such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee and its agents
and counsel.
(b) In case the Issuer shall fail forthwith to pay such amounts upon
such demand, the Trustee, in its own name and as trustee of an express trust,
may institute a proceeding for the collection of the sums so due and unpaid, and
may prosecute such proceeding to judgment or final decree, and may enforce the
same against the Issuer or other obligor upon such Notes and collect in the
manner provided by law out of the property of the Issuer or other obligor upon
such Notes, wherever situated, the moneys adjudged or decreed to be payable.
(c) If an Event of Default occurs and is continuing, the Trustee may,
as more particularly provided in Section 5.4, in its discretion, proceed to
protect and enforce its rights and the rights of the Noteholders, by such
appropriate proceedings as the Trustee shall deem most effective to protect and
enforce any such rights, whether for the specific enforcement of any covenant or
agreement in this Indenture or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy or legal or equitable right vested
in the Trustee by this Indenture or by law.
(d) In case there shall be pending, relative to the Issuer or any
other obligor upon the Notes or any Person having or claiming an ownership
interest in the Trust Estate, proceedings under Title 11 of the United States
Code or any other applicable Federal or state bankruptcy, insolvency or other
similar law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Issuer or its property or such other
obligor or Person, or in case of any other comparable judicial proceedings
relative to the Issuer or other obligor upon the Notes, or to the creditors or
property of the Issuer or such other obligor, the Trustee, irrespective of
whether the principal of any Notes shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee
shall have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, by intervention in such proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Notes and to
file such other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee (including any claim for
reasonable compensation to the Trustee and each predecessor Trustee,
and their respective agents, attorneys and counsel, and for
reimbursement of all expenses and liabilities incurred, and all
advances made, by the Trustee and each predecessor Trustee, except as
a result of negligence, bad faith or willful misconduct) and of the
Noteholders allowed in such proceedings;
(ii) unless prohibited by applicable law and regulations, to vote
on behalf of the Holders of Notes in any election of a trustee, a
standby trustee or person performing similar functions in any such
proceedings;
(iii) to collect and receive any moneys or other property payable
or deliverable on any such claims and to distribute all amounts
received with respect to the claims of the Noteholders and of the
Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the
Trustee or the Holders of Notes allowed in any judicial proceedings
relative to the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such proceeding is hereby authorized by each of such Noteholders to make
payments to the Trustee, and, in the event that the Trustee shall consent to the
making of payments directly to such Noteholders, to pay to the Trustee such
amounts as shall be sufficient to cover reasonable compensation to the Trustee,
each predecessor Trustee and their respective agents, attorneys and counsel, and
all other expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee except as a result of negligence or bad
faith.
(e) Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or vote for or accept or adopt on behalf of any
Noteholder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof or to authorize the
Trustee to vote in respect of the claim of any Noteholder in any such proceeding
except, as aforesaid, to vote for the election of a trustee in bankruptcy or
similar person.
(f) All rights of action and of asserting claims under this Indenture,
or under any of the Notes, may be enforced by the Trustee without the possession
of any of the Notes or the production thereof in any trial or other proceedings
relative thereto, and any such action or proceedings instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery of judgment, subject to the payment of the expenses, disbursements and
compensation of the Trustee, each predecessor Trustee and their respective
agents and attorneys, shall be for the ratable benefit, as provided herein, of
the Holders of the Notes.
(g) In any proceedings brought by the Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture to
which the Trustee shall be a party), the Trustee shall be held to represent all
the Holders of the Notes, and it shall not be necessary to make any Noteholder a
party to any such proceedings.
SECTION 5.4 REMEDIES; PRIORITIES. (a) If an Event of Default shall
have occurred and be continuing, the Trustee may do one or more of the following
(subject to Section 5.5):
(i) institute proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on the
Notes or under this Indenture with respect thereto, whether by
declaration or otherwise, enforce any judgment obtained, and collect
from the Issuer and any other obligor upon such Notes moneys adjudged
due;
(ii) institute proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Trust
Estate;
(iii) exercise any remedies of a secured party under the UCC and
take any other appropriate action to protect and enforce the rights
and remedies of the Trustee and the Holders of the Notes; and
(iv) sell the Trust Estate or any portion thereof or rights or
interest therein, at one or more public or private sales called and
conducted in any manner permitted by law;
PROVIDED, HOWEVER, that the Trustee may not sell or other-wise
liquidate the Trust Estate following an Event of Default, other than
an Event of Default described in Section 5.1(i) or (ii), unless (A)
the Holders of 100% of the Outstanding Amount of the Notes consent
thereto, (B) the proceeds of such sale or liquidation distributable to
the Noteholders are sufficient to discharge in full all amounts then
due and unpaid upon such Notes for principal and interest or (C) the
Trustee determines that the Trust Estate will not continue to provide
sufficient funds for the payment of principal of and interest on the
Notes as they would have become due if the Notes had not been declared
due and payable, and the Trustee obtains the consent of Holders of
66-2/3% of the Outstanding Amount of the Notes. In determining such
sufficiency or insufficiency with respect to clause (B) and (C), the
Trustee may, but need not, obtain and rely upon an opinion of an
Independent investment banking or accounting firm of national
reputation as to the feasibility of such proposed action and as to the
sufficiency of the Trust Estate for such purpose.
(b) If the Trustee collects any money or property pursuant to this
Article V, it shall pay out such money or property (and other amounts including
amounts held on deposit in the Reserve Account) held as Collateral for the
benefit of the Noteholders in the following order:
FIRST: to the Trustee for amounts due under Section 6.7;
SECOND: to Noteholders for amounts due and unpaid on the Notes
for interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for interest;
THIRD: to Noteholders for amounts due and unpaid on the Notes for
principal, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for principal;
and
FOURTH: to the Issuer for distribution to the Certificateholders.
The Trustee may fix a record date and payment date for any payment to
Noteholders pursuant to this Section. At least 15 days before such record date,
the Issuer shall mail to each Noteholder and the Trustee a notice that states
the record date, the payment date and the amount to be paid.
SECTION 5.5 OPTIONAL PRESERVATION OF THE Receivables. If the Notes
have been declared to be due and payable under Section 5.2 following an Event of
Default and such declaration and its consequences have not been rescinded and
annulled, the Trustee may, but need not, elect to maintain possession of the
Trust Estate. It is the desire of the parties hereto and the Noteholders that
there be at all times sufficient funds for the payment of principal of and
interest on the Notes, and the Trustee shall take such desire into account when
determining whether or not to maintain possession of the Trust Estate. In
determining whether to maintain possession of the Trust Estate, the Trustee may,
but need not, obtain and rely upon an opinion of an Independent investment
banking or accounting firm of national reputation as to the feasibility of such
proposed action and as to the sufficiency of the Trust Estate for such purpose.
SECTION 5.6 LIMITATION OF SUITS. No Holder of any Note shall have any
right to institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(i) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the Outstanding Amount
of the Notes have made written request to the Trustee to institute
such proceeding in respect of such Event of Default in its own name as
Trustee hereunder;
(iii) such Holder or Holders have offered to the Trustee
indemnity reasonably satisfactory to it against the costs, expenses
and liabilities to be incurred in complying with such request;
(iv) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such
proceedings; and
(v) no direction inconsistent with such written request
has been given to the Trustee during such 60-day period by the
Holders of a majority of the Outstanding Amount of the Notes;
it being understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided.
In the event the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Holders of Notes, each
representing less than a majority of the Outstanding Amount of the Notes, the
Trustee in its sole discretion may determine what action, if any, shall be
taken, notwithstanding any other provisions of this Indenture.
SECTION 5.7 UNCONDITIONAL RIGHTS OF NOTEHOLDERS TO RECEIVE PRINCIPAL
AND INTEREST. Notwithstanding any other provisions in this Indenture, the Holder
of any Note shall have the right, which is absolute and unconditional, to
receive payment of the principal of and interest, if any, on such Note on or
after the respective due dates thereof expressed in such Note or in this
Indenture (or, in the case of redemption, on or after the Redemption Date) and
to institute suit for the enforcement of any such payment, and such right shall
not be impaired without the consent of such Holder.
SECTION 5.8 RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any
Noteholder has instituted any proceeding to enforce any right or remedy under
this Indenture and such proceeding has been discontinued or abandoned for any
reason or has been determined adversely to the Trustee or to such Noteholder,
then and in every such case the Issuer, the Trustee and the Noteholders shall,
subject to any determination in such Proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Trustee and the Noteholders shall continue as though no such
proceeding had been instituted.
SECTION 5.9 RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein
conferred upon or reserved to the Trustee or to the Noteholders is intended to
be exclusive of any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to every other right
and remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 5.10 DELAY OR OMISSION NOT A WAIVER. No delay or omission of
the Trustee or any Holder of any Note to exercise any right or remedy accruing
upon any Default or Event of Default shall impair any such right or remedy or
constitute a waiver of any such Default or Event of Default or an acquiescence
therein. Every right and remedy given by this Article V or by law to the Trustee
or to the Noteholders may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the Noteholders, as the case may be.
SECTION 5.11 CONTROL BY NOTEHOLDERS. The Holders of a majority of the
Outstanding Amount of the Notes shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
with respect to the Notes or exercising any trust or power conferred on the
Trustee; PROVIDED that
(i) such direction shall not be in conflict with any rule of law
or with this Indenture;
(ii) subject to the express terms of Section 5.4, any direction
to the Trustee to sell or liquidate the Trust Estate shall be by the
Holders of Notes representing not less than 100% of the Outstanding
Amount of the Notes;
(iii) if the conditions set forth in Section 5.5 have been
satisfied and the Trustee elects to retain the Trust Estate pursuant
to such Section, then any direction to the trustee by Holders of Notes
representing less than 100% of the Outstanding Amount of the Notes to
sell or liquidate the Trust Estate shall be of no force and effect;
and
(iv) the Trustee may take any other action deemed proper by the
Trustee that is not inconsistent with such direction;
PROVIDED, HOWEVER, that, subject to Section 6.1, the Trustee need not take any
action that it determines might involve it in liability or might materially
adversely affect the rights of any Noteholders not consenting to such action.
SECTION 5.12 WAIVER OF PAST DEFAULTS. Prior to the declaration of the
acceleration of the maturity of the Notes as provided in Section 5.2, the
Holders of Notes of not less than 66 2/3% of the Outstanding Amount of the Notes
may waive any past Default or Event of Default and its consequences except a
Default (a) in payment of principal of or interest on any of the Notes or (b) in
respect of a covenant or provision hereof which cannot be modified or amended
without the consent of the Holder of each Note. In the case of any such waiver,
the Issuer, the Trustee and the Holders of the Notes shall be restored to their
former positions and rights hereunder, respectively; but no such waiver shall
extend to any subsequent or other Default or impair any right consequent
thereto.
Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereto.
SECTION 5.13 UNDERTAKING FOR COSTS. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken, suffered or omitted by it as Trustee,
the filing by any party litigant in such suit of an undertaking to pay the costs
of such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section shall not apply to (a)
any suit instituted by the Trustee, (b) any suit instituted by any Noteholder,
or group of Noteholders, in each case holding in the aggregate more than 10% of
the Outstanding Amount of the Notes or (c) any suit instituted by any Noteholder
for the enforcement of the payment of principal of or interest on any Note on or
after the respective due dates expressed in such Note and in this Indenture (or,
in the case of redemption, on or after the Redemption Date).
SECTION 5.14 WAIVER OF STAY OR EXTENSION LAWS. The Issuer covenants
(to the extent that it may lawfully do so) that it will not at any time insist
upon, or plead or in any manner whatsoever, claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
SECTION 5.15 ACTION ON NOTES. The Trustee's right to seek and recover
judgment on the Notes or under this Indenture shall not be affected by the
seeking, obtaining or application of any other relief under or with respect to
this Indenture. Neither the lien of this Indenture nor any rights or remedies of
the Trustee or the Noteholders shall be impaired by the recovery of any judgment
by the Trustee against the Issuer or by the levy of any execution under such
judgment upon any portion of the Trust Estate or upon any of the assets of the
Issuer.
SECTION 5.16 PERFORMANCE AND ENFORCEMENT OF CERTAIN OBLIGATIONS. (a)
Promptly following a written request from the Trustee to do so and at the
Servicer's expense, the Issuer agrees to take all such lawful action as the
Trustee may request to compel or secure the performance and observance by the
Depositor, the Seller and the Servicer, as applicable, of each of their
obligations to the Issuer under or in connection with the Sale and Servicing
Agreement in accordance with the terms thereof, and to exercise any and all
rights, remedies, powers and privileges lawfully available to the Issuer under
or in connection with the Sale and Servicing Agreement to the extent and in the
manner directed by the Trustee, including the transmission of notices of default
on the part of the Depositor or the Servicer thereunder and the institution of
legal or administrative actions or proceedings to compel or secure performance
by the Depositor or the Servicer of each of their obligations under the Sale and
Servicing Agreement.
(b) If an Event of Default has occurred and is continuing, the Trustee
may, and, at the direction (which direction shall be in writing or by telephone
(confirmed in writing promptly thereafter)) of the Holders of 66-2/3% of the
Outstanding Amount of the Notes shall, exercise all rights, remedies, powers,
privileges and claims of the Issuer against the Depositor or the Servicer under
or in connection with the Sale and Servicing Agreement, including the right or
power to take any action to compel or secure performance or observance by the
Depositor or the Servicer of each of their obligations to the Issuer thereunder
and to give any consent, request, notice, direction, approval, extension or
waiver under the Sale and Servicing Agreement, and any right of the Issuer to
take such action shall be suspended.
ARTICLE VI
THE TRUSTEE
SECTION 6.1 DUTIES OF TRUSTEE. (a) If an Event of Default has occurred
and is continuing, the Trustee shall exercise the rights and powers vested in it
by this Indenture and use the same degree of care and skill in their exercise as
a prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture; however, the Trustee shall examine the certificates
and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 5.11.
(d) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Issuer.
(e) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law or the terms of this Indenture
or the Sale and Servicing Agreement.
(f) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur financial liability in the performance
of any of its duties hereunder or in the exercise of any of its rights or
powers, if it shall have reasonable grounds to believe that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it.
(g) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 6.2 RIGHTS OF TRUSTEE. (a) The Trustee may rely on any
document believed by it to be genuine and to have been signed or presented by
the proper person. The Trustee need not investigate any fact or matter stated in
the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officer's Certificate or an Opinion of Counsel. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on the
Officer's Certificate or Opinion of Counsel.
(c) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian or nominee, and the Trustee shall not be responsible
for any misconduct or negligence on the part of, or for the supervision of, any
such agent, attorney, custodian or nominee appointed with due care by it
hereunder.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers; PROVIDED, HOWEVER, that the Trustee's conduct does not constitute
willful misconduct, negligence or bad faith.
(e) The Trustee may consult with counsel of its selection, and the
advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Notes shall be full and complete authorization and protection
from liability in respect to any action taken, omitted or suffered by it
hereunder in good faith and in accordance with the advice or opinion of such
counsel.
SECTION 6.3 INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its
individual or any other capacity may become the owner or pledgee of Notes and
may otherwise deal with the Issuer or its Affiliates with the same rights it
would have if it were not Trustee. Any Paying Agent, Note Registrar,
co-registrar or co-paying agent may do the same with like rights. However, the
Trustee must comply with Sections 6.11 and 6.12.
SECTION 6.4 TRUSTEE'S DISCLAIMER. The Trustee shall not be responsible
for and makes no representation as to the validity or adequacy of this Indenture
or the Notes, it shall not be accountable for the Issuer's use of the proceeds
from the Notes, and it shall not be responsible for any statement of the Issuer
in the Indenture or in any document issued in connection with the sale of the
Notes or in the Notes other than the Trustee's certificate of authentication.
SECTION 6.5 NOTICE OF DEFAULTS; NOTICE OF EVENT OF DEFAULT. (a) If a
Default occurs and is continuing and if it is either actually known or written
notice of the existence thereof has been delivered to a Responsible Officer of
the Trustee, the Trustee shall mail to each Noteholder and the Owner Trustee
notice of the Default within 90 days after such knowledge or notice occurs.
Except in the case of a Default in payment of principal of or interest on any
Note (including payments pursuant to the mandatory redemption provisions of such
Note), the Trustee may withhold the notice if and so long as a committee of its
Responsible Officers in good faith determines that withholding the notice is in
the interests of Noteholders.
(b) Within 5 Business Days of an Event of Default, the Trustee shall
deliver notice thereof to the Rating Agencies.
SECTION 6.6 REPORTS BY TRUSTEE TO HOLDERS. The Trustee shall deliver
to each Noteholder such information as may be reasonably required to enable such
Holder to prepare its Federal and state income tax returns.
SECTION 6.7 COMPENSATION AND INDEMNITY. The Issuer shall or shall
cause the Servicer to pay to the Trustee from time to time compensation for its
services in accordance with a separate agreement between the Servicer and the
Trustee. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Issuer shall or shall cause
the Servicer to reimburse the Trustee for all reasonable out-of-pocket expenses
incurred or made by it, including costs of collection, in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Trustee's agents,
counsel, accountants and experts. The Issuer shall or shall cause the Servicer
to indemnify the Trustee and its officers, directors, employees and agents
against any and all loss, liability or expense (including attorneys' fees and
expenses) incurred by it in connection with the acceptance or the administration
of this trust and the performance of its duties hereunder. The Trustee shall
notify the Issuer and the Servicer promptly of any claim for which it may seek
indemnity. Failure by the Trustee to so notify the Issuer and the Servicer shall
not relieve the Issuer of its obligations hereunder or the Servicer of its
obligations under Article X of the Sale and Servicing Agreement. The Issuer
shall or shall cause the Servicer to defend the claim and the Trustee may have
separate counsel and the Issuer shall or shall cause the Servicer to pay the
fees and expenses of such counsel. Neither the Issuer nor the Servicer need
reimburse any expense or indemnify against any loss, liability or expense
incurred by the Trustee through the Trustee's own willful misconduct, negligence
or bad faith.
The Issuer's payment obligations to the Trustee pursuant to
this Section shall survive the discharge of this Indenture and the resignation
or removal of the Trustee subject to a satisfaction of the Rating Agency
Condition. When the Trustee incurs expenses after the occurrence of a Default
specified in Section 5.1(iv) or (v) with respect to the Issuer, the expenses are
intended to constitute expenses of administration under Title 11 of the United
States Code or any other applicable Federal or state bankruptcy, insolvency or
similar law.
SECTION 6.8 REPLACEMENT OF TRUSTEE. The Trustee may resign at any time
by so notifying the Issuer. The Holders of a majority in Outstanding Amount of
the Notes may remove the Trustee by so notifying the Trustee and may appoint a
successor Trustee. The Issuer shall remove the Trustee if:
(i) the Trustee fails to comply with Section 6.11;
(ii) the Trustee is adjudged a bankrupt or insolvent;
(iii) a receiver or other public officer takes charge of the
Trustee or its property; or
(iv) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Issuer shall promptly appoint a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuer. Thereupon the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture subject to satisfaction of the Rating Agency Condition. The successor
Trustee shall mail a notice of its succession to Noteholders. The retiring
Trustee shall promptly transfer all property held by it as Trustee to the
successor Trustee.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuer or the
Holders of a majority in Outstanding Amount of the Notes may petition any court
of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 6.11, any Noteholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor Trustee
pursuant to Section 6.8 and payment of all fees and expenses owed to the
outgoing Trustee.
Notwithstanding the replacement of the Trustee pursuant to this Section, the
Issuer's and the Servicer's obligations under Section 6.7 shall continue for the
benefit of the retiring Trustee.
SECTION 6.9 SUCCESSOR TRUSTEE BY MERGER. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee. The Trustee shall provide the Rating
Agencies with prior written notice of any such transaction.
In case at the time such successor or successors by merger, conversion
or consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Notes shall have been authenticated but not delivered, any
such successor to the Trustee may adopt the certificate of authentication of any
predecessor trustee, and deliver such Notes so authenticated; and in case at
that time any of the Notes shall not have been authenticated, any successor to
the Trustee may authenticate such Notes either in the name of any predecessor
hereunder or in the name of the successor to the Trustee; and in all such cases
such certificates shall have the full force which it is anywhere in the Notes or
in this Indenture provided that the certificate of the Trustee shall have.
SECTION 6.10 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE. (a)
Notwithstanding any other provisions of this Indenture, at any time, for the
purpose of meeting any legal requirement of any jurisdiction in which any part
of the Trust may at the time be located, the Trustee shall have the power and
may execute and deliver all instruments to appoint one or more Persons to act as
a co-trustee or co-trustees, or separate trustee or separate trustees, of all or
any part of the Trust, and to vest in such Person or Persons, in such capacity
and for the benefit of the Noteholders, such title to the Trust, or any part
hereof, and, subject to the other provisions of this Section, such powers,
duties, obligations, rights and trusts as the Trustee may consider necessary or
desirable. No co-trustee or separate trustee hereunder shall be required to meet
the terms of eligibility as a successor trustee under Section 6.11 and no notice
to Noteholders of the appointment of any co-trustee or separate trustee shall be
required under Section 6.8 hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
the Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof in
any such jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of the
Trustee;
(ii) no trustee hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder, including acts or
omissions of predecessor or successor trustees; and
(iii) the Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VI. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Indenture,
specifically including every provision of this Indenture relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall invest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION 6.11 ELIGIBILITY; DISQUALIFICATION. The Trustee shall at all
times satisfy the requirements of TIA ss. 310(a). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition and it shall have a long term debt
rating of BBB- by Standard & Poor's and Baa3 by Moody's or better by the Rating
Agencies. The Trustee shall comply with TIA ss. 310 (b), including the optional
provision permitted by the second sentence of TIA ss. 310(b)(9); PROVIDed,
HOWEVer, that there shall be excluded from the operation of TIA ss. 310(b)(1)
any indenture or indentures under which otheR securities of the Issuer are
outstanding if the requirements for such exclusion set forth in TIA ss.
310(b)(1) are met.
SECTION 6.12 PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER. The
Trustee shall comply with TIA ss. 311(a), excluding any creditor relationship
listed in TIA ss. 311(b). A Trustee who has resigned or been removed shall be
subject to TIA ss. 311(a) to the extent indicated.
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.1 ISSUER TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
NOTEHOLDERS. The Issuer will furnish or cause to be furnished to the Trustee (a)
not more than five days after the earlier of (i) each Record Date and (ii) three
months after the last Record Date, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Holders as of such Record
Date, (b) at such other times as the Trustee may request in writing, within 30
days after receipt by the Issuer of any such request, a list of similar form and
content as of a date not more than 10 days prior to the time such list is
furnished; PROVIDED, HOWEVER, that so long as the Trustee is the Note Registrar,
no such list shall be required to be furnished.
SECTION 7.2 PRESERVATION OF INFORMATION; COMMUNICATIONS TO
NOTEHOLDERS. (a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders contained in the
most recent list furnished to the Trustee as provided in Section 7.1 and the
names and addresses of Holders received by the Trustee in its capacity as Note
Registrar. The Trustee may destroy any list furnished to it as provided in such
Section 7.1 upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA ss. 312(b) with other
Noteholders with respect to their rights undeR this Indenture or under the
Notes.
(c) The Issuer, the Trustee and the Note Registrar shall have the
protection of TIA ss. 312(c).
SECTION 7.3 REPORTS BY ISSUER. (a) The Issuer shall:
(i) file with the Trustee, within 15 days after the Issuer is
required to file the same with the Commission, copies of the
annual reports and of the information, documents and other
reports (or copies of such portions of any of the foregoing as
the Commission may from time to time by rules and regulations
prescribe) which the Issuer may be required to file with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act;
(ii) file with the Trustee and the Commission in accordance with rules
and regulations prescribed from time to time by the Commission
such additional information, documents and reports with respect
to compliance by the Issuer with the conditions and covenants of
this Indenture as may be required from time to time by such rules
and regulations; and
(iii) supply to the Trustee (and the Trustee shall transmit by mail to
all Noteholders described in TIA ss. 313(c)) such summaries of
any information, documents and reports required to be filed by
the Issuer pursuant to clauses (i) and (ii) of this Section
7.3(a) as may be required by rules and regulations prescribed
from time to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on December 31 of each year.
SECTION 7.4 REPORTS BY TRUSTEE. If required by TIA ss. 313(a), within
60 days after each _________ 1, beginning with _____ 1, ____, the Trustee shall
mail to each Noteholder as required by TIA ss. 313(c) a brief report dated as of
such date that complies with TIA ss. 313(a). The Trustee also shall comply with
TIA ss. 313(b).
A copy of each report at the time of its mailing to Noteholders shall
be filed by the Trustee with the Commission, if required by the Exchange Act,
and each stock exchange, if any, on which the Notes are listed. The Issuer shall
notify the Trustee if and when the Notes are listed on any stock exchange.
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.1 COLLECTION OF MONEY. Except as otherwise expressly
provided herein, the Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or
receivable by the Trustee pursuant to this Indenture. The Trustee shall apply
all such money received by it as provided in this Indenture. Except as otherwise
expressly provided in this Indenture, if any default occurs in the making of any
payment or performance under any agreement or instrument that is part of the
Trust Estate, the Trustee may take such action as may be appropriate to enforce
such payment or performance, including the institution and prosecution of
appropriate proceedings. Any such action shall be without prejudice to any right
to claim a Default or Event of Default under this Indenture and any right to
proceed thereafter as provided in Article V.
SECTION 8.2 TRUST ACCOUNTS. (a) On or prior to the Closing Date, the
Issuer shall cause the Servicer to establish and maintain, in the name of the
Trustee, for the benefit of the Noteholders and the Certificateholders, the
Trust Accounts as provided in Section 5.1 of the Sale and Servicing Agreement.
(b) On or before each Distribution Date, the Total Distribution Amount
with respect to the preceding Collection Period will be deposited in the
Collection Account as provided in Section 5.2 of the Sale and Servicing
Agreement. On or before each Distribution Date, the Noteholders' Distributable
Amount with respect to the preceding Collection Period will be transferred from
the Collection Account and/or the Reserve Account to the Note Distribution
Account as provided in Sections 5.5 and 5.6 of the Sale and Servicing Agreement.
(c) On each Distribution Date and Redemption Date, the Trustee shall
distribute all amounts on deposit in the Note Distribution Account to
Noteholders in respect of the Notes to the extent of amounts due and unpaid on
the Notes for principal and interest in the following amounts and in the
following order of priority (except as otherwise provided in Section 5.4(b)):
(i) accrued and unpaid interest on the Notes; PROVIDED that if
there are not sufficient funds in the Note Distribution Account to pay
the entire amount of accrued and unpaid interest then due on the
Notes, the amount in the Note Distribution Account shall be applied to
the payment of such interest on the Notes pro rata on the basis of the
total such interest due on the Notes; and
(ii) to the Holders of the Notes on account of principal until
the Outstanding Amount of the Notes is reduced to zero.
SECTION 8.3 GENERAL PROVISIONS REGARDING Accounts. (a) So long as no
Default or Event of Default shall have occurred and be continuing, all or a
portion of the funds in the Trust Accounts shall be invested in Eligible
Investments and reinvested by the Trustee upon Issuer Order, subject to the
provisions of Section 5.1(b) of the Sale and Servicing Agreement. All income or
other gain from investments of moneys deposited in the Trust Accounts (other
than the Payahead Account) shall be deposited (or caused to be deposited) by the
Trustee in the Collection Account, and any loss resulting from such investments
shall be charged to such account. All income or other gain from investments of
monies deposited in the Payahead Account shall be released by the Trustee to the
Depositor, net of any loss resulting from such investments charged to the
Payahead Account. The Issuer will not direct the Trustee to make any investment
of any funds or to sell any investment held in any of the Trust Accounts unless
the security interest Granted and perfected in such account will continue to be
perfected in such investment or the proceeds of such sale, in either case
without any further action by any Person, and, in connection with any direction
to the Trustee to make any such investment or sale, if requested by the Trustee,
the Issuer shall deliver to the Trustee an Opinion of Counsel, acceptable to the
Trustee, to such effect.
(b) [Reserved]
(c) Subject to Section 6.1(c), the Trustee shall not in any way be
held liable by reason of any insufficiency in any of the Trust Accounts
resulting from any loss on any Eligible Investment included therein except for
losses attributable to the Trustee's failure to make payments on such Eligible
Investments issued by the Trustee, in its commercial capacity as principal
obligor and not as trustee, in accordance with their terms.
(d) If (i) the Issuer shall have failed to give investment directions
for any funds on deposit in the Trust Accounts to the Trustee by 11:00 a.m.
Eastern Time (or such other time as may be agreed by the Issuer and Trustee) on
any Business Day; or (ii) a Default or Event of Default shall have occurred and
be continuing with respect to the Notes but the Notes shall not have been
declared due and payable pursuant to Section 5.2, or, (iii) if such Notes shall
have been declared due and payable following an Event of Default but amounts
collected or receivable from the Trust Estate are being applied in accordance
with Section 5.5 as if there had not been such a declaration; then the Trustee
shall, to the fullest extent practicable, invest and reinvest funds in the Trust
Accounts in one or more investments under clause (a) of the definition of
Eligible Investments.
SECTION 8.4 RELEASE OF TRUST ESTATE. (a) Subject to Article VI
hereunder, the Trustee may, and when required by the provisions of this
Indenture shall, execute instruments to release property from the lien of this
Indenture, or convey the Trustee's interest in the same, in a manner and under
circumstances that are not inconsistent with the provisions of this Indenture.
No party relying upon an instrument executed by the Trustee as provided in this
Article VIII shall be bound to ascertain the Trustee's authority, inquire into
the satisfaction of any conditions precedent or see to the application of any
moneys.
(b) The Trustee shall, at such time as there are no Notes outstanding
and all sums due the Trustee pursuant to Section 6.7 have been paid, release any
remaining portion of the Trust Estate that secured the Notes from the lien of
this Indenture and release to the Issuer or any other Person entitled thereto
any funds then on deposit in the Trust Accounts. The Trustee shall release
property from the lien of this Indenture pursuant to this Section 8.4(b) only
upon receipt of an Issuer Request accompanied by an Officer's Certificate, an
Opinion of Counsel and (if required by the TIA) Independent Certificates in
accordance with TIA ss. 314(c) and 314(d)(1) meeting the applicable requirements
of Section 11.1.
SECTION 8.5 OPINION OF COUNSEL. The Trustee shall receive at least
seven days' notice when requested by the Issuer to take any action pursuant to
Section 8.4(a), accompanied by copies of any instruments involved, and the
Trustee shall also require as a condition to such action, an Opinion of Counsel,
in form and substance satisfactory to the Trustee, stating the legal effect of
any such action, outlining the steps required to complete the same, and
concluding that all conditions precedent to the taking of such action have been
complied with and such action will not materially and adversely impair the
security for the Notes or the rights of the Noteholders in contravention of the
provisions of this Indenture; PROVIDED, HOWEVER, that such Opinion of Counsel
shall not be required to express an opinion as to the fair value of the Trust
Estate. Counsel rendering any such opinion may rely, without independent
investigation, on the accuracy and validity of any certificate or other
instrument delivered to the Trustee in connection with any such action.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF NOTEHOLDERS.
(a) Without the consent of the Holders of any Notes but with prior notice to the
Rating Agencies by the Issuer, as evidenced to the Trustee, the Issuer and the
Trustee, when authorized by an Issuer Order, at any time and from time to time,
may enter into one or more indentures supplemental hereto (which shall conform
to the provisions of the Trust Indenture Act as in force at the date of the
execution thereof), in form satisfactory to the Trustee, for any of the
following purposes:
(i) to correct or amplify the description of any property at any
time subject to the lien of this Indenture, or better to assure,
convey and confirm unto the Trustee any property subject or required
to be subjected to the lien of this Indenture, or to subject to the
lien of this Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer
contained herein and in the Notes;
(iii) to add to the covenants of the Issuer, for the benefit of
the Holders of the Notes, or to surrender any right or power herein
conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property
to or with the Trustee;
(v) to cure any ambiguity, to correct or supplement any provision
herein or in any supplemental indenture which may be inconsistent with
any other provision herein or in any supplemental indenture or to make
any other provisions with respect to matters or questions arising
under this Indenture or in any supplemental indenture; PROVIDED that
such action shall not adversely affect the interests of the Holders of
the Notes;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the Notes
and to add to or change any of the provisions of this Indenture as
shall be necessary to facilitate the administration of the trusts
hereunder by more than one trustee, pursuant to the requirements of
Article VI; or
(vii) to modify, eliminate or add to the provisions of
this Indenture to such extent as shall be necessary to effect
the qualification of this Indenture under the TIA or under any
similar federal statute hereafter enacted and to add to this
Indenture such other provisions as may be expressly required
by the TIA.
The Trustee is hereby authorized to join in the execution of any such
supplemental indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
(b) The Issuer and the Trustee, when authorized by an Issuer Order,
may, also without the consent of any of the Holders of the Notes but with prior
notice to the Rating Agencies by the Issuer, as evidenced to the Trustee, enter
into an indenture or indentures supplemental hereto for the purpose of adding
any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture or of modifying in any manner the rights of the
Holders of the Notes under this Indenture; PROVIDED, HOWEVER, that such action
shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Noteholder; PROVIDED, FURTHER, that any
amendment within the scope of Section 9.2 (i)-(vii) shall be deemed to
materially and adversely affect the interests of the Noteholders, as evidenced
by an Officer's Certificate of the Servicer delivered to the Trustee.
SECTION 9.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF NOTEHOLDERS. The
Issuer and the Trustee, when authorized by an Issuer Order, also may, with prior
notice to the Rating Agencies and with the consent of the Holders of not less
than a majority of the outstanding Amount of the Notes, by Act of such Holders
delivered to the Issuer and the Trustee, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, or changing in
any manner or eliminating any of the provisions of, this Indenture or of
modifying in any manner the rights of the Holders of the Notes under this
Indenture; PROVIDED, HOWEVER, that no such supplemental indenture shall, without
the consent of the Holder of each Outstanding Note affected thereby:
(i) change the date of payment of any installment of principal of
or interest on any Note, or reduce the principal amount thereof, the
interest rate thereon or the Redemption Price with respect thereto,
change the provision of this Indenture relating to the application of
collections on, or the proceeds of the sale of, the Trust Estate to
payment of principal of or interest on the Notes, or change any place
of payment where, or the coin or currency in which, any Note or the
interest thereon is payable, or impair the right to institute suit for
the enforcement of the provisions of this Indenture requiring the
application of funds available therefor, as provided in Article V, to
the payment of any such amount due on the Notes on or after the
respective due dates thereof (or, in the case of redemption, on or
after the Redemption Date);
(ii) reduce the percentage of the Outstanding Amount of the
Notes, the consent of the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is
required for any waiver of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences
provided for in this Indenture;
(iii) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(iv) reduce the percentage of the Outstanding Amount of the Notes
required to direct the Trustee to direct the Issuer to sell or
liquidate the Trust Estate pursuant to Section 5.4;
(v) modify any provision of this Section except to increase any
percentage specified herein or to provide that certain additional
provisions of this Indenture or the Basic Documents cannot be modified
or waived without the consent of the Holder of each Outstanding Note
affected thereby;
(vi) modify any of the provisions of this Indenture in such
manner as to affect the calculation of the amount of any payment of
interest or principal due on any Note on any Distribution Date
(including the calculation of any of the individual components of such
calculation) or to affect the rights of the Holders of Notes to the
benefit of any provisions for the mandatory redemption of the Notes
contained herein; or
(vii) permit the creation of any lien ranking prior to or on a
parity with the lien of this Indenture with respect to any part of the
Trust Estate or, except as otherwise permitted or contemplated herein
or in the Basic Documents, terminate the lien of this Indenture on any
property at any time subject hereto or deprive the Holder of any Note
of the security provided by the lien of this Indenture.
The Trustee may determine whether or not any Notes would be affected
by any supplemental indenture and any such determination shall be conclusive
upon the Holders of all Notes, whether theretofore or thereafter authenticated
and delivered hereunder. The Trustee shall not be liable for any such
determination made in good faith.
It shall not be necessary for any Act of Noteholders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to this Section, the Trustee shall mail to the
Holders of the Notes to which such amendment or supplemental indenture relates a
notice setting forth in general terms the substance of such supplemental
indenture. Any failure of the Trustee to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such supplemental indenture.
SECTION 9.3 EXECUTION OF SUPPLEMENTAL INDENTURES. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modifications thereby of the trusts created
by this Indenture, the Trustee shall be entitled to receive, and subject to
Sections 6.1 and 6.2, shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of such supplemental indenture is authorized
or permitted by this Indenture. The Trustee may, but shall not be obligated to,
enter into any such supplemental indenture that affects the Trustee's own
rights, duties, liabilities or immunities under this Indenture or otherwise. The
Trustee shall provide copies of each such supplemental indenture to each of the
Rating Agencies.
SECTION 9.4 EFFECT OF SUPPLEMENTAL INDENTURE. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith with
respect to the Notes affected thereby, and the respective rights, limitations of
rights, obligations, duties, liabilities and immunities under this Indenture of
the Trustee, the Issuer and the Holders of the Notes shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
SECTION 9.5 CONFORMITY WITH TRUST INDENTURE ACT. Every amendment of
this Indenture and every supplemental indenture executed pursuant to this
Article IX shall conform to the requirements of the Trust Indenture Act as then
in effect so long as this Indenture shall then be qualified under the Trust
Indenture Act.
SECTION 9.6 REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Trustee shall, bear a
notation in form approved by the Trustee as to any matter provided for in such
supplemental indenture. If the Issuer or the Trustee shall so determine, new
Notes so modified as to conform, in the opinion of the Trustee and the Issuer,
to any such supplemental indenture may be prepared and executed by the Issuer
and authenticated and delivered by the Trustee in exchange for Outstanding
Notes.
ARTICLE X
REDEMPTION OF NOTES
SECTION 10.1 REDEMPTION. (a) The Notes are subject to redemption in
whole, but not in part, (i) at the direction of the Depositor pursuant to
Section 9.1(a) of the Sale and Servicing Agreement, on any Distribution Date on
which the Depositor exercises its option to purchase the Trust Estate pursuant
to said Section 9.1(a) and (ii) upon the mandatory sale of the Receivables
pursuant to Section 9.2 of the Sale and Servicing Agreement. The purchase price
for the Notes shall be equal to the Redemption Price; PROVIDED, HOWEVER, that
the Issuer has available funds sufficient to pay the Redemption Price. The
Servicer shall furnish the Rating Agencies notice of such redemption. If the
Notes are to be redeemed pursuant to this Section 10.1(a) (i) or (ii), the
Servicer shall furnish notice to the Trustee not later than 25 days prior to the
Redemption Date and the Issuer shall deposit with the Trustee in the Note
Distribution Account, on or before the Redemption Date, the Redemption Price of
the Notes to be redeemed whereupon all such Notes shall be due and payable on
the Redemption Date upon the furnishing of a notice complying with Section 10.2
to each Holder of the Notes.
(b) In the event that the assets of the Trust are sold pursuant to
Section 9.2 of the Trust Agreement, all amounts on deposit in the Note
Distribution Account shall be paid to the Noteholders up to the Outstanding
Amount of the Notes and all accrued and unpaid interest thereon. If amounts are
to be paid to Noteholders pursuant to this Section 10.1(b), the Servicer shall,
to the extent practicable, furnish notice of such event to the Trustee not later
than 25 days prior to the Redemption Date whereupon all such amounts shall be
payable on the Redemption Date.
SECTION 10.2 FORM OF REDEMPTION NOTICE. (a) Notice of redemption under
Section 10.1(a) shall be given by the Trustee by facsimile or by first-class
mail, postage prepaid, transmitted or mailed not less than five days in the case
of Section 10.1(a)(i) and Section 10.1(a)(ii) prior to the applicable Redemption
Date to each Holder of Notes, as of the close of business on the Record Date
preceding the applicable Redemption Date, at such Holder's address appearing in
the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) that the Record Date otherwise applicable to such
Redemption Date is not applicable and that payments shall be
made only upon presentation and surrender of such Notes and
the place where such Notes are to be surrendered for payment
of the Redemption Price (which shall be the office or agency
of the Issuer to be maintained as provided in Section 3.2);
and
(iv) that interest on the Notes shall cease to accrue on
the Redemption Date.
Notice of redemption of the Notes shall be given by the Trustee in the
name and at the expense of the Issuer. Failure to give notice of redemption, or
any defect therein, to any Holder of any Note shall not impair or affect the
validity of the redemption of any other Note.
(b) Prior notice of redemption under Sections 10.1(b) is not required
to be given to Noteholders.
SECTION 10.3 NOTES PAYABLE ON REDEMPTION DATE. The Notes to be
redeemed shall, following notice of redemption as required by Section 10.2 (in
the case of redemption pursuant to Section 10.1(a)), on the Redemption Date
become due and payable at the Redemption Price and (unless the Issuer shall
default in the payment of the Redemption Price) no interest shall accrue on the
Redemption Price for any period after the date to which accrued interest is
calculated for purposes of calculating the Redemption Price.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 COMPLIANCE CERTIFICATES AND OPINIONS, ETC.. (a) Upon any
application or request by the Issuer to the Trustee to take any action under any
provision of this Indenture, the Issuer shall furnish to the Trustee (i) an
Officer's Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with,
(ii) an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with and (iii) (if required by
the TIA) an Independent Certificate from a firm of certified public accountants
meeting the applicable requirements of this Section, except that, in the case of
any such application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or condition
and the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory,
such signatory has made such examination or investigation as is
necessary to enable such signatory to express an informed opinion as
to whether or not such covenant or condition has been complied with;
and
(iv) a statement as to whether, in the opinion of each such
signatory such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any Collateral or other
property or securities with the Trustee that is to be made the basis for the
release of any property or securities subject to the lien of this Indenture,
the Issuer shall, in addition to any obligation imposed in Section 11.1(a) or
elsewhere in this Indenture, furnish to the Trustee an Officer's Certificate
certifying or stating the opinion of each person signing such certificate as to
the fair value (within 90 days of such deposit) to the Issuer of the Collateral
or other property or securities to be so deposited.
(ii) Whenever the Issuer is required to furnish to the Trustee an
Officer's Certificate certifying or stating the opinion of any signer
thereof as to the matters described in clause (i) above, the Issuer
shall also deliver to the Trustee an Independent Certificate as to the
same matters, if the fair value to the Issuer of the securities to be
so deposited and of all other such securities made the basis of any
such withdrawal or release since the commencement of the then-current
fiscal year of the Issuer, as set forth in the certificates delivered
pursuant to clause (i) above and this clause (ii), is 10% or more of
the Outstanding Amount of the Notes, but such a certificate need not
be furnished with respect to any securities so deposited, if the fair
value thereof to the Issuer as set forth in the related Officer's
Certificate is less than $25,000 or less than one percent of the
Outstanding Amount of the Notes.
(iii) Other than with respect to the release of any Purchased
Receivables or Liquidated Receivables, whenever any property or
securities are to be released from the lien of this Indenture, the
Issuer shall also furnish to the Trustee an Officer's Certificate
certifying or stating the opinion of each person signing such
certificate as to the fair value (within 90 days of such release) of
the property or securities proposed to be released and stating that in
the opinion of such person the proposed release will not impair the
security under this Indenture in contravention of the provisions
hereof.
(iv) Whenever the Issuer is required to furnish to the Trustee an
Officer's Certificate certifying or stating the opinion of any signer
thereof as to the matters described in clause (iii) above, the Issuer
shall also furnish to the Trustee an Independent Certificate as to the
same matters if the fair value of the property or securities and of
all other property other than Purchased Receivables and Defaulted
Receivables, or securities released from the lien of this Indenture
since the commencement of the then current calendar year, as set forth
in the certificates required by clause (iii) above and this clause
(iv), equals 10% or more of the Outstanding Amount of the Notes, but
such certificate need not be furnished in the case of any release of
property or securities if the fair value thereof as set forth in the
related Officer's Certificate is less than $25,000 or less than one
percent of the then Outstanding Amount of the Notes.
(v) Notwithstanding Section 2.9 or any other provision of this
Section, the Issuer may (A) collect, liquidate, sell or otherwise
dispose of Receivables as and to the extent permitted or required by
the Basic Documents and (B) make cash payments out of the Trust
Accounts as and to the extent permitted or required by the Basic
Documents.
SECTION 11.2 FORM OF DOCUMENTS DELIVERED TO TRUSTEE. In any case where
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified by,
or covered by the opinion of, only one such Person, or that they be so certified
or covered by only one document, but one such Person may certify or give an
opinion with respect to some matters and one or more other such Persons as to
other matters, and any such Person may certify or give an opinion as to such
matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his or her certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer or
Opinion of Counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of
the Servicer, the Depositor or the Issuer, stating that the information with
respect to such factual matters is in the possession of the Servicer, the
Depositor or the Issuer, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Trustee, it is provided that the Issuer shall
deliver any document as a condition of the granting of such application, or as
evidence of the Issuer's compliance with any term hereof, it is intended that
the truth and accuracy, at the time of the granting of such application or at
the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Trustee's right to rely upon the truth and accuracy of
any statement or opinion contained in any such document as provided in Article
VI.
SECTION 11.3 ACTS OF NOTEHOLDERS. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Noteholders in person or by agents duly appointed in writing; and except as
herein otherwise expressly provided such action shall become effective when such
instrument or instruments are delivered to the Trustee, and, where it is hereby
expressly required, to the Issuer. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Noteholders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and (subject to Section 6.1)
conclusive in favor of the Trustee and the Issuer, if made in the manner
provided in this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any customary manner of the Trustee.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of every
Note issued upon the registration thereof or in exchange therefor or in lieu
thereof, in respect of anything done, omitted or suffered to be done by the
Trustee or the Issuer in reliance thereon, whether or not notation of such
action is made upon such Note.
SECTION 11.4 NOTICES, ETC., TO TRUSTEE, ISSUER AND RATING AGENCIES.
Any request, demand, authorization, direction, notice, consent, waiver or Act of
Noteholders or other documents provided or permitted by this Indenture to be
made upon, given or furnished to or filed with:
(a) The Trustee by any Noteholder or by the Issuer shall be sufficient
for every purpose hereunder if personally delivered, delivered by overnight
courier or mailed certified mail, return receipt requested and shall be deemed
to have been duly given upon receipt to the Trustee at its Corporate Trust
Office, or
(b) The Issuer by the Trustee or by any Noteholder shall be in writing
and sufficient for every purpose hereunder if personally delivered, delivered by
overnight courier or mailed certified mail, return receipt requested and shall
be deemed to have been duly given upon receipt to the Issuer addressed to:
Mellon Auto Trust 199_-_, in care of the Owner Trustee, Attention: Corporate
Trust Administration at the address of the Owner Trustee's Corporate Trust
Office set forth in the Trust Agreement or at any other address previously
furnished in writing to the Trustee by Issuer. The Issuer shall promptly
transmit any notice received by it from the Noteholders to the Trustee.
Notices required to be given to the Rating Agencies by the Issuer, the
Trustee or the Owner Trustee shall be in writing, personally delivered,
delivered by overnight courier or mailed certified mail, return receipt
requested to (i) in the case of ___________________, at the following address:
___________________________________________________________, ______________,
Attention: ________________________ and (ii) in the case of _______________ at
the following address: _________________________________________, Attention:
______________________________; or as to each of the foregoing, at such other
address as shall be designated by written notice to the other parties.
SECTION 11.5 NOTICES TO NOTEHOLDERS; WAIVER. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner here
in provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Trustee but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute a Default or
Event of Default.
SECTION 11.6 ALTERNATE PAYMENT AND NOTICE Provisions. Notwithstanding
any provision of this Indenture or any of the Notes to the contrary, the Issuer
may enter into any agreement with any Holder of a Note providing for a method of
payment, or notice by the Trustee or any Paying Agent to such Holder, that is
different from the methods provided for in this Indenture for such payments or
notices, provided that such methods are reasonable and consented to by the
Trustee (which consent shall not be unreasonably withheld). The Issuer will
furnish to the Trustee a copy of each such agreement and the Trustee will cause
payments to be made and notices to be given in accordance with such agreements.
SECTION 11.7 CONFLICT WITH TRUST INDENTURE ACT. If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this indenture by any of the provisions of the Trust
Indenture Act, such required provision shall control.
The provisions of TIA ss. 310 through 317 that impose duties on any
person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
SECTION 11.8 EFFECT OF HEADINGS AND TABLE OF Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
SECTION 11.9 SUCCESSORS AND ASSIGNS. All covenants and agreements in
this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Trustee in this
Indenture shall bind its successors.
SECTION 11.10 SEPARABILITY. In case any provision in this Indenture or
in the Notes shall be invalid, illegal or unenforceable, the validity, legality,
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 11.11 BENEFITS OF INDENTURE. Nothing in this Indenture or in
the Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, and the Noteholders, and any other party
secured hereunder, and any other person with an Ownership interest in any part
of the Trust Estate, any benefit or any legal or equitable right, remedy or
claim under this Indenture.
SECTION 11.12 LEGAL HOLIDAYS. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the date an which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
SECTION 11.13 GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.14 COUNTERPARTS. This Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
SECTION 11.15 RECORDING OF INDENTURE. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at its expense accompanied by an Opinion of Counsel
(which may be counsel to the Trustee or any other counsel reasonably acceptable
to the Trustee) to the effect that such recording is necessary either for the
protection of the Noteholders or any other person secured hereunder or for the
enforcement of any right or remedy granted to the Trustee under this Indenture.
SECTION 11.16 TRUST OBLIGATION. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Depositor, the
Servicer, the holder of the GP Interest, the Owner Trustee or the Trustee on the
Notes or under this Indenture or any certificate or other writing delivered in
connection herewith or therewith, against (i) the Depositor, the Servicer, the
holder of the GP Interest, the Trustee or the Owner Trustee in its individual
capacity, (ii) any owner of a beneficial interest in the Issuer or (iii) any
partner, owner, beneficiary, agent, officer, director, employee or agent of the
Depositor, the Servicer, the holder of the GP Interest, the Trustee or the Owner
Trustee in its individual capacity, any holder of a beneficial interest in the
Issuer, the Depositor, the Servicer, the holder of the GP Interest, the Owner
Trustee or the Trustee or of any successor or assign of the Depositor, the
Servicer, the holder of the GP Interest, the Trustee or the Owner Trustee in its
individual capacity, except as any such Person may have expressly agreed (it
being understood that the Trustee and the Owner Trustee have no such obligations
in their individual capacity) and except that any such partner, owner or
beneficiary shall be fully liable, to the extent provided by applicable law, for
any unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity. For all purposes of this
Indenture, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Article VI, VII and VIII of the Trust Agreement.
SECTION 11.17 NO PETITION. The Trustee, by entering into this
Indenture, and each Noteholder, by accepting a Note, hereby covenant and agree
that they will not at any time institute against the Depositor, the holder of
the GP Interest or the Trust, or join in any institution against the Depositor,
the holder of the GP Interest or the Trust of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States Federal or state bankruptcy or similar law in connection with
any obligations relating to the Notes, this Indenture or any of the Basic
Documents.
SECTION 11.18 INSPECTION. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Trustee, during the Issuer's
normal business hours, to examine all the books of account, records, reports,
and other papers of the Issuer, to make copies and extracts therefrom, to cause
such books to be audited by Independent certified public accountants, and to
discuss the Issuer's affairs, finances and accounts with the Issuer's officers,
employees, and independent certified public accountants, all at such reasonable
times and as often as may be reasonably requested. The Trustee shall and shall
cause its representatives to hold in confidence all such information except to
the extent disclosure may be required by law (and all reasonable applications
for confidential treatment are unavailing) and except to the extent that the
Trustee may reasonably determine that such disclosure is consistent with its
Obligations hereunder.
[THIS SPACE LEFT INTENTIONALLY BLANK]
<PAGE>
IN WITNESS WHEREOF, the Issuer and the Trustee have caused this
Indenture to be duly executed by their respective officers, thereunto duly
authorized, all as of the day and year first above written.
MELLON AUTO TRUST 199_-_,
By:____________________________, not in its
individual capacity but solely as Owner Trustee,
By:____________________________________
Name:
Title:
_______________________________________,
not in its individual capacity
but solely as Trustee,
By:_____________________________________
Name:
Title:
<PAGE>
[Form of Note] EXHIBIT D
REGISTERED $
No. R
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. ______________
[UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.]
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
<PAGE>
MELLON AUTO TRUST 199_-_
__% ASSET BACKED NOTES
Mellon Auto Trust 199_-_, a business trust organized and existing
under the laws of the State of Delaware (herein referred to as the "Issuer"),
for value received, hereby promises to pay to CEDE & CO., or registered assigns,
the principal sum of [] DOLLARS payable on each Distribution Date in an amount
equal to the result obtained by multiplying (i) a fraction the numerator of
which is $[INSERT INITIAL PRINCIPAL AMOUNT OF NOTE) and the denominator of which
is $___________ by (ii) the aggregate amount, if any, payable from the Note
Distribution Account in respect of principal on the Notes pursuant to Section
3.1 of the Indenture; PROVIDED, HOWEVER, that the entire unpaid principal amount
of this Note shall be due and payable on the earlier of the __________
Distribution Date (the "Note Final Scheduled Distribution Date") and the
Redemption Date, if any, pursuant to Section 10.1(a) (i) or (ii) or Section
10.1(b) of the Indenture. The Issuer will pay interest on this Note at the rate
per annum shown above on each Distribution Date commencing in ___________ until
the principal of this Note is paid or made available for payment, on the
principal amount of this Note outstanding on the preceding Distribution Date
(after giving effect to all payments of principal made on the preceding
Distribution Date). Interest on this Note will accrue for each Distribution Date
from the most recent Distribution Date on which interest has been paid to but
excluding such Distribution Date or, if no interest has yet been paid, from
_________ __, 199_-_. Interest will be computed on the basis of a 360-day year
of twelve 30-day months. Such principal of and interest on this Note shall be
paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture referred to on the reverse hereof,
or be valid or obligatory for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer as of the date set
forth below.
Date: MELLON AUTO TRUST 199_-_,
By: _______________________________, not in its
individual capacity but solely as Owner
Trustee under the Trust Agreement,
By:________________________________
Authorized Signatory
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the __% Asset Backed Notes of Mellon Auto Trust 199_-_
designated above and referred to in the within-mentioned Indenture.
Date: ____________________________________,
not in its individual capacity
but solely as Trustee,
By: _________________________
Authorized Signatory
<PAGE>
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its __% Asset Backed Notes (herein called the "Notes"), all issued
under an Indenture dated as of _________ __, 199_-_ (such indenture, as
supplemented or amended, is herein called the "Indenture"), between the Issuer
and ________________, as trustee (the "Trustee", which term includes any
successor Trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights and obligations thereunder of the Issuer, the Trustee and the Holders of
the Notes. The Notes are subject to all terms of the Indenture. All terms used
in this Note that are defined in the Indenture, as supplemented or amended,
shall have the meanings assigned to them in or pursuant to the Indenture, as so
supplemented or amended.
The Notes are and will be equally and ratably secured by the
collateral pledged as security therefor as provided in the Indenture.
Principal of the Notes will be payable on each Distribution Date in an
amount described on the face hereof. "Distribution Date" means the fifteenth day
of each month, or, if any such date is not a Business Day, the next succeeding
Business Day, commencing ____________.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the Note Final Scheduled Distribution
Date and the Redemption Date, if any, pursuant to Section 10.1(a) (i) or (ii) or
Section 10.1(b) of the Indenture. Notwithstanding the foregoing, the entire
unpaid principal amount of the Notes shall be due and payable on the date on
which an Event of Default shall have occurred and be continuing and the Trustee
or the Holders of the Notes representing not less than a majority of the
Outstanding Amount of the Notes have declared the Notes to be immediately due
and payable in the manner provided in Section 5.2 of the Indenture. All
principal payments on the Notes shall be made pro rata to the Noteholders
entitled thereto.
Payments of interest on this Note due and payable on each Distribution
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Holder of this Note (or one or more Predecessor Notes) on
the Note Register as of the close of business on each Record Date, except that
with respect to Notes registered on the Record Date in the name of the nominee
of the Clearing Agency (initially, such nominee to be Cede & Co.), payments will
be made by wire transfer in immediately available funds to the account
designated by such nominee. Such checks shall be mailed to the Person entitled
thereto at the address of such Person as it appears on the Note Register as of
the applicable Record Date without requiring that this Note be submitted for
notation of payment. Any reduction in the principal amount of this Note (or any
one or more Predecessor Notes) effected by any payments made on any Distribution
Date shall be binding upon all future Holders of this Note and of any Note
issued upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not noted hereon. If funds are expected to be available, as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Distribution Date, then the Trustee, in the
name of and on behalf of the Issuer, will notify the Person who was the Holder
hereof as of the Record Date preceding such Distribution Date by notice mailed
prior to such Distribution Date and the amount then due and payable shall be
payable only upon presentation and surrender of this Note at the Trustee's
principal Corporate Trust Office or at the office of the Trustee's agent
appointed for such purposes located in the City of New York.
The Issuer shall pay interest on overdue installments of interest at
the Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed in whole, but
not in part, (i) at the option of the Servicer, on any Distribution Date on or
after the date on which the Pool Balance is less than 5% of the Initial Pool
Balance or (ii) if the Depositor has not exercised its rights in clause (i)
within ten days following a Distribution Date as of which the Pool Balance is 5%
or less of the Initial Pool Balance, an auction sale shall be conducted (as
described in the Sale and Servicing Agreement).
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, (i) duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or his attorney duly authorized in
writing, with such signature guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note Registrar which requirements include
membership or participation in Securities Transfer Agents Medallion Program
("Stamp") or such other "signature guarantee program" as may be determined by
the Note Registrar in addition to, or in substitution for, Stamp, all in
accordance with the Exchange Act, and (ii) accompanied by such other documents
as the Trustee may require, and thereupon one or more new Notes of authorized
denominations and in the same aggregate principal amount will be issued to the
designated transferee or transferees. No service charge will be charged for any
registration of transfer or exchange of this Note, but the transferor may be
required to pay a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any such registration of transfer or
exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Trustee on the Notes or under the
Indenture or any certificate or other writing delivered in connection therewith,
against (i) the Depositor, the Servicer, the holder of the GP Interest, the
Trustee or the Owner Trustee in its individual capacity, (ii) any owner of a
beneficial interest in the Issuer or (iii) any partner, owner, beneficiary,
agent, officer, director or employee of the Depositor, the Servicer, the holder
of the GP Interest, the Trustee or the Owner Trustee in its individual capacity,
any holder of a beneficial interest in the Issuer, the Depositor, the Servicer,
the holder of the GP Interest, the Owner Trustee or the Trustee or of any
successor or assign of the Depositor, the Servicer, the holder of the GP
Interest, the Trustee or the Owner Trustee in its individual capacity, except as
any such Person may have expressly agreed (it being understood that the Trustee
and the Owner Trustee have no such obligations in their individual capacity) and
except that any such partner, owner or beneficiary shall be fully liable, to the
extent provided by applicable law, for any unpaid consideration for stock,
unpaid capital contribution or failure to pay any installment or call owing to
such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note covenants and agrees that by
accepting the benefits of the Indenture that such Noteholder will not at any
time institute against the Depositor, the holder of the GP Interest or the
Issuer, or join in any institution against the Depositor, the holder of the GP
Interest or the Issuer of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings, under any United
States Federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture or the Basic Documents.
Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Trustee and any agent of the Issuer or the Trustee may
treat the Person in whose name this Note (as of the day of determination or as
of such other date as may be specified in the Indenture) is registered as the
owner hereof for all purposes, whether or not this Note be overdue, and neither
the Issuer, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing a
majority of the Outstanding Amount of all Notes at the time Outstanding. The
Indenture also contains provisions permitting the Holders of Notes representing
specified percentages of the Outstanding Amount of the Notes, on behalf of the
Holders of all the Notes, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Note (or
any one of more Predecessor Notes) shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note. The Indenture
also permits the Trustee to amend or waive certain terms and conditions set
forth in the Indenture without the consent of Holders of the Notes issued
thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Trustee and the Holders of
Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Indenture or the Basic Documents, neither ________________ in
its individual capacity, ________________ in its individual capacity, any owner
of a beneficial interest in the Issuer, nor any of their respective partners,
beneficiaries, agents, officers, directors, employees or successors or assigns
shall be personally liable for, nor shall recourse be had to any of them for,
the payment of principal of or interest on, or performance of, or omission to
perform, any of the covenants, obligations or indemnifications contained in this
Note or the Indenture, it being expressly understood that said covenants,
obligations and indemnifications have been made by the Owner Trustee for the
sole purposes of binding the interests of the Owner Trustee in the assets of the
Issuer. The Holder of this Note by the acceptance hereof agrees that except as
expressly provided in the Indenture or the Basic Documents, in the case of an
Event of Default under the Indenture, the Holder shall have no claim against any
of the foregoing for any deficiency, loss or claim therefrom; PROVIDED, HOWEVER,
that nothing contained herein shall be taken to prevent recourse to, and
enforcement against, the assets of the Issuer for any and all liabilities,
obligations and undertakings contained in the Indenture or in this Note.
<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:
- ------------------
3. NOTE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatsoever.
EXHIBIT 4.4
MELLON AUTO TRUST 199_-_
FORM OF TRUST AGREEMENT
between
MELLON AUTO RECEIVABLES CORPORATION
and
----------------------------------------
Dated as of ______ __, 199_
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I - DEFINITIONS
SECTION 1.1. Capitalized Terms..........................................1
SECTION 1.2 Other Definitional Provisions..............................4
ARTICLE II - ORGANIZATION
SECTION 2.1. Name.......................................................4
SECTION 2.2. Office.....................................................4
SECTION 2.3. Purposes and Powers........................................5
SECTION 2.4. Appointment of Owner Trustee...............................5
SECTION 2.5. Initial Capital Contribution of Trust Estate...............5
SECTION 2.6. Declaration of Trust.......................................6
SECTION 2.7. Transfer of Interest to the Depositor;
Liability of the Holder of the GP Interest...............6
SECTION 2.8. Title to Trust Property....................................6
SECTION 2.9. Situs of Trust.............................................7
SECTION 2.10. Representations and Warranties of the
Depositor................................................7
SECTION 2.11. Federal Income Tax Allocations.............................7
ARTICLE III - TRUST CERTIFICATES AND TRANSFER OF INTERESTS
SECTION 3.1. Initial Ownership..........................................8
SECTION 3.2. The Trust Certificates.....................................8
SECTION 3.3. Authentication of Trust Certificates.......................9
SECTION 3.4. Registration of Transfer and Exchange of
Trust Certificates.......................................9
SECTION 3.5. Mutilated, Destroyed, Lost or Stolen Trust
Certificates............................................10
SECTION 3.6. Persons Deemed Certificateholders.........................10
SECTION 3.7. Access to List of Certificateholders' Names
and Addresses...........................................10
SECTION 3.8. Maintenance of Office or Agency...........................11
SECTION 3.9. Appointment of Paying Agent...............................11
SECTION 3.10. Disposition by the Holder of the GP Interest..............11
SECTION 3.11. Book-Entry Trust Certificates.............................12
SECTION 3.12. Notices to Clearing Agency................................13
SECTION 3.13. Definitive Trust Certificates.............................13
SECTION 3.14. Trust Certificate Transfer Restrictions...................13
ARTICLE IV - ACTIONS BY OWNER TRUSTEE
SECTION 4.1. Prior Notice to Owners with Respect to
Certain Matters.........................................13
SECTION 4.2. Action by Certificateholders with Respect to
Certain Matters.........................................14
SECTION 4.3. Action by Certificateholders with Respect to
Bankruptcy..............................................14
SECTION 4.4. Restrictions on Certificateholders' Power.................14
SECTION 4.5. Majority Control..........................................15
SECTION 4.6. Execution of Documents....................................15
ARTICLE V - APPLICATION OF TRUST FUNDS: CERTAIN DUTIES
SECTION 5.1. Establishment of Certificate Distribution
Account.................................................15
SECTION 5.2. Application of Funds in Certificate
Distribution Account....................................15
SECTION 5.3. Method of Payment.........................................16
SECTION 5.4. No Segregation of Monies; No Interest.....................17
SECTION 5.5. Accounting and Reports to the Noteholders,
Certificateholders, the Internal Revenue Service
and Others..............................................17
SECTION 5.6. Signature on Returns; Tax Matters Partner.................17
ARTICLE VI - AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.1. General Authority.........................................17
SECTION 6.2. Action upon Instruction...................................18
SECTION 6.3. No Duties Except as Specified in this
Agreement or in Instructions............................19
SECTION 6.4. No Action Except under Specified Documents or
Instructions............................................19
SECTION 6.5. Restrictions..............................................19
SECTION 6.6. Notice of Default Under Indenture.........................20
ARTICLE VII - CONCERNING THE OWNER TRUSTEE
SECTION 7.1. Acceptance of Trusts and Duties...........................20
SECTION 7.2. Furnishing of Documents...................................21
SECTION 7.3. Representations and Warranties............................21
SECTION 7.4. Reliance; Advice of Counsel...............................21
SECTION 7.5. Not Acting in Individual Capacity.........................22
SECTION 7.6. Owner Trustee Not Liable for Trust
Certificates or Receivables.............................22
SECTION 7.7. Owner Trustee May Own Trust Certificates and
Notes...................................................23
ARTICLE VIII - COMPENSATION OF OWNER TRUSTEE
SECTION 8.1. Owner Trustee's Fees and Expenses.........................23
SECTION 8.2. Indemnification...........................................23
SECTION 8.3. Payments to the Owner Trustee.............................23
ARTICLE IX - DISSOLUTION AND TERMINATION OF TRUST
SECTION 9.1. Termination of Trust Agreement............................24
SECTION 9.2. Dissolution upon Bankruptcy of the Holder of
the GP Interest.........................................25
ARTICLE X - SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.1. Eligibility Requirements for Owner Trustee................25
SECTION 10.2. Resignation or Removal of Owner Trustee...................26
SECTION 10.3. Successor Owner Trustee...................................26
SECTION 10.4. Merger or Consolidation of Owner Trustee..................27
SECTION 10.5. Appointment of Co-Trustee or Separate Trustee.............27
ARTICLE XI - MISCELLANEOUS
SECTION 11.1. Supplements and Amendments................................28
SECTION 11.2. No Legal Title to Owner Trust Estate in
Certificateholders......................................30
SECTION 11.3. Limitations on Rights of Others...........................30
SECTION 11.4. Notices ................................................30
SECTION 11.5. Severability..............................................30
SECTION 11.6. Separate Counterparts.....................................30
SECTION 11.7. Successors and Assigns....................................31
SECTION 11.8. No Petition...............................................31
SECTION 11.9 No Recourse...............................................31
SECTION 11.10. Headings .................................................31
SECTION 11.11. GOVERNING LAW.............................................31
SECTION 11.12. Servicer..................................................31
Testimonium, Signatures and Seals
Exhibit A Form of Certificate
Exhibit B Form of Certificate of Trust
Exhibit C Form of Certificate Depository Agreement
<PAGE>
TRUST AGREEMENT dated as of __________
__, 199_ between MELLON AUTO RECEIVABLES
CORPORATION, a Delaware corporation, as
depositor, and ____________________ as Owner
Trustee.
ARTICLE I
DEFINITIONS
SECTION 1.1. CAPITALIZED TERMS. For all purposes of this Agreement,
the following terms shall have the meanings set forth below:
"Agreement" shall mean this Trust Agreement, as the same may be
amended and supplemented from time to time.
"Bank" shall mean Mellon Bank, N.A., a national banking association.
"Basic Documents" shall mean the Sale and Servicing Agreement, the
Indenture, the Certificate Depository Agreement, the Note Depository Agreement
and the other documents and certificates delivered in connection therewith.
"Benefit Plan" shall have the meaning assigned to such term in Section
3.14.
"Book Entry Trust Certificates" means a beneficial interest in the
Trust Certificates, ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 3.11.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of the
Delaware Code, 12 DEL. CODE ' 3801 ET SEQ., as the same may be amended from time
to time.
"Certificate" means a certificate evidencing the beneficial interest
of a Certificateholder in the Trust, substantially in the form of Exhibit A
attached hereto.
"Certificate Depository Agreement" shall mean the agreement among the
Trust, the Servicer and The Depository Trust Company, as the initial Clearing
Agency, dated as of one Business Day prior to the Closing Date, relating to the
Trust Certificates, substantially in the form attached hereto as Exhibit C, as
the same may be amended and supplemented from time to time.
"Certificate Distribution Account" shall have the meaning assigned to
such term in Section 5.1.
"Certificate of Trust" shall mean the Certificate of Trust in the form
of Exhibit B to be filed for the Trust pursuant to Section 3810(a) of the
Business Trust Statute.
"Certificate Register" and "Certificate Registrar" shall mean the
register mentioned and the registrar appointed pursuant to Section 3.4.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and Treasury Regulations promulgated thereunder.
"Corporate Trust Office" shall mean, with respect to the Owner
Trustee, the principal corporate trust office of the Owner Trustee located
_______________________, Attention: _____________; or at such other address as
the Owner Trustee may designate by notice to the Certificateholders and the
Depositor, or the principal corporate trust office of any successor Owner
Trustee (the address of which the successor owner trustee will notify the
Certificateholders and the Depositor).
"Definitive Trust Certificates" shall mean either or both (as the
context requires) of (i) Trust Certificates issued in certificated, fully
registered form as provided in Section 3.11 and (ii) Trust Certificates issued
in certificated, fully registered form as provided in Section 3.13.
["Delaware Trustee" shall have the meaning assigned to such term in
Section 10.1.]
"Depositor" shall mean Mellon Auto Receivables Corporation, as the
depositor of the Receivables, and each successor to Mellon Auto Receivables
Corporation, (in the same capacity) to the extent permitted hereunder.
"ERISA" shall have the meaning assigned to such term in Section 3.14.
"Expenses" shall have the meaning assigned to such term in Section
8.2.
"GP Interest" shall have the meaning assigned to such term in Section
2.7.
"Holder" or "Certificateholder" shall mean the Person in whose name a
Trust Certificate is registered on the Certificate Register.
"Indemnified Parties" shall have the meaning assigned to such term in
Section 8.2.
"Note Depository Agreement" shall mean the agreement among the Trust,
the Trustee, the Servicer and The Depository Trust Company, as the initial
Clearing Agency, dated as of one Business Day prior to the Closing Date,
relating to the Notes, as the same may be amended or supplemented from time to
time.
"Owner" shall mean each Person who is the beneficial owner of a Book
Entry Certificate as reflected in the records of the Clearing Agency or if a
Clearing Agency Participant is not the Owner, then as reflected in records of a
Person maintaining an account with such Clearing Agency (directly or indirectly,
in accordance with the rules of such Clearing Agency).
"Owner Trust Estate" shall mean all right, title and interest of the
Trust in and to the property and rights assigned to the Trust pursuant to
Article II of the Sale and Servicing Agreement, all funds on deposit from time
to time in the Trust Accounts and the Certificate Distribution Account and all
other property of the Trust from time to time, including any rights of the Owner
Trustee and the Trust pursuant to the Sale and Servicing Agreement.
"Owner Trustee" shall mean _______________________, a _______________,
not in its individual capacity but solely as owner trustee under this Agreement,
and any successor Owner Trustee hereunder.
"Paying Agent" shall mean any paying agent or co-paying agent
appointed pursuant to Section 3.9 and shall initially be the Owner Trustee.
"Record Date" shall mean, with respect to any Distribution Date, the
close of business on the last day of the calendar month preceding such
Distribution Date occurs.
"Responsible Officer" shall mean, when used with respect to the Owner
Trustee, any officer assigned to the Corporate Trust Office of the Owner
Trustee, including any Vice President, any Assistant Vice President, any trust
officer or any other officer of the Owner Trustee customarily performing
functions similar to those performed by any of the above designated officers or
any agent acting under a power of attorney from the Owner Trustee, having
responsibility for the administration of this Trust Agreement, as the case may
be, and also, with respect to a particular matter relating to the Trust, any
other officer of the Owner Trustee to whom such matter is referred because of
such officer's knowledge of and familiarity with such matter. Any notice given
to the address and in the manner specified in Section 11.4 hereof shall be
deemed to be given to a Responsible Officer.
"Sale and Servicing Agreement" shall mean the Sale and Servicing
Agreement among the Trust, Mellon Auto Receivables Corporation, as depositor,
and the Bank, as seller and as servicer, dated as of ______ __, 199_, as the
same may be amended and supplemented from time to time.
"Secretary of State" shall mean the Secretary of State of the State of
Delaware.
"Treasury Regulations" shall mean regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust" shall mean the trust established by this Agreement.
"Trust Certificate" shall mean a Certificate.
SECTION 1.2. Other Definitional Provisions.
(a) Capitalized terms used herein and not otherwise defined have the
meanings assigned to them in the Sale and Servicing Agreement or, if not defined
therein, in the Indenture.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings given to
them under generally accepted accounting principles as in effect on the date of
this Agreement or any such certificate or other document, as applicable. To the
extent that the definitions of accounting terms in this Agreement or in any such
certificate or other document are inconsistent with the meanings of such terms
under generally accepted accounting principles, the definitions contained in
this Agreement or in any such certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation."
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
ARTICLE II
ORGANIZATION
SECTION 2.1. NAME. The Trust created hereby shall be known as "Mellon
Auto Trust 199_-_", in which name the Owner Trustee may engage in the
transactions contemplated hereby, make and execute contracts and other
instruments on behalf of the Trust and sue and be sued.
SECTION 2.2. OFFICE. The office of the Trust shall be in care of the
Owner Trustee at the Corporate Trust Office, or at the office of the Delaware
Trustee, if one exists, or at such other address as the Owner Trustee may
designate by written notice to the Certificateholders and the Depositor.
SECTION 2.3. PURPOSES AND POWERS. (a) The purpose of the Trust is, and
the Trust shall have the power and authority, to engage in the following
activities:
(i) to issue the Notes pursuant to the Indenture and the Trust
Certificates pursuant to this Agreement, and to sell the Notes and the
Trust Certificates;
(ii) with the proceeds of the sale of the Notes and the Trust
Certificates, to pay the organizational, start-up and transactional
expenses of the Trust and to pay the balance to the Depositor pursuant
to the Sale and Servicing Agreement;
(iii) to acquire, receive and accept from time to time the Owner
Trust Estate, and to assign, grant, transfer, pledge, mortgage and
convey the Trust Estate pursuant to the Indenture and to hold, manage
and distribute to the Certificateholders pursuant to the terms of the
Sale and Servicing Agreement any portion of the Trust Estate released
from the Lien of, and remitted to the Trust pursuant to, the
Indenture;
(iv) to enter into and perform its obligations under the Basic
Documents to which it is a party;
(v) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish
the foregoing or are incidental thereto or connected therewith; and
(vi) subject to compliance with the Basic Documents to which the
Trust is a party, to engage in such other activities as may be
required in connection with conservation of the Owner Trust Estate and
the making of distributions to the Certificateholders and the
Noteholders.
The Trust is hereby authorized to engage in the foregoing activities. The Trust
shall not engage in any activity other than in connection with the foregoing or
other than as required or authorized by the terms of this Agreement or the Basic
Documents.
SECTION 2.4. Appointment of Owner Trustee. The Depositor hereby
appoints the Owner Trustee as trustee of the Trust effective as of the date
hereof, to have all the rights, powers and duties set forth herein.
SECTION 2.5. INITIAL CAPITAL CONTRIBUTION OF TRUST ESTATE. The
Depositor hereby sells, assigns, transfers, conveys and sets over to the Owner
Trustee, as of the date hereof, the sum of $1. The Owner Trustee hereby
acknowledges receipt in trust from the Depositor, as of the date hereof, of the
foregoing contribution, which shall constitute the initial Owner Trust Estate
and shall be deposited in the Certificate Distribution Account.
SECTION 2.6. DECLARATION OF TRUST. The Owner Trustee hereby declares
that it will hold the Owner Trust Estate in trust upon and subject to the
conditions set forth herein for the use and benefit of the Certificateholders,
subject to the obligations of the Trust under the Basic Documents to which the
Trust is a party. It is the intention of the parties hereto that the Trust
constitute a business trust under the Business Trust Statute and that this
Agreement constitute the governing instrument of such business trust. It is the
intention of the parties hereto that, solely for income and franchise tax
purposes, the Trust shall be treated as a partnership. The parties agree that,
unless otherwise required by appropriate tax authorities, the Trust will file or
cause to be filed annual or other necessary returns, reports and other forms
consistent with the characterization of the Trust as a partnership for such tax
purposes. Effective as of the date hereof, the Owner Trustee shall have all
rights, powers and duties set forth herein and to the extent not inconsistent
herewith, in the Business Trust Statute with respect to accomplishing the
purposes of the Trust. The Owner Trustee shall file the Certificate of Trust
with the Secretary of State.
SECTION 2.7. TRANSFER OF INTEREST TO THE DEPOSITOR; LIABILITY OF THE
HOLDER OF THE GP INTEREST. (a) On the Closing Date the Depositor shall purchase
a 1% interest in the Trust (the "GP Interest"). The holder of the GP Interest
shall pay organizational expenses of the Trust as they may arise or shall, upon
the request of the Owner Trustee, promptly reimburse the Owner Trustee for any
such expenses paid by the Owner Trustee. The holder of the GP Interest shall
also be liable directly to and will indemnify any injured party for all losses,
claims, damages, liabilities and expenses of the Trust (including Expenses, to
the extent not paid out of the Owner Trust Estate) to the extent that the holder
of the GP Interest would be liable if the Trust were a partnership under the
Delaware Revised Uniform Limited Partnership Act in which the holder of the GP
Interest were a general partner; PROVIDED, HOWEVER, that the holder of the GP
Interest shall not be liable for any losses incurred by a Certificateholder in
the capacity of an investor in the Trust Certificates or a Noteholder in the
capacity of an investor in the Notes. In addition, any third party creditors of
the Trust (other than in connection with the obligations described in the
preceding sentence for which the holder of the GP Interest shall not be liable)
shall be deemed third party beneficiaries of this paragraph. The obligations of
the holder of the GP Interest under this paragraph shall be evidenced by the
Trust Certificates described in Section 3.10, which for purposes of the Business
Trust Statute shall be deemed to be a separate class of Trust Certificates from
all other Trust Certificates issued by the Trust.
(b) No Holder, other than to the extent set forth in clause (a), shall
have any personal liability for any liability or obligation of the Trust.
SECTION 2.8. TITLE TO TRUST PROPERTY. Legal title to all the Owner
Trust Estate shall be vested at all times in the Trust as a separate legal
entity except where applicable law in any jurisdiction requires title to any
part of the Owner Trust Estate to be vested in a trustee or trustees, in which
case title shall be deemed to be vested in the Owner Trustee, a co-trustee
and/or a separate trustee, as the case may be.
SECTION 2.9 SITUS OF TRUST. The Trust will be located and administered
in the State of Delaware. All bank accounts maintained by the Owner Trustee on
behalf of the Trust shall be located in the State of Delaware or the State of
_____________. Payments will be received by the Trust only in Delaware or
_____________, and payments will be made by the Trust only from Delaware or
__________. The only office of the Trust will be at the Corporate Trust Office
in Delaware.
SECTION 2.10. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR. The
Depositor hereby represents and warrants to the Owner Trustee that:
(a) The Depositor is duly organized and validly existing as a Delaware
corporation with power and authority to own its properties and to conduct its
business as such properties are currently owned and such business is presently
conducted.
(b) The Depositor has the corporate power and authority to execute and
deliver this Agreement and to carry out its terms; the Depositor has full power
and authority to sell and assign the property to be sold and assigned to and
deposited with the Trust and the Depositor has duly authorized such sale and
assignment and deposit to the Trust by all necessary corporate action; and the
execution, delivery and performance of this Agreement has been duly authorized
by the Depositor by all necessary corporate action.
(c) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with, result
in any breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time) a default under, the certificate of
incorporation or by-laws of the Depositor, or any material indenture, agreement
or other instrument to which the Depositor is a party or by which it is bound;
nor result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement or other instrument
(other than pursuant to the Basic Documents); nor violate any law or, to the
best of the Depositor's knowledge, any order, rule or regulation applicable to
the Depositor of any court or of any Federal or state regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over the Depositor or its properties.
(d) It is duly qualified to do business as a foreign corporation in
good standing, and has obtained all necessary licenses and approvals in all
jurisdictions in which the ownership or lease of property or the conduct of its
business shall require such qualifications.
SECTION 2.11. FEDERAL INCOME TAX ALLOCATIONS. Net income of the Trust
for any month as determined for Federal income tax purposes (and each item of
income, gain, loss, credit and deduction entering into the computation thereof)
shall be allocated:
(a) to the extent of available net income, among the
Certificateholders as of the first Record Date following the end of such month,
in proportion to their ownership of principal amount of Trust Certificates on
such date, an amount of net income up to the sum of (i) the Certificateholders'
Monthly Interest Distribution Amount for such month, (ii) interest on the
excess, if any, of the Certificateholders' Interest Distributable Amount for the
preceding Distribution Date over the amount in respect of interest at the
Certificate Rate that is actually deposited in the Certificate Distribution
Account on such preceding Distribution Date, to the extent permitted by law, at
the Certificate Rate from such preceding Distribution Date through the current
Distribution Date, and (iii) the portion of the market discount on the
Receivables accrued during such month that is allocable to the excess of the
initial aggregate principal amount of the Trust Certificates over their initial
aggregate issue price; and
(b) to the holder of the GP Interest, to the extent of any remaining
net income. If the net income of the Trust for any month is insufficient for the
allocations described in clause (a) above, subsequent net income shall first be
allocated to make up such shortfall before being allocated as provided in clause
(b). Net losses of the Trust, if any, for any month as determined for Federal
income tax purposes (and each item of income, gain, loss, credit and deduction
entering into the computation thereof) shall be allocated to the holder of the
GP Interest to the extent the holder of the GP Interest is reasonably expected
as determined by the Servicer to bear the economic burden of such net losses,
then net losses shall be allocated among the Certificateholders as of the first
Record Date following the end of such month in proportion to their ownership of
principal amount of Trust Certificates on such Record Date until the principal
balance of the Trust Certificates is reduced to zero. The holder of the GP
Interest is authorized to modify the allocations in this paragraph if necessary
or appropriate, in its sole discretion, for the allocations to fairly reflect
the economic income, gain or loss to the holder of the GP Interest, the
Certificateholders, or as otherwise required by the Code.
ARTICLE III.
TRUST CERTIFICATES AND TRANSFER OF INTERESTS
SECTION 3.1. INITIAL OWNERSHIP. Upon the formation of the Trust by the
contribution by the Depositor pursuant to Section 2.5 and until the issuance of
the Trust Certificates, the Depositor shall be the sole beneficiary of the
Trust.
SECTION 3.2. THE TRUST CERTIFICATES. The Trust Certificates shall be
issued in denominations of $25,000 and integral multiples of $1,000 in excess
thereof; PROVIDED, however, that (a) Trust Certificates may be issued to the
holder of the GP Interest pursuant to Section 2.7 in such denominations as to
represent at least 1% of the initial Certificate Balance and (b) one Trust
Certificate may be issued in a denomination other than an integral multiple of
$1,000. The Trust Certificates shall be executed on behalf of the Trust by
manual or facsimile signature of an authorized officer of the Owner Trustee.
Trust Certificates bearing the manual or facsimile signatures of individuals who
were, at the time when such signatures shall have been affixed, authorized to
sign on behalf of the Trust, shall be validly issued and entitled to the benefit
of this Agreement, notwithstanding that such individuals or any of them shall
have ceased to be so authorized prior to the authentication and delivery of such
Trust Certificates or did not hold such offices at the date of authentication
and delivery of such Trust Certificates. A transferee of a Trust Certificate
shall become a Certificateholder, and shall be entitled to the rights and
subject to the obligations of a Certificateholder hereunder, upon due
registration of such Trust Certificate in such transferee's name pursuant to
Section 3.4.
SECTION 3.3. AUTHENTICATION OF TRUST CERTIFICATES. Concurrently with
the initial sale of the Receivables to the Trust pursuant to the Sale and
Servicing Agreement, the Owner Trustee shall cause the Trust Certificates in an
aggregate principal amount equal to the initial Certificate Balance to be
executed on behalf of the Trust, authenticated and delivered to or upon the
written order of the Depositor, signed by its chairman of the board, its
president or any vice president, without further corporate action by the
Depositor, in authorized denominations. No Trust Certificate shall entitle its
holder to any benefit under this Agreement, or shall be valid for any purpose,
unless there shall appear on such Trust Certificate a certificate of
authentication substantially in the form set forth in Exhibit A, executed by the
Owner Trustee by manual signature; such authentication shall constitute
conclusive evidence that such Trust Certificate shall have been duly
authenticated and delivered hereunder. All Trust Certificates shall be dated the
date of their authentication. ____ is hereby appointed as the Owner Trustee=s
authenticating agent for the Trust Certificates. Any reference herein regarding
the Owner Trustee's authentication of the Trust Certificates shall be deemed to
include ____.
SECTION 3.4 REGISTRATION OF TRANSFER AND EXCHANGE OF TRUST
CERTIFICATES. The Certificate Registrar shall keep or cause to be kept, at the
office or agency maintained pursuant to Section 3.8, a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, the Owner
Trustee shall provide for the registration of Trust Certificates and of
transfers and exchanges of Trust Certificates as herein provided. ____ shall be
the initial Certificate Registrar.
Upon surrender for registration of transfer of any Trust Certificate
at the office or agency maintained pursuant to Section 3.8, and, upon
satisfaction of the conditions set forth below, the Owner Trustee shall execute,
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Trust Certificates in authorized denominations of a
like class and aggregate face amount dated the date of authentication by the
Owner Trustee or any authenticating agent. At the option of a Holder, Trust
Certificates may be exchanged for other Trust Certificates of the same class in
authorized denominations of a like aggregate amount upon surrender of the Trust
Certificates to be exchanged at the office or agency maintained pursuant to
Section 3.8. Every Trust Certificate presented or surrendered for registration
of transfer or exchange shall be accompanied by a written instrument of transfer
in form satisfactory to the Owner Trustee and the Certificate Registrar duly
executed by the Certificateholder or his attorney duly authorized in writing,
with such signature guaranteed by an "eligible guarantor institution" meeting
the requirements of the Certificate Registrar, which requirements include
membership or participation in the Securities Transfer Agent's Medallion Program
("STAMP") or such other "signature guarantee program" as may be determined by
the Certificate Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Exchange Act. Each Trust Certificate surrendered for
registration of transfer or exchange shall be canceled and subsequently disposed
of by the Owner Trustee in accordance with its customary practice.
No service charge shall be made for any registration of transfer or
exchange of Trust Certificates, but the Owner Trustee or the Certificate
Registrar may, but shall not be obligated to, require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Trust Certificates.
SECTION 3.5. MUTILATED, DESTROYED, LOST OR STOLEN TRUST CERTIFICATES.
If (a) any mutilated Trust Certificate shall be surrendered to the Certificate
Registrar, or if the Certificate Registrar shall receive evidence to its
satisfaction of the destruction, loss or theft of any Trust Certificate and (b)
there shall be delivered to the Certificate Registrar and the Owner Trustee such
security or indemnity as may be required by them to save each of them harmless,
then in the absence of actual knowledge by a Responsible Officer of the Owner
Trustee that such Trust Certificate shall have been acquired by a bona fide
purchaser, the Owner Trustee on behalf of the Trust shall execute and the Owner
Trustee shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Trust Certificate, a new Trust Certificate
of like class, tenor and denomination. In connection with the issuance of any
new Trust Certificate under this Section, the Owner Trustee or the Certificate
Registrar may, but shall not be obligated to, require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith. Any duplicate Trust Certificate issued pursuant to this
Section shall constitute conclusive evidence of an ownership interest in the
Trust, as if originally issued, whether or not the lost, stolen or destroyed
Trust Certificate shall be found at any time.
SECTION 3.6 PERSONS DEEMED CERTIFICATEHOLDERS. Every person by virtue
of becoming a Certificateholder or Owner in accordance with this Agreement and
the rules and regulations of the Clearing Agency shall be deemed to be bound by
the terms of this Agreement. Prior to due presentation of a Trust Certificate
for registration of transfer, the Owner Trustee or the Certificate Registrar may
treat the Person in whose name any Trust Certificate shall be registered in the
Certificate Register as the Owner of such Trust Certificate for the purpose of
receiving distributions pursuant to Section 5.2 and for all other purposes
whatsoever, and none of the Owner Trustee, the Certificate Registrar or the
Paying Agent shall be bound by any notice to the contrary.
SECTION 3.7. ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND
ADDRESSES. The Owner Trustee shall furnish or cause to be furnished to the
Servicer, the Depositor and the holder of the GP Interest, within 15 days after
receipt by the Owner Trustee of a request therefor from the Servicer, the
Depositor or the holder of the GP Interest in writing, a list, in such form as
the Servicer, the Depositor or the holder of the GP Interest may reasonably
require, of the names and addresses of the Certificateholders as of the most
recent Record Date. If three or more Holders of Trust Certificates or one or
more Holders of Trust Certificates evidencing not less than 25% of the
Certificate Balance apply in writing to the Owner Trustee, and such application
states that the applicants desire to communicate with other Certificateholders
with respect to their rights under this Agreement or under the Trust
Certificates and such application is accompanied by a copy of the communication
that such applicants propose to transmit, then the Owner Trustee shall, within
five Business Days after the receipt of such application, afford such applicants
access during normal business hours to the current list of Certificateholders.
Each Holder, by receiving and holding a Trust Certificate, shall be deemed to
have agreed not to hold either the Depositor or the Owner Trustee accountable by
reason of the disclosure of its name and address, regardless of the source from
which such information was derived.
SECTION 3.8. MAINTENANCE OF OFFICE OR AGENCY. The Owner Trustee shall
maintain in the Borough of Manhattan, City of New York, an office or offices or
agency or agencies where Trust Certificates may be surrendered for registration
of transfer or exchange and where notices and demands to or upon the Owner
Trustee in respect of the Trust Certificates and the Basic Documents may be
served. The Owner Trustee initially designates ____ as its agent for such
purposes. The Owner Trustee shall give prompt written notice to the Depositor
and to the Certificateholders of any change in the location of the Certificate
Register or any such office or agency.
SECTION 3.9. APPOINTMENT OF PAYING AGENT. The Paying Agent shall make
distributions to Certificateholders from the Certificate Distribution Account
pursuant to Section 5.2 and shall report the amounts of such distributions to
the Owner Trustee. Any Paying Agent shall have the revocable power to withdraw
funds from the Certificate Distribution Account for the purpose of making the
distributions referred to above. The Owner Trustee may revoke such power and
remove the Paying Agent if the Owner Trustee determines in its sole discretion
that the Paying Agent shall have failed to perform its obligations under this
Agreement in any material respect. The Paying Agent shall initially be ____, and
any co-paying agent chosen by ____, and acceptable to the Servicer. The Paying
Agent shall be permitted to resign upon 30 days' written notice to the Owner
Trustee and the Servicer. In the event that ___________________ shall no longer
be the Paying Agent, the Owner Trustee shall appoint a successor to act as
Paying Agent (which shall be a bank or trust company). The Owner Trustee shall
cause such successor Paying Agent or any additional Paying Agent appointed by
the Owner Trustee to execute and deliver to the Owner Trustee an instrument in
which such successor Paying Agent or additional Paying Agent shall agree with
the Owner Trustee that as Paying Agent, such successor Paying Agent or
additional Paying Agent will hold all sums, if any, held by it for payment to
the Certificateholders in trust for the benefit of the Certificateholders
entitled thereto until such sums shall be paid to such Certificateholders. The
Paying Agent shall return all unclaimed funds to the Owner Trustee and upon
removal of a Paying Agent such Paying Agent shall also return all funds in its
possession to the Owner Trustee. The provisions of Articles VII and VIII shall
apply to ____ or the Owner Trustee also in its role as Paying Agent, for so long
as ____ or the Owner Trustee shall act as Paying Agent and, to the extent
applicable, to any other paying agent appointed hereunder. Any reference in this
Agreement to the Paying Agent shall include any co-paying agent unless the
context requires otherwise.
SECTION 3.10. DISPOSITION BY THE HOLDER OF THE GP Interest. On and
after the Closing Date, the holder of the GP Interest shall retain beneficial
and record ownership of Trust Certificates representing at least 1% of the
initial Certificate Balance. Any attempted transfer of any Trust Certificate
that would reduce such interest of the holder of the GP Interest below 1% of the
Certificate Balance shall be void. The Owner Trustee shall cause any Trust
Certificate issued to the holder of the GP Interest to contain a legend stating
"THIS CERTIFICATE IS NOT TRANSFERABLE."
SECTION 3.11. BOOK-ENTRY TRUST CERTIFICATES. The Trust Certificates,
upon original issuance, will be issued in the form of a typewritten Trust
Certificate or Trust Certificates representing Book-Entry Trust Certificates, to
be delivered to The Depository Trust Company, the initial Clearing Agency, by or
on behalf of the Trust; PROVIDED, HOWEVER, that one Definitive Certificate (as
defined below) may be issued to the Depositor, as holder of the GP Interest
pursuant to Section 2.7. Such Book-Entry Trust Certificate or Trust Certificates
shall initially be registered on the Certificate Register in the name of Cede &
Co., the nominee of the initial Clearing Agency, and no beneficial owner (other
than the Depositor and the holder of the GP Interest) will receive a definitive
Trust Certificate representing such beneficial owner's interest in such Trust
Certificate, except as provided in Section 3.13. Unless and until Definitive
Trust Certificates have been issued to beneficial owners pursuant to Section
3.13:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Certificate Registrar and the Owner Trustee shall be
entitled to deal with the Clearing Agency for all purposes of this
Agreement relating to the Book-Entry Trust Certificates (including the
payment of principal of and interest on the Book-Entry Trust
Certificates and the giving of instructions or directions to Owners of
Book-Entry Trust Certificates) as the sole Holder of Book-Entry Trust
Certificates and shall have no obligations to the Owners thereof;
(iii) to the extent that the provisions of this Section conflict
with any other provisions of this Agreement, the provisions of this
Section shall control;
(iv) the rights of the Owners of the Book-Entry Trust
Certificates shall be exercised only through the Clearing Agency and
shall be limited to those established by law and agreements between
such Owners and the Clearing Agency and/or the Clearing Agency
Participants. Pursuant to the Certificate Depository Agreement, unless
and until Definitive Trust Certificates are issued pursuant to Section
3.13, the initial Clearing Agency will make book-entry transfers among
the Clearing Agency Participants and receive and transmit payments of
principal of and interest on the Book-Entry Trust Certificates to such
Clearing Agency Participants; and
(v) whenever this Agreement requires or permits actions to be
taken based upon instructions or directions of Holders of Trust
Certificates evidencing a specified percentage of the Certificate
Balance, the Clearing Agency shall be deemed to represent such
percentage only to the extent that it has received instructions to
such effect from Owners and/or Clearing Agency Participants owning or
representing, respectively, such required percentage of the beneficial
interest in the Book-Entry Trust Certificates and has delivered such
instructions to the Owner Trustee.
SECTION 3.12 NOTICES TO CLEARING AGENCY. Whenever a notice or other
communication to the Owners is required under this Agreement, unless and until
Definitive Trust Certificates shall have been issued to Owners pursuant to
Section 3.13, the Owner Trustee shall give all such notices and communications
specified herein to be given to Owners to the Clearing Agency, and shall have no
obligations to the Owners, except to the holder of the GP Interest.
SECTION 3.13. DEFINITIVE TRUST CERTIFICATES. If (i) the Servicer
advises the Owner Trustee in writing that the Clearing Agency is no longer
willing or able to properly discharge its responsibilities with respect to the
Trust Certificates, and the Servicer is unable to locate a qualified successor,
(ii) the Servicer at its option advises the Owner Trustee in writing that it
elects to terminate the book-entry system through the Clearing Agency or (iii)
after the occurrence of an Event of Default, Owners of Certificates representing
beneficial interests aggregating at least a majority of the Certificate Balance
advise the Clearing Agency in writing that the continuation of a book-entry
system through the Clearing Agency is no longer in the best interest of the
Owners of Trust Certificates, then the Clearing Agency shall notify all Owners
and the Owner Trustee of the occurrence of any such event and of the
availability of the Definitive Trust Certificates to Owners requesting the same.
Upon surrender to the Owner Trustee of the typewritten Trust Certificate or
Trust Certificates representing the Book Entry Trust Certificates by the
Clearing Agency, accompanied by registration instructions, the Owner Trustee
shall execute and authenticate the Definitive Trust Certificates in accordance
with the instructions of the Clearing Agency. Neither the Certificate Registrar
nor the Owner Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Upon the issuance of Definitive Trust Certificates, the Owner
Trustee shall recognize the Holders of the Definitive Trust Certificates as
Certificateholders. The Definitive Trust Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is reasonably
acceptable to the Owner Trustee, as evidenced by its execution thereof.
SECTION 3.14. TRUST CERTIFICATE TRANSFER RESTRICTIONS. The Trust
Certificates may not be acquired by or for the account of (i) an employee
benefit plan (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) that is subject to the provisions of
Title 1 of ERISA, (ii) a plan described in Section 4975(e) (1) of the Code, or
(iii) any entity (including an insurance company general account) whose
underlying assets include plan assets by reason of such plan's investment in the
entity (each, a "Benefit Plan"). By accepting and holding a Trust Certificate,
the Holder thereof shall be deemed to have represented and warranted that it is
not a Benefit Plan.
ARTICLE IV.
ACTIONS BY OWNER TRUSTEE
SECTION 4.1. PRIOR NOTICE TO OWNERS WITH RESPECT TO CERTAIN MATTERS.
With respect to the following matters, the Owner Trustee shall not take action
unless at least 30 days before the taking of such action, the Owner Trustee
shall have notified the Certificateholders in writing of the proposed action and
the Certificateholders shall not have notified the Owner Trustee in writing
prior to the 30th day after such notice is given that such Certificateholders
have withheld consent or provided alternative direction:
(a) the initiation of any material claim or lawsuit by the Trust
except claims or lawsuits brought in connection with the collection of the
Receivables and the compromise of any material action, claim or lawsuit brought
by or against the Trust (except with respect to the aforementioned claims or
lawsuits for collection of the Receivables);
(b) the election by the Trust to file an amendment to the Certificate
of Trust (unless such amendment is required to be filed under the Business Trust
Statute);
(c) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required;
(d) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is not required and such
amendment materially adversely affects the interest of the Certificateholders;
(e) the amendment, change or modification of the Sale and Servicing
Agreement, except to cure any ambiguity or defect or to amend or supplement any
provision in a manner that would not materially adversely affect the interests
of the Certificateholders; or
(f) the appointment pursuant to the Indenture of a successor Trustee
or the consent to the assignment by the Note Registrar, Paying Agent or Trustee
or Certificate Registrar of its obligations under the Indenture or this
Agreement, as applicable. The Owner Trustee shall notify the Certificateholders
in writing of any appointment of a successor Note Registrar, Paying Agent or
Certificate Registrar within five Business Days thereof.
SECTION 4.2. ACTION BY CERTIFICATEHOLDERS WITH RESPECT TO CERTAIN
MATTERS. The Owner Trustee shall not have the power, except upon the direction
of the Certificateholders, to (a) remove the Servicer under the Sale and
Servicing Agreement pursuant to Section 8.1 thereof or (b) sell the Receivables
after the termination of the Indenture. The Owner Trustee shall take the actions
referred to in the preceding sentence only upon written instructions signed by
the Certificateholders.
SECTION 4.3 ACTION BY CERTIFICATEHOLDERS WITH RESPECT TO BANKRUPTCY.
The Owner Trustee shall not have the power to commence a voluntary proceeding in
bankruptcy relating to the Trust without the unanimous prior approval of all
Certificateholders and the delivery to the Owner Trustee by each such
Certificateholder of a certificate certifying that such Certificateholder
reasonably believes that the Trust is insolvent.
SECTION 4.4. RESTRICTIONS ON CERTIFICATEHOLDERS' Power. The
Certificateholders shall not direct the Owner Trustee to take or refrain from
taking any action if such action or inaction would be contrary to any obligation
of the Trust or the Owner Trustee under this Agreement or any of the Basic
Documents or would be contrary to Section 2.3 nor shall the Owner Trustee be
obligated to determine if a Certificateholder's direction violates this Section
4.4 or to follow any such direction, if given.
SECTION 4.5. MAJORITY CONTROL. Except as otherwise specifically
provided herein, any action that may be taken by the Certificateholders under
this Agreement may be taken by the Holders of Trust Certificates evidencing not
less than a majority of the Certificate Balance. Except as otherwise
specifically provided herein, any written notice of the Certificateholders
delivered pursuant to this Agreement shall be effective if signed by Holders of
Certificates evidencing not less than a majority of the Certificate Balance at
the time of the delivery of such notice.
SECTION 4.6. EXECUTION OF DOCUMENTS. Notwithstanding anything herein
to the contrary, the Owner Trustee is authorized, empowered and directed, on
behalf of the Trust, to execute, deliver, issue and authenticate the
Certificates, to execute, deliver and issue the Notes, and to execute and
deliver each Basic Document to which the Trust or the Owner Trustee is or is to
be a party and any other document, instrument, certificate or other writing that
may be necessary, convenient or incidental thereto. Any such execution,
delivery, issuance and authentication is hereby ratified and confirmed in all
respects and does not and will be deemed not to conflict with, constitute or
result in a breach or violation of, or a default under, any provision of or any
duty under this Trust Agreement.
ARTICLE V.
APPLICATION OF TRUST FUNDS: CERTAIN DUTIES
SECTION 5.1. ESTABLISHMENT OF CERTIFICATE DISTRIBUTION ACCOUNT. The
Owner Trustee, for the benefit of the Certificateholders, shall establish and
maintain in the name of the Trust an Eligible Deposit Account (the "Certificate
Distribution Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Certificateholders. Except as
otherwise provided herein, the Certificate Distribution Account shall be under
the sole dominion and control of the Owner Trustee for the benefit of the
Certificateholders.
SECTION 5.2. APPLICATION OF FUNDS IN CERTIFICATE DISTRIBUTION ACCOUNT.
(a) On each Distribution Date, the Owner Trustee will, based on the information
contained in the Servicer's Certificate delivered on the related Determination
Date pursuant to Section 4.9 of the Sale and Servicing Agreement, distribute to
Certificateholders, to the extent of the funds available, amounts deposited in
the Certificate Distribution Account pursuant to Section 5.5 of the Sale and
Servicing Agreement on such Distribution Date in the following order of
priority:
(i) first, to the Certificateholders, on a pro rata basis, an
amount equal to the Certificateholders' Interest Distributable Amount;
and
(ii) second, to the Certificateholders, on a pro rata basis, an
amount equal to the Certificateholders' Principal Distributable
Amount.
(b) On each Distribution Date, the Owner Trustee shall send to each
Certificateholder the statement provided to the Owner Trustee by the Servicer
pursuant to Section 5.8 of the Sale and Servicing Agreement on such Distribution
Date.
(c) In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to a Certificateholder, such tax shall reduce
the amount otherwise distributable to the Certificateholder in accordance with
this Section. The Owner Trustee is hereby authorized and directed to retain from
amounts otherwise distributable to the Certificateholders sufficient funds for
the payment of any tax that is legally owed by the Trust (but such authorization
shall not prevent the Owner Trustee from contesting any such tax in appropriate
proceedings, and withholding payment of such tax, if permitted by law, pending
the outcome of such proceedings). The amount of any withholding tax imposed with
respect to a Certificateholder shall be treated as cash distributed to such
Certificateholder at the time it is withheld by the Trust and remitted to the
appropriate taxing authority. If there is a possibility that withholding tax is
payable with respect to a distribution (such as a distribution to a non-US
Certificateholder), the Owner Trustee may in it sole discretion withhold such
amounts in accordance with this clause (c). In the event that an Owner wishes to
apply for a refund of any such withholding tax, the Owner Trustee shall
reasonably cooperate with such Certificateholder in making such claim so long as
such Certificateholder agrees to reimburse the Owner Trustee for any
out-of-pocket expenses incurred. The Servicer shall facilitate compliance with
this Section 5.2(c) by performance of its duties under Section 10.1(b) of the
Sale and Servicing Agreement.
SECTION 5.3. METHOD OF PAYMENT. Subject to Section 9.1(c),
distributions required to be made to Certificateholders on any Distribution Date
shall be made to each Certificateholder of record on the preceding Record Date
either by wire transfer, in immediately available funds, to the account of such
Holder at a bank or other entity having appropriate facilities therefor, if (i)
such Certificateholder shall have provided to the Certificate Registrar
appropriate written instructions at least five Business Days prior to such
Distribution Date or (ii) such Certificateholder is the holder of the GP
Interest, or an Affiliate thereof, or, if not, by check mailed to such
Certificateholder at the address of such holder appearing in the Certificate
Register; PROVIDED, HOWEVER, that, unless Definitive Certificates have been
issued pursuant to Section 3.13, with respect to Trust Certificates registered
on the Record Date in the name of the nominee of the Clearing Agency (initially,
such nominee to be Cede & Co.), distributions will be made by wire transfer in
immediately available funds to the account designated by such nominee.
Notwithstanding the foregoing, the final distribution in respect of any Trust
Certificate (whether on the Final Scheduled Distribution Date or otherwise) will
be payable only upon presentation and surrender of such Trust Certificate at the
office or agency maintained for that purpose by the Owner Trustee pursuant to
Section 3.8.
SECTION 5.4. NO SEGREGATION OF MONIES; NO INTEREST. Subject to
Sections 5.1 and 5.2, monies received by the Owner Trustee hereunder need not be
segregated in any manner except to the extent required by law and may be
deposited under such general conditions as may be prescribed by law. The Owner
Trustee shall not be liable for any interest thereon.
SECTION 5.5. ACCOUNTING AND REPORTS TO THE NOTEHOLDERS,
CERTIFICATEHOLDERS, THE INTERNAL REVENUE SERVICE AND OTHERS. Subject to Sections
10.1(b)(iii) and 10.1(c) of the Sale and Servicing Agreement, the holder of the
GP Interest shall (a) maintain (or cause to be maintained) the books of the
Trust on a calendar year basis on the accrual method of accounting, (b) deliver
(or cause to be delivered) to each Certificateholder, as may be required by the
Code and applicable Treasury Regulations, such information as may be required
(including Schedule K-1) to enable each Certificateholder to prepare its Federal
and state income tax returns, (c) prepare or cause to be prepared, and file or
cause to be filed, all tax returns relating to the Trust (including a
partnership information return, Form 1065), and direct the Owner Trustee to make
such elections as may from time to time be required or appropriate under any
applicable state or Federal statute or rule or regulation thereunder so as to
maintain the Trust's characterization as a partnership for Federal income tax
purposes and (d) collect or cause to be collected any withholding tax as
described in and in accordance with Section 5.2(c) with respect to income or
distributions to Certificateholders. The Owner Trustee shall make all elections
pursuant to this Section as directed by the holder of the GP Interest. The Owner
Trustee shall sign all tax information returns furnished to it in execution form
by the holder of the GP Interest, and filed pursuant to this Section 5.5 and any
other returns as may be required by law and so furnished to it by the holder of
the GP Interest, and in doing so shall rely entirely upon, and shall have no
liability for information provided by, or calculations provided by, the holder
of the GP Interest. The holder of the GP Interest shall cause the Trust to elect
under Section 1278 of the Code to include in income currently any market
discount that accrues with respect to the Receivables. The Trust shall not make
the election provided under Section 754 of the Code.
SECTION 5.6. SIGNATURE ON RETURNS; TAX MATTERS PARTNER. (a)
Notwithstanding the provisions of Section 5.5, the Owner Trustee shall sign on
behalf of the Trust the tax returns of the Trust furnished to it in execution
form by the holder of the GP Interest, unless applicable law requires a
Certificateholder or an Owner to sign such documents, in which case such
documents shall be signed by the holder of the GP Interest.
(b) The holder of the GP Interest shall be the "tax matters partner"
of the Trust pursuant to the Code.
ARTICLE VI.
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.1 GENERAL AUTHORITY. The Owner Trustee is authorized and
directed to execute and deliver the Basic Documents to which the Trust is named
as a party and each certificate or other document attached as an exhibit to or
contemplated by the Basic Documents to which the Trust is named as a party and
any amendment thereto, in each case, in such form as the Depositor shall approve
as evidenced conclusively by the Owner Trustee's execution thereof, and on
behalf of the Trust, to direct the Trustee to authenticate and deliver Notes in
the aggregate principal amount of $__________. In addition to the foregoing, the
Owner Trustee is authorized, but shall not be obligated, to take all actions
required of the Trust pursuant to the Basic Documents. The Owner Trustee is
further authorized from time to time to take such action as the Servicer
recommends to it in writing with respect to the Basic Documents.
It shall be the duty of the Owner Trustee to discharge (or cause to be
discharged) all of its responsibilities pursuant to the terms of this Agreement
and the Basic Documents and to administer the Trust in the interest of the
Owners, subject to the Basic Documents and in accordance with the provisions of
this Agreement. Notwithstanding the foregoing, the Owner Trustee shall be deemed
to have discharged its duties and responsibilities hereunder and under the Basic
Documents to the extent the Servicer has agreed in the Sale and Servicing
Agreement, or the holder of the GP Interest has agreed hereunder or thereunder,
to perform any act or to discharge any duty of the Owner Trustee hereunder or of
the Trust under any Basic Document, and the Owner Trustee shall not be liable
for the default or failure of the Servicer or the holder of the GP Interest to
carry out its obligations hereunder or thereunder.
SECTION 6.2. ACTION UPON INSTRUCTION. (a) Subject to Article IV, the
Certificateholders may, by written instruction, direct the Owner Trustee in the
management of the Trust. Such direction may be exercised at any time by written
instruction of the Certificateholders pursuant to Article IV.
(b) The Owner Trustee shall not be required to take any action
hereunder or under any Basic Document if the Owner Trustee shall have reasonably
determined, or shall have been advised by counsel, that such action is likely to
result in liability on the part of the Owner Trustee or is contrary to the terms
hereof or of any Basic Document or is otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or any
Basic Document, the Owner Trustee shall promptly give notice (in such form as
shall be appropriate under the circumstances) to the Certificateholders
requesting instruction as to the course of action to be adopted, and to the
extent the Owner Trustee acts in good faith in accordance with any written
instruction of the Certificateholders received, the Owner Trustee shall not be
liable on account of such action to any Person. If the Owner Trustee shall not
have received appropriate instruction within ten days of such notice (or within
such shorter period of time as may be specified in such notice or may be
necessary under the circumstances) it may, but shall be under no duty to, take
or refrain from taking such action, not inconsistent with this Agreement or the
Basic Documents, as it shall deem to be in the best interests of the
Certificateholders, and shall have no liability to any Person for such action or
inaction.
(d) In the event that the Owner Trustee is unsure as to the
application of any provision of this Agreement or any Basic Document or any such
provision is ambiguous as to its application, or is, or appears to be, in
conflict with any other applicable provision, or in the event that this
Agreement permits any determination by the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required to take
with respect to a particular set of facts, the Owner Trustee may give notice (in
such form as shall be appropriate under the circumstances) to the
Certificateholders requesting instruction and, to the extent that the Owner
Trustee acts or refrains from acting in good faith in accordance with any such
instruction received, the Owner Trustee shall not be liable, on account of such
action or inaction, to any Person. If the Owner Trustee shall not have received
appropriate instruction within 10 days of such notice (or within such shorter
period of time as may be specified in such notice or may be necessary under the
circumstances) it may, but shall be under no duty to, take or refrain from
taking such action, not inconsistent with this Agreement or the Basic Documents,
as it shall deem to be in the best interests of the Certificateholders, and
shall have no liability to any Person for such action or inaction.
SECTION 6.3 NO DUTIES EXCEPT AS SPECIFIED IN THIS AGREEMENT OR IN
INSTRUCTIONS. The Owner Trustee shall not have any duty or obligation to manage,
make any payment with respect to, register, record, sell, dispose of, or
otherwise deal with the Owner Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Owner Trustee is a party, except as expressly provided by the terms
of this Agreement or in any direction or written instruction received by the
Owner Trustee pursuant to Section 6.3; and no implied duties or obligations
shall be read into this Agreement or any Basic Document against the Owner
Trustee. The Owner Trustee shall have no responsibility for filing any financing
or continuation or termination statement in any public office at any time or to
otherwise perfect or maintain the perfection of any security interest or lien or
to prepare or file any Securities and Exchange Commission filing for the Trust
or to record this Agreement or any Basic Document. The Owner Trustee
nevertheless agrees that it will, at its own cost and expense, promptly take all
action as may be necessary to discharge any Liens on any part of the Owner Trust
Estate that result from actions by, or claims against, the Owner Trustee that
are not related to the ownership or the administration of the Owner Trust
Estate.
SECTION 6.4. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR
INSTRUCTIONS. The Owner Trustee shall not manage, control, use, sell, dispose of
or otherwise deal with any part of the Owner Trust Estate except (i) in
accordance with the powers granted to and the authority conferred upon the Owner
Trustee pursuant to this Agreement, (ii) in accordance with the Basic Documents
and (iii) in accordance with any direction or instruction delivered to the Owner
Trustee pursuant to Section 6.3.
SECTION 6.5. RESTRICTIONS. The Owner Trustee shall not take any action
(a) that is inconsistent with the purposes of the Trust set forth in Section 2.3
or (b) that, to the actual knowledge of a Responsible Officer of the Owner
Trustee, would result in the Trust's becoming taxable as a corporation for
Federal income tax purposes. The Certificateholders shall not direct the Owner
Trustee to take action that would violate the provisions of this Section.
SECTION 6.6 NOTICE OF DEFAULT UNDER INDENTURE. Within 5 business days
of receipt of a notice of Default under the Indenture, the Owner Trustee shall
provide notice to each Certificateholder by letter.
ARTICLE VII.
CONCERNING THE OWNER TRUSTEE
SECTION 7.1 ACCEPTANCE OF TRUSTS AND DUTIES. The Owner Trustee accepts
the trusts hereby created and agrees to perform its duties hereunder with
respect to such trusts but only upon the terms of this Agreement. The Owner
Trustee also agrees to disburse all moneys actually received by it constituting
part of the Owner Trust Estate upon the terms of the Basic Documents and this
Agreement. The Owner Trustee shall not be answerable or accountable hereunder or
under any Basic Document under any circumstances, except (i) for its own willful
misconduct, bad faith or negligence or (ii) in the case of the inaccuracy of any
representation or warranty contained in Section 7.3 expressly made by the Owner
Trustee. In particular, but not by way of limitation (and subject to the
exceptions set forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any error of judgment
made by a Responsible Officer of the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in accordance with the instructions of the
Servicer or any Certificateholder;
(c) no provision of this Agreement or any Basic Document shall require
the Owner Trustee to expend or risk funds or otherwise incur any financial
liability in the performance of any of its rights or powers hereunder or under
any Basic Document if the Owner Trustee shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured or provided to it;
(d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents, including
the principal of and interest on the Notes;
(e) the Owner Trustee shall not be responsible for or in respect of
the validity or sufficiency of this Agreement or for the due execution hereof by
the Depositor or for the form, character, genuineness, sufficiency, value or
validity of any of the Owner Trust Estate or for or in respect of the validity
or sufficiency of the Basic Documents, other than the certificate of
authentication on the Trust Certificates, and the Owner Trustee shall in no
event assume or incur any liability, duty or obligation to any Noteholder or to
any Certificateholder, other than as expressly provided for herein and in the
Basic Documents;
(f) the Owner Trustee shall not be liable for the default or
misconduct of the Trustee or the Servicer or the holder of the GP Interest under
any of the Basic Documents or otherwise and the Owner Trustee shall have no
obligation or liability to insure compliance by the Servicer or the holder of
the GP Interest with any agreement to which it is a party or to perform the
obligations of the Trust under this Agreement or the Basic Documents that are
required to be performed by the Trustee under the Indenture or the Servicer
under the Sale and Servicing Agreement or the holder of the GP Interest under
this Agreement; and
(g) the Owner Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute, conduct or
defend any litigation under this Agreement or otherwise or in relation to this
Agreement or any Basic Document, at the request, order or direction of any of
the Certificateholders, unless such Certificateholders have offered to the Owner
Trustee security or indemnity satisfactory to it against the costs, expenses and
liabilities that may be incurred by the Owner Trustee therein or thereby. The
right of the Owner Trustee to perform any discretionary act enumerated in this
Agreement or in any Basic Document shall not be construed as a duty, and, except
as otherwise provided in the third sentence of this Section 7.1, the Owner
Trustee shall not be answerable to any Certificateholder in the performance of
any such act.
SECTION 7.2. FURNISHING OF DOCUMENTS. The Owner Trustee shall furnish
to the Certificateholders promptly upon receipt of a written request therefor,
duplicates or copies of all reports, notices, requests, demands, certificates,
financial statements and any other instruments furnished to the Owner Trustee
under the Basic Documents.
SECTION 7.3. REPRESENTATIONS AND WARRANTIES. The Owner Trustee hereby
represents and warrants to the Depositor, for the benefit of the
Certificateholders, that:
(a) It is a banking corporation duly organized and validly existing in
good standing under the laws of the State of Delaware and having an office
within the State of Delaware. It has all requisite corporate power and authority
to execute, deliver and perform its obligations under this Agreement.
(b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement will be
executed and delivered by one of its officers who is duly authorized to execute
and deliver this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this Agreement,
nor the consummation by it of the transactions contemplated hereby nor
compliance by it with any of the terms or provisions hereof will contravene any
federal or Delaware state law, governmental rule or regulation governing the
banking or trust powers of the Owner Trustee or any judgment or order binding on
it, or constitute any default under its charter documents or by-laws or any
indenture, mortgage, contract, agreement or instrument to which it is a party or
by which any of its properties may be bound.
SECTION 7.4. RELIANCE; ADVICE OF COUNSEL. (a) The Owner Trustee shall
incur no liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or other
document or paper believed by it to be genuine and believed by it to be signed
by the proper party or parties. The Owner Trustee may accept a certified copy of
a resolution of the board of directors or other governing body of any corporate
party as conclusive evidence that such resolution has been duly adopted by such
body and that the same is in full force and effect. As to any fact or matter the
method of the determination of which is not specifically prescribed herein, the
Owner Trustee may for all purposes hereof rely on a certificate, signed by the
president or any vice president or by the treasurer, secretary or other
authorized officers of the relevant party, as to such fact or matter, and such
certificate shall constitute full protection to the Owner Trustee for any action
taken or omitted to be taken by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Agreement or the Basic
Documents, the Owner Trustee (i) may act directly or through its agents or
attorneys pursuant to agreements entered into with any of them, and the Owner
Trustee shall not be liable for the conduct or misconduct of such agents or
attorneys if such agents or attorneys shall have been selected by the Owner
Trustee with reasonable care, and (ii) may consult with counsel, accountants and
other skilled persons to be selected with reasonable care and employed by it.
The Owner Trustee shall not be liable for anything done, suffered or omitted in
good faith by it in accordance with the written opinion or advice of any such
counsel, accountants or other such persons and not contrary to this Agreement or
any Basic Document.
SECTION 7.5. NOT ACTING IN INDIVIDUAL CAPACITY. Except as provided in
this Article VII, in accepting the trusts hereby created _______________________
acts solely as Owner Trustee hereunder and not in its individual capacity and
all Persons having any claim against the Owner Trustee by reason of the
transactions contemplated by this Agreement or any Basic Document shall look
only to the Owner Trust Estate for payment or satisfaction thereof.
SECTION 7.6. OWNER TRUSTEE NOT LIABLE FOR TRUST CERTIFICATES OR
RECEIVABLES. The recitals contained herein and in the Trust Certificates (other
than the signature and countersignature of the Owner Trustee on the Trust
Certificates) shall be taken as the statements of the Depositor and the Owner
Trustee assumes no responsibility for the correctness thereof. The Owner Trustee
makes no representations as to the validity or sufficiency of this Agreement, of
any Basic Document or of the Trust Certificates (other than the signature and
countersignature of the Owner Trustee on the Trust Certificates) or the Notes,
or of any Receivable or related documents. The Owner Trustee shall at no time
have any responsibility or liability for or with respect to the legality,
validity and enforceability of any Receivable, or the perfection and priority of
any security interest created by any Receivable in any Financed Vehicle or the
maintenance of any such perfection and priority, or for or with respect to the
sufficiency of the Owner Trust Estate or its ability to generate the payments to
be distributed to Certificateholders under this Agreement or the Noteholders
under the Indenture, including, without limitation: the existence, condition and
ownership of any Financed Vehicle; the existence and enforceability of any
insurance thereon; the existence and contents of any Receivable or any computer
or other record thereof; the validity of the assignment of any Receivable to the
Trust or of any intervening assignment; the completeness of any Receivable; the
performance or enforcement of any Receivable; the compliance by the Depositor or
the Servicer with any warranty or representation made under any Basic Document
or in any related document or the accuracy of any such warranty or
representation or any action of the Trustee or the Servicer or any subservicer
taken in the name of the Owner Trustee.
SECTION 7.7. OWNER TRUSTEE MAY OWN TRUST CERTIFICATES AND NOTES. The
Owner Trustee in its individual or any other capacity may become the owner or
pledgee of Trust Certificates or Notes and may deal with the Depositor, the
Trustee and the Servicer in banking transactions with the same rights as it
would have if it were not Owner Trustee.
ARTICLE VIII.
COMPENSATION OF OWNER TRUSTEE
SECTION 8.1 OWNER TRUSTEE'S FEES AND EXPENSES. The Owner Trustee shall
receive as compensation for its services hereunder such fees as have been
separately agreed upon before the date hereof between the Sponsor and the Owner
Trustee, and the Owner Trustee shall be entitled to be reimbursed by the holder
of the GP Interest for its other reasonable expenses hereunder, including the
reasonable compensation, expenses and disbursements of such agents,
representatives, experts and counsel as the Owner Trustee may employ in
connection with the exercise and performance of its rights and its duties
hereunder.
SECTION 8.2 INDEMNIFICATION. The holder of the GP Interest shall be
liable as primary obligor for, and shall indemnify the Owner Trustee and its
successors, assigns, agents and servants (collectively, the "Indemnified
Parties") from and against, any and all liabilities, obligations, losses,
damages, taxes, claims, actions and suits, and any and all reasonable costs,
expenses and disbursements (including reasonable legal fees and expenses) of any
kind and nature whatsoever (collectively, "Expenses") which may at any time be
imposed on, incurred by, or asserted against the Owner Trustee or any
Indemnified Party in any way relating to or arising out of this Agreement, the
Basic Documents, the Owner Trust Estate, the administration of the Owner Trust
Estate or the action or inaction of the Owner Trustee hereunder, except only
that the holder of the GP Interest shall not be liable for or required to
indemnify the Owner Trustee from and against Expenses arising or resulting from
any of the matters described in the third sentence of Section 7.1. The
indemnities contained in this Section shall survive the resignation or
termination of the Owner Trustee or the termination of this Agreement. In any
event of any claim, action or proceeding for which indemnity will be sought
pursuant to this Section, the Owner Trustee's choice of legal counsel shall be
subject to the approval of the holder of the GP Interest, which approval shall
not be unreasonably withheld.
SECTION 8.3 PAYMENTS TO THE OWNER TRUSTEE. Any amounts paid to the
Owner Trustee pursuant to this Article VIII shall be deemed not to be a part of
the Owner Trust Estate immediately after such payment.
ARTICLE IX.
DISSOLUTION AND TERMINATION OF TRUST
SECTION 9.1 TERMINATION OF TRUST AGREEMENT. (a) The Trust shall
dissolve, (i) upon the final distribution by the Owner Trustee of all moneys or
other property or proceeds of the Owner Trust Estate in accordance with the
terms of the Indenture, the Sale and Servicing Agreement and Article V or (ii)
at the time provided in Section 9.2. The bankruptcy, liquidation, dissolution,
death or incapacity of any Certificateholder or Owner, other than the holder of
the GP Interest as described in Section 9.2, shall not (x) operate to terminate
this Agreement or the Trust, nor (y) entitle such Certificateholder's or Owner's
legal representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of all or any part of the
Trust or Owner Trust Estate nor (z) otherwise affect the rights, obligations and
liabilities of the parties hereto.
(b) Except as provided in clause (a), neither the Depositor nor the
holder of the GP Interest nor any Certificateholder shall be entitled to revoke
or terminate the Trust.
(c) Notice of any termination of the Trust, specifying the
Distribution Date upon which the Certificateholders shall surrender their Trust
Certificates to the Paying Agent for payment of the final distribution and
cancellation, shall be given by the Owner Trustee by letter to
Certificateholders mailed within five Business Days of receipt of notice of such
termination from the Servicer given pursuant to Section 9.1(c) of the Sale and
Servicing Agreement, stating (i) the Distribution Date upon or with respect to
which final payment of the Trust Certificates shall be made upon presentation
and surrender of the Trust Certificates at the office of the Paying Agent
therein designated, (ii) the amount of any such final payment and (iii) that the
Record Date otherwise applicable to such Distribution Date is not applicable,
payments being made only upon presentation and surrender of the Trust
Certificates at the office of the Paying Agent therein specified. The Owner
Trustee shall give such notice to the Certificate Registrar (if other than the
Owner Trustee) and the Paying Agent (if other than the Owner Trustee) at the
time such notice is given to Certificateholders. Upon presentation and surrender
of the Trust Certificates, the Paying Agent shall cause to be distributed to
Certificateholders amounts distributable on such Distribution Date pursuant to
Section 5.2.
In the event that all of the Certificateholders shall not surrender
their Trust Certificates for cancellation within six months after the date
specified in the above mentioned written notice, the Owner Trustee shall give a
second written notice to the remaining Certificateholders to surrender their
Trust Certificates for cancellation and receive the final distribution with
respect thereto. If within one year after the second notice all the Trust
Certificates shall not have been surrendered for cancellation, the Owner Trustee
may take appropriate steps, or may appoint an agent to take appropriate steps,
to contact the remaining Certificateholders concerning surrender of their Trust
Certificates, and the cost thereof shall be paid out of the funds and other
assets that shall remain subject to this Agreement. Any funds remaining in the
Trust after exhaustion of such remedies shall be distributed, subject to
applicable escheat laws, by the Owner Trustee to the holder of the GP Interest.
Certificateholders shall thereafter look solely to the holder of the GP Interest
as general unsecured creditors.
(d) Any funds remaining in the Trust after funds for final
distribution have been distributed or set aside for distribution shall be
distributed by the Owner Trustee to the holder of the GP Interest (other than
any amounts remaining in the Reserve Account which shall be distributed to the
Depositor).
(e) Upon dissolution and completion of the winding up of the Trust,
the Owner Trustee shall cause the Certificate of Trust to be canceled by filing
a certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3810 of the Business Trust Statute and thereupon the Trust
and this Agreement shall terminate. The Owner Trustee shall furnish notice of
such dissolution to each Rating Agency.
SECTION 9.2. DISSOLUTION UPON BANKRUPTCY OF THE HOLDER OF THE GP
INTEREST. In the event that an Insolvency Event shall occur with respect to the
holder of the GP Interest, the Trust shall dissolve and this Agreement shall be
terminated in accordance with Section 9.1 90 days after the date of such
Insolvency Event, unless, before the end of such 90-day period, the Owner
Trustee shall have received written instructions from Certificateholders holding
a majority of the Certificate Balance (other than the holder of the GP Interest)
to the effect that each such party disapproves of the liquidation of the
Receivables and dissolution of the Trust. Promptly after the occurrence of any
Insolvency Event with respect to the holder of the GP Interest, (i) the holder
of the GP Interest shall give the Trustee and the Owner Trustee written notice
of such Insolvency Event, (ii) the Owner Trustee shall, upon the receipt of such
written notice from the holder of the GP Interest, give prompt written notice to
the Certificateholders and the Trustee of the occurrence of such event and (iii)
the Trustee shall, upon receipt of written notice of such Insolvency Event from
the Owner Trustee or the holder of the GP Interest, give prompt written notice
to the Noteholders of the occurrence of such event; PROVIDED, HOWEVER, that any
failure to give a notice required by this sentence shall not prevent or delay,
in any manner, a termination of the Trust pursuant to the first sentence of this
Section 9.2. Upon a termination pursuant to this Section, the Owner Trustee on
behalf of the Trust shall direct the Trustee promptly to sell the assets of the
Owner Trust Estate in a commercially reasonable manner and on commercially
reasonable terms. The proceeds of such a sale of the assets of the Trust shall
be treated as collections under the Sale and Servicing Agreement and shall be
distributed in accordance with Section 9.1(b) thereof.
ARTICLE X.
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.1. ELIGIBILITY REQUIREMENTS FOR OWNER TRUSTEE. The Owner
Trustee shall at all times be a corporation authorized to exercise corporate
trust powers; and having a combined capital and surplus of at least $50,000,000
and subject to supervision or examination by Federal or state authorities and
have (or have a parent which has) a long-term unsecured debt rating of at least
_________________ by ______________________ and at least __________________ by
______________________; PROVIDED that with respect to the Owners Trustee (but
not any successor trustee) the combined capital and surplus of the parent
organization of such banking corporation shall be included in the determination
of the combined capital and surplus of such banking corporation. If such
corporation shall publish reports of condition at least annually, pursuant to
law or to the requirements of the aforesaid supervising or examining authority,
then for the purpose of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. In case at any time the
Owner Trustee shall cease to be eligible in accordance with the provisions of
this Section, the Owner Trustee shall resign immediately in the manner and with
the effect specified in Section 10.2. [In addition, at all times the Owner
Trustee or a co-trustee shall be a person that satisfies the requirements of
Section 3807(a) of the Business Trust Statute (the "Delaware Trustee").]
SECTION 10.2 RESIGNATION OR REMOVAL OF OWNER TRUSTEE. The Owner
Trustee may at any time resign and be discharged from the trusts hereby created
by giving written notice thereof to the Servicer. Upon receiving such notice of
resignation, the Servicer shall promptly appoint a successor Owner Trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Owner Trustee and one copy to the successor Owner
Trustee. If no successor Owner Trustee shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Owner Trustee may petition any court of competent
jurisdiction for the appointment of a successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.1 and shall fail to resign after
written request therefor by the Servicer, or if at any time the Owner Trustee
shall be legally unable to act, or shall be adjudged bankrupt or insolvent, or a
receiver of the Owner Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Owner Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Servicer may remove the Owner Trustee. If the Servicer
shall remove the Owner Trustee under the authority of the immediately preceding
sentence, the Servicer shall promptly appoint a successor Owner Trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the outgoing Owner Trustee so removed and one copy to the successor
Owner Trustee and payment of all fees owed to the outgoing Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until acceptance of appointment by the successor Owner
Trustee pursuant to Section 10.3 and payment of all fees and expenses owed to
the outgoing Owner Trustee. The Servicer shall provide notice of such
resignation or removal of the Owner Trustee to each of the Rating Agencies.
SECTION 10.3. SUCCESSOR OWNER TRUSTEE. Any successor Owner Trustee
appointed pursuant to Section 10.2 shall execute, acknowledge and deliver to the
Servicer and to its predecessor Owner Trustee an instrument accepting such
appointment under this Agreement, and thereupon the resignation or removal of
the predecessor Owner Trustee shall become effective and such successor Owner
Trustee, without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties and obligations of its predecessor under
this Agreement, with like effect as if originally named as Owner Trustee. The
predecessor Owner Trustee shall upon payment of its fees and expenses deliver to
the successor Owner Trustee all documents and statements and monies held by it
under this Agreement; and the Servicer and the predecessor Owner Trustee shall
execute and deliver such instruments and do such other things as may reasonably
be required for fully and certainly vesting and confirming in the successor
Owner Trustee all such rights, powers, duties and obligations.
No successor Owner Trustee shall accept appointment as provided in
this Section unless at the time of such acceptance such successor Owner Trustee
shall be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Owner Trustee pursuant
to this Section, the Servicer shall mail notice of the successor of such Owner
Trustee to all Certificateholders, the Trustee, the Noteholders and the Rating
Agencies. If the Servicer shall fail to mail such notice within 10 days after
acceptance of appointment by the successor Owner Trustee, the successor Owner
Trustee shall cause such notice to be mailed at the expense of the Servicer.
SECTION 10.4. MERGER OR CONSOLIDATION OF OWNER TRUSTEE. Any
corporation into which the Owner Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Owner Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Owner Trustee, shall be the successor of the Owner Trustee
hereunder, provided such corporation shall be eligible pursuant to Section 10.1,
without the execution or filing of any instrument or any further act on the part
of any of the parties hereto, anything herein to the contrary notwithstanding;
provided further that the Owner Trustee shall mail notice of such merger, sale,
conversion or consolidation to the Rating Agencies.
SECTION 10.5 APPOINTMENT OF CO-TRUSTEE OR SEPARATE Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Owner Trust Estate or any Financed Vehicle may at the time be located or
relating to the transactions contemplated by the Basic Documents, the Servicer
and the Owner Trustee acting jointly shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved by the Owner
Trustee to act as co-trustee, jointly with the Owner Trustee, or separate
trustee or separate trustees, of all or any part of the Owner Trust Estate, and
to vest in such Person, in such capacity, such title to the Owner Trust Estate,
or any part thereof, and, subject to the other provisions of this Section, such
powers, duties, obligations, rights and trusts as the Servicer and the Owner
Trustee may consider necessary or desirable. If the Servicer shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, the Owner Trustee alone shall have the power to make such appointment.
No co-trustee or separate trustee under this Agreement shall be required to meet
the terms of eligibility as a successor trustee pursuant to Section 10.1 and no
notice of the appointment of any co-trustee or separate trustee shall be
required pursuant to Section 10.3.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred upon and exercised
or performed by the Owner Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Owner
Trustee joining in such act), except to the extent that under any law
of any jurisdiction in which any particular act or acts are to be
performed, the Owner Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties
and obligations (including the holding of title to the Owner Trust
Estate or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or co-trustee,
but solely at the direction of the Owner Trustee;
(ii) no trustee under this Agreement shall be personally liable
by reason of any act or omission of any other trustee under this
Agreement; and
(iii) the Servicer and the Owner Trustee acting jointly may at
any time accept the resignation of or remove any separate trustee or
co-trustee.
Any notice, request or other writing given to the Owner Trustee shall
be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Owner
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Owner Trustee. Each such instrument shall be filed with the Owner
Trustee and a copy thereof given to the Servicer.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Owner Trustee, to the extent permitted by law, without the appointment of a new
or successor trustee.
ARTICLE XI.
MISCELLANEOUS
SECTION 11.1. SUPPLEMENTS AND AMENDMENTS. (a) This Agreement may be
amended by the Depositor and the Owner Trustee, with prior written notice to the
Rating Agencies, without the consent of any of the Noteholders or the
Certificateholders, to cure any ambiguity or defect, to correct or supplement
any provisions in this Agreement or for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions in this Agreement
or of modifying in any manner the rights of the Noteholders or the
Certificateholders; provided, HOWEVER, that such action shall not, as evidenced
by an Opinion of Counsel, adversely affect in any material respect the interests
of any Noteholder or Certificateholder; PROVIDED, FURTHER, that any amendment
within the scope of Section 11.1(b)(i) or (ii) shall be deemed to materially and
adversely affect the interests of the Noteholders or the Certificateholders, as
evidenced by an Officer's Certificate of the Servicer delivered to the Owner
Trustee.
(b) This Agreement may also be amended from time to time by the
Depositor and the Owner Trustee, with prior written notice to the Rating
Agencies, with the consent of the Holders of Notes evidencing not less than a
majority of the Outstanding Amount of the Notes and, to the extent affected
thereby, the consent of the Holders of Certificates evidencing not less than a
majority of the Certificate Balance for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this Agreement
or of modifying in any manner the rights of the Noteholders or the
Certificateholders; PROVIDED, HOWEVER, that no such amendment shall (i) increase
or reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on Receivables or distributions that shall be required
to be made for the benefit of the Noteholders or the Certificateholders or (ii)
reduce the aforesaid percentage of the Outstanding Amount of the Notes and the
Certificate Balance required to consent to any such amendment, without the
consent of the Holders of all the outstanding Notes and Holders of all
outstanding Certificates. Promptly after the execution of any such amendment or
consent, the Owner Trustee shall furnish written notification of the substance
of such amendment or consent to each Certificateholder, the Trustee and each of
the Rating Agencies.
(c) It shall not be necessary for the consent of Certificateholders,
the Noteholders or the Trustee pursuant to this Section to approve the
particular form of any proposed amendment or consent, but it shall be sufficient
if such consent shall approve the substance thereof. The manner of obtaining
such consents (and any other consents of Certificateholders provided for in this
Agreement or in any other Basic Document) and of evidencing the authorization of
the execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Owner Trustee may prescribe.
(d) Promptly after the execution of any amendment to the Certificate
of Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State.
(e) Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and that all conditions precedent to
the execution and delivery of such amendment have been satisfied. The Owner
Trustee may, but shall not be obligated to, enter into any such amendment which
affects the Owner Trustee's own rights, duties or immunities under this
Agreement or otherwise. The Owner Trustee shall furnish copies of any such
amendments to this Agreement to each Rating Agency.
SECTION 11.2. NO LEGAL TITLE TO OWNER TRUST ESTATE IN
CERTIFICATEHOLDERS. The Certificateholders shall not have legal title to any
part of the Owner Trust Estate. The Certificateholders shall be entitled to
receive distributions with respect to their undivided beneficial ownership
interest therein only in accordance with Articles V and IX. No transfer, by
operation of law or otherwise, of any right, title or interest of the
Certificateholders to and in their ownership interest in the Owner Trust Estate
shall operate to terminate this Agreement or the trusts hereunder or entitle any
transferee to an accounting or to the transfer to it of legal title to any part
of the Owner Trust Estate.
SECTION 11.3. LIMITATIONS ON RIGHTS OF OTHERS. Except for Section 2.7,
the provisions of this Agreement are solely for the benefit of the Owner
Trustee, the Depositor, the Certificateholders, the Servicer and, to the extent
expressly provided herein, the Trustee and the Noteholders, and nothing in this
Agreement, whether express or implied, shall be construed to give to any other
Person any legal or equitable right, remedy or claim in the Owner Trust Estate
or under or in respect of this Agreement or any covenants, conditions or
provisions contained herein.
SECTION 11.4. NOTICES. Unless otherwise expressly specified or
permitted by the terms hereof, all notices shall be in writing and shall be
deemed given upon receipt personally delivered, delivered by overnight courier
or mailed certified mail, return receipt requested and shall be deemed to have
been duly given upon receipt, if to the Owner Trustee, addressed to the
Corporate Trust Office; if to the Depositor or the holder of the GP Interest,
addressed to Mellon Auto Receivables Corporation, One Mellon Bank Center, Fourth
Floor, Pittsburgh, Pennsylvania 15758 11747, Attention: Stephen Cobain; or, as
to each party, at such other address as shall be designated by such party in a
written notice to each other party.
(a) Any notice required or permitted to be given to a
Certificateholder shall be given by first-class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder receives
such notice.
SECTION 11.5 SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.6. SEPARATE COUNTERPARTS. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 11.7 SUCCESSORS AND ASSIGNS. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the
Depositor, the holder of the GP Interest, the Owner Trustee and its successors
and each Certificateholder and its successors and permitted assigns, all as
herein provided. Any request, notice, direction, consent, waiver or other
instrument or action by a Certificateholder shall bind the successors and
assigns of such Certificateholder.
SECTION 11.8 NO PETITION. The Owner Trustee (not in its individual
capacity but solely as Owner Trustee), by entering into this Agreement, each
Certificateholder, by accepting a Trust Certificate, and the Trustee and each
Noteholder by accepting the benefits of this Agreement, hereby covenants and
agrees that they will not at any time institute against the holder of the GP
Interest, or join in any institution against the holder of the GP Interest of,
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any United States Federal or state
bankruptcy or similar law in connection with any obligations relating to the
Trust Certificates, the Notes, this Agreement or any of the Basic Documents.
SECTION 11.9 NO RECOURSE. Each Certificateholder by accepting a Trust
Certificate acknowledges that such Certificateholder's Trust Certificates
represent beneficial ownership interests in the Trust only and do not represent
interests in or obligations of the Depositor, the Servicer, the holder of the GP
Interest, the Owner Trustee, the Trustee or any Affiliate thereof and no
recourse by such Certificateholder may be had against such parties or their
assets, except as may be expressly set forth or contemplated in this Agreement,
the Trust Certificates or the Basic Documents.
SECTION 11.10. HEADINGS. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 11.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
SECTION 11.12 SERVICER. The Servicer is authorized to execute on
behalf of the Trust all such documents, reports, filings, tax returns,
instruments, certificates and opinions as it shall be the duty of the Trust to
prepare, file or deliver pursuant to the Basic Documents. Upon written request,
the Owner Trustee on behalf of the Trust shall execute and deliver to the
Servicer a power of attorney appointing the Servicer the Trust's agent and
attorney-in-fact to execute all such documents, reports, filings, tax returns,
instruments, certificates and opinions.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers hereunto duly
authorized as of the day and year first above written.
__________________________________________,
as Owner Trustee
By:________________________________________
Name:
Title:
MELLON AUTO RECEIVABLES CORPORATION,
Depositor and intended holder of the
GP Interest,
By:________________________________________
Name: Stephen Cobain
Title: President
<PAGE>
EXHIBIT A
NUMBER $
R- CUSIP NO.___________
SEE REVERSE FOR CERTAIN DEFINITIONS
NO INTEREST IN THIS TRUST CERTIFICATE MAY BE ACQUIRED BY OR FOR THE
ACCOUNT OF (i) AN "EMPLOYEE BENEFIT PLAN" (AS DEFINED IN SECTION 3(3) OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, ("ERISA")) THAT IS
SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (ii) A PLAN DESCRIBED IN SECTION
4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (INCLUDING, WITHOUT
LIMITATION, INDIVIDUAL RETIREMENT ACCOUNTS AND KEOGH PLANS), OR (iii) ANY ENTITY
(INCLUDING INSURANCE COMPANY GENERAL ACCOUNTS) WHOSE UNDERLYING ASSETS INCLUDE
PLAN ASSETS BY REASON OF SUCH PLAN'S INVESTMENT IN SUCH ENTITY (EACH, "A BENEFIT
PLAN"). BY ACCEPTING AND HOLDING THIS CERTIFICATE, THE HOLDER HEREOF AND THE
CERTIFICATE OWNER SHALL EACH BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT IT
IS NOT A BENEFIT PLAN.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
THE PRINCIPAL OF THIS TRUST CERTIFICATE IS DISTRIBUTABLE IN
INSTALLMENTS AS SET FORTH IN THE TRUST AGREEMENT. ACCORDINGLY, THE OUTSTANDING
PRINCIPAL OF THIS TRUST CERTIFICATE AT ANY TIME MAY BE LESS THAN THE AMOUNT
SHOWN ON THE FACE HEREOF.
[THIS CERTIFICATE IS NOT TRANSFERABLE]1
MELLON AUTO TRUST 199_-_
____% ASSET BACKED CERTIFICATE
- ---------------
1 To be inserted on the Certificate to be held by the holder of the GP
Interest.
<PAGE>
evidencing a beneficial ownership interest in certain distributions of the
Trust, as defined below, the property of which includes a pool of motor vehicle
retail installment sale contracts and other motor vehicle installment chattel
paper secured by new and used automobiles (including passenger cars, minivans,
sport/utility vehicles and light trucks), and sold to the Trust by Mellon Auto
Receivables Corporation.
(THIS TRUST CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF
MELLON AUTO RECEIVABLES CORPORATION OR ANY OF ITS AFFILIATES, EXCEPT TO THE
EXTENT DESCRIBED BELOW.)
THIS CERTIFIES THAT __________________________ is the registered owner
of _____________ DOLLARS nonassessable, fully-paid, beneficial ownership
interest in Mellon Auto Trust 199_-_ (the "Trust") formed by Mellon Auto
Receivables Corporation, a Delaware corporation (the "Depositor"). The Trust
Certificates have a Certificate Rate of ___% per annum.
The Trust was created pursuant to a Trust Agreement dated as of ______
__, 199_ (the "Trust Agreement"), between the Depositor and
_______________________, not in its individual capacity but solely as owner
trustee (the "Owner Trustee"), a summary of certain of the pertinent provisions
of which is set forth below. To the extent not otherwise defined herein, the
capitalized terms used herein have the meanings assigned to them in the Trust
Agreement.
This Certificate is one of the duly authorized Trust Certificates
designated as "___% Asset Backed Certificates" (herein called the "Trust
Certificates"). Also issued under the Indenture dated as of ______ __, 199_,
between the Trust and _____________, as trustee, are Notes designated as "___%
Asset Backed Notes" (the "Notes"). This Trust Certificate is issued under and is
subject to the terms, provisions and conditions of the Trust Agreement, to which
Trust Agreement the holder of this Trust Certificate by virtue of the acceptance
hereof assents and by which such holder is bound. The property of the Trust
includes a pool of motor vehicle retail installment sale contracts and other
motor vehicle installment chattel paper secured by new and used automobiles
(including passenger cars, minivans, sport/utility vehicles and light trucks),
(the "Receivables"), all monies received on the Receivables on or after ______
__, 199_, security interests in the vehicles financed thereby, certain bank
accounts and the proceeds thereof, proceeds from claims on certain insurance
policies and certain other rights under the Trust Agreement and the Sale and
Servicing Agreement.
Under the Trust Agreement, there will be distributed on the 15th day
of each month or, if such 15th day is not a Business Day, the next Business Day
(the "Distribution Date"), commencing in __________, to the Person in whose name
this Trust Certificate is registered at the close of business on the day
immediately preceding the Distribution Date (the "Record Date") such
Certificateholder's fractional undivided interest in the amount to be
distributed to Certificateholders on such Distribution Date; PROVIDED, HOWEVER,
that principal will be distributed to the Certificateholders on (to the extent
of funds remaining after the Notes have been paid in full) and after the date on
which the Notes have been paid in full.
The holder of this Trust Certificate acknowledges and agrees that its
rights to receive distributions in respect of this Trust Certificate are
subordinated to the rights of the Noteholders as described in the Sale and
Servicing Agreement, the Indenture and the Trust Agreement, as applicable.
It is the intent of the Depositor, Servicer, holder of the GP Interest
and Certificateholders that, for purposes of Federal income taxes, the Trust
will be treated as a partnership and the Certificateholders (including the
holder of the GP Interest) will be treated as partners in that partnership. The
holder of the GP Interest and the other Certificateholders by acceptance of a
Trust Certificate, agree to treat, and to take no action inconsistent with the
treatment of, the Trust Certificates for such tax purposes as partnership
interests in the Trust.
Each Certificateholder, by its acceptance of a Trust Certificate,
covenants and agrees that such Certificateholder will not at any time institute
against the Trust or the holder of the GP Interest, or join in any institution
against the Trust or the holder of the GP Interest of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States Federal or state bankruptcy or similar law
in connection with any obligations relating to the Trust Certificates, the
Notes, the Trust Agreement or any of the Basic Documents.
Distributions on this Trust Certificate will be made as provided in
the Trust Agreement by the Owner Trustee by wire transfer or check mailed to the
Certificateholder of record in the Trust Certificate Register without the
presentation or surrender of this Trust Certificate or the making of any
notation hereon, except that with respect to Trust Certificates registered on
the Record Date in the name of the nominee of the Clearing Agency (initially,
such nominee to be Cede & Co.), payments will be made by wire transfer in
immediately available funds to the account designated by such nominee. Except as
otherwise provided in the Trust Agreement and notwithstanding the above, the
final distribution on this Trust Certificate will be made after due notice by
the Owner Trustee of the pendency of such distribution and only upon
presentation and surrender of this Trust Certificate at the office or agency
maintained for the purpose by the Owner Trustee in the Borough of Manhattan,
City of New York.
Reference is hereby made to the further provisions of this Trust
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee, by manual signature,
this Trust Certificate shall not entitle the holder hereof to any benefit under
the Trust Agreement or the Sale and Servicing Agreement or be valid for any
purpose.
THIS TRUST CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not
in its individual capacity, has caused this Trust Certificate to be duly
executed.
Date:
MELLON AUTO TRUST 199_-_
By: _________________________________,
solely as Owner Trustee and not
in its individual capacity
By: __________________________________
Authorized Signatory
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Trust Certificates of Mellon Auto Trust 199_-_
referred to in the within-mentioned Trust Agreement.
Date:
_________________________________,
solely as Owner Trustee and not in its
individual capacity
By:______________________________
Authorized Signatory
<PAGE>
(Reverse of Trust Certificate)
The Trust Certificates do not represent an obligation of, or an
interest in, the Depositor, the Servicer, the holder of the GP Interest, the
Owner Trustee or any Affiliates of any of them and no recourse may be had
against such parties or their assets, except as may be expressly set forth or
contemplated herein or in the Trust Agreement, the Indenture or the Basic
Documents. In addition, this Trust Certificate is not guaranteed by any
governmental agency or instrumentality and is limited in right of payment to
certain collections with respect to the Receivables (and certain other amounts),
all as more specifically set forth herein and in the Sale and Servicing
Agreement. The Trust Certificates are limited in right of payment to certain
collections and recoveries respecting the Receivables, all as more specifically
set forth in the Sale and Servicing Agreement. A copy of each of the Sale and
Servicing Agreement and the Trust Agreement may be examined during normal
business hours at the principal office of the Depositor, and at such other
places, if any, designated by the Depositor, by any Certificateholder upon
written request.
The Trust Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of the
Depositor and the rights of the Certificateholders under the Trust Agreement at
any time by the Depositor and the Owner Trustee with the consent of the holders
of the Notes and the Trust Certificates evidencing not less than a majority of
the outstanding principal balance of the Notes and the Certificate Balance. Any
such consent by the holder of this Trust Certificate shall be conclusive and
binding on such holder and on all future holders of this Trust Certificate and
of any Trust Certificate issued upon the transfer hereof or in exchange hereof
or in lieu hereof whether or not notation of such consent is made upon this
Trust Certificate. The Trust Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the holders of any of the
Trust Certificates.
As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of this Trust Certificate is registerable in the
Certificate Register upon surrender of this Trust Certificate for registration
of transfer at the offices or agencies of the Certificate Registrar maintained
by the Owner Trustee in the Borough of Manhattan, The City of New York,
accompanied by a written instrument of transfer in form satisfactory to the
Owner Trustee and the Certificate Registrar duly executed by the holder hereof
or such holder's attorney duly authorized in writing, and thereupon one or more
new Trust Certificates in authorized denominations evidencing the same aggregate
interest in the Trust will be issued to the designated transferee. The initial
Certificate Registrar appointed under the Trust Agreement is the Owner Trustee.
Except for Trust Certificates issued to the Depositor and transferred
to the holder of the GP Interest (if an entity other than the Depositor), the
Trust Certificates are issuable only as registered Trust Certificates without
coupons in denominations of $25,000 or integral multiples of $1,000 in excess
thereof; except as otherwise provided in the Trust Agreement. As provided in the
Trust Agreement and subject to certain limitations therein set forth, Trust
Certificates are exchangeable for new Trust Certificates in authorized
denominations evidencing the same aggregate denomination, as requested by the
holder surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Owner Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge payable in connection therewith.
The Owner Trustee, the Certificate Registrar and any agent of the
Owner Trustee or the Certificate Registrar may treat the person in whose name
this Trust Certificate is registered as the owner hereof for all purposes, and
none of the Owner Trustee, the Certificate Registrar or any such agent shall be
affected by any notice to the contrary.
The obligations and responsibilities created by the Trust Agreement
and the Trust created thereby shall terminate upon the payment to
Certificateholders of all amounts required to be paid to them pursuant to the
Trust Agreement and the Sale and Servicing Agreement and the disposition of all
property held as part of the Owner Trust Estate. The Servicer may at its option
purchase the corpus of the Trust at a price specified in the Sale and Servicing
Agreement, and such purchase of the Receivables and other property of the Trust
will effect early retirement of the Trust Certificates; however, such right of
purchase is exercisable, subject to certain restrictions, only as of the last
day of any Collection Period as of which the Pool Balance is 5% or less of the
Initial Pool Balance. In addition, within ten days following a Distribution Date
as of which the Pool Balance is 5% or less of the Initial Pool Balance, and if
the Servicer has not exercised its option to repurchase the Receivable an
auction sale shall be conducted (as described in the Sale and Servicing
Agreement) and such auction shall effect early retirement of the Certificates.
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
(Please print or type name and address, including postal zip code, of assignee)
the within Trust Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
_______________________________________________ Attorney to transfer said Trust
Certificate on the books of the Trust Certificate Registrar, with full power of
substitution in the premises.
Dated:
*
Signature Guaranteed:
*
- --------------------------
*NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Trust Certificate in
every particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Certificate Registrar, which requirements include membership
or participation in STAMP or such other "signature guarantee program" as may be
determined by the Certificate Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.
<PAGE>
EXHIBIT B
[FORM OF]
CERTIFICATE OF TRUST OF
MELLON AUTO TRUST 199_-_
THIS Certificate of Trust of Mellon Auto Trust 199_-_ (the "Trust"),
is being duly executed and filed by _______________________, a Delaware banking
corporation, as trustee, to form a business trust under the Delaware Business
Trust Act (12 DEL. CODE, ' 3801 ET SEQ.).
1. NAME. The name of the business trust formed hereby is MELLON AUTO
TRUST 199_-_.
2. DELAWARE TRUSTEE. The name and business address of the trustee of
the Trust in the State of Delaware is _______________________, , , Delaware
_________, Attention: _____________________________.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust.
__________________________________,
not in its individual capacity but
solely as owner trustee of the Trust.
By:_______________________________
Name:
Title:
EXHIBIT 5.1
STROOCK & STROOCK & LAVAN LLP
180 Maiden Lane
New York, New York 10038-4982
January 21, 1999
Mellon Auto Receivables Corporation
One Mellon Bank Center
Fourth Floor
Pittsburgh, Pennsylvania 15758
Ladies and Gentlemen:
We have acted as counsel to Mellon Auto Receivables Corporation, a Delaware
corporation (the "Company"), in connection with the preparation of the
registration statement on Form S-3 (No. 333-26675) (the "Registration
Statement") relating to the proposed offering from time to time in one or more
series (each, a "Series") by one or more trusts of asset backed notes (the
"Notes") and asset backed certificates (the "Certificates," and, together with
the Notes, the "Securities"). The Registration Statement has been filed with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Act"). As set forth in the Registration Statement,
each Series of Securities is to be issued under and pursuant to the terms of a
separate pooling and servicing agreement, or sale and servicing agreement, trust
agreement and indenture (each, an "Agreement") among two or more of the Company,
Mellon Bank, N.A. as servicer (the "Servicer"), the seller(s) identified therein
(each, a "Seller"), and one or more independent trustees (each, a "Trustee") to
be identified in the prospectus supplement for such Series of Securities.
As such counsel, we have examined copies of the Certificate of Incorporation and
By-Laws of the Company, the Registration Statement, the base Prospectus and
forms of Prospectus Supplement included therein, the form of each Agreement, and
originals or copies of such other corporate minutes, records, agreements and
other instruments of the Company, certificates of
public officials and other documents and have made such examinations of law, as
we have deemed necessary to form the basis for the opinions hereinafter
expressed. In our examination of such materials, we have assumed the genuineness
of all signatures, the authenticity of all documents submitted to us as
originals and the conformity to original documents of all copies submitted to
us. As to various questions of fact material to such opinion, we have relied, to
the extent we deemed appropriate, upon representations, statements and
certificates of officers and representatives of the Company and others.
Attorneys involved in the preparation of this opinion are admitted to practice
law in the State of New York and we do not express any opinion herein concerning
any law other than the federal laws of the United States of America, the laws of
the State of New York and the General Corporation Law of the State of Delaware.
Based upon and subject to the foregoing, we are of the opinion that:
1. When the issuance, execution and delivery of each Series of Notes
have been authorized by all necessary corporate action of the Company in
accordance with the provisions of the related Agreement or Agreements, and when
such Notes have been duly executed and delivered, authenticated by the Trustee
and sold as described in the Registration Statement, such Notes will constitute
valid and binding obligations of the issuer thereof in accordance with their
terms and the terms of such Agreement or Agreements. This opinion is subject to
the effect of bankruptcy, insolvency, moratorium, fraudulent conveyance and
similar laws relating to or affecting creditors' rights generally and court
decisions with respect thereto and we express no opinion with respect to the
application of equitable principles or remedies in any proceeding, whether at
law or in equity.
2. When the issuance, execution and delivery of each Series of
Certificates have been authorized by all necessary corporate action of the
Company in accordance with the provisions of the related Agreement or
Agreements, and when such Certificates have been duly executed and delivered,
authenticated by the Trustee and sold as described in the Registration
Statement, such Certificates will be legally issued, fully paid and
non-assessable.
3. We hereby confirm and adopt the opinions set forth in the Prospectus
under the heading "Federal Income Tax Consequences - Opinions".
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to this firm under the captions
"Federal Income Tax Consequences" and "Legal Matters" in the Prospectus which
forms a part of the Registration Statement. In giving such consent, we do not
admit hereby that we come within the category of persons whose consent is
required under Section 7 of the Act or the Rules and Regulations of the
Commission thereunder.
Very truly yours,
/s/ Stroock & Stroock & Lavan LLP
STROOCK & STROOCK & LAVAN LLP
EXHIBIT 10.1
FORM OF SALE AND SERVICING
AGREEMENT
among
MELLON AUTO TRUST 199_-_,
as Issuer,
MELLON BANK, N.A.,
as Servicer and Seller,
and
MELLON AUTO RECEIVABLES CORPORATION,
as Depositor
Dated as of __________ __, 199_
<PAGE>
TABLE OF CONTENTS
ARTICLE I
Definitions
SECTION 1.1. Definitions.................................................1
SECTION 1.2. Other Definitional Provisions..............................18
ARTICLE II
Conveyance of Receivables
SECTION 2.1. Conveyance of Receivables..................................19
ARTICLE III.
The Receivables
SECTION 3.1. A. Representations and Warranties of Seller...................20
SECTION 3.1. B. Representations and Warranties of Depositor................24
SECTION 3.2. Repurchase upon Breach.....................................25
SECTION 3.3. Custody of Receivable Files................................25
SECTION 3.4. Duties of Servicer as Custodian............................26
SECTION 3.5. Instructions; Authority To Act.............................27
SECTION 3.6. Custodian's Indemnification................................27
SECTION 3.7. Effective Period and Termination...........................27
ARTICLE IV
Administration and Servicing of Receivables
SECTION 4.1. Duties of Servicer.........................................28
SECTION 4.2. Collection and Allocation of Receivable Payments...........28
SECTION 4.3. Realization upon Receivables...............................29
SECTION 4.4. Physical Damage Insurance; Other Insurance.................29
SECTION 4.5. Maintenance of Security Interests in Financed Vehicles.....30
SECTION 4.6. Covenants of Servicer......................................30
SECTION 4.7. Purchase of Receivables upon Breach........................31
SECTION 4.8. Servicing Fee..............................................31
SECTION 4.9. Servicer's Certificate.....................................31
SECTION 4.10. Annual Statement as to Compliance; Notice of Default.......31
SECTION 4.11. Annual Independent Certified Public Accountants'
Report.....................................................32
SECTION 4.12. Access to Certain Documentation and Information
Regarding Receivables......................................32
SECTION 4.13. Servicer Expenses..........................................33
SECTION 4.14. Appointment of Subservicer.................................33
ARTICLE V
Distributions; Reserve Account; Statements to Certificateholders
and Noteholders
SECTION 5.1. Establishment of Trust Accounts............................33
SECTION 5.2. Collections................................................36
SECTION 5.3. Application of Collections.................................36
SECTION 5.4. Additional Deposits........................................37
SECTION 5.5. Distributions..............................................37
SECTION 5.6. Reserve Account............................................39
SECTION 5.7. Advance....................................................39
SECTION 5.8. Statements to Certificateholders and Noteholders...........39
SECTION 5.9. Net Deposits...............................................41
ARTICLE VI
The Depositor
SECTION 6.1 Representations of Depositor...............................41
SECTION 6.2 Corporate Existence........................................43
SECTION 6.3. Liability of Depositor; Indemnities........................43
SECTION 6.4. Merger or Consolidation of, or Assumption of
the Obligations of, Depositor..............................45
SECTION 6.5. Limitation on Liability of Depositor and Others............45
SECTION 6.6. Depositor May Own Certificates or Notes....................46
SECTION 6.7 Security Interest..........................................46
ARTICLE VII
The Servicer and the Seller
SECTION 7.1. Representations of the Bank................................46
SECTION 7.2. Indemnities of the Bank....................................48
SECTION 7.3. Merger or Consolidation of, or Assumption of
the Obligations of the Bank................................49
SECTION 7.4. Limitation on Liability of the Bank and Others.............50
SECTION 7.5. The Bank Not To Resign as Servicer.........................50
SECTION 7.6. Corporate Existence........................................50
ARTICLE VIII
Default
SECTION 8.1. Servicer Default...........................................51
SECTION 8.2. Appointment of Successor...................................52
SECTION 8.3. Payment of Servicing Fee; Repayment of Advances............53
SECTION 8.4. Notification to Noteholders and Certificateholders.........53
SECTION 8.5. Waiver of Past Defaults....................................53
ARTICLE IX
Termination
SECTION 9.1. Optional Purchase of All Receivables.......................54
SECTION 9.2. Mandatory Sale of all Contracts............................55
ARTICLE X.
Administrative Duties of the Servicer
SECTION 10.1. Administrative Duties......................................57
SECTION 10.2. Records....................................................59
SECTION 10.3. Additional Information To Be Furnished to the Issuer.......59
ARTICLE XI.
Miscellaneous Provisions
SECTION 11.1. Amendment...................................................59
SECTION 11.2. Protection of Title to Trust................................60
SECTION 11.3. Notices.....................................................62
SECTION 11.4. Assignment..................................................63
SECTION 11.5. Limitations on Rights of Others.............................63
SECTION 11.6. Severability................................................63
SECTION 11.7. Separate Counterparts.......................................63
SECTION 11.8. Headings....................................................63
SECTION 11.9. Governing Law...............................................63
SECTION 11.10. Assignment to Trustee.......................................64
SECTION 11.11. Nonpetition Covenant........................................64
SECTION 11.12. Limitation of Liability of Owner Trustee and Trustee........64
SECTION 11.13. Independence of the Servicer................................64
SECTION 11.14. No Joint Venture............................................65
<PAGE>
SCHEDULES
Schedule A - Schedule of Receivables
Schedule B - Location of Receivables
EXHIBITS
Exhibit A - Form of Monthly Securityholder Statement
Exhibit B - Form of Servicer's Certificate
Exhibit C - Auction Procedures
<PAGE>
SALE AND SERVICING AGREEMENT dated as of
__________ __, 199_, among MELLON AUTO TRUST
199_-_, a Delaware business trust, as issuer
(the "Issuer"), MELLON AUTO RECEIVABLES
CORPORATION, as depositor (the "Depositor")
and MELLON BANK, N.A. (the "Bank"), as
servicer (the "Servicer") and seller (the
"Seller").
WHEREAS the Issuer desires to purchase a portfolio of receivables
arising in connection with motor vehicle retail installment sale contracts and
other motor vehicle installment sale contracts generally purchased by the Seller
from motor vehicle dealers;
WHEREAS the Depositor as of the date hereof has formed the Issuer;
WHEREAS the Seller is willing to sell such receivables to the
Depositor and the Depositor is willing to sell such receivables to the Issuer;
and
WHEREAS the Servicer is willing to service such receivables.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. Whenever used in this Agreement, the
following words and phrases shall have the following meanings:
"ADVISER" has the meaning specified in Section 9.2.
"ACTUARIAL RECEIVABLE" means any Receivable under which the portion of
a payment allocable to principal and the portion of a payment allocable to
interest is determined in accordance with the Scheduled Payment.
"ADVANCE" means the amount, as of the close of business on the last
day of a Collection Period, which the Servicer is required to advance on the
related Actuarial Receivable pursuant to Section 5.7(a).
"AGGREGATE NET LOSSES" means, with respect to a Collection Period, the
aggregate principal balance of all Receivables newly designated during such
Collection Period as Liquidated Receivables minus Liquidation Proceeds collected
during such Collection Period with respect to all Liquidated Receivables.
"AGREEMENT" means this Sale and Servicing Agreement, as the same may
be amended and supplemented from time to time.
"AMOUNT FINANCED" with respect to a Receivable means the amount
advanced under the Receivable toward the purchase price of the Financed Vehicle
and any related costs.
"ANNUAL PERCENTAGE RATE" or "APR" of a Receivable means the annual
rate of finance charges stated in the related Contract.
"AUCTION" has the meaning specified in Section 9.2.
"AUCTION PROCEDURES" has the meaning specified in Section 9.2.
"AUCTION PROPERTY" has the meaning specified in Section 9.2.
"AVAILABLE PRINCIPAL" means, with respect to any Distribution Date,
the sum of the following amounts without duplication: (a) that portion of all
collections on the Receivables allocable to principal in respect of the
preceding Collection Period using (x) in the case of a Simple Interest
Receivable, the Simple Interest Method and (y) in the case of an Actuarial
Receivable, the actuarial method (including, with respect to Actuarial
Receivables, amounts withdrawn from the Payahead Account and allocable to
principal and excluding amounts deposited into the Payahead Account and
allocable to principal, in each case, in respect of the preceding Collection
Period); (b) Liquidation Proceeds attributable to the principal amount of
Receivables which became Liquidated Receivables during the preceding Collection
Period in accordance with the Servicer's customary servicing procedures; (c) all
Advances made by the Servicer of principal due on the Actuarial Receivables in
respect of the preceding Collection Period; (d) to the extent attributable to
principal, the Purchase Amount of each Receivable repurchased by the Seller or
purchased by the Servicer as of the close of business on the last day of the
preceding Collection Period; and (e) partial prepayments on Receivables in
respect of the preceding Collection Period relating to refunds of extended
warranty contract costs or of credit life or disability insurance policy
premiums, but only if such costs or premiums were financed by the respective
Obligor and only to the extent not included in clause (a) above; provided,
however, that in calculating the Available Principal all payments and proceeds
(including Liquidation Proceeds) of any Receivables (i) repurchased by the
Seller or purchased by the Servicer the Purchase Amount of which has been
included in the Available Principal on a prior Distribution Date, and (ii)
distributed to the Servicer, with respect to such Distribution Date, as
reimbursement for Outstanding Advances in accordance with Section 5.7 shall all
be excluded.
"BALLOON LOAN" means a Receivable originated with a stated maturity of
less than the period of time of the corresponding amortization schedule.
"BALLOON PAYMENT" means the final payment required to be made under a
Balloon Loan.
"BANK" means Mellon Bank, N.A., a national banking association.
"BASIC DOCUMENTS" means the Certificate of Trust, the Trust Agreement,
the Indenture, the Depository Agreements and other documents and certificates
delivered in connection therewith.
"CERTIFICATE" means a Trust Certificate (as defined in the Trust
Agreement).
"CERTIFICATE BALANCE" equals, initially, $_________ and, thereafter,
equals the initial Certificate Balance, reduced by all amounts allocable to
principal previously distributed to Certificateholders.
"CERTIFICATE DISTRIBUTION ACCOUNT" has the meaning assigned to such
term in the Trust Agreement.
"CERTIFICATE POOL FACTOR" as of the close of business on a
Distribution Date means a seven-digit decimal figure equal to the Certificate
Balance (after giving effect to distributions made on such date) divided by the
initial Certificate Balance. The Certificate Pool Factor will be 1.0000000 as of
the Cutoff Date; thereafter, the Certificate Pool Factor will decline to reflect
reductions in the Certificate Balance.
"CERTIFICATE RATE" means ___% per annum.
"CERTIFICATEHOLDER" has the meaning assigned to such term in the Trust
Agreement.
"CERTIFICATEHOLDERS' DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of the Certificateholders' Interest Distributable
Amount and the Certificateholders' Principal Distributable Amount.
"CERTIFICATEHOLDERS' INTEREST CARRYOVER SHORTFALL" means, with respect
to any Distribution Date, the excess of the Certificateholders' Monthly Interest
Distributable Amount for the preceding Distribution Date and any outstanding
Certificateholders' Interest Carryover Shortfall on such preceding Distribution
Date, over the amount in respect of interest at the Certificate Rate that is
actually deposited in the Certificate Distribution Account on such preceding
Distribution Date, plus interest on such excess, to the extent permitted by law,
at the Certificate Rate from and including such preceding Distribution Date to
but excluding the current Distribution Date.
"CERTIFICATEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT" means, with
respect to any Distribution Date, the sum of the Certificateholders' Monthly
Interest Distributable Amount for such Distribution Date and the
Certificateholders' Interest Carryover Shortfall for such Distribution Date.
Interest shall be computed on the basis of a 360-day year of twelve 30-day
months for purposes of this definition.
"CERTIFICATEHOLDERS' MONTHLY INTEREST DISTRIBUTABLE AMOUNT" means,
with respect to any Distribution Date, the product of (i) one-twelfth of the
Certificate Rate (or, in the case of the first Distribution Date, the
Certificate Rate multiplied by a fraction, the numerator of which is the number
of days elapsed from and including the Closing Date to but excluding such
Distribution Date and the denominator of which is 360) and (ii) the Certificate
Balance on the immediately preceding Distribution Date, after giving effect to
all payments of principal to the Certificateholders on or prior to such
Distribution Date (or, in the case of the first Distribution Date, the
Certificate Balance on the Closing Date).
"CERTIFICATEHOLDERS' MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT" means,
with respect to any Distribution Date, the Certificateholders' Percentage of the
Principal Distribution Amount or, with respect to any Distribution Date on or
after the Distribution Date on which the outstanding principal balance of the
Notes is reduced to zero, 100% of the Principal Distribution Amount (less any
amount required on the first such Distribution Date to reduce the outstanding
principal balance of the Notes to zero, which shall be deposited into the Note
Distribution Account).
"CERTIFICATEHOLDERS' PERCENTAGE" means 100% minus the Noteholders'
Percentage.
"CERTIFICATEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL" means, as of the
close of any Distribution Date, the excess of the Certificateholders' Monthly
Principal Distributable Amount and any outstanding Certificateholders' Principal
Carryover Shortfall from the preceding Distribution Date, over the amount in
respect of principal that is actually deposited in the Certificate Distribution
Account on such current Distribution Date.
"CERTIFICATEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT" means, with
respect to any Distribution Date, the sum of the Certificateholders' Monthly
Principal Distributable Amount for such Distribution Date and the
Certificateholders' Principal Carryover Shortfall as of the close of the
preceding Distribution Date; PROVIDED, HOWEVER, that the Certificateholders'
Principal Distributable Amount shall not exceed the Certificate Balance. In
addition, on the Certificate Final Scheduled Distribution Date, the principal
required to be distributed to Certificateholders will include the lesser of (a)
any payments of principal due and remaining unpaid on each Receivable in the
Trust as of the last day of the Collection Period preceding the Certificate
Final Scheduled Distribution Date or (b) the portion of the amount that is
necessary (after giving effect to the other amounts to be deposited in the
Certificate Distribution Account on such Distribution Date and allocable to
principal) to reduce the Certificate Balance to zero, in either case after
giving effect to any required distribution of the Noteholders' Principal
Distributable Amount to the Note Distribution Account. In addition, on any
Distribution Date on which, after giving effect to all distributions to the
Servicer, the Noteholders and the Certificateholders on such Distribution Date,
(i) the outstanding principal balance of the Notes is zero and (ii) the amount
on deposit in the Reserve Account is equal to or greater than the Certificate
Balance, Certificateholders' Principal Distributable Amount shall include an
amount equal to such Certificate Balance.
"CLOSING DATE" means _______, 199_.
"COLLECTION ACCOUNT" means the account designated as such, established
and maintained pursuant to Section 5.1.
"COLLECTION PERIOD" means a calendar month, except with respect to the
first Collection Period, which shall be the period from the Cutoff Date to
_________ __, 199_. Any amount stated "as of the close of business on the last
day of a Collection Period" shall give effect to the following calculations as
determined as of the end of the day on such last day: (1) all applications of
collections, (2) all current and previous Payaheads, (3) all applications of
Payahead Balances, (4) all Advances and reductions of Outstanding Advances and
(5) all distributions to be made on the immediately following Distribution Date.
"COMPUTER TAPE" means the computer tapes furnished to the Trustee
describing certain characteristics of the Receivables as of the Cutoff Date.
"CONTRACT" means a motor vehicle retail installment sale contract.
"CRAM DOWN LOSS" means, with respect to a Receivable if a court of
appropriate jurisdiction in a bankruptcy or insolvency proceeding shall have
issued an order reducing the amount owed on such Receivable or otherwise
modifying or restructuring the scheduled payments to be made on such Receivable,
an amount equal to (i) the excess of the principal balance of such Receivable
immediately prior to such order over the principal balance of such Receivable as
so reduced and/or (ii) if such court shall have issued an order reducing the
effective rate of interest on such Receivable, the net present value (using as
the discount rate the higher of the APR on such Receivable or the rate of
interest, if any, specified by the court in such order) of the scheduled
payments as so modified or restructured. A "Cram Down Loss" shall be deemed to
have occurred on the date of issuance of such order.
"CUMULATIVE NET LOSS RATIO" means, with respect to any Distribution
Date, a fraction, expressed as a percentage, the numerator of which is an amount
equal to the excess of (i) the cumulative amount of Realized Losses and Cram
Down Losses from the Cutoff Date through the last day of the related Collection
Period over (ii) the cumulative amount of Recoveries from the Cutoff Date
through the last day of the related Collection Period and the denominator of
which is the Initial Pool Balance.
"CUTOFF DATE" means __________ __, 199_.
"DEALER" means a motor vehicle dealer who sold a Financed Vehicle and
who originated and assigned the respective Receivable to the Seller under an
existing agreement between such Dealer and the Seller.
"DEALER AGREEMENT" means any agreement between a Dealer and the Seller
relating to the acquisition of Receivables from a Dealer by the Seller.
"DELINQUENCY PERCENTAGE" means, with respect to a Collection Period,
the ratio of (a) the outstanding principal balance of all outstanding
Receivables 60 days or more delinquent (which amount shall include Receivables
in respect of Financed Vehicles that have been repossessed but not yet sold or
otherwise liquidated) as of the last day of such Collection Period, determined
in accordance with the Servicer's normal practices, divided by (b) the
outstanding principal balance of all Receivables on the last day of such
Collection Period.
"DELIVERY" when used with respect to Trust Account Property means:
(a) with respect to bankers' acceptances, commercial paper, negotiable
certificates of deposit and other obligations that constitute instruments and
are susceptible of physical delivery ("Physical Property"):
(i) transfer of possession thereof to the Trustee, endorsed to,
or registered in the name of, the Trustee or its nominee or endorsed
in blank;
(b) with respect to a certificated security:
(i) delivery thereof in bearer form to the Trustee or its nominee
or custodian; or
(ii) delivery thereof in registered form to the Trustee or its
nominee or custodian and
(A) the certificate is endorsed to the
Trustee or its nominee or custodian or in blank by
effective endorsement; or
(B) the certificate is registered in the
name of the Trustee or its nominee or custodian, upon original
issue or registration of transfer by the Issuer;
(c) with respect to an uncertificated security:
(i) the delivery of the uncertificated security to the Trustee or
its nominee or custodian; or
(ii) the issuer has agreed that it will comply with instructions
originated by the Trustee or its nominee or custodian without further
consent by the registered owner;
(d) with respect to any security issued by the U.S. Treasury that is a
book-entry security held through the Federal Reserve System pursuant to Federal
book-entry regulations:
(i) a Federal Reserve Bank by book entry credits the
book-entry security to the securities account (as defined in
31 CFR Part 357) of a participant (as defined in 31 CFR Part
357) which is also a securities intermediary; and
(ii) the participant indicates by book entry that the
book-entry security has been credited to the Trustee or its
nominee or custodian securities account;
(e) with respect to a security entitlement:
(i) the Trustee or its nominee or custodian
becomes the entitlement holder; or
(ii) the securities intermediary has agreed that it
will comply with entitlement orders originated by the Trustee
or its nominee or custodian without further consent by the
entitlement holder;
(f) for the purpose of clauses (b) and (c) hereof "delivery" means:
(i) with respect to a certificated security:
(A) the Trustee or its nominee or custodian
acquires possession thereof;
(B) another person (other than a securities
intermediary) either acquires possession thereof on behalf of
the Trustee or its nominee or custodian or, having previously
acquired possession thereof, acknowledges that it holds for
the Trustee or its nominee or custodian; or
(C) a securities intermediary acting on
behalf of the Trustee or its nominee or custodian acquires
possession of thereof, only if the certificate is in
registered form and has been specially endorsed to the Trustee
or its nominee or custodian by an effective endorsement;
(ii) with respect to an uncertificated security:
(A) the issuer registers the Trustee or its
nominee or custodian as the registered owner, upon original
issue or registration of transfer; or
(B) another person (other than a securities
intermediary) either becomes the registered owner thereof on
behalf of the Trustee or its nominee or custodian or, having
previously become the registered owner, acknowledges that it
holds for the Trustee or its nominee or custodian;
(g) for purposes of this definition, except as otherwise indicated,
the following terms shall have the meaning assigned to each such term in the
UCC:
(i) "certificated security"
(ii) "effective endorsement"
(iii) "entitlement holder"
(iv) "instrument"
(v) "securities account"
(vi) "securities entitlement"
(vii) "securities intermediary"
(viii) "uncertificated security"
(h) in each case of Delivery contemplated herein, the Trustee or its
nominee or custodian shall make appropriate notations on its records, and shall
cause same to be made on the records of its nominees, indicating that securities
are held in trust pursuant to and as provided in this Agreement.
"DEPOSITOR" means Mellon Auto Receivables Corporation, as the
depositor of the Receivables, and each successor to Mellon Auto Receivables
Corporation (in the same capacity) to the extent permitted hereunder.
"DEPOSITORY AGREEMENTS" mean the Certificate Depository Agreement and
the Note Depository Agreement.
"DETERMINATION DATE" means, with respect to any Distribution Date, the
earlier of the eighth Business Day of the month in which a Distribution Date
occurs and the fourth Business Day preceding such Distribution Date.
"DISTRIBUTION DATE" means, with respect to each Collection Period, the
fifteenth day of the following month, or if such day is not a Business Day, the
immediately following Business Day, commencing in _________.
"ELIGIBLE DEPOSIT ACCOUNT" means either (a) a segregated account with
an Eligible Institution or (b) a segregated trust account with the corporate
trust department of a depository institution (other than the Depositor or any
affiliate of the Depositor) organized under the laws of the United States of
America or any one of the states thereof or the District of Columbia (or any
domestic branch of a foreign bank), having corporate trust powers and acting as
trustee for funds deposited in such account, so long as any of the securities of
such depository institution have a credit rating from each Rating Agency in one
of its generic rating categories which signifies investment grade.
"ELIGIBLE INSTITUTION" means (a) the corporate trust department of the
Trustee or the Owner Trustee, or (b) a depository institution organized under
the laws of the United States of America or any one of the states thereof or the
District of Columbia (or any domestic branch of a foreign bank), which (i) has
either (A) a long-term senior unsecured debt rating of acceptable to the Rating
Agencies or (B) a short-term senior unsecured debt rating or certificate of
deposit rating acceptable to the Rating Agencies and (ii) whose deposits are
insured by the Federal Deposit Insurance Corporation.
"ELIGIBLE INVESTMENTS" mean book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence:
(a) direct obligations of, and obligations fully guaranteed as to
timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of any
depository institution (including the Depositor or any Affiliate of the
Depositor) or trust company incorporated under the laws of the United States of
America or any state thereof or the District of Columbia (or any domestic branch
of a foreign bank) and subject to supervision and examination by federal or
state banking or depository institution authorities (including depository
receipts issued by any such institution or trust company as custodian with
respect to any obligation referred to in clause (a) above or portion of such
obligation for the benefit of the holders of such depository receipts);
PROVIDED, HOWEVER, that at the time of the investment or contractual commitment
to invest therein (which shall be deemed to be made again each time funds are
reinvested following each Distribution Date), the commercial paper or other
short-term senior unsecured debt obligations (other than such obligations the
rating of which is based on the credit of a Person other than such depository
institution or trust company) of such depository institution or trust company
shall have a credit rating from Standard & Poor's of A-1+ and from Moody's of
P-1;
(c) commercial paper (including commercial paper of the Depositor or
any Affiliate of the Depositor) having, at the time of the investment or
contractual commitment to invest therein, a rating from Standard & Poor's of
A-1+ and from Moody's of P-1;
(d) investments in money market funds (including funds for which the
Depositor, the Trustee or the Owner Trustee or any of their respective
Affiliates is investment manager or advisor) having a rating from Standard &
Poor's of AAA-m or AAAm-G and from Moody's of Aaa;
(e) bankers' acceptances issued by any depository institution or trust
company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States of America or
any agency or instrumentality thereof the obligations of which are backed by the
full faith and credit of the United States of America, in either case entered
into with a depository institution or trust company (acting as principal)
referred to in clause (b) above; and
(g) any other investment which would not cause either Rating Agency to
downgrade or withdraw its then current rating of the Notes or the Certificates.
"EXCHANGE ACT" means the Securities and Exchange Act of 1934, as
amended.
"FINAL SCHEDULED DISTRIBUTION DATE" means with respect to (i) the
Notes, the _____________ Distribution Date and (ii) the Certificates, the
______________ Distribution Date.
"FINAL SCHEDULED MATURITY DATE" means ________________.
"FINANCED VEHICLE" means a new or used automobile, (including
passenger car, minivan, sport/utility vehicle or light truck) together with all
accessions thereto, securing an Obligor's indebtedness under the respective
Receivable.
"GP INTEREST" means the 1% interest in the Trust held by [the
Depositor] pursuant to the Trust Agreement.
"INDENTURE" means the Indenture dated as of __________ __, 199_,
between the Issuer and the Trustee, as the same may be amended and supplemented
from time to time.
"INITIAL POOL BALANCE" means the Pool Balance as of the Cutoff Date,
which is $____________.
"INSOLVENCY EVENT" means, with respect to a specified Person, (a) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a receiver
(including any receiver appointed under the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as amended), liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or ordering the winding-up or liquidation of
such Person's affairs, and such decree or order shall remain unstayed and in
effect for a period of 60 consecutive days; or (b) the commencement by such
Person of a voluntary case under any applicable Federal or state bankruptcy,
insolvency or other similar law now or hereafter in effect, or the consent by
such Person to the entry of an order for relief in an involuntary case under any
such law, or the consent by such Person to the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official for such Person or for any substantial part of its property,
or the making by such Person of any general assignment for the benefit of
creditors, or the failure by such Person generally to pay its debts as such
debts become due, or the taking of action by such Person in furtherance of any
of the foregoing.
"INTEREST DISTRIBUTION AMOUNT" means, with respect to any Distribution
Date, the sum of the following amounts without duplication: (a) that portion of
all collections on the Receivables allocable to interest in respect of the
preceding Collection Period using (x) in the case of a Simple Interest
Receivable, the Simple Interest Method and (y) in the case of an Actuarial
Receivable, the actuarial method (including, with respect to Actuarial
Receivables, amounts withdrawn from the Payahead Account and allocable to
interest, and excluding amounts deposited into the Payahead Account and
allocable to interest, in each case in respect of the preceding Collection
Period); (b) Liquidation Proceeds attributable to interest on the Receivables
which became Liquidated Receivables during the preceding Collection Period in
accordance with the Servicer's customary servicing procedures; (c) all Advances
made by the Servicer of interest due on the Actuarial Receivables; (d) the
Purchase Amount of each Receivable repurchased by the Seller or purchased by the
Servicer as of the close of business on the last day of the preceding Collection
Period to the extent attributable to accrued interest on such Receivable; (e)
Recoveries for such Collection Period and (f) Investment Earnings for such
Distribution Date; PROVIDED, HOWEVER, that in calculating the Interest
Distribution Amount (i) all payments and proceeds (including Liquidation
Proceeds) of any Receivables repurchased by the Seller or purchased by the
Servicer the Purchase Amount of which has been included in the Interest
Distribution Amount on a prior Distribution Date, and (ii) distributed to the
Servicer with respect to such Distribution Date, as reimbursement for
Outstanding Advances in accordance with Section 5.7 shall all be excluded.
"INVESTMENT EARNINGS" means, with respect to any Distribution Date,
the investment earnings (net of losses and investment expenses) on amounts on
deposit in the Trust Accounts (except the Payahead Account) and the Certificate
Distribution Account to be deposited into the Collection Account on such
Distribution Date pursuant to Section 5.1(b).
"ISSUER" means Mellon Auto Trust 199_-_.
"LIEN" means a security interest, lien, charge, pledge or encumbrance
of any kind, other than tax liens, mechanics' liens and any liens which attach
to the respective Receivable by operation of law as a result of any act or
omission by the related Obligor.
"LIQUIDATED RECEIVABLES" means, Receivables (i) which have been
liquidated by the Servicer through the sale of the related Financed Vehicle,
(ii) as to which all or a portion representing 10% or more of a scheduled
payment due is 150 or more days delinquent or (iii) with respect to which
proceeds have been received which, in the Servicer's judgment, constitute the
final amounts recoverable in respect of such Receivable.
"LIQUIDATION DISTRIBUTION DATE" has the meaning specified in Section
9.2.
"LIQUIDATION PROCEEDS" means, with respect to any Liquidated
Receivable, the moneys collected in respect thereof, from whatever source (other
than any proceeds from any Dealer commission) on a Liquidated Receivable during
the Collection Period in which such Receivable became a Liquidated Receivable,
net of the sum of any amounts expended by the Servicer in connection with such
liquidation and any amounts required by law to be remitted to the Obligor on
such Liquidated Receivable.
"MOODY'S" means Moody's Investors Service, Inc., or its successor.
"NET LOSSES" means the sum of Realized Losses and Cram Down Losses
minus Recoveries for any Collection Period.
"NOTE DISTRIBUTION ACCOUNT" means the account designated as such,
established and maintained pursuant to Section 5.1.
"NOTE POOL FACTOR" for the Notes as of the close of business on a
Distribution Date means a seven-digit decimal figure equal to the outstanding
principal balance of Notes divided by the original outstanding principal balance
of the Notes. The Note Pool Factor for the Notes will be 1.0000000 as of the
Cutoff Date; thereafter, the Note Pool Factor for the Notes will decline to
reflect reductions in the outstanding principal balance of the Notes.
"NOTEHOLDERS' DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of the Noteholders' Principal Distributable Amount
and the Noteholders' Interest Distributable Amount.
"NOTEHOLDERS' INTEREST CARRYOVER SHORTFALL" means, with respect to any
Distribution Date, the excess of the Noteholders' Monthly Interest Distributable
Amount for the preceding Distribution Date and any outstanding Noteholders'
Interest Carryover Shortfall on such preceding Distribution Date, over the
amount in respect of interest that is actually deposited in the Note
Distribution Account on such preceding Distribution Date, plus interest on the
amount of interest due but not paid to Noteholders on the preceding Distribution
Date, to the extent permitted by law, at the Interest Rate from such preceding
Distribution Date through the current Distribution Date.
"NOTEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT" means, with respect to
any Distribution Date, the sum of the Noteholders' Monthly Interest
Distributable Amount for such Distribution Date and the Noteholders' Interest
Carryover Shortfall for such Distribution Date. Interest shall be computed on
the basis of a 360 day year of twelve 30-day months.
"NOTEHOLDERS' MONTHLY INTEREST DISTRIBUTABLE AMOUNT" means, with
respect to any Distribution Date, the product of (i) one-twelfth of the Interest
Rate (or, in the case of the first Distribution Date, the Interest Rate
multiplied by a fraction, the numerator of which is the number of days elapsed
from and including the Closing Date to but excluding such Distribution Date and
the denominator of which is 360) and (ii) the outstanding principal balance of
the Notes on the immediately preceding Distribution Date, after giving effect to
all distributions of principal to Noteholders on such Distribution Date (or, in
the case of the first Distribution Date, on the Closing Date).
"NOTEHOLDERS' MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT" means, with
respect to any Distribution Date, the Noteholders' Percentage of the Principal
Distribution Amount.
"NOTEHOLDERS' PERCENTAGE" means 100% until the point in time at which
the Notes have been paid in full and zero thereafter.
"NOTEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL" means, as of the close of
any Distribution Date, the excess of the Noteholders' Monthly Principal
Distributable Amount and any outstanding Noteholders' Principal Carryover
Shortfall from the preceding Distribution Date over the amount in respect of
principal that is actually deposited in the Note Distribution Account.
"NOTEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to
any Distribution Date, the sum of the Noteholder's Monthly Principal
Distributable Amount for such Distribution Date and the Noteholders' Principal
Carryover Shortfall as of the close of the preceding Distribution Date;
PROVIDED, HOWEVER, that the Noteholders' Principal Distributable Amount shall
not exceed the outstanding principal balance of the Notes. In addition, on the
Final Scheduled Distribution Date of the Notes, the principal required to be
deposited in the Note Distribution Account will include the amount necessary
(after giving effect to the other amounts to be deposited in the Note
Distribution Account on such Distribution Date and allocable to principal) to
reduce the Outstanding Amount of such Notes to zero.
"OBLIGOR" on a Receivable means the purchaser or co-purchasers of the
Financed Vehicle and any other Person who owes payments under the Receivable.
"OFFICERS' CERTIFICATE" means a certificate signed by (a) the
president, any senior vice president or any vice president and (b) a secretary
or assistant secretary of the Depositor, the Seller or the Servicer, as
appropriate, provided that no one person may sign in a capacity fulfilling both
clause (a) and clause (b).
"OUTSTANDING ADVANCES" on the Actuarial Receivables means the sum, as
of the close of business on the last day of a Collection Period, of all Advances
as reduced as provided in Section 5.7(a).
"OWNER TRUST ESTATE" has the meaning assigned to such term in the
Trust Agreement.
"OWNER TRUSTEE" means ____________, not in its individual capacity but
solely as Owner Trustee under the Trust Agreement, its successors in interest or
any successor Owner Trustee under the Trust Agreement.
"PAYAHEAD" on an Actuarial Receivable means the amount, as of the
close of business on the last day of a Collection Period, computed in accordance
with Section 5.3 with respect to such Receivable.
"PAYAHEAD ACCOUNT" means the account designated as such, established
and maintained pursuant to Section 5.1.
"PAYAHEAD BALANCE" on an Actuarial Receivable means the sum, as of the
close of business on the last day of a Collection Period, of all Payaheads made
by or on behalf of the Obligor with respect to such Actuarial Receivable, as
reduced by applications of previous Payaheads with respect to such Actuarial
Receivable, pursuant to Sections 5.3 and 5.7.
"PERSON" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust (including any beneficiary
thereof), unincorporated organization or government or any agency or political
subdivision thereof.
"PHYSICAL PROPERTY" has the meaning assigned to such term in the
definition of "Delivery" above.
"POOL BALANCE" as of the close of business on the last day of a
Collection Period means the aggregate Principal Balance of the Receivables
(excluding Purchased Receivables and Liquidated Receivables).
"PRINCIPAL BALANCE" of a Receivable, as of the close of business on
the last day of a Collection Period, means the Amount Financed minus the sum of
(i)(a) with respect to a Simple Interest Receivable, that portion of all
payments made by or on behalf of the related Obligor on or prior to such day and
allocable to principal using the Simple Interest Method and (b) in the case of
an Actuarial Receivable, that portion of all Scheduled Payments due on or prior
to such day allocable to principal using the actuarial method, (ii) any refunded
portion of extended warranty protection plan costs or of physical damage, theft,
credit life, credit accident or health insurance premiums included in the Amount
Financed, (iii) any payment of the Purchase Amount with respect to the
Receivable allocable to principal, (iv) any prepayment in full or any partial
prepayments applied to reduce the Principal Balance of the Receivable and (v)
Cram Down Losses in respect of such Receivable.
"PRINCIPAL DISTRIBUTION AMOUNT" means, with respect to any
Distribution Date, the sum of (i) (a) with respect to Simple Interest
Receivables, that portion of all collections on the Receivable allocable to
principal in respect of the preceding Collection Period and (b) with respect to
Actuarial Receivables, the sum of (x) the amount of all Scheduled Payments
allocable to principal due during the preceding Collection Period and (y) the
portion of all prepayments in full allocable to principal received during the
preceding Collection Period, in the case of both (a) and (b), without regard to
any extensions or modifications thereof effected after the Cutoff Date, other
than with respect to any extensions or modifications required in connection with
Cram Down Losses during such Collection Period; (ii) the principal balance of
each Receivable that was repurchased by the Seller, or purchased by the
Servicer, in each case, as of the close of business on the last day of the
preceding Collection Period (except to the extent included in (i) above; (iii)
the principal balance of each Liquidated Receivable which became such during the
preceding Collection Period (except to the extent included in (i) above); (iv)
partial prepayments on Receivables in respect of the preceding Collection Period
relating to refunds of extended service contracts, or of physical damage, credit
life, credit accident or heath insurance premium, disability insurance policy
premiums, but only if such costs or premiums were financed by the respective
Obligor and only to the extent not included in clause (i) above; and (v) the
aggregate amount of Cram Down Losses during such Collection Period.
"PURCHASE AMOUNT" means the amount, as of the close of business on the
last day of a Collection Period, required to prepay in full the respective
Receivable under the terms thereof including interest at the APR to the end of
the month of purchase (without giving effect to Outstanding Advances).
"PURCHASED RECEIVABLE" means a Receivable purchased as of the close of
business on the last day of a Collection Period by (i) the Servicer pursuant to
Section 4.7 or (ii) repurchased by the Seller pursuant to Section 3.2.
"RATING AGENCY" means _____________. If no such organization or
successor is any longer in existence, "Rating Agency" shall be a nationally
recognized statistical rating organization or other comparable Person designated
by the Depositor, notice of which designation shall be given to the Trustee, the
Owner Trustee and the Servicer.
"RATING AGENCY CONDITION" means, with respect to any action, that each
Rating Agency shall have been given 10 days' prior notice thereof (or such
shorter period as shall be acceptable to the Rating Agencies) and that neither
of the Rating Agencies shall have notified the Depositor, the Servicer, the
Owner Trustee or the Trustee in writing that such action will, in and of itself,
result in a reduction or withdrawal of the then current rating of the Notes, or
the Certificates.
"REALIZED LOSSES" means the excess of the Principal Balance of any
Liquidated Receivable over Liquidation Proceeds to the extent allocable to
principal.
"RECEIVABLE" means any Contract listed on Schedule A (which Schedule
may be in the form of microfiche) but excluding Liquidated Receivables and
Purchased Receivables.
"RECEIVABLE FILES" means the documents specified in Section 3.3.
"RECOVERIES" means, with respect to any Liquidated Receivable, monies
collected in respect thereof, from whatever source (other than any proceeds from
any Dealer commission), during any Collection Period following the Collection
Period in which such Receivable became a Liquidated Receivable, net of the sum
of any amounts expended by the Servicer for the account of the Obligor and any
amounts required by law to be remitted to the Obligor.
"RELATED FINANCED VEHICLE" means a Financed Vehicle securing the
Obligor's indebtedness under a Receivable.
"RESERVE ACCOUNT" means the account designated as such, established
and maintained pursuant to Section 5.1.
"RESERVE ACCOUNT INITIAL DEPOSIT" means an amount equal to $_________.
"RESERVE ACCOUNT TRANSFER AMOUNT" means an amount equal to the lesser
of (i) the amount of cash or other immediately available funds on deposit in the
Reserve Account on such Distribution Date (before giving effect to any
withdrawals therefrom relating to such Distribution Date) or (ii) the amount, if
any, by which (x) the sum of the Total Servicing Fee, the Noteholders' Interest
Distributable Amount, the Certificateholders' Interest Distributable Amount, the
Noteholders' Principal Distributable Amount and the Certificateholders'
Principal Distributable Amount for such Distribution Date exceeds (y) the sum of
the Interest Distribution Amount and the Available Principal for such
Distribution Date.
"SCHEDULED PAYMENT" on an Actuarial Receivable means that portion of
the payment required to be made by the Obligor during the respective Collection
Period sufficient to amortize the Principal Balance under the actuarial method
over the term of the Actuarial Receivable (except, in the case a Balloon Loan,
to the extent necessary to amortize the Principal Balance to the amount of the
Balloon Payment over the life of the Actuarial Receivable) and to provide
interest at the APR.
"SECURITIES" means the Notes and the Certificates.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLER" means the Bank, as the entity which contributes the
Receivables to the Depositor pursuant to this Agreement.
"SERVICER" means the Bank, the servicer of the Receivables, and each
successor to the Bank, (in the same capacity) pursuant to Section 7.3 or 8.2.
"SERVICER DEFAULT" means an event specified in Section 8.1.
"SERVICER'S CERTIFICATE" means an Officers' Certificate of the
Servicer delivered pursuant to Section 4.9, substantially in the form of Exhibit
B.
"SERVICING FEE" has the meaning specified in Section 4.8.
"SERVICING FEE RATE" means ____% per annum.
"SIMPLE INTEREST METHOD" means the method of allocating a fixed level
payment to principal and interest, pursuant to which the portion of such payment
that is allocated to interest is equal to the product of the fixed rate of
interest multiplied by the unpaid principal balance multiplied by the period of
time elapsed since the preceding payment of interest was made and the remainder
of such payment is allocable to principal.
"SIMPLE INTEREST RECEIVABLE" means any Receivable under which the
portion of a payment allocable to principal and the portion of a payment
allocable to interest is determined in accordance with the Simple Interest
Method.
"SPECIFIED RESERVE ACCOUNT BALANCE" means, with respect to any
Distribution Date the greater of (a) ____% of the sum of the aggregate
outstanding principal amount of Notes plus the outstanding Certificate Balance
on such Distribution Date (after giving effect to all payments on the Notes and
distributions with respect to the Certificates to be made on such Distribution
Date), except that, if on any Distribution Date (x) the Cumulative Net Loss
Ratio exceeds the Trigger Percentage for such Distribution Date or (y) the
average of the Delinquency Percentages for the three preceding Collection
Periods exceeds ____%, then the Specified Reserve Account Balance shall be an
amount equal to ____% of the sum of the aggregate outstanding principal amount
of the Notes and the aggregate outstanding Certificate Balance on such
Distribution Date (after giving effect to all payments on the Notes and
distributions with respect to the Certificates to be made on such Distribution
Date); or (b) ___% of the sum of the aggregate initial principal balance of the
Notes plus the initial Certificate Balance.
"STANDARD & POOR'S" means Standard & Poor's, a division of the
McGraw-Hill Companies, Inc., or its successor.
"TOTAL DISTRIBUTION AMOUNT" means, for each Distribution Date, the sum
of (i) the Interest Distribution Amount, (ii) the Available Principal and (iii)
the Reserve Account Transfer Amount, in each case in respect of such
Distribution Date.
"TOTAL SERVICING FEE" means with respect to each Distribution Date the
Servicing Fee for the related Collection Period and all accrued and unpaid
Servicing Fees for prior Collection Periods.
"TRANSFER DATE" means, with respect to any Distribution Date, the
Business Day preceding such Distribution Date.
"TRIGGER PERCENTAGE" means (i) in the case of any Distribution Date
prior to ___ Distribution Date, ___%, (ii) in the case of any Distribution Date
on and after the ___ Distribution Date but prior to the ___ Distribution Date,
___%, (iii) in the case of any Distribution Date on and after the ___
Distribution Date but prior to the ___ Distribution Date, ___%, (iv) in the case
of any Distribution Date on and after the ___ Distribution Date but prior to the
___ Distribution Date, ___% and (v) in the case of any Distribution Date on and
after the ___ Distribution Date, ___%.
"TRUST" means the Issuer.
"TRUST ACCOUNT PROPERTY" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the form of
deposit accounts, Physical Property, book-entry securities, uncertificated
securities or otherwise), including the Reserve Account Initial Deposit, and all
proceeds of the foregoing.
"TRUST ACCOUNTS" has the meaning assigned thereto in Section 5.1.
"TRUST AGREEMENT" means the Trust Agreement dated as of __________ __,
199_, between the Depositor and the Owner Trustee, as the same may be amended
and supplemented from time to time.
"TRUST OFFICER" means, (i) in the case of the Trustee, any Officer
within the Corporate Trust Office of the Trustee, including any Vice President,
Assistant Vice President, Assistant Treasurer, Assistant Secretary or any other
officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also, with respect to a
particular matter, any other officer to whom such matter is referred because of
such officer's knowledge of and familiarity with the particular subject and (ii)
in the case of the Owner Trustee, any officer in the corporate trust office of
the Owner Trustee with direct responsibility for the administration of this
Agreement or any of the Basic Documents on behalf of the Owner Trustee.
"TRUST PROPERTY" has the meaning assigned thereto in Section 2.1.
"TRUSTEE" means the Person acting as Trustee under the Indenture, its
successors in interest and any successor trustee under the Indenture.
"UCC" means the Uniform Commercial Code as in effect in the relevant
jurisdiction.
SECTION 1.2. OTHER DEFINITIONAL PROVISIONS. (a) Capitalized terms used
herein and not otherwise defined herein have the meanings assigned to them in
the Indenture, or, if not defined therein, in the Trust Agreement.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any instrument governed hereby and in any certificate or
other document made or delivered pursuant hereto unless otherwise defined
therein.
(c) As used in this Agreement, in any instrument governed hereby and
in any certificate or other document made or delivered pursuant hereto or
thereto, accounting terms not defined in this Agreement or in any such
instrument, certificate or other document, and accounting terms partly defined
in this Agreement or in any such instrument, certificate or other document to
the extent not defined, shall have the respective meanings given to them under
generally accepted accounting principles as in effect on the date of this
Agreement or any such instrument, certificate or other document, as applicable.
To the extent that the definitions of accounting terms in this Agreement or in
any such instrument, certificate or other document are inconsistent with the
meanings of such terms under generally accepted accounting principles, the
definitions contained in this Agreement or in any such instrument, certificate
or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; Section, Schedule and Exhibit
references contained in this Agreement are references to Sections, Schedules and
Exhibits in or to this Agreement unless otherwise specified; and the term
"including" shall mean "including without limitation."
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.1. CONVEYANCE OF RECEIVABLES. (a) The Seller, concurrently
with the execution and delivery hereof, does hereby sell, transfer, assign, set
over and otherwise convey to the Depositor at a purchase price previously agreed
to by the Seller and Depositor, without recourse (subject to the obligations
herein), whether now or hereafter acquired:
(i) all right, title and interest of the Seller in and to the
Receivables and all monies received thereon (other than any proceeds
from any Dealer commission) on or after the Cutoff Date and, with
respect to Receivables which are Actuarial Receivables, all monies
received thereon prior to the Cutoff Date that are due on or after the
Cutoff Date;
(ii) all right, title and interest of the Seller in and to its
security interests in the Financed Vehicles granted by Obligors
pursuant to the Receivables sold by it and any other interest of the
Seller in the Financed Vehicles;
(iii) all right, title and interest of the Seller in and to any
proceeds from claims on any physical damage, repossession, loss, skip,
credit life and credit accident, vendor's single interest and health
insurance policies or certificates relating to the Financed Vehicles
or the Obligors;
(iv) all right, title and interest of the Seller in and to
refunds for the costs of extended service contracts with respect to
Financed Vehicles, refunds of unearned premiums with respect to credit
life and credit accident and health insurance policies or certificates
covering an Obligor or Financed Vehicle or his or her obligations with
respect to a Financed Vehicle and any recourse to Dealers for any of
the foregoing;
(v) the interest of the Seller in any proceeds from any
Receivable repurchased by a Dealer, pursuant to a Dealer Agreement, as
a result of a breach of representation or warranty in the related
Dealer Agreement or a default by an Obligor resulting in the
repossession of the Financed Vehicle under such Dealer Agreement; and
(vi) the proceeds of any and all of the foregoing (the items
specified in clauses (i) through (v) is referred to herein as the
"Trust Property").
(b) In consideration of the Issuer's delivery to or upon the order of
the Depositor on the Closing Date of the net proceeds from the sale of the Notes
and the Certificates and the other amounts to be distributed from time to time
to the Depositor in accordance with the terms of this Agreement, the Depositor,
concurrently with the execution and delivery hereof, does hereby sell, transfer,
assign, set over and otherwise convey to the Issuer, without recourse (subject
to the obligations herein) all right, title and interest of the Depositor in and
to the Trust Property together with the Depositor's right to require the Seller
to cure any breach of a representation or warranty made herein by the Seller or
to repurchase or substitute for any affected Receivable in accordance herewith.
It is the intention of the parties hereto that the transfers and
assignments contemplated by this Agreement shall each constitute a sale of the
Receivables and other Trust Property from the Seller to the Depositor and from
the Depositor to the Trust and the beneficial interest in and title to the
Receivables and such other Trust Property shall not be part of the Seller's or
the Depositor's estate in the event of the filing of a bankruptcy petition by or
against the Seller or the Depositor, as applicable, under any bankruptcy law. In
the event that, notwithstanding the intent of the parties hereto, any transfer
and assignment contemplated hereby is held not to be a sale, this Agreement
shall constitute a grant of a security interest to the Owner Trustee in the
Trust Property for the benefit of the Securityholders.
ARTICLE III.
The Receivables
SECTION 3.1. A. Representations and Warranties of Seller. The Seller
makes the following representations and warranties as to the Receivables on
which each of the Depositor and the Issuer is deemed to have relied in acquiring
the Receivables. Such representations and warranties speak as of the execution
and delivery of the Agreement, but shall survive the sale, transfer and
assignment of the Receivables to the Issuer and the pledge thereof to the
Trustee pursuant to the Indenture.
(a) TITLE. Immediately prior to the transfer and assignment to the
Depositor herein contemplated, the Seller had good and marketable title to each
Receivable conveyed by it to the Depositor, free and clear of all Liens and,
immediately upon the transfer thereof, the Depositor shall have good and
marketable title to each Receivable, free and clear of all Liens; and the
transfer of the Receivables to the Depositor has been perfected under the UCC.
It is the intention of the Seller that the transfer and assignment herein
contemplated constitute a sale of the Receivables from the Seller to the
Depositor and that the beneficial interest in and title to such Receivables not
be part of the debtor's estate in the event of the filing of a petition for
receivership by or against the Seller. No Receivable has been sold, transferred,
assigned or pledged by the Seller to any Person other than the Depositor.
(b) ALL FILINGS MADE. All filings (including UCC filings) necessary in
any jurisdiction to give the Seller a first priority perfected security interest
in the Receivables, to give the Depositor a first priority perfected security
interest in the Receivables, to give the Issuer a first priority perfected
ownership interest in the Receivables, and to give the Trustee a first priority
perfected security interest therein, shall have been presented to the Trustee
for filing in the appropriate filing offices. Upon such filing by the Servicer,
the Trustee will have a first priority perfected security interest in the Trust
Property.
(c) CHARACTERISTICS OF RECEIVABLES. Each Receivable (A) has been
either originated by a Dealer in the regular course of such Dealer's business
and purchased from such Dealer by the Seller in the ordinary course of the
Seller's business or otherwise originated by the Seller in the ordinary course
of the Seller's business, and each Obligor was approved in accordance with the
Seller's standard underwriting procedures in effect at the time such Receivable
was originated or purchased, (B) was conveyed by the Seller to the Depositor,
(C) has created or shall create a valid, subsisting and enforceable first
priority security interest in favor of the Seller in the Financed Vehicle, which
security interest has been assigned by the Seller to the Depositor, which is
assignable by the Depositor to the Issuer and by the Issuer to the Trustee, (D)
contains customary and enforceable provisions under the laws of the State
governing such Receivable such that the rights and remedies of the holder
thereof are adequate for realization against the collateral of the benefits of
the security; and (E) provides for level monthly payments that fully amortizes
the Amount Financed by maturity (except for the last payment, which may be
different from the level payment and except, with respect to a Balloon Loan, to
the extent of the Balloon Payment).
(d) SCHEDULE OF RECEIVABLES. The information set forth in Schedule A
to this Agreement is true and correct in all material respects as of the opening
of business on the Cutoff Date and no selection procedures believed by the
Seller to be adverse to the Noteholders or the Certificateholders were utilized
in selecting the Receivables. The Computer Tape regarding the Receivables is
true and correct in all material respects as of the Cutoff Date.
(e) COMPLIANCE WITH LAW. Each Receivable, the sale of the Financed
Vehicle and the sale of any physical damage and credit life and credit accident
and health insurance and any extended service contracts complied in all material
respects at the time it was originated or made and at the Closing Date (after
giving effect to the transactions contemplated by the Basic Documents) complies
in all material respects with all requirements of applicable federal, state and
local laws and regulations thereunder, including usury laws, the Federal
Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit
Reporting Act, the Fair Debt Collection Practices Act, the Federal Trade
Commission Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board's
Regulations B and Z, the Soldier's and Sailor's Civil Relief Act of 1940, state
adaptations of the National Consumer Act and the Uniform Consumer Credit Code,
and other consumer credit laws and equal credit opportunity and disclosure laws.
(f) BINDING OBLIGATION. Each Receivable represents the legal, valid
and binding payment obligation in writing of the Obligor thereunder, enforceable
by the holder thereof in accordance with its terms except as such enforceability
may be limited by applicable bankruptcy, insolvency, moratorium, fraudulent
conveyance, reorganization and similar laws now or hereafter in effect related
to or affecting creditors' rights generally and subject to general principles of
equity (whether applied in a proceeding at law or in equity) and all parties to
such Receivable had full legal capacity to execute and deliver such Receivable
and all other documents related thereto and to grant the security interest
purported to be granted thereby.
(g) NO GOVERNMENT OBLIGOR. None of the Receivables is due from the
United States of America or any state or from any agency, department or
instrumentality of the United States of America or any state.
(h) SECURITY INTEREST IN FINANCED VEHICLE. Immediately prior to the
sale, assignment, and transfer thereof under the Agreement, (i) each Receivable
shall be secured by a validly perfected first priority security interest in the
Financed Vehicle in favor of the Seller as secured party or (ii) application has
been made with the appropriate governmental authority for a valid perfected
first priority security interest in the Financed Vehicle in favor of the Seller,
and such security interest is or shall be prior to all other Liens upon and
security interests in such Financed Vehicle which now exist or may hereafter
arise or be created (except, as to priority, for any tax liens or mechanics'
liens which may arise after the Closing Date).
(i) RECEIVABLES IN FORCE. No Receivable has been satisfied,
subordinated or rescinded, nor has any Financed Vehicle been released from the
Lien granted by the related Receivable in whole or in part unless another
vehicle has been substituted as collateral securing the Receivable without any
other modification to such Receivable.
(j) NO WAIVER. No provision of a Receivable has been modified or
waived except as reflected in the Receivable File relating to such Receivable.
(k) NO AMENDMENTS. No Receivable has been amended, except as permitted
pursuant to Section 4.2.
(l) NO DEFENSES. No right of rescission, setoff, counterclaim or
defense has been asserted or threatened with respect to any Receivable. The
operation of the terms of any Receivable or the exercise of any right thereunder
will not render such Receivable unenforceable in whole or in part or subject to
any such right of rescission, setoff, counterclaim, or defense.
(m) NO LIENS. As of the Cutoff Date, there are no Liens or claims,
including Liens for work, labor, materials or unpaid state or federal taxes
relating to any Financed Vehicle securing the related Receivable, that are or
may be prior to or equal to the Lien granted by such Receivable.
(n) NO DEFAULT. Except for payment delinquencies continuing for a
period of not more than thirty days as of the Cutoff Date and, except as
permitted in this paragraph, no default, breach, violation or event (in any such
case) permitting acceleration under the terms of any Receivable has occurred;
and no continuing condition that with notice or the lapse of time would
constitute a default, breach, violation or event (in any such case) permitting
acceleration under the terms of any Receivable has arisen; and the Seller has
not waived and shall not waive any of the foregoing.
(o) MATURITY OF RECEIVABLES. Each Receivable has an original maturity
of not more than ___ months; the weighted average original maturity of the
Receivables is ___ months as of the Cutoff Date; the remaining term of each
Receivable is ___ months or less as of the Cutoff Date; the weighted average
remaining term of the Receivables is ___ months as of the Cutoff Date; and the
latest scheduled maturity of any Receivable shall be no later than the Final
Scheduled Maturity Date.
(p) NO BANKRUPTCIES. No Obligor on any Receivable was noted in the
related Receivable File as having filed for bankruptcy in a proceeding which
remained undischarged as of the Cutoff Date.
(q) NO REPOSSESSIONS. As of the Cutoff Date, no Financed Vehicle
securing any Receivable is in repossession status.
(r) CHATTEL PAPER. Each Receivable constitutes "chattel paper" as
defined in the UCC.
(s) APR. The weighted average Annual Percentage Rate of the
Receivables as of the Cutoff Date is approximately ___%.
(t) PRINCIPAL BALANCE. Each Receivable has an outstanding principal
balance as of the Cutoff Date of not less than ___ or more than $____. The
average principal balance of the Receivables as of the Cutoff Date is $___. The
aggregate principal balance of the Receivables as of the Cutoff Date is $___.
(u) FINANCING. Approximately ___% of the aggregate principal balance
of the Receivables, constituting approximately ___% of the number of
Receivables, as of the Cutoff Date, represents financing of new vehicles; the
remainder of the Receivables represents financing of used vehicles.
Approximately ___% of the aggregate principal balance of the Receivables,
constituting approximately ___% of the number of Receivables, as of the Cutoff
Date, represents financing of Balloon Loans. Approximately ___% of the aggregate
Principal Balance of the Receivables, constituting approximately ___% of the
number of Receivables, as of the Cutoff Date, represents financing of Simple
Interest Receivables; the remainder of the Receivables represents financing of
Actuarial Receivables.
(v) PAID-AHEAD. Approximately ___% of the aggregate Principal Balance
of the Receivables, constituting approximately ___% of the number of Receivables
are paid-ahead for a period of one to six months. No Receivable is paid-ahead
more than ___ months.
(w) INSURANCE; OTHER. The Servicer, in accordance with its customary
procedures, has confirmed (A) that each Obligor has obtained insurance covering
the Financed Vehicle as of the date of execution of the Related Receivable
insuring against loss and damage due to fire, theft, collision and other risks
generally covered by comprehensive and collision coverage and that each
Receivable requires the Obligor to maintain such insurance naming the Seller and
its successors and assigns as a loss payee, (B) each Receivable that finances
the cost of premiums for credit life and credit accident and health insurance is
covered by an insurance policy or certificate of insurance naming the Seller as
loss payee (lienholder) under each such insurance policy and certificate of
insurance and (C) as to each Receivable that finances the cost of an extended
service contract, the respective Financed Vehicle which secures the Receivable
is covered by an extended service contract.
(x) LAWFUL ASSIGNMENT. No Receivable has been originated in, or as of
the Closing Date is subject to the laws of, any jurisdiction under which the
sale, transfer and assignment of such Receivable under this Agreement or the
pledge of such Receivable to the Trustee under the Indenture (i) is unlawful,
void, voidable or unenforceable in accordance with its terms or (ii) would
render such Receivable void, voidable or unenforceable in accordance with its
terms. The Seller has not entered into any agreement with any account debtor
that prohibits, restricts or conditions the assignment of all or any portion of
the Receivable.
(y) NO INSURANCE PREMIUMS. As of the Cutoff Date, no portion of the
principal balance of any Receivable included amounts attributable to the payment
of any physical damage or theft insurance premium.
(z) ONE ORIGINAL. There is only one manually executed original copy of
each Receivable.
(aa) ORIGINATION OF RECEIVABLES. Based on the billing address of the
Obligors and the principal balance of Receivables as of the Cutoff Date,
approximately ___% of the Receivables were originated in ___, approximately ___%
of the Receivables were originated in ___ and approximately ___% of the
Receivables were originated in ___, each Obligor has been approved by the Seller
based on the Seller's standard underwriting procedures as in effect at the time
the related Receivable was entered into. Based on the billing address of the
Obligors and the principal balance of the Receivables as of the Cutoff Date, not
more than 10% of the Receivables were originated in any one state other than
___, ___ and ___.
(bb) RECEIVABLE FILES. The Receivable Files are kept at the locations
listed in Schedule B.
(cc) COMPUTER RECORDS. As of the Closing Date, the accounting and
computer records relating to the Receivables of the Seller have been marked to
indicate the Depositor's ownership interest therein.
SECTION 3.1. B. Representations and Warranties of Depositor. The
Depositor makes the following representations and warranties as to the
Receivables on which the Issuer is deemed to have relied in acquiring the
Receivables. Such representations and warranties speak as of the execution and
delivery of the Agreement, but shall survive the sale, transfer and assignment
of the Receivables to the Issuer and the pledge thereof to the Trustee pursuant
to the Indenture.
(a) TITLE. It is the intention of the Depositor that the transfer and
assignment herein contemplated constitute a sale of the Receivables from the
Depositor to the Issuer and that the beneficial interest in and title to such
Receivables not be part of the debtor's estate in the event of the filing of a
petition for receivership by or against the Depositor. No Receivable has been
sold, transferred, assigned or pledged by the Depositor to any Person other than
the Issuer. Immediately prior to the transfer and assignment herein
contemplated, the Depositor had good and marketable title to each Receivable,
free and clear of all Liens and, immediately upon the transfer thereof, the
Issuer shall have good and marketable title to each such Receivable, free and
clear of all Liens; and the transfer of the Receivables to the Issuer has been
perfected under the UCC.
(b) ALL FILINGS MADE. All filings (including UCC filings) necessary in
any jurisdictions to give the Issuer a first priority perfected ownership
interest in the Receivables, and to give the Trustee a first priority perfected
security interest therein, shall have been presented to the Trustee for filing
in the appropriate filing offices. Upon such filing by the Servicer, the Trustee
will have a first priority perfected security interest in the Trust Property.
(c) LAWFUL ASSIGNMENT. No Receivable has been originated in, or as of
the Closing Date is subject to the laws of, any jurisdiction under which the
sale, transfer and assignment of such Receivable or this Agreement or the pledge
of such Receivable to the Trustee under the Indenture (i) is unlawful, void,
voidable or unenforceable in accordance with its terms or (ii) would render such
Receivable void, voidable or unenforceable in accordance with its terms. The
Depositor has not entered into any agreement with any account debtor that
prohibits, restricts or conditions the assignment of all or any portion of the
Receivable.
(d) COMPUTER RECORDS. As of the Closing Date, the accounting and
computer records relating to the Receivables of the Depositor have been marked
to show the absolute ownership by the Owner Trustee on behalf of the Trust of
the Receivables.
SECTION 3.2. REPURCHASE UPON BREACH. The Seller, the Depositor, the
Servicer or the Owner Trustee, as the case may be, shall inform the other
parties to this Agreement and the Trustee promptly, in writing, upon its
discovery of any breach of the Sellers's or the Depositor's representations and
warranties made pursuant to Section 3.1. Unless any such breach shall have been
cured by the last day of the first Collection Period following the discovery
thereof by the Owner Trustee or receipt by the Owner Trustee of written notice
from the Seller, the Depositor or the Servicer of such breach, the Seller shall
be obligated to repurchase any Receivable in which the interests of the
Noteholders or Certificateholders are materially and adversely affected by any
such breach as of the last day of such Collection Period. In consideration of
and simultaneously with the repurchase of the Receivable, the Seller shall remit
to the Collection Account the Purchase Amount in the manner specified in Section
5.4 and the Issuer shall execute such assignments and other documents reasonably
requested by the Seller in order to effect such repurchase. The sole remedy of
the Issuer, the Owner Trustee, the Trustee, the Noteholders or the
Certificateholders with respect to a breach of representations and warranties
pursuant to Section 3.1 and the agreement contained in this Section shall be to
require the Seller to repurchase Receivables pursuant to this Section, subject
to the conditions contained herein. Neither the Owner Trustee nor the Trustee
shall have a duty to conduct any affirmative investigation as to the occurrence
of any conditions requiring the repurchase of any Receivable pursuant to this
Section.
SECTION 3.3. CUSTODY OF RECEIVABLE FILES. To assure uniform quality in
servicing the Receivables and to reduce administrative costs, the Issuer and the
Trustee hereby revocably appoints the Servicer, and the Servicer hereby accepts
such appointment, to act as the agent of the Issuer and the Trustee as custodian
of the following documents or instruments which are hereby constructively
delivered to the Trustee, as pledgee of the Issuer with respect to each
Receivable:
(a) the original of the Receivable;
(b) a record of the information supplied by the Obligor in the
original credit application;
(c) the original certificate of title or such documents that the
Servicer shall keep on file, in accordance with its customary procedures,
evidencing the security interest of the Depositor in the Financed Vehicle (it
being understood that the original certificates of title generally are not
delivered to the Servicer for 90 days but that promptly upon delivery they shall
be delivered to the Servicer as custodian hereunder); and
(d) any and all other documents that the Servicer shall keep on file,
in accordance with its customary procedures, relating to a Receivable, an
Obligor or a Financed Vehicle.
SECTION 3.4. DUTIES OF SERVICER AS CUSTODIAN. (a) SAFEKEEPING. The
Servicer shall hold the Receivable Files on behalf of the Issuer and the Trustee
and maintain such accurate and complete accounts, records and computer systems
pertaining to each Receivable File as shall enable the Issuer to comply with
this Agreement. In performing its duties as custodian the Servicer shall act
with reasonable care, using that degree of skill and attention that the Servicer
exercises with respect to the receivable files relating to all comparable
automotive receivables that the Servicer services for itself or others. The
Servicer shall conduct, or cause to be conducted, periodic audits of the
Receivable Files held by it under this Agreement and of the related accounts,
records and computer systems, in such a manner as shall enable the Issuer or the
Trustee to verify the accuracy of the Servicer's record keeping. The Servicer
shall promptly report to the Issuer and the Trustee any failure on its part to
hold the Receivable Files and maintain its accounts, records and computer
systems as herein provided and promptly take appropriate action to remedy any
such failure.
(b) MAINTENANCE OF AND ACCESS TO RECORDS. The Servicer shall maintain
each Receivable File at one of its offices specified in Schedule B to this
Agreement or at such other office as shall be specified to the Issuer and the
Trustee by written notice not later than 90 days after any change in location.
Upon reasonable prior notice, the Servicer shall make available to the Issuer
and the Trustee or their respective duly authorized representatives, attorneys
or auditors a list of locations of the Receivable Files and records and computer
systems maintained by the Servicer at such times during normal business hours as
the Issuer or the Trustee shall instruct.
(c) RELEASE OF DOCUMENTS. Upon written instruction from the Trustee,
the Servicer shall release any Receivable File to the Trustee, the Trustee's
agent, or the Trustee's designee, as the case may be, at such place or places as
the Trustee may designate, as soon as practicable and upon the release and
delivery of any such document in accordance with the instructions of the
Trustee, the Servicer shall be released from any further liability and
responsibilities under this Section 3.4 with respect to such documents unless
and until such time as such document may be returned to the Servicer.
SECTION 3.5. INSTRUCTIONS; AUTHORITY TO ACT. The Servicer shall be
deemed to have received proper instructions with respect to the Receivable Files
upon its receipt of written instructions signed by a Trust Officer of the
Trustee.
SECTION 3.6. CUSTODIAN'S INDEMNIFICATION. The Servicer as custodian
shall indemnify and hold harmless the Trust, the Owner Trustee and the Trustee
and each of their officers, directors, employees and agents for any and all
liabilities, obligations, losses, compensatory damages, payments, costs or
expenses (including reasonable attorneys' fees and expenses) that may be imposed
on, incurred by or asserted against the Trust, the Owner Trustee or the Trustee
or any of their officers, directors, employees and agents as the result of any
improper act or omission in any way relating to the maintenance and custody by
the Servicer as custodian of the Receivable Files where the final determination
that any such improper act or omission by the Servicer resulted in such
liability, obligation, loss, damage, payment, cost or expense is established by
a court of law, by an arbitrator or by way of settlement agreed to by the
Servicer; PROVIDED, HOWEVER, that the Servicer shall not be liable to the Trust
or the Owner Trustee for any portion of any such amount resulting from the
willful misfeasance, bad faith or negligence of the Owner Trustee and the
Servicer shall not be liable to the Trustee for any portion of any such amount
resulting from the willful misfeasance, bad faith or negligence of the Trustee.
This provision shall not be considered to limit the Servicer's or any other
party's rights, obligations, liabilities, claims or defenses which arise as a
matter of law or pursuant to any other provision of this Agreement.
SECTION 3.7. EFFECTIVE PERIOD AND TERMINATION. The Servicer's
appointment as custodian shall become effective as of the Cutoff Date and shall
continue in full force and effect until terminated pursuant to this Section. If
the Bank shall resign as Servicer in accordance with the provisions of this
Agreement or if all of the rights and obligations of any Servicer shall have
been terminated under Section 8.1, the appointment of such Servicer as custodian
shall be terminated by the Trustee or by the Holders of Notes evidencing not
less than 25% of the Outstanding Amount of the Notes or, with the consent of
Holders of the Notes evidencing not less than 25% of the Outstanding Amount of
the Notes, by the Owner Trustee or by Certificateholders evidencing not less
than 25% of the Certificate Balance, in the same manner as the Trustee or such
Holders may terminate the rights and obligations of the Servicer under Section
8.1. The Trustee or, with the consent of the Trustee, the Owner Trustee, may
terminate the Servicer's appointment as custodian, with cause, at any time upon
written notification to the Servicer, and without cause upon 30 days' prior
written notification to the Servicer and the Rating Agencies. As soon as
practicable after any termination of such appointment, the Servicer shall
deliver the Receivable Files to the Trustee or the Trustee's agent at such place
or places as the Trustee may reasonably designate in writing. If the Servicer
shall be terminated as custodian hereunder for any reason but shall continue to
serve as Servicer, the Trustee shall, or shall cause its agent to, make the
Receivable Files available to the Servicer during normal business hours upon
reasonable notice so as to permit the Servicer to perform its obligations as
Servicer hereunder.
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.1. DUTIES OF SERVICER. The Servicer, as agent for the Issuer
(to the extent provided herein), shall manage, service, administer and make
collections on the Receivables (other than Purchased Receivables) with
reasonable care, using that degree of skill and attention that the Servicer
exercises with respect to all comparable automotive receivables that it services
for itself or others. The Servicer's duties shall include collection and posting
of all payments, responding to inquiries of Obligors on such Receivables,
investigating delinquencies, sending payment coupons or periodic statements or
invoices to Obligors, reporting any tax information to Obligors, accounting for
collections and furnishing monthly and annual statements to the Owner Trustee
and the Trustee with respect to distributions and making Advances pursuant to
Section 5.7. Subject to the provisions of Section 4.2, the Servicer shall follow
its customary standards, policies and procedures in performing its duties as
Servicer. Without limiting the generality of the foregoing, the Servicer is
authorized and empowered to execute and deliver, on behalf of itself, the
Issuer, the Owner Trustee, the Trustee, the Certificateholders and the
Noteholders or any of them, any and all instruments of satisfaction or
cancellation, or partial or full release or discharge, and all other comparable
instruments, with respect to such Receivables or to the Financed Vehicles
securing such Receivables. If the Servicer shall commence a legal proceeding to
enforce a Receivable, the Issuer (in the case of a Receivable other than a
Purchased Receivable) shall thereupon be deemed to have automatically assigned,
solely for the purpose of collection, such Receivable to the Servicer. If in any
enforcement suit or legal proceeding it shall be held that the Servicer may not
enforce a Receivable on the ground that it shall not be a real party in interest
or a holder entitled to enforce such Receivable the Owner Trustee shall, at the
Servicer's expense and direction, take steps to enforce such Receivable,
including bringing suit in its name or the name of the Owner Trustee, the
Trustee, the Certificateholders or the Noteholders. The Owner Trustee shall upon
the written request of the Servicer furnish the Servicer with any powers of
attorney and other documents reasonably necessary or appropriate (as certified
to the Owner Trustee by the Servicer) to enable the Servicer to carry out its
servicing and administrative duties hereunder.
SECTION 4.2. COLLECTION AND ALLOCATION OF RECEIVABLE PAYMENTS. (a) The
Servicer shall make reasonable efforts to collect all payments called for under
the terms and provisions of the Receivables as and when the same shall become
due and shall follow such collection procedures as it follows with respect to
all comparable automotive receivables that it services for itself or others. The
Servicer shall allocate collections between principal and interest in accordance
with the customary servicing procedures it follows with respect to all
comparable automotive receivables that it services for itself or others.
(b) The Servicer may not grant extensions or modify the original due
dates of a Receivable; PROVIDED, HOWEVER, that the Servicer may (i) grant one
extension with respect to a Receivable of one month in any rolling twelve month
period and may change the original due date once during the term of a Receivable
to a new due date within 20 days of the original scheduled due date of such
Receivable and (ii) grant extensions or modify the original due dates of a
Receivable with respect to a Receivable for which a court of appropriate
jurisdiction in a bankruptcy or insolvency proceeding shall have issued an order
reducing the amount owed on such Receivable or otherwise modifying or
restructuring the scheduled payments or other terms on such Receivable;
provided, however, that the Servicer may not extend the date for final payment
by the Obligor of any Receivable beyond the last day of the Collection Period
preceding the Certificate Final Scheduled Distribution Date. The Servicer may in
its discretion waive any late payment charge or any other fees that may be
collected in the ordinary course of servicing a Receivable. The Servicer shall
not voluntarily agree to any reduction of (i) the original interest rate, (ii)
the amount of any Scheduled Payment on an Actuarial Receivable or the original
regular scheduled payment on a Simple Interest Receivable, or (iii) the
Principal Balance of any Receivable.
SECTION 4.3. REALIZATION UPON RECEIVABLES. On behalf of the Issuer,
the Servicer shall use all reasonable efforts, consistent with its customary
servicing procedures, to repossess or otherwise convert the ownership of the
Financed Vehicle securing any Receivable as to which the Servicer shall have
determined eventual payment in full is unlikely. From time to time, as
appropriate for servicing or foreclosing upon any Receivable, the Owner Trustee
shall, upon written request of the Servicer, execute such documents as shall be
necessary to prosecute any such proceedings. The Servicer shall follow such
customary and usual practices and procedures as it shall deem necessary or
advisable in its servicing of automotive receivables, which may include
reasonable efforts to realize proceeds from Receivables repurchased by a Dealer,
pursuant to a Dealer Agreement, as a result of a breach of representation or
warranty in the related Dealer Agreement or a default by an Obligor resulting in
the repossession of the Financed Vehicle under such Dealer Agreement. The
foregoing shall be subject to the provision that, in any case in which the
Financed Vehicle shall have suffered damage, the Servicer shall not expend funds
in connection with the repair or the repossession of such Financed Vehicle
unless it shall determine in its reasonable discretion that such repair and/or
repossession will increase the Liquidation Proceeds by an amount greater than
the amount of such expenses.
SECTION 4.4. PHYSICAL DAMAGE INSURANCE; OTHER INSURANCE. (a) The
Servicer shall, in accordance with its customary servicing procedures, verify
(i) that each Obligor shall have obtained insurance covering the Financed
Vehicle, as of the date of the execution of the Receivable, insuring against
loss and damage due to fire, theft, collision and other risks generally covered
by comprehensive and collision coverage and that each Receivable requires the
Obligor to maintain such physical loss and damage insurance naming the Seller
and its successors and assigns as a loss payee, (ii) that each Receivable that
finances the cost of premiums for credit life and credit accident and health
insurance is covered by an insurance policy or certificate naming the Seller as
policyholder (creditor) and (iii) as to each Receivable that finances the cost
of an extended service contract, the respective Financed Vehicle which secures
the Receivable is covered by an extended service contract.
(b) To the extent applicable, the Servicer shall not take any action
which would result in noncoverage under any of the insurance policies referred
to in Section 4.4(a) which, but for the actions of the Servicer, would have been
covered thereunder. The Servicer, on behalf of the Trustee shall take such
reasonable action as shall be necessary to permit recovery under any of the
foregoing insurance policies. Any amounts collected by the Servicer under any of
the foregoing insurance policies, shall be deposited in the Collection Account
pursuant to Section 5.2. The parties hereto acknowledge that the Servicer shall
not be required to force place any insurance coverage referred to in Section
4.4(a)(i) above, or any other insurance coverage.
SECTION 4.5. MAINTENANCE OF SECURITY INTERESTS IN FINANCED VEHICLES.
The Servicer shall, in accordance with its customary servicing procedures, take
such steps as are necessary to maintain perfection of (i) the security interest
created by each Receivable in the related Financed Vehicle and (ii) the interest
of the Trust in the Receivables created by this Agreement, including but not
limited to obtaining the execution by the Obligors and the recording,
registering, filing, re-recording, re-registering and refiling of all security
agreements, financing statements and continuation statements or instruments as
are necessary to maintain the security interest granted by Obligors under the
respective Receivables, each of the Seller and the Depositor hereunder and the
Issuer under the Indenture. The Servicer is hereby authorized to take such steps
as are necessary to re-perfect such security interest on behalf of the Issuer
and the Trustee in the event of the relocation of a Financed Vehicle or for any
other reason.
SECTION 4.6. COVENANTS OF SERVICER. The Servicer shall not release the
Financed Vehicle securing any Receivable from the security interest granted by
such Receivable in whole or in part except in the event of payment in full by
the Obligor thereunder or repossession or except as may be required by an
insurer in order to receive proceeds from insurance covering such Financed
Vehicle, nor shall the Servicer impair the rights of the Issuer, the Trustee,
the Certificateholders or the Noteholders in such Receivables (it being
understood that no action of the Servicer taken in compliance with the terms of
this Agreement shall be deemed to impair such rights), nor shall the Servicer
increase the number of scheduled payments due under a Receivable.
Notwithstanding the foregoing, the Servicer may, as described in Section 4.2(b),
grant extensions or modify the original due dates of a Receivable or make such
other changes with respect to a Receivable for which a court of appropriate
jurisdiction in a bankruptcy or insolvency proceeding shall have issued an order
reducing the amount owed on such Receivable or otherwise modifying or
restructuring the scheduled payments on such Receivable; provided, however, that
the Servicer may not extend the date for final payment by the Obligor of any
Receivable beyond the last day of the Collection Period preceding the
Certificate Final Scheduled Distribution Date.
SECTION 4.7. PURCHASE OF RECEIVABLES UPON BREACH. The Servicer or the
Owner Trustee shall inform the other party and the Trustee and the Depositor
promptly, in writing, upon the discovery of any breach pursuant to Section
4.2(b), 4.5 or 4.6. Unless the breach shall have been cured by the last day of
the second Collection Period following such discovery thereof by the Owner
Trustee or the receipt by the Owner Trustee of notice of such breach, the
Servicer shall be obligated to purchase any Receivable in which the interests of
the Noteholders or the Certificateholders are materially and adversely affected
by such breach as of the last day of such second Collection Period (or, at the
Servicer's option, the last day of the first Collection Period following the
discovery). In consideration of the purchase of any such Receivable pursuant to
the preceding sentence, the Servicer shall remit the Purchase Amount in the
manner specified in Section 5.4. The sole remedy of the Issuer, the Owner
Trustee, the Trustee, the Certificateholders or the Noteholders with respect to
a breach of Section 4.2(b), 4.5 or 4.6 shall be to require the Servicer to
purchase Receivables pursuant to this Section. Neither the Trustee nor the Owner
Trustee shall have any duty to conduct any affirmative investigation as to the
occurrence of any condition requiring the purchase of any Receivable pursuant to
this Section.
SECTION 4.8. SERVICING FEE. The servicing fee for (a) the
___Distribution Date shall equal $___ and (b) for each Distribution Date
thereafter shall equal the product of (i) one-twelfth, (ii) the Servicing Fee
Rate and (iii) the Pool Balance as of the first day of the related Collection
Period (the "Servicing Fee"). In addition, the "Servicing Fee" described in (a)
and (b) above shall include late fees, prepayment charges and other similar
charges allowed by applicable law with respect to Receivables collected (from
whatever source) on the Receivables.
SECTION 4.9. SERVICER'S CERTIFICATE. Not later than 11:00 a.m. (New
York time) on each Determination Date, the Servicer shall deliver to the Owner
Trustee, the Trustee and the Depositor, with a copy to the Rating Agencies, a
Servicer's Certificate containing all information necessary to make the
distributions pursuant to Sections 5.5 and 5.6 (including, if required,
withdrawals from or deposits to the Payahead Account and Advances by the
Servicer pursuant to Section 5.7) for the Collection Period preceding the date
of such Servicer's Certificate. Receivables to be purchased by the Servicer or
to be repurchased by the Seller shall be identified by the Servicer by account
number with respect to such Receivable (as specified in Schedule A).
SECTION 4.10. ANNUAL STATEMENT AS TO COMPLIANCE; NOTICE OF DEFAULT.
(a) The Servicer shall deliver to the Owner Trustee and the Trustee, on or
before October 31 of each year beginning October 31, 199_, an Officers'
Certificate, dated as of June 30 of the preceding year, stating that (i) a
review of the activities of the Servicer during the preceding 12-month period
(or, in the case of the first such report, during the period from the Closing
Date to June 30, 199_) and of its performance under this Agreement has been made
under such officers' supervision and (ii) to the best of such officers'
knowledge, based on such review, the Servicer has fulfilled all its obligations
under this Agreement throughout such year (or, in the case of the first such
certificate, such longer period) or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officers and the nature and status thereof. The Trustee shall send a copy of
such certificate and the report referred to in Section 4.11 to the Rating
Agencies. A copy of such certificate and the report referred to in Section 4.11
may be obtained by any Certificateholder by a request in writing to the Owner
Trustee addressed to the Corporate Trust Office (as defined in the Trust
Agreement) or by any Noteholder by a request in writing to the Trustee addressed
to the Corporate Trust Office. Upon the telephone request of the Owner Trustee,
the Trustee will promptly furnish the Owner Trustee a list of Noteholders as of
the date specified by the Owner Trustee.
(b) The Servicer shall deliver to the Owner Trustee, the Trustee and
the Rating Agencies, promptly after having obtained knowledge thereof, but in no
event later than five (5) Business Days thereafter, written notice in an
Officers' Certificate of any event which with the giving of notice or lapse of
time, or both, would become a Servicer Default under Section 8.1(a) or (b).
SECTION 4.11. ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' REPORT.
The Servicer shall cause a firm of independent certified public accountants,
which may also render other services to the Servicer or the Depositor, to
deliver to the Depositor, the Owner Trustee and the Trustee on or before October
31 of each year as of June 30 of the preceding fiscal year, beginning October
31, 199_, (1) a report addressed to the Board of Directors of the Servicer, to
the effect that such firm has examined the financial statements of the Servicer
and issued its report and that such examination was made in accordance with
generally accepted auditing standards (except as otherwise noted therein), and
accordingly included such tests of the accounting records and such other
auditing procedures as such firm considered necessary in the circumstances; and
(2) a report on description of lease and loan servicing operations and tests of
operating effectiveness in form and substance as is currently prepared on an
annual basis with respect to Servicer. The Servicer shall also concurrently
cause the accountants to deliver a report addressed to the Servicer, the Trustee
and the Owner Trustee to the effect that (1) a review in accordance with agreed
upon procedures was made of three randomly selected Servicer Certificates; (2)
except as disclosed in the report, no exceptions or errors in the Servicer
Certificates were found; and (3) the delinquencies and loss information,
relating to the Receivables contained in the Servicer Certificates were found to
be accurate.
Such report will also indicate that the firm is independent of the
Servicer within the meaning of the Code of Professional Ethics of the American
Institute of Certified Public Accountants.
SECTION 4.12. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING RECEIVABLES. The Servicer shall provide to the Certificateholders and
Noteholders access to the Receivable Files in such cases where the
Certificateholders or the Noteholders shall be required by applicable statutes
or regulations to review such documentation as demonstrated by evidence
satisfactory to the Servicer in its reasonable judgment. Access shall be
afforded without charge, but only upon reasonable request (not less than
seventy-two hours) and during the normal business hours at the respective
offices of the Servicer. Nothing in this Section shall affect the obligation of
the Servicer to observe any applicable law prohibiting disclosure of information
regarding the Obligors and the failure of the Servicer to provide access to
information as a result of such obligation shall not constitute a breach of this
Section.
SECTION 4.13. SERVICER EXPENSES. The Servicer shall be required to pay
all expenses incurred by it in connection with its activities hereunder,
including fees and disbursements of independent accountants, taxes imposed on
the Servicer and expenses incurred in connection with distributions and reports
to Certificateholders and Noteholders.
SECTION 4.14. APPOINTMENT OF SUBSERVICER. The Servicer may at any time
appoint a subservicer to perform all or any portion of its obligations as
Servicer hereunder; PROVIDED, HOWEVER, that the Rating Agency Condition shall
have been satisfied in connection therewith; PROVIDED FURTHER that the Servicer
shall remain obligated and be liable to the Issuer, the Owner Trustee, the
Trustee, the Certificateholders and the Noteholders for the servicing and
administering of the Receivables in accordance with the provisions hereof
without diminution of such obligation and liability by virtue of the appointment
of such subservicer and to the same extent and under the same terms and
conditions as if the Servicer alone were servicing and administering the
Receivables. The fees and expenses of the subservicer shall be as agreed between
the Servicer and its subservicer from time to time and none of the Issuer, the
Owner Trustee, the Trustee, the Certificateholders or the Noteholders shall have
any responsibility therefor.
ARTICLE V
DISTRIBUTIONS; RESERVE ACCOUNT; STATEMENTS TO CERTIFICATEHOLDERS
AND NOTEHOLDERS
SECTION 5.1. ESTABLISHMENT OF TRUST ACCOUNTS. (a)(i) The Servicer, for
the benefit of the Noteholders and the Certificateholders, shall establish and
maintain in the name of the Trustee an Eligible Deposit Account (the "Collection
Account"), bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Noteholders and the Certificateholders.
The Collection Account shall be established and maintained with the Trustee.
(ii) The Servicer, for the benefit of the Noteholders, shall
establish and maintain in the name of the Trustee an Eligible Deposit
Account (the "Note Distribution Account"), bearing a designation
clearly indicating that the funds deposited therein are held for the
benefit of the Noteholders. The Note Distribution Account shall be
established and maintained with the Trustee.
(iii) The Servicer, for the benefit of the Noteholders and the
Certificateholders, shall establish and maintain in the name of the
Trustee an Eligible Deposit Account (the "Reserve Account"), bearing a
designation clearly indicating that the funds deposited therein are
held for the benefit of the Noteholders and the Certificateholders.
The Reserve Account shall be maintained with the Trustee as long as
the Trustee is an Eligible Institution.
(b) Funds on deposit in the Collection Account, the Note Distribution
Account, the Payahead Account and the Reserve Account (collectively, the "Trust
Accounts") and the Certificate Distribution Account shall be invested by the
Trustee with respect to Trust Accounts and by the Owner Trustee with respect to
the Certificate Distribution Account (or any custodian with respect to funds on
deposit in any such account) in Eligible Investments selected in writing by the
Servicer (pursuant to standing instructions delivered to a Trust Officer of the
Trustee and a Trust Officer of the Owner Trustee or other written notice so
delivered); PROVIDED, HOWEVER, it is understood and agreed that neither the
Trustee nor the Owner Trustee shall be liable for any loss arising from such
investment in Eligible Investments. All such Eligible Investments shall be held
by or on behalf of the Trustee or the Owner Trustee, as applicable, for the
benefit of the Noteholders or the Certificateholders, as applicable; on each
Distribution Date all interest and other investment income (net of losses and
investment expenses) on funds on deposit therein shall be deposited into the
Collection Account and shall be deemed to constitute a portion of the Interest
Distribution Amount. Other than as permitted by the Rating Agencies, funds on
deposit in the Collection Account, the Note Distribution Account, the
Certificate Distribution Account, the Payahead Account and the Reserve Account
shall be invested in Eligible Investments that will mature so that such funds
will be available at the close of business on the Transfer Date preceding the
following Distribution Date. Funds deposited in a Trust Account or the
Certificate Distribution Account on a Transfer Date which immediately precedes a
Distribution Date upon the maturity of any Eligible Investments are not required
to be invested overnight.
(c) (i) The Trustee shall possess all right, title and interest
in all funds on deposit from time to time in the Trust Accounts and in
all proceeds thereof (including all income thereon) and all such
funds, investments, proceeds and income shall be part of the Owner
Trust Estate. Except as otherwise provided herein, the Trust Accounts
shall be under the sole dominion and control of the Trustee for the
benefit of the Noteholders and the Certificateholders, or the
Noteholders, as the case may be. If, at any time, any of the Trust
Accounts or the Certificate Distribution Account ceases to be an
Eligible Deposit Account, the Trustee (or the Servicer on its behalf)
or the Owner Trustee, as applicable, shall within 10 Business Days (or
such longer period as to which each Rating Agency may consent)
establish a new Trust Account or new Certificate Distribution Account,
as applicable, as an Eligible Deposit Account and shall transfer any
cash and/or any investments to such new Trust Account or a new
Certificate Distribution Account, as applicable. In connection with
the foregoing, the Servicer agrees that, in the event that (A) any of
the Trust Accounts (other than the Certificate Distribution Account)
are not accounts with the Trustee or (B) the Certificate Distribution
Account is not an account with the Owner Trustee, the Servicer shall
notify the Trustee or the Owner Trustee, as applicable, in writing
promptly upon any of such Trust Accounts ceasing to be an Eligible
Deposit Account.
(ii) With respect to the Trust Account Property, the Trustee, and
with respect to the Certificate Distribution Account, the Owner
Trustee, agrees, by its respective acceptance hereof, that:
(A) any Trust Account Property or any property in the
Certificate Distribution Account that is held in deposit accounts
shall be held solely in Eligible Deposit Accounts subject to the
penultimate sentence of Section 5.1(c)(i); and, except as
otherwise provided herein, each such Eligible Deposit Account
shall be subject to the exclusive custody and control of the
Trustee with respect to the Trust Accounts and the Owner Trustee
with respect to the Certificate Distribution Account, and the
Trustee or the Owner Trustee, as applicable, shall have sole
signature authority with respect thereto;
(B) any Trust Account Property shall be Delivered to the
Trustee in accordance with the definition of "Delivery" and shall
be held, pending maturity or disposition, solely by the Trustee
or such other Person acting solely for the Trustee as required
for Delivery; and
(C) In the event that the Trustee, in its capacity as
securities intermediary has or subsequently obtains by agreement,
operation of law or otherwise a security interest in the Trust
Accounts or any security entitlement credited thereto, the
Trustee, in its capacity as securities intermediary hereby agrees
that such security interest shall be subordinate to the security
interest of the Trustee. The financial assets and other items
deposited to the Trust Accounts will not be subject to deduction,
set-off, banker's lien, or any other right in favor of any person
(except that the Trustee, in its capacity as securities
intermediary may set off the face amount of any checks which have
been credited to the Trust Accounts but are subsequently returned
unpaid because of uncollected or insufficient funds).
(iii) The Servicer shall have the power, revocable by the Trustee
or by the Owner Trustee with the consent of the Trustee, to instruct
the Trustee to make withdrawals and payments from the Trust Accounts
for the purpose of permitting the Servicer or the Owner Trustee to
carry out its respective duties hereunder or permitting the Trustee to
carry out its duties under the Indenture.
(d) (i) The Servicer shall establish and maintain with the
Trustee an Eligible Deposit Account (the "Payahead Account"). On the
Closing Date, the Depositor shall cause to be deposited $___in the
Payahead Account representing all collected funds received in
connection with the Actuarial Receivables prior to the Cutoff Date
that are due on or after the Cutoff Date, consisting of all or a
portion of the Scheduled Payments due on the Actuarial Receivables in
any Collection Period following the first Collection Period.
(ii) The Servicer shall on or prior to each Distribution Date
(and prior to deposits to the Note Distribution Account or the
Certificate Distribution Account) transfer from the Collection Account
to the Payahead Account all Payaheads as described in Section 5.3
received by the Servicer during the Collection Period. Notwithstanding
the foregoing and the first sentence of Section 5.2, for so long as
the Servicer is permitted to make monthly remittances to the
Collection Account pursuant to Section 5.2, Payaheads need not be
remitted to and deposited in the Payahead Account but instead may be
remitted to and held by the Servicer. So long as such condition is
met, the Servicer shall not be required to segregate or otherwise hold
separate any Payaheads remitted to the Servicer as aforesaid but shall
be required to remit Payaheads to the Collection Account in accordance
with Section 5.5(a).
SECTION 5.2. COLLECTIONS. On the Closing Date, the Depositor shall
cause to be deposited $___in the Collection Account representing all collected
funds received on the Receivables after the Cutoff Date and prior to the Closing
Date. The Servicer shall remit within two Business Days of receipt thereof to
the Collection Account all collected funds received from payments by or on
behalf of the Obligors with respect to the Receivables, and all Liquidation
Proceeds, both as collected during the Collection Period. Notwithstanding the
foregoing, for so long as (i) the Servicer is the Bank, (ii) no Servicer Default
shall have occurred and be continuing, (iii) if the Servicer does not have a
short term debt rating or deposit rating as applicable, of at least A-1 from
Standard & Poor's and P-1 from Moody's, a guaranty, letter of credit, surety
bond or other similar instrument is issued covering collections, any amounts
referred to in clause (e) of the definition of Available Principal and
Liquidation Proceeds held by the Bank, which is acceptable to the Rating
Agencies and issued by an entity, which has a short-term debt or deposit
rating, as applicable, of at least A-1 from Standard & Poor's and P-1 from
Moody's; and (iv) the Rating Agency Condition shall have been satisfied (and any
conditions or limitations imposed by the Rating Agencies in connection therewith
are complied with), the Servicer shall remit such collections to the Collection
Account on the related Transfer Date. For purposes of this Article V the phrase
"payments by or on behalf of Obligors" shall mean payments made with respect to
the Receivables by Persons other than the Servicer, the Seller or the Depositor.
The Rating Agency Condition with respect to this Section 5.4 and the Closing
Date shall be deemed to be satisfied upon the issuance to the Depositor of the
rating letters on the Closing Date.
SECTION 5.3. APPLICATION OF COLLECTIONS. (a) All collections for the
Collection Period shall be applied by the Servicer as follows:
With respect to each Actuarial Receivable (other than a Purchased
Receivable), payments by or on behalf of the Obligor shall be applied first to
reduce Outstanding Advances as described in Section 5.7(a). Next, any excess
shall be applied, in the case of Actuarial Receivables, to the Scheduled Payment
and, shall be applied in the case of Simple Interest Receivables, to interest
and principal in accordance with the Simple Interest Method. With respect to
Actuarial Receivables, any remaining excess shall be added to the Payahead
Balance, and shall be applied to prepay the Actuarial Receivable, but only if
the sum of such excess and the previous Payahead Balance shall be sufficient to
prepay the Actuarial Receivable in full. Otherwise, any such remaining excess
payments shall constitute a Payahead and shall increase the Payahead Balance.
(b) All Liquidation Proceeds shall be applied to the related
Receivable in accordance with the Servicer's customary servicing procedures.
SECTION 5.4. ADDITIONAL DEPOSITS. The Servicer shall deposit in the
Collection Account the aggregate Advances pursuant to Section 5.7. The Servicer
and the Seller shall deposit or cause to be deposited in the Collection Account
the aggregate Purchase Amount with respect to any Purchased Receivables and the
Servicer shall deposit therein any amounts to be paid under Section 9.1. The
Servicer will deposit or cause to be deposited the aggregate Purchase Amount
with respect to Purchased Receivables within two Business Days after such
obligations become due, unless the Servicer shall not be required to make
deposits within two Business Days of receipt pursuant to Section 5.2 (in which
case such deposit will be made by the related Transfer Date). All such other
deposits shall be made on the Transfer Date following the end of the related
Collection Period.
SECTION 5.5. DISTRIBUTIONS. (a) On each Distribution Date, the Trustee
shall cause to be transferred from the Payahead Account, or from the Servicer in
the event the provisions of Section 5.1(d)(ii) are applicable, (i) to the
Collection Account, in immediately available funds, the aggregate previous
Payaheads to be applied to Scheduled Payments on Actuarial Receivables for the
related Collection Period or prepayments for the related Collection Period,
pursuant to Sections 5.3 and 5.7, in the amounts set forth in the Servicer's
Certificate for such Distribution Date and (ii) to the Depositor, in immediately
available funds, the investment earnings, net of losses on the Payaheads for the
related Collection Period. A single, net transfer may be made.
(b) On each Determination Date, the Servicer shall calculate all
amounts required to determine the amounts to be deposited from the Reserve
Account into the Collection Account and from the Collection Account into the
Note Distribution Account and the Certificate Distribution Account.
(c) On or before each Distribution Date, the Servicer shall instruct
the Trustee (based on the information contained in the Servicer's Certificate
delivered on the related Determination Date pursuant to Section 4.9) to withdraw
from the Reserve Account and deposit in the Collection Account and the Trustee
shall so withdraw and deposit the Reserve Account Transfer Amount for such
Distribution Date.
(d) The Servicer shall instruct the Trustee (based on the information
contained in the Servicer's Certificate delivered on the related Determination
Date pursuant to Section 4.9) to make, and the Trustee shall make, a
distribution from the Collection Account to the Servicer by 11:00 a.m. (New York
time), amounts in respect of Outstanding Advances to the extent that the
Servicer is entitled to reimbursement in respect thereof in accordance with
Section 5.7. Subject to the last paragraph of this Section 5.5(d), no later than
each Distribution Date, the Servicer shall instruct the Trustee (based on the
information contained in the Servicer's Certificate delivered on the related
Determination Date pursuant to Section 4.9) to make, and the Trustee shall make,
the following deposits and distributions from the Collection Account for deposit
in the applicable Account by 10:00 a.m. (New York time), to the extent of the
Total Distribution Amount, in the following order of priority:
(i) to the Servicer, from the Total Distribution Amount, the
Total Servicing Fee;
(ii) to the Note Distribution Account, from the Total
Distribution Amount remaining after the application of clause (i), the
Noteholders' Interest Distributable Amount;
(iii) to the Owner Trustee for deposit in the Certificate
Distribution Account, from the Total Distribution Amount remaining
after the application of clause (i) and clause (ii), the
Certificateholders' Interest Distributable Amount;
(iv) to the Note Distribution Account, from the Total
Distribution Amount remaining after the application of clauses (i)
through (iii), the Noteholders' Principal Distributable Amount;
(v) to the Owner Trustee for deposit in the Certificate
Distribution Account, from the Total Distribution Amount remaining
after the application of clauses (i) through (iv), the
Certificateholders' Principal Distributable Amount; and
(vi) to the Trustee for deposit in the Reserve Account, from the
Total Distribution Amount, the amounts remaining after the application
of clauses (i) through (v) above PROVIDED, HOWEVER, that following the
occurrence of an Event of Default pursuant to Section 5.1(i), 5.1(ii),
5.1(iv) or 5.1(v) of the Indenture, an acceleration of the Notes
pursuant to Section 5.2 of the Indenture or an Insolvency Event with
respect to the holder of the GP Interest, amounts on deposit in the
Collection Account will be deposited in the Note Distribution Account
to the extent necessary to pay accrued and unpaid interest on the
Notes and then, to the extent funds are available therefore, principal
on the Notes until the principal balance of the Notes has been reduced
to zero, before any amounts are deposited in the Certificate
Distribution Account. Following the payment in full of the Notes,
amounts on deposit in the Collection Account will be deposited in the
Certificate Distribution Account to the extent necessary to pay
accrued and unpaid interest on the Certificates and then, to the
extent funds are available therefore, principal on the Certificates
until the principal balance thereof has been reduced to zero.
In the event that the Collection Account is maintained with an
institution other than the Trustee, the Servicer shall instruct and cause such
institution to make all deposits and distributions pursuant to this Section
5.5(d) on the related Transfer Date.
SECTION 5.6. RESERVE ACCOUNT (a) On the Closing Date, the Depositor
shall deposit the Reserve Account Initial Deposit into the Reserve Account. In
no circumstances will the Depositor be required to deposit from its own funds
any amounts in the Reserve Account other than the Reserve Account Initial
Deposit to be made on the Closing Date.
(b) If the amount on deposit in the Reserve Account on any
Distribution Date (after giving effect to any and all deposits and withdrawals
therefrom on such Distribution Date) is greater than the Specified Reserve
Account Balance for such Distribution Date, the Servicer shall instruct the
Trustee to distribute, and the Trustee shall distribute, the amount of the
excess to the Depositor. Amounts properly distributed to the Depositor pursuant
to Section 5.6(b) shall be deemed released from the Trust and the security
interest therein granted to the Trustee and the Depositor shall in no event
thereafter be required to refund any such distributed amounts.
SECTION 5.7. ADVANCE. (a) As of the close of business on the last day
of each Collection Period, if the payments by or on behalf of the Obligor on an
Actuarial Receivable (other than a Purchased Receivable) shall be less than the
Scheduled Payment, the Payahead Balance shall be applied by the Servicer to the
extent of the shortfall and such Payahead Balance shall be reduced accordingly.
Next, the Servicer shall advance any remaining shortfall (such amount an
"Advance"), to the extent that the Servicer, at its sole discretion, shall
determine that the Advance shall be recoverable from the Obligor, the Purchase
Amount, Liquidation Proceeds or proceeds of any other Actuarial Receivables.
With respect to each Actuarial Receivable, the Advance shall increase
Outstanding Advances. Outstanding Advances shall be reduced by subsequent
payments by or on behalf of the Obligor, collections of Liquidation Proceeds in
respect of the related Receivable or payments of the Purchase Amount of the
related Receivable.
If the Servicer shall determine that an Outstanding Advance with
respect to any Actuarial Receivable shall not be recoverable as aforesaid, the
Servicer shall be reimbursed from any collections (including Liquidation
Proceeds) on other Actuarial Receivables in the Trust and Outstanding Advances
with respect to such Actuarial Receivables shall be reduced accordingly.
(b) The Servicer shall not make any advance with respect to interest
on or principal of Simple Interest Receivables.
SECTION 5.8. STATEMENTS TO CERTIFICATEHOLDERS AND NOTEHOLDERS. On each
Determination Date, the Servicer shall provide to the Trustee (with a copy to
the Rating Agencies) for the Trustee to forward to each Noteholder of record, to
each Paying Agent, if any, and to the Owner Trustee for the Owner Trustee to
forward to each Certificateholder of record, a statement substantially in the
form of Exhibit A, setting forth at least the following information as to the
Notes and the Certificates to the extent applicable:
(i) the amount of such distribution allocable to principal of the
Notes and to the Certificate Balance of the Certificates;
(ii) the amount of such distribution allocable to interest on or
with respect to the Notes and to the Certificates;
(iii) the Pool Balance as of the close of business on the last
day of the preceding Collection Period, after giving effect to
payments allocated to principal reported under (i) above;
(iv) the aggregate outstanding principal balance of the Notes,
the Note Pool Factor for the Notes, the Certificate Balance and the
Certificate Pool Factor after giving effect to payments allocated to
principal reported under (i) above;
(v) the amount of the Total Servicing Fee paid to the Servicer
with respect to the related Collection Period;
(vi) the amount of the aggregate Realized Losses, net of
Recoveries, if any, for such Collection Period;
(vii) the Reserve Account Transfer Amount, if any, for such
Distribution Date, the average of the Charge-off Rates and the
Delinquency Percentages for the three preceding Collection Periods,
the Specified Reserve Account Balance for such Distribution Date, the
amount distributed to the Depositor from the Reserve Account on such
Distribution Date, and the balance of the Reserve Account (if any) on
such Distribution Date, after giving effect to changes therein on such
Distribution Date;
(viii) the Noteholders' Interest Carryover Shortfall, the
Certificateholders' Interest Carryover Shortfall, the Noteholders'
Principal Carryover Shortfall, and the Certificateholders' Principal
Carryover Shortfall;
(ix) the aggregate Purchase Amount paid by the Seller or the
Servicer with respect to the related Collection Period;
(x) the aggregate Payahead Balance;
(xi) the amounts collected by the Servicer;
(xii) the amounts received by the Trust from the Servicer; and
(xiii) delinquency information relating to the Receivables which
are 30, 60 and 90 days delinquent.
Each amount set forth pursuant to paragraph (i), (ii), (v) or (viii)
above shall be expressed as a dollar amount per $1,000 of the initial principal
balance of the Notes or the initial Certificate Balance, as applicable.
SECTION 5.9. NET DEPOSITS. As an administrative convenience, if the
Servicer is not required to remit collected funds within two Business Days of
receipt thereof, the Servicer will be permitted to make the deposit of such
funds, aggregate Advances and Purchase Amounts for or with respect to the
Collection Period net of distributions to be made to the Servicer with respect
to the Collection Period. Similarly, the Servicer may cause to be made a single,
net transfer, from the Collection Account to the Payahead Account, or vice
versa. The Servicer, however, will account to the Owner Trustee, the Trustee,
the Noteholders and the Certificateholders as if all deposits, distributions and
transfers were made individually.
ARTICLE VI
THE DEPOSITOR
SECTION 6.1 REPRESENTATIONS OF DEPOSITOR. The Depositor makes the
following representations on which the Issuer is deemed to have relied in
acquiring the Receivables. The representations speak as of the execution and
delivery of this Agreement and shall survive the sale of the Receivables to the
Issuer and the pledge thereof to the Trustee pursuant to the Indenture.
(a) ORGANIZATION AND GOOD STANDING. The Depositor is duly organized
and validly existing as a corporation in good standing under the laws of the
State of Delaware with the corporate power and authority to own its properties
and to conduct its business as such properties are currently owned and such
business is presently conducted, and had at all relevant times, and has, the
power, authority and legal right to acquire and own the Receivables.
(b) DUE QUALIFICATION. The Depositor is duly qualified to do business
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or lease of
property or the conduct of its business shall require such qualifications.
(c) POWER AND AUTHORITY OF THE DEPOSITOR. The Depositor has the
corporate power and authority to execute and deliver this Agreement and to
perform its obligations under each of the Basic Documents to which the Depositor
is a party; the Depositor has full corporate power and authority to sell and
assign the property to be sold and assigned to and deposited with the Issuer;
the Depositor has duly authorized such sale and assignment to the Issuer by all
necessary corporate action; and the execution, delivery and performance of each
of the Basic Documents to which the Depositor is a party has been duly
authorized by the Depositor by all necessary corporate action.
(d) BINDING OBLIGATION. This Agreement and each of the Basic Documents
to which the Depositor is a party constitute legal, valid and binding
obligations of the Depositor, enforceable in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, moratorium, fraudulent
conveyance, reorganization and similar laws now or hereafter in effect relating
to creditors' rights generally and subject to general principles of equity
(whether applied in a proceeding at law or in equity).
(e) NO VIOLATION. The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof do not result in any
breach of any of the terms and provisions of, nor constitute (with or without
notice or lapse of time or both) a default under, the certificate of
incorporation or by-laws of the Depositor, or any material indenture, agreement
or other instrument to which the Depositor is a party or by which it shall be
bound; nor result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement or other
instrument (other than pursuant to the Basic Documents); nor violate any law or,
to the best of its knowledge, any order, rule or regulation applicable to the
Depositor of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over the Depositor or its properties.
(f) NO PROCEEDINGS. There are no proceedings or investigations pending
against the Depositor or, to its best knowledge, threatened against the
Depositor, before any court, regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Depositor or its
properties: (i) asserting the invalidity of this Agreement or any of the Basic
Documents, the Notes or the Certificates, (ii) seeking to prevent the issuance
of the Notes or the Certificates or the consummation of any of the transactions
contemplated by this Agreement or any of the Basic Documents, (iii) seeking any
determination or ruling that could reasonably be expected to have a material and
adverse effect on the performance by the Depositor of its obligations under, or
the validity or enforceability of the Basic Documents, the Notes or the
Certificates or (iv) seeking to affect adversely the Federal or state income tax
or ERISA attributes of the Issuer, the Notes or the Certificates.
(g) ALL CONSENTS. All authorizations, licenses, consents, orders or
approvals of or registrations or declarations with any court, regulatory body,
administrative agency or other government instrumentality required to be
obtained, effected or given by the Depositor in connection with the execution
and delivery by the Depositor of this Agreement or any of the Basic Documents to
which it is a party and the performance by the Depositor of the transactions
contemplated by this Agreement or any of the Basic Documents to which it is a
party, have been duly obtained, effected or given and are in full force and
effect, except where failure to obtain the same would not have a material
adverse effect upon the rights of the Issuer, the Noteholders or the
Certificateholders.
SECTION 6.2 CORPORATE EXISTENCE. (a) During the term of this
Agreement, subject to Section 6.4, the Depositor will keep in full force and
effect its existence, rights and franchises as a corporation under the laws of
the jurisdiction of its incorporation and will obtain and preserve its
qualification to do business in each jurisdiction in which such qualification is
or shall be necessary to protect the validity and enforceability of this
Agreement, the Basic Documents and each other instrument or agreement necessary
or appropriate to the proper administration of this Agreement and the
transactions contemplated hereby.
(b) During the term of this Agreement, the Depositor shall observe the
applicable legal requirements for the recognition of the Depositor as a legal
entity separate and apart from its affiliates, including as follows:
(i) the Depositor shall maintain corporate records and books of
account separate from those of its affiliates;
(ii) except as otherwise provided in this Agreement, the
Depositor shall not commingle its assets and funds with those of its
affiliates;
(iii) the Depositor shall hold such appropriate meetings of its
Board of Directors as are necessary to authorize all the Depositor's
corporate actions required by law to be authorized by the Board of
Directors, shall keep minutes of such meetings and of meetings of its
stockholder(s) and observe all other customary corporate formalities
(and any successor Depositor not a corporation shall observe similar
procedures in accordance with its governing documents and applicable
law);
(iv) the Depositor shall at all times hold itself out to the
public under the Depositor's own name as a legal entity separate and
distinct from its affiliates; and
(v) all transactions and dealings between the Depositor and its
affiliates will be conducted on an arm's-length basis
SECTION 6.3. LIABILITY OF DEPOSITOR; INDEMNITIES. The Depositor shall
be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Depositor under this Agreement and the
representations made by the Depositor in this Agreement.
(a) The Depositor shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee and the Trustee and their respective officers,
directors, employees and agents from and against any taxes that may at any time
be asserted against any such Person with respect to the transactions
contemplated in this Agreement and any of the Basic Documents (except any income
taxes arising out of fees paid to the Owner Trustee or the Trustee and except
any taxes to which the Owner Trustee or the Trustee may otherwise be subject
to), including any sales, gross receipts, general corporation, tangible personal
property, privilege or license taxes (but, in the case of the Issuer, not
including any taxes asserted with respect to, and as of the date of, the sale of
the Receivables to the Issuer or the issuance and original sale of the
Certificates and the Notes, or asserted with respect to ownership of the
Receivables or Federal or other income taxes arising out of distributions on the
Certificates and the Notes) and reasonable costs and expenses in defending
against the same or in connection with any application relating to the Notes or
Certificates under any state securities laws.
(b) The Depositor shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Trustee, the Certificateholders and the
Noteholders and the officers, directors, employees and agents of the Issuer, the
Owner Trustee and the Trustee from and against any and all costs, expenses,
losses, claims, damages and liabilities to the extent arising out of, or imposed
upon such Person through (i) the Depositor's willful misfeasance, bad faith or
gross negligence in the performance of its duties under this Agreement, or by
reason of reckless disregard of its obligations and duties under this Agreement
and (ii) the Depositor's or the Issuer's violation of federal or state
securities laws in connection with the offering and sale of the Notes and the
Certificates or in connection with any application relating to the Notes or
Certificates under any state securities laws.
(c) The Depositor shall be liable as primary obligor for, and shall
indemnify, defend and hold harmless the Owner Trustee and its officers,
directors, employees and agents from and against any and all losses, claims,
damages and liabilities and reasonable costs and expenses arising out of, or
incurred in connection with, this Agreement or any of the Basic Documents, the
Owner Trust Estate, the acceptance or performance of the trusts and duties set
forth herein and in the Trust Agreement or the action or the inaction of the
Owner Trustee hereunder and under the Trust Agreement, except to the extent that
such cost, expense, loss, claim, damage or liability: (i) shall be due to the
failure of the Owner Trustee to perform in accordance with the Trust Agreement
or the willful misfeasance, bad faith or negligence of the Owner Trustee, or
(ii) shall arise from the breach by the Owner Trustee of any of its
representations or warranties set forth in Section 7.3 of the Trust Agreement.
Such liability and indemnification shall survive the termination of the Trust.
In the event of any claim, action or proceeding for which indemnity will be
sought pursuant to this paragraph, the Owner Trustee's choice of legal counsel
shall be subject to the approval of the Depositor, which approval shall not be
unreasonably withheld.
(d) The Depositor shall pay any and all taxes levied or assessed upon
all or any part of the Trust Estate (other than those taxes expressly excluded
from the Depositor's responsibilities pursuant to the parentheticals in
paragraph (a) above).
Indemnification under this Section shall survive the resignation or
removal of the Owner Trustee or the Trustee and the termination of this
Agreement or the Indenture or the Trust Agreement, as applicable, and shall
include reasonable fees and expenses of counsel and other reasonable expenses of
litigation. If the Depositor shall have made any indemnity payments pursuant to
this Section and the Person to or on behalf of whom such payments are made
thereafter shall collect any of such amounts from others, such Person shall
promptly repay such amounts to the Depositor, without interest.
SECTION 6.4. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, DEPOSITOR. Any Person (a) into which the Depositor may be merged
or consolidated, (b) which may result from any merger or consolidation to which
the Depositor shall be a party or (c) which may succeed to the properties and
assets of the Depositor substantially as a whole, shall be the successor to the
Depositor without the execution or filing of any document or any further act by
any of the parties to this Agreement; PROVIDED, HOWEVER, that the Depositor
hereby covenants that it will not consummate any of the foregoing transactions
except upon satisfaction of the following: (i) the surviving Depositor if other
than Mellon Auto Receivables Corporation executes an agreement of assumption to
perform every obligation of the Depositor under this Agreement, (ii) immediately
after giving effect to such transaction, no representation or warranty made
pursuant to Section 3.1 or 6.1 shall have been breached and no Event of Default,
and no event that, after notice or lapse of time, or both, would become an Event
of Default shall have happened and be continuing, (iii) the Depositor shall have
delivered to the Owner Trustee and the Trustee an Officers' Certificate and an
Opinion of Counsel each stating that such consolidation, merger or succession
and such agreement of assumption comply with this Section and that all
conditions precedent, if any, provided for in this Agreement relating to such
transaction have been complied with, and that the Rating Agency Condition shall
have been satisfied with respect to such transaction, (iv) the surviving
Depositor shall have a consolidated net worth at least equal to that of the
predecessor Depositor, (v) such transaction will not result in a material
adverse federal or state tax consequence to the Issuer, the Noteholders or the
Certificateholders and (vi) unless Mellon Auto Receivables Corporation, is the
surviving entity, the Depositor shall have delivered to the Owner Trustee and
the Trustee an Opinion of Counsel either (A) stating that, in the opinion of
such counsel, all financing statements and continuation statements and
amendments thereto have been executed and filed that are necessary fully to
preserve and protect the interest of the Owner Trustee and Trustee,
respectively, in the Receivables and reciting the details of such filings, or
(B) stating that, in the opinion of such counsel, no such action shall be
necessary to preserve and protect such interests.
SECTION 6.5. LIMITATION ON LIABILITY OF DEPOSITOR AND OTHERS. The
Depositor and any director or officer or employee or agent of the Depositor may
rely in good faith on the advice of counsel or on any document of any kind,
prima facie properly executed and submitted by any Person respecting any matters
arising under any Basic Document (provided that such reliance shall not limit in
any way the Depositor's obligations under Section 3.2). Except as provided in
this Agreement, the Depositor shall not be under any obligation to appear in,
prosecute or defend any legal action that shall not be incidental to its
obligations under this Agreement, and that in its opinion may involve it in any
expense or liability.
SECTION 6.6. DEPOSITOR MAY OWN CERTIFICATES OR Notes. The Depositor
and any Affiliate thereof may in its individual or any other capacity become the
owner or pledgee of Certificates or Notes with the same rights as it would have
if it were not the Depositor or an Affiliate thereof, except as expressly
provided herein or in any Basic Document.
SECTION 6.7 SECURITY INTEREST. During the term of this Agreement, the
Depositor will not take any action to assign the security interest in any
Financed Vehicles other than pursuant to the Basic Documents.
ARTICLE VII
THE SERVICER AND THE SELLER
SECTION 7.1. REPRESENTATIONS OF THE BANK. The Bank makes the following
representations on which each of the Depositor and the Issuer is deemed to have
relied in acquiring the Receivables. The representations speak as of the
execution and delivery of the Agreement and shall survive the sale of the
Receivables to the Issuer and the pledge thereof to the Trustee pursuant to the
Indenture.
(a) ORGANIZATION AND GOOD STANDING. The Bank is duly organized and
validly existing as a national banking association in good standing under the
laws of the United States of America with the power and authority to own its
properties and to conduct its business as such properties are currently owned
and such business is presently conducted, and had at all relevant times, and
has, the power, authority and legal right to acquire, own and service the
Receivables.
(b) DUE QUALIFICATION. The Bank is duly qualified to do business and
has obtained all necessary licenses and approvals in all jurisdictions in which
the ownership or lease of property or the conduct of its business (including the
servicing of the Receivables as required by this Agreement) shall require such
qualifications.
(c) POWER AND AUTHORITY OF THE BANK. The Bank has the power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder; the Bank has full power and authority to sell and assign the property
to be sold and assigned to and deposited with the Depositor; the Bank has duly
authorized such sale and assignment to the Depositor by all necessary action;
and the execution, delivery and performance of this Agreement have been duly
authorized by the Bank by all necessary action.
(d) BINDING OBLIGATION. This Agreement constitutes a legal, valid and
binding obligation of the Bank, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, moratorium, fraudulent conveyance,
reorganization and similar laws now or hereafter in effect relating to
creditors' rights generally, and the rights of creditors of national banking
associations and depository institutions, the accounts of which are insured by
the FDIC, and subject to general principles of equity (whether applied in a
proceeding of law or in equity).
(e) NO VIOLATION. The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof do not result in any
breach of any of the terms and provisions of, nor constitute (with or without
notice or lapse of time or both) a default under the articles of association or
by-laws of the Bank, or any material indenture, agreement or other instrument to
which the Bank is a party or by which it shall be bound; nor result in the
creation or imposition of any Lien upon any of its properties pursuant to the
terms of any such indenture, agreement or other instrument (other than pursuant
to the Basic Documents); nor violate any law or, to the best of its knowledge,
any order, rule or regulation applicable to the Bank of any court or of any
federal or state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Bank or its properties.
(f) NO PROCEEDINGS. There are no proceedings or investigations pending
against the Bank, or, to its best knowledge, threatened against the Bank, before
any court, regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Bank or its properties: (i)
asserting the invalidity of this Agreement or any of the Basic Documents, the
Notes or the Certificates, (ii) seeking to prevent the issuance of the Notes or
the Certificates or the consummation of any of the transactions contemplated by
this Agreement or any of the Basic Documents, (iii) seeking any determination or
ruling that could reasonably be expected to have a material and adverse effect
on the performance by the Bank of its obligations under, or the validity or
enforceability of this Agreement or any of the Basic Documents, the Notes or the
Certificates or (iv) seeking to affect adversely the federal or state income tax
or ERISA attributes of the Issuer, the Notes or the Certificates.
(g) NO AMENDMENT OR WAIVER. No provision of any Receivable has been
waived, altered or modified in any respect, except pursuant to a document,
instrument or writing included in the relevant Receivable File, and no such
amendment, waiver, alteration or modification causes such Receivable not to
conform to the other warranties contained in this Section or those of the Seller
contained in Section 3.1.
(h) APPROVALS. All approvals, licenses, authorizations, consents,
orders or other actions of any person, corporation or other organization, or of
any court, governmental agency or body or official, required in connection with
the execution and delivery of this Agreement have been or will be taken or
obtained on or prior to the Closing Date.
(i) LOCATION OF RECEIVABLE FILES. The Receivable Files are kept in the
offices of the Servicer, specified in Schedule B, or at such other office
specified in accordance with Section 3.4(b).
(j) ALL CONSENTS. All authorizations, consents, orders or approvals of
or registrations or declarations with any court, regulatory body, administrative
agency or other government instrumentality required to be obtained, effected or
given by the Bank in connection with the execution and delivery by the Bank of
this Agreement or any of the Basic Documents to which it is a party and the
performance by the Bank of the transactions contemplated by this Agreement or
any of the Basic Documents to which it is a party, have been duly obtained,
effected or given and are in full force and effect, except where failure to
obtain the same would not have a material adverse effect upon the rights of the
Issuer, the Noteholders or the Certificateholders.
SECTION 7.2. INDEMNITIES OF THE BANK. The Bank shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by the Bank, in its capacities as Seller or Servicer under this
Agreement.
The Bank shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee, the Trustee, the Depositor, the Certificateholders and the
Noteholders and any of the officers, directors, employees and agents of the
Issuer, the Owner Trustee, the Trustee or the Depositor from any and all losses,
claims, damages, liabilities and reasonable costs and expenses (including
reasonable attorneys' fees and expenses) to the extent arising out of, or
imposed upon any such Person through, the gross negligence, willful misfeasance
or bad faith of the Bank in the performance of its obligations and duties under
this Agreement or in the performance of the obligations and duties of any
subservicer under any subservicing agreement or by reason of the reckless
disregard of its obligations and duties under this Agreement or by reason of the
reckless disregard of the obligations of any subservicer under any subservicing
agreement, where the final determination that any such cost, expense, loss,
claim, damage or liability arose out of, or was imposed upon any such Person
through, any such gross negligence, willful misfeasance, bad faith or
recklessness on the part of the Bank or any subservicer, is established by a
court of law, by an arbitrator or by way of settlement agreed to by the Bank.
Notwithstanding the foregoing, if the Bank is rendered unable, in whole or in
part, by virtue of an act of God, act of war, fires, earthquake or other natural
disasters, to satisfy its obligations under this Agreement, the Bank shall not
be deemed to have breached any such obligation upon the sending of written
notice of such event to the other parties hereto, for so long as the Bank
remains unable to perform such obligation as a result of such event. This
provision shall not be construed to limit the Bank's or any other party's
rights, obligations, liabilities, claims or defenses which arise as a matter of
law or pursuant to any other provision of this Agreement.
The Bank shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee, the Trustee, the Depositor, the Certificateholders and the
Noteholders or any of the officers, directors, employees and agents of the
Issuer, the Owner Trustee, the Trustee or the Depositor from any and all losses,
claims, damages, liabilities and reasonable costs and expenses (including
reasonable attorneys' fees and expenses) to the extent arising out of or imposed
upon any such Person as a result of any compensation payable to any subcustodian
or subservicer (including any fees payable in connection with the release of any
Receivable File from the custody of such subservicer or in connection with the
termination of the servicing activities of such subservicer with respect to any
Receivable) whether pursuant to the terms of any subservicing agreement or
otherwise.
The Bank shall indemnify, defend and hold harmless the Trustee, the
Owner Trustee, the Trust, the Depositor, the Certificateholders and the
Noteholders from and against any taxes that may at any time be asserted against
the Trustee, the Trust, the Owner Trustee, the Certificateholders, the
Noteholders or the Depositor (other than any taxes based upon the income of any
such person), with respect to the transactions contemplated herein including,
without limitation, any sales, gross receipts, general corporation, tangible
personal property, privilege, or license taxes and costs and expenses in
defending against the same.
The Bank shall indemnify, defend, and hold harmless the Owner Trustee
and Trustee and each of their agents, officers, employees and other Persons
employed by each of them in connection with the Basic Documents from and against
all reasonable costs and expenses, losses, claims, damages, and liabilities
arising out of or incurred in connection with the acceptance or performance of
the trusts and duties herein contained or contained in the Basic Documents, if
any, except to the extent that such reasonable cost or expense, reasonable loss,
claim, damage or liability: (a) shall be due to the willful misfeasance, bad
faith, or negligence (except for errors in judgment) of the Owner Trustee or
Trustee; (b) relates to any tax other than the taxes with respect to which the
Servicer shall be required to indemnify the Owner Trustee or Trustee; or (c)
shall arise from the Owner Trustee's or Trustee's breach of any of its
representations or warranties set forth in the Trust Agreement or the Indenture,
as applicable.
Indemnification under this Section shall survive the resignation and
removal of the Trustee and the Owner Trustee or the termination of this
Agreement.
SECTION 7.3. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF THE BANK. Any Person (a) into which the Bank may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Bank shall be a party or (c) which may succeed to the properties and assets of
the Bank, substantially as a whole, shall be the successor to the Bank without
the execution or filing of any document or any further act by any of the parties
to this Agreement; PROVIDED, HOWEVER, that the Bank hereby covenants that it
will not consummate any of the foregoing transactions except upon satisfaction
of the following: (i) the surviving Servicer if other than the Bank, executes an
agreement of assumption to perform every obligation of the Servicer under this
Agreement, (ii) immediately after giving effect to such transaction, no
representation or warranty made pursuant to Section 7.1 shall have been breached
and no Servicer Default, and no event that, after notice or lapse of time, or
both, would become a Servicer Default shall have occurred and be continuing,
(iii) the Bank shall have delivered to the Owner Trustee and the Trustee an
Officers' Certificate and an Opinion of Counsel each stating that such
consolidation, merger or succession and such agreement of assumption comply with
this Section and that all conditions precedent, if any, provided for in this
Agreement relating to such transaction have been complied with, and that the
Rating Agency Condition shall have been satisfied with respect to such
transaction, (iv) the surviving Servicer shall have a consolidated net worth at
least equal to that of the predecessor Servicer, and (v) such transaction will
not result in a material adverse federal or state tax consequence to the Issuer,
the Noteholders or the Certificateholders.
SECTION 7.4. LIMITATION ON LIABILITY OF THE BANK AND OTHERS. Neither
the Bank nor any of its directors, officers, employees or agents shall be under
any liability to the Issuer, the Noteholders or the Certificateholders, except
as provided under this Agreement, for any action taken or for refraining from
the taking of any action by the Bank or any subservicer pursuant to this
Agreement or for errors in judgment; PROVIDED, HOWEVER, that this provision
shall not protect the Bank or any such person against any liability that would
otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties under this Agreement. The Bank or any subservicer and any
of their respective directors, officers, employees or agents may rely in good
faith on any document of any kind prima facie properly executed and submitted by
any Person respecting any matters arising under this Agreement.
Except as provided in this Agreement the Bank shall not be under any
obligation to appear in, prosecute or defend any legal action that shall be
incidental to its duties to service the Receivables in accordance with this
Agreement, and that in its opinion may involve it in any expense or liability;
PROVIDED, HOWEVER, that the Bank, may (but shall not be required to) undertake
any reasonable action that it may deem necessary or desirable in respect of the
Basic Documents to protect the interests of the Certificateholders under this
Agreement and the Noteholders under the Indenture.
SECTION 7.5. THE BANK NOT TO RESIGN AS SERVICER. Subject to the
provisions of Section 7.3, the Bank hereby agrees not to resign from the
obligations and duties hereby imposed on it as Servicer under this Agreement
except upon determination that the performance of its duties hereunder shall no
longer be permissible under applicable law or if such resignation is required by
regulatory authorities. Notice of any such determination permitting the
resignation of the Bank, as Servicer shall be communicated to the Owner Trustee
and the Trustee at the earliest practicable time (and, if such communication is
not in writing, shall be confirmed in writing at the earliest practicable time)
and any such determination shall be evidenced by an Opinion of Counsel to such
effect delivered to the Owner Trustee and the Trustee concurrently with or
promptly after such notice. No such resignation shall become effective until the
earlier of the Trustee or a Successor Servicer having assumed the
responsibilities and obligations of the resigning Servicer in accordance with
Section 8.2 or the date upon which any regulatory authority requires such
resignation.
SECTION 7.6. CORPORATE EXISTENCE. (a) During the term of this
Agreement, subject to Section 6.4, the Bank will keep in full force and effect
its existence, rights and franchises as a national banking association under the
laws of the United States of America and will obtain and preserve its
qualification to do business in each jurisdiction in which such qualification is
or shall be necessary to protect the validity and enforceability of this
Agreement, the Basic Documents and each other instrument or agreement necessary
or appropriate to the proper administration of this Agreement and the
transactions contemplated hereby.
(a) During the term of this Agreement, the Bank shall observe the
applicable legal requirements for the recognition of the Bank as a legal entity
separate and apart from its Affiliates, including as follows:
(i) the Bank shall maintain corporate records and books of
account separate from those of its Affiliates;
(ii) except as otherwise provided in this Agreement, the Bank
shall not commingle its assets and funds with those of its Affiliates;
(iii) the Bank shall hold such appropriate meetings of its Board
of Directors as are necessary to authorize all the Bank's corporate
actions required by law to be authorized by the Board of Directors,
shall keep minutes of such meetings and of meetings of its
stockholder(s) and observe all other customary corporate formalities
(and any successor Servicer not a corporation shall observe similar
procedures in accordance with its governing documents and applicable
law);
(iv) the Bank shall at all times hold itself out to the public
under the Bank's own name as a legal entity separate and distinct from
its Affiliates; and
(v) all transactions and dealings between the Bank and its
Affiliates will be conducted on an arm's-length basis.
ARTICLE VIII
DEFAULT
SECTION 8.1. SERVICER DEFAULT. If any one of the following events (a
"Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer to deliver to the Trustee for deposit
in any of the Trust Accounts or the Certificate Distribution Account any
required payment or to direct the Trustee to make any required distributions
therefrom that shall continue unremedied for a period of three Business Days
after written notice of such failure is received by the Servicer from the Owner
Trustee or the Trustee or after discovery of such failure by an Authorized
Officer of the Servicer; or
(b) failure on the part of the Servicer duly to observe or to perform
in any material respect any other covenants or agreements of the Servicer set
forth in this Agreement or any other Basic Document, which failure shall (i)
materially and adversely affect the rights of either the Certificateholders or
Noteholders and (ii) continue unremedied for a period of 30 days after the date
on which written notice of such failure, requiring the same to be remedied,
shall have been given (A) to the Servicer by the Owner Trustee or the Trustee or
(B) to the Servicer and to the Owner Trustee and the Trustee by the Holders of
Notes evidencing not less than 25% of the Outstanding Amount of the Notes or
Holders of Certificates evidencing not less than 25% of the outstanding
Certificate Balance, as applicable (or for such longer period, not in excess of
120 days, as may be reasonably necessary to remedy such default; provided that
such default is capable of remedy within 120 days and the Servicer delivers an
Officers' Certificate to the Owner Trustee and the Trustee to such effect and to
the effect that the Servicer has commenced or will promptly commence, and will
diligently pursue, all reasonable efforts to remedy such default); or
(c) an Insolvency Event occurs with respect to the Servicer or any
successor; then, and in each and every case, so long as the Servicer Default
shall not have been remedied, either the Trustee, or the Holders of Notes
evidencing not less than 25% of the Outstanding Amount of the Notes, by notice
then given in writing to the Servicer and the Owner Trustee (and to the Trustee
if given by the Noteholders) may terminate all the rights and obligations (other
than the obligations set forth in Section 7.2) of the Servicer under this
Agreement. On or after the receipt by the Servicer of such written notice, all
authority and power of the Servicer under this Agreement, whether with respect
to the Notes, the Certificates or the Receivables or otherwise, shall, without
further action, pass to and be vested in the Trustee or such successor Servicer
as may be appointed under Section 8.2; and, without limitation, the Trustee and
the Owner Trustee are hereby authorized and empowered to execute and deliver, on
behalf of the predecessor Servicer, as attorney-in-fact or otherwise, any and
all documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of the Receivables
and related documents, or otherwise. The predecessor Servicer shall cooperate
with the successor Servicer, the Trustee and the Owner Trustee in effecting the
termination of the responsibilities and rights of the predecessor Servicer under
this Agreement, including the transfer to the successor Servicer for
administration by it of all cash amounts that shall at the time be held by the
predecessor Servicer for deposit, or shall thereafter be received by it with
respect to a Receivable. All reasonable costs and expenses (including reasonable
attorneys' fees) incurred in connection with transferring the Receivable Files
to the successor Servicer and amending this Agreement to reflect such succession
as Servicer pursuant to this Section shall be paid by the predecessor Servicer
upon presentation of reasonable documentation of such costs and expenses. Upon
receipt of notice of the occurrence of a Servicer Default, the Owner Trustee
shall give notice thereof to the Rating Agencies.
SECTION 8.2. APPOINTMENT OF SUCCESSOR. (a) Upon the Servicer's receipt
of notice of termination, pursuant to Section 8.1 or the Servicer's resignation
in accordance with the terms of this Agreement, the predecessor Servicer shall
continue to perform its functions as Servicer under this Agreement, in the case
of termination, only until the date specified in such termination notice or, if
no such date is specified in a notice of termination, until receipt of such
notice and, in the case of resignation, until the earlier of (x) the date 45
days from the delivery to the Owner Trustee and the Trustee of written notice of
such resignation (or written confirmation of such notice) in accordance with the
terms of this Agreement and (y) the date upon which the predecessor Servicer
shall become unable to act as Servicer, as specified in the notice of
resignation and accompanying Opinion of Counsel. In the event of the Servicer's
termination hereunder, the Trustee shall appoint a successor Servicer, and the
successor Servicer shall accept its appointment by a written assumption in form
acceptable to the Owner Trustee and the Trustee. In the event that a successor
Servicer has not been appointed at the time when the predecessor Servicer has
ceased to act as Servicer in accordance with this Section, the Trustee without
further action shall automatically be appointed the successor Servicer and the
Trustee shall be entitled to the Servicing Fee. Notwithstanding the above, the
Trustee shall, if it shall be unwilling or unable so to act, appoint or petition
a court of competent jurisdiction to appoint, any established institution,
having a net worth of not less than $50,000,000 and whose regular business shall
include the servicing of automotive receivables, as the successor to the
Servicer under this Agreement.
(b) Upon appointment, the successor Servicer (including the Trustee
acting as successor Servicer) shall be the successor in all respects to the
predecessor Servicer and shall be subject to all the responsibilities, duties
and liabilities arising thereafter relating thereto placed on the predecessor
Servicer and shall be entitled to the Servicing Fee and all the rights granted
to the predecessor Servicer by the terms and provisions of this Agreement. No
successor Servicer shall be liable for any acts or omissions of any predecessor
Servicer.
SECTION 8.3. PAYMENT OF SERVICING FEE; REPAYMENT OF ADVANCES. If the
Servicer shall change, the predecessor Servicer shall be entitled to (i) receive
any accrued and unpaid Servicing Fees through the date of the successor
Servicer's acceptance hereunder in accordance with Section 4.8. and (ii)
reimbursement for Outstanding Advances pursuant to Sections 5.3 and 5.7 with
respect to all Advances made by the predecessor Servicer.
SECTION 8.4. NOTIFICATION TO NOTEHOLDERS AND CERTIFICATEHOLDERS. Upon
the receipt by a Trust Officer of the Owner Trustee of written notice of any
termination of, or appointment of a successor to, the Servicer pursuant to this
Article VIII, the Owner Trustee shall give prompt written notice thereof to
Certificateholders and the Trustee shall give prompt written notice thereof to
Noteholders subject to the Rating Agency Condition.
SECTION 8.5. WAIVER OF PAST DEFAULTS. The Holders of Notes evidencing
not less than a majority of the Outstanding Amount of the Notes (or the Holders
(as defined in the Trust Agreement) of Certificates evidencing not less than a
majority of the outstanding Certificate Balance, as applicable, in the case of
any default which does not adversely affect the Trustee or the Noteholders) may,
on behalf of all Noteholders and Certificateholders, waive in writing any
default by the Servicer in the performance of its obligations hereunder and its
consequences, except a default in making any required deposits to or payments
from any of the Trust Accounts or the Certificate Distribution Account in
accordance with this Agreement. Upon any such waiver of a past default, such
default shall cease to exist, and any Servicer Default arising therefrom shall
be deemed to have been remedied for every purpose of this Agreement. No such
waiver shall extend to any subsequent or other default or impair any right
consequent thereto.
ARTICLE IX
TERMINATION
SECTION 9.1. OPTIONAL PURCHASE OF ALL RECEIVABLES. (a) On the last day
of any Collection Period immediately preceding a Determination Date as of which
the then outstanding Pool Balance is 5% or less of the Initial Pool Balance, the
Servicer shall have the option to purchase the Owner Trust Estate, other than
the Trust Accounts and the Certificate Distribution Account. To exercise such
option, the Servicer shall deposit pursuant to Section 5.4 in the Collection
Account an amount which, when added to the amounts on deposit in the Collection
Account for such Distribution Date, equals the sum of (a) the unpaid principal
amount of the then outstanding Notes, plus accrued and unpaid interest thereon,
plus (b) the Certificate Balance plus accrued and unpaid interest thereon. The
Notes and the Certificates will be redeemed concurrently therewith.
(b) Upon any sale of the assets of the Trust pursuant to Section 9.2
of the Trust Agreement, the Servicer shall instruct the Trustee to deposit the
proceeds from such sale after all payments and reserves therefrom (including the
expenses of such sale) have been made (the "Insolvency Proceeds") in the
Collection Account. On the Distribution Date on which the Insolvency Proceeds
are deposited in the Collection Account (or, if such proceeds are not so
deposited on a Distribution Date, on the Distribution Date immediately following
such deposit), the Servicer shall instruct the Trustee to make, and the Trustee
shall make, the following deposits and distributions (after the application on
such Distribution Date of the Total Distribution Amount pursuant to Section 5.5)
from the Insolvency Proceeds and any funds remaining on deposit in the Reserve
Account (including the proceeds of any sale of investments therein):
(i) to the Note Distribution Account, any portion of the
Noteholders' Interest Distributable Amount not otherwise deposited
into the Note Distribution Account on such Distribution Date;
(ii) to the Note Distribution Account, the outstanding principal
balance of the Notes (after giving effect to the reduction in the
outstanding principal balance of the Notes to result from the deposits
made in the Note Distribution Account on such Distribution Date);
(iii) to the Owner Trustee for deposit in the Certificate
Distribution Account, any portion of the Certificateholders' Interest
Distributable Amount not otherwise deposited into the Certificate
Distribution Account on such Distribution Date; and
(iv) to the Owner Trustee for deposit in the Certificate
Distribution Account, the Certificate Balance and any
Certificateholders' Principal Carryover Shortfall Amount (after giving
effect to the reduction in the Certificate Balance to result from the
deposits made in the Certificate Distribution Account on such
Distribution Date).
Any Insolvency Proceeds remaining after the deposits described above
shall be paid to the holder of the GP Interest.
(c) Notice of any termination of the Trust shall be given by the
Servicer to the Owner Trustee, the Trustee and the Rating Agencies as soon as
practicable after the Servicer has knowledge thereof.
(d) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder and
the Owner Trustee will succeed to the rights of, and assume the obligations of,
the Trustee pursuant to this Agreement.
SECTION 9.2. MANDATORY SALE OF ALL CONTRACTS. In accordance with the
procedures and schedule set forth in Exhibit C hereto (the "Auction
Procedures"), the Trustee (or, if the Notes have been paid in full and the
Indenture shall have been discharged in accordance with its terms, the Owner
Trustee) shall conduct or shall cause to be conducted an auction (the "Auction")
of the Receivables remaining in the Trust (such Receivables hereinafter referred
to as the "Auction Property") in order to effect a termination of the Trust
pursuant to Section 9.1 of the Trust Agreement on the second Distribution Date
succeeding the Record Date on which the Pool Balance is 5% or less of the
Initial Pool Balance and at such time as the Depositor shall have not exercised
its option contained in Section 9.1. Such Auction shall be conducted within 10
days following the Distribution Date following the Record Date on which the Pool
Balance is 5% or less of the Initial Pool Balance. The Depositor, the Seller, or
the Servicer may, but shall not be required to, bid at the Auction. Such Trustee
shall sell or shall cause the sale and transfer of the Auction Property to the
highest bidder therefor at the Auction provided that;
(i) the Auction has been conducted in accordance with the Auction
Procedures;
(ii) such Trustee has received good faith bids for the Auction
Property from two prospective purchasers that are considered by such
Trustee, in its sole discretion, to be competitive participants in the
market for motor vehicle retail installment sale contracts and other
motor vehicle installment sale contracts;
(iii) a financial advisor, as advisor to such Trustee (in such
capacity, the "Advisor"), shall have advised such Trustee in writing
that at least two of such bidders (including the winning bidder) are
participants in the market for motor vehicle retail installment sale
contracts and other motor vehicle installment sale contracts willing
and able to purchase the Auction Property;
(iv) the highest bid in respect of the Auction Property is not
less than the aggregate fair market value of the Auction Property (as
determined by such Trustee in its sole discretion);
(v) any bid submitted by the Depositor, the Seller, the Servicer
or any Affiliate of any of them shall reasonably represent the fair
market value of the Auction Property, as independently verified and
represented in writing by a qualified independent third party
evaluator (which may include the Advisor or an investment bank firm)
selected by such Trustee; and
(vi) the highest bid would result in proceeds from the sale of
the Auction Property which will be at least equal to the sum of (A)
the greater of (1) the aggregate Purchase Price for the Receivables
(including defaulted Receivables), plus the appraised value of any
other property held by the Trust (less liquidation expenses) or (2) an
amount that, when added to amounts on deposit in the Collection
Account and available for distribution to Securityholders on the
second Distribution Date following the consummation of such sale (the
"Liquidation Distribution Date"), would result in proceeds sufficient
to distribute to Securityholders the amounts of interest due to the
Securityholders for such Distribution Date and any unpaid interest
payable to the Securityholders with respect to one or more prior
Distribution Dates and the outstanding principal amount of the Notes
and the Certificate Balance, and (B) the Total Servicing Fee payable
on such second Distribution Date.
Provided that all of the conditions set forth in clauses (i) through
(vi) have been met, such Trustee shall sell and transfer the Auction Property,
without representation, warranty or recourse, to such highest bidder in
accordance with and upon completion of the Auction Procedures. Such Trustee
shall deposit the purchase price for the Auction Property in the Collection
Account at least one Business Day prior to such second succeeding Distribution
Date. In addition, the Auction must stipulate that the Servicer be retained to
service the Receivables on terms substantially similar to those in the
Agreement. In the event that any of such conditions are not met or such highest
bidder fails or refuses to comply with any of the Auction Procedures, such
Trustee shall decline to consummate such sale and transfer. In the event such
sale and transfer is not consummated in accordance with the foregoing, however,
such Trustee may from time to time in the future, but shall not be under any
further obligation to, solicit bids for sale of the assets of the Trust upon the
same terms and conditions as set forth above. If any of the foregoing conditions
are not met, such Trustee shall decline to consummate such sale and shall not be
under any obligation to solicit any further bids or otherwise negotiate any
further sale of Receivables remaining in the Trust. In such event, however, such
Trustee may from time to time solicit bids in the future for the purchase of
such Receivables pursuant to this Section 9.2. If applicable, the Trustee shall
provide notice to the Owner Trustee of the termination of the Trust pursuant to
this Section 9.2 as soon as practicable upon the consummation of the mandatory
sale of the Receivables pursuant to this Section 9.2. Each of the Servicer, the
Trustee, the Seller and the Depositor acknowledge that the duties and
responsibilities of the Issuer under the Basic Documents shall be performed by
the Servicer, and not by the Owner Trustee.
ARTICLE X.
ADMINISTRATIVE DUTIES OF THE SERVICER
SECTION 10.1. ADMINISTRATIVE DUTIES. (a) DUTIES WITH RESPECT TO THE
INDENTURE AND DEPOSITORY AGREEMENTS. The Servicer shall perform all its duties
and the duties of the Issuer under the Depository Agreements. In addition, the
Servicer shall consult with the Owner Trustee as the Servicer deems appropriate
regarding the duties of the Issuer under the Indenture and the Depository
Agreements. The Servicer shall monitor the performance of the Issuer and shall
provide notice to the Owner Trustee when action is necessary to comply with the
Issuer's duties under the Indenture and the Depository Agreements. The Servicer
shall prepare for execution by the Issuer or shall cause the preparation by
other appropriate Persons of all such documents, reports, filings, instruments,
certificates and opinions as it shall be the duty of the Issuer to prepare, file
or deliver pursuant to the Indenture and the Depository Agreements. In
furtherance of the foregoing, the Servicer shall take all appropriate action
that is the duty of the Issuer to take pursuant to the Indenture.
(b) DUTIES WITH RESPECT TO THE ISSUER.
(i) In addition to the duties of the Servicer set forth in this
Agreement or any of the Basic Documents, the Servicer shall perform
such calculations and shall prepare for execution by the Issuer or the
Owner Trustee or shall cause the preparation by other appropriate
Persons of all such documents, reports, filings, instruments,
certificates and opinions as it shall be the duty of the Issuer or the
Owner Trustee to prepare, file or deliver pursuant to this Agreement
or any of the Basic Documents, and at the request of the Owner Trustee
shall take all appropriate action that it is the duty of the Issuer to
take pursuant to this Agreement or any of the Basic Documents. The
Servicer shall administer, perform or supervise the performance of
such other activities in connection with the Collateral (including the
Basic Documents) as are not covered by any of the foregoing provisions
and as are expressly requested by the Owner Trustee and are reasonably
within the capability of the Servicer.
(ii) Notwithstanding anything in this Agreement or any of the
Basic Documents to the contrary, the Servicer shall be responsible for
promptly notifying the Owner Trustee in the event that any withholding
tax is imposed on the Issuer's payments (or allocations of income) to
an Owner (as defined in the Trust Agreement) as contemplated in
Section 5.2(c) of the Trust Agreement. Any such notice shall specify
the amount of any withholding tax required to be withheld by the Owner
Trustee pursuant to such provision.
(iii) Notwithstanding anything in this Agreement or the Basic
Documents to the contrary, the Servicer shall be responsible for
performance of the duties of the Owner Trustee and the holder of the
GP Interest set forth in Section 5.6(a), (b), (c) and (d) of the Trust
Agreement with respect to, among other things, accounting and reports
to Owners (as defined in the Trust Agreement); PROVIDED, HOWEVER, that
the Owner Trustee shall retain responsibility for the distribution to
Certificateholders of the Schedule K-1s furnished to the Owner Trustee
by the Servicer which are necessary to enable each Certificateholder
to prepare its federal and state income tax returns.
(iv) The Servicer shall perform the duties of the Servicer
specified in Section 10.2 of the Trust Agreement required to be
performed in connection with the resignation or removal of the Owner
Trustee, and any other duties expressly required to be performed by
the Servicer under this Agreement or any of the Basic Documents.
(v) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Servicer may enter into
transactions with or otherwise deal with any of its Affiliates;
PROVIDED, HOWEVER, that the terms of any such transactions or dealings
shall be in accordance with any directions received from the Issuer
and shall be, in the Servicer's opinion, no less favorable to the
Issuer in any material respect.
(c) TAX MATTERS. The Servicer shall prepare and file, on behalf of the
holder of the GP Interest, all tax returns, tax elections, financial statements
and such annual or other reports of the Issuer as are necessary for preparation
of tax reports as provided in Article V of the Trust Agreement, including
without limitation forms 1099 and 1066. All tax returns will be signed by the
holder of the GP Interest.
(d) NON-MINISTERIAL MATTERS. With respect to matters that in the
reasonable judgment of the Servicer are non-ministerial, the Servicer shall not
take any action pursuant to this Article X unless within a reasonable time
before the taking of such action, the Servicer shall have notified the Owner
Trustee and the Trustee of the proposed action and the Owner Trustee and, with
respect to items (A), (B), (C) and (D) below, the Trustee shall not have
withheld consent or provided an alternative direction. For the purpose of the
preceding sentence, "non-ministerial matters" shall include:
(A) the amendment of or any supplement to the
Indenture;
(B) the initiation of any claim or lawsuit by the
Issuer and the compromise of any action, claim or lawsuit
brought by or against the Issuer (other than in connection
with the collection of the Receivables);
(C) the amendment, change or modification of
this Agreement or any of the Basic Documents;
(D) the appointment of successor Note Registrars,
successor Paying Agents and successor Trustees pursuant to the
Indenture or the appointment of Successor Servicers or the
consent to the assignment by the Note Registrar, Paying Agent
or Trustee of its obligations under the Indenture; and
(E) the removal of the Trustee.
(e) EXCEPTIONS. Notwithstanding anything to the contrary in this
Agreement, except as expressly provided herein or in the other Basic Documents,
the Servicer, in its capacity hereunder, shall not be obligated to, and shall
not, (1) make any payments to the Noteholders or Certificateholders under the
Basic Documents, (2) sell the Indenture Trust Estate pursuant to Section 5.4 of
the Indenture, (3) take any other action that the Issuer directs the Servicer
not to take on its behalf or (4) in connection with its duties hereunder assume
any indemnification obligation of any other Person.
SECTION 10.2. RECORDS. The Servicer shall maintain appropriate books
of account and records relating to services performed under this Agreement,
which books of account and records shall be accessible for inspection by the
Issuer at any time during normal business hours.
SECTION 10.3. ADDITIONAL INFORMATION TO BE FURNISHED TO THE ISSUER.
The Servicer shall furnish to the Issuer from time to time such additional
information regarding the Collateral as the Issuer shall reasonably request.
ARTICLE XI.
MISCELLANEOUS PROVISIONS
SECTION 11.1. AMENDMENT. This Agreement may be amended by all of the
Seller, the Depositor, the Servicer and the Owner Trustee, with the consent of
the Trustee (which consent may not be unreasonably withheld), but without the
consent of any of the Noteholders or the Certificateholders, to cure any
ambiguity or defect, to correct or supplement any provisions in this Agreement
or for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions in this Agreement or of modifying in any
manner the rights of the Noteholders or the Certificateholders; PROVIDED,
HOWEVER, that such action shall not, as evidenced by an Opinion of Counsel
delivered to the Owner Trustee and the Trustee, adversely affect in any material
respect the interests of any Noteholder or Certificateholder.
This Agreement may also be amended from time to time by all of the
Seller, the Depositor, the Servicer and the Owner Trustee, with the consent of
the Trustee, the consent of the Holders of Notes evidencing not less than a
majority of the Outstanding Amount of the Notes and the consent of the Holders
(as defined in the Trust Agreement) of Certificates evidencing not less than a
majority of the Certificate Balance for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this Agreement
or of modifying in any manner the rights of the Noteholders or the
Certificateholders; PROVIDED, HOWEVER, that no such amendment shall (a) increase
or reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on Receivables or distributions that shall be required
to be made for the benefit of the Noteholders or the Certificateholders or (b)
reduce the aforesaid percentage of the Outstanding Amount of the Notes and the
Certificate Balance, the Holders of which are required to consent to any such
amendment, without the consent of the Holders of all the outstanding Notes and
the Holders (as defined in the Trust Agreement) of all the outstanding
Certificates affected thereby.
Prior to its execution of any such amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such amendment or
consent to the Rating Agencies. Promptly after its execution of any such
amendment or consent, the Owner Trustee shall furnish written notification of
the substance of such amendment or consent to each Rating Agency, each
Certificateholder and the Trustee.
It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to this Section to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof.
Prior to the execution of any amendment to this Agreement, the Owner
Trustee and the Trustee shall be entitled to receive and rely upon an Opinion of
Counsel stating that the execution of such amendment is authorized or permitted
by this Agreement and that all conditions precedent to the execution and
delivery of such amendment have been satisfied and the Opinion of Counsel
referred to in Section 11.2(i)(1) has been delivered. The Owner Trustee and the
Trustee may, but shall not be obligated to, enter into any such amendment which
affects the Owner Trustee's or the Trustee's, as applicable, own rights, duties
or immunities under this Agreement or otherwise.
SECTION 11.2. PROTECTION OF TITLE TO TRUST. (a) The Depositor shall
execute and file such financing statements and cause to be executed and filed
such continuation statements, all in such manner and in such places as may be
required by law fully to preserve, maintain and protect the interest of the
Issuer and the interests of the Trustee in the Receivables and in the proceeds
thereof. The Depositor shall deliver (or cause to be delivered) to the Owner
Trustee and the Trustee file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such filing.
(b) None of the Depositor, the Seller, or the Servicer shall change
its name, identity or corporate structure in any manner that would, could or
might make any financing statement or continuation statement filed in accordance
with paragraph (a) above seriously misleading within the meaning of ss. 9-402(7)
of the UCC, unless it shall have given the Owner Trustee and the Trustee at
least five days' prior written notice thereof and shall have promptly filed
appropriate amendments to all previously filed financing statements or
continuation statements.
(c) Each of the Depositor, the Seller and the Servicer shall have an
obligation to give the Owner Trustee and the Trustee at least 60 days' prior
written notice of any relocation of its principal executive office if, as a
result of such relocation, the applicable provisions of the UCC would require
the filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement and shall promptly file any such
amendment. The Servicer shall at all times maintain each office from which it
shall service Receivables, and its principal executive office, within the United
States of America.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader thereof
to know at any time the status of such Receivable, including payments and
recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Collection Account
and Payahead Account in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables, the Servicer's
master computer records (including any backup archives) that refer to a
Receivable shall indicate clearly the interest of the Issuer and the Trustee in
such Receivable and that such Receivable is owned by the Issuer and has been
pledged to the Trustee. Indication of the Issuer's and the Trustee's interest in
a Receivable shall be deleted from or modified on the Servicer's computer
systems when, and only when, the related Receivable shall have been paid in full
or repurchased by the Seller or purchased by the Servicer.
(f) If at any time the Seller, the Depositor or the Servicer shall
propose to sell, grant a security interest in or otherwise transfer any interest
in automotive receivables to any prospective purchaser, lender or other
transferee, the Servicer shall give to such prospective purchaser, lender or
other transferee computer tapes, records or printouts (including any restored
from backup archives) that, if they shall refer in any manner whatsoever to any
Receivable, shall indicate clearly that such Receivable has been sold and is
owned by the Issuer and has been pledged to the Trustee.
(g) The Servicer shall permit the Trustee and its agents at any time
during normal business hours to inspect, audit and make copies of and abstracts
from the Servicer's records regarding any Receivable.
(h) Upon request at any time the Owner Trustee or the Trustee shall
have reasonable grounds to believe that such request is necessary in connection
with the performance of its duties under this Agreement or any of the Basic
Documents, the Servicer shall furnish to the Owner Trustee or to the Trustee,
within five Business Days, a list of all Receivables (by contract number and
name of Obligor) then held as part of the Trust, together with a reconciliation
of such list to the Schedule of Receivables and to each of the Servicer's
Certificates furnished before such request indicating removal of Receivables
from the Trust.
(i) The Servicer shall deliver to the Owner Trustee and the Trustee:
(1) promptly after the execution and delivery of this
Agreement and of each amendment thereto, an Opinion of
Counsel either (A) stating that, in the opinion of such
counsel, all financing statements and continuation
statements have been executed and filed that are
necessary fully to preserve and protect the interest of
the Owner Trustee and the Trustee in the Receivables,
and reciting the details of such filings or referring
to prior Opinions of Counsel in which such details are
given, or (B) stating that, in the opinion of such
counsel, no such action shall be necessary to preserve
and protect such interest; and
(2) within 120 days after the beginning of each calendar
year beginning with the first calendar year beginning
more than three months after the Cutoff Date, an
Opinion of Counsel, dated as of a date during such
120-day period, either (A) stating that, in the opinion
of such counsel, all financing statements and
continuation statements have been executed and filed
that are necessary fully to preserve and protect the
interest of the Owner Trustee and the Trustee in the
Receivables, and reciting the details of such filings
or referring to prior Opinions of Counsel in which such
details are given, or (B) stating that, in the opinion
of such counsel, no such action shall be necessary to
preserve and protect such interest.
Each Opinion of Counsel referred to in clause (l) or (2) above shall
specify any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
(ii) The Depositor shall, to the extent required by applicable
law, cause the Certificates and the Notes to be registered with the
Securities and Exchange Commission pursuant to Section 12(b) or
Section 12(g) of the Exchange Act within the time periods specified in
such sections.
SECTION 11.3. NOTICES. All demands, notices and communications upon or
to the Depositor, the Seller, the Servicer, the Owner Trustee, the Trustee or
the Rating Agencies under this Agreement shall be in writing, personally
delivered, sent by overnight courier or mailed by certified mail, return receipt
requested, and shall be deemed to have been duly given upon receipt (a) in the
case of the Depositor, to Mellon Auto Receivables Corporation, One Mellon Bank
Center, Fourth Floor, Pittsburgh, Pennsylvania 15758, Attention: Stephen Cobain,
(b) in the case of the Seller or the Servicer, to Mellon Bank, N.A., One Mellon
Bank Center, 500 Grant Street, Pittsburgh, Pennsylvania 15258, Attention:
Patrick Ryan, (c) in the case of the Issuer or the Owner Trustee, at the
Corporate Trust Office (as defined in the Trust Agreement), (d) in the case of
the Trustee, at the Corporate Trust Office, (e) in the case of _______, to
_________ ________ _______, Attention: _________ _______________ and (f) in the
case of ________ ________, to _______________________, Attention of
____________________________________.
SECTION 11.4. ASSIGNMENT. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 6.4 and 7.3 and as provided in
the provisions of this Agreement concerning the resignation of the Servicer,
this Agreement may not be assigned by the Depositor or the Servicer.
SECTION 11.5. LIMITATIONS ON RIGHTS OF OTHERS. The provisions of this
Agreement are solely for the benefit of the Depositor, the Seller, the Servicer,
the Issuer, the Owner Trustee and for the benefit of the Certificateholders
(including the holder of the GP Interest), the Trustee and the Noteholders, as
third-party beneficiaries, and nothing in this Agreement, whether express or
implied, shall be construed to give to any other Person any legal or equitable
right, remedy or claim in the Owner Trust Estate or under or in respect of this
Agreement or any covenants, conditions or provisions contained herein.
SECTION 11.6. SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.7. SEPARATE COUNTERPARTS. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 11.8. HEADINGS. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 11.9. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.10. ASSIGNMENT TO TRUSTEE. The Depositor hereby
acknowledges and consents to any mortgage, pledge, assignment and grant of a
security interest by the Issuer to the Trustee pursuant to the Indenture for the
benefit of the Noteholders of all right, title and interest of the Issuer in, to
and under the Receivables and/or the assignment of any or all of the Issuer's
rights and obligations hereunder to the Trustee.
SECTION 11.11. NONPETITION COVENANT. Notwithstanding any prior
termination of this Agreement, the Servicer, the Seller and the Depositor shall
not, prior to the date which is one year and one day after the termination of
this Agreement with respect to the Issuer, acquiesce, petition or otherwise
invoke or cause the Issuer to invoke the process of any court or government
authority for the purpose of commencing or sustaining a case against the Issuer
under any Federal or state bankruptcy, insolvency or similar law or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Issuer or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Issuer.
SECTION 11.12. LIMITATION OF LIABILITY OF OWNER TRUSTEE AND TRUSTEE.
(a) Notwithstanding anything contained herein to the contrary, this Agreement
has been countersigned by ____________, not in its individual capacity but
solely in its capacity as Owner Trustee of the Issuer and in no event shall
_______________, in its individual capacity or, except as expressly provided in
the Trust Agreement, as Owner Trustee have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Issuer hereunder or under any of the certificates, notices or agreements
delivered pursuant hereto, as to all of which recourse shall be had solely to
the assets of the Issuer. For all purposes of this Agreement, in the performance
of its duties or obligations hereunder or in the performance of any duties or
obligations of the Issuer hereunder, the Owner Trustee shall be subject to, and
entitled to the benefits of, the terms and provisions of Articles VI, VII and
VIII of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by ____________ not in its individual capacity but
solely as Trustee and in no event shall ____________ have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Issuer hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto, as to all of which recourse shall be had solely to the assets
of the Issuer.
SECTION 11.13. INDEPENDENCE OF THE SERVICER. For all purposes of this
Agreement, the Servicer shall be an independent contractor and shall not be
subject to the supervision of the Issuer or the Owner Trustee with respect to
the manner in which it accomplishes the performance of its obligations
hereunder. Unless expressly authorized by the Issuer, the Servicer shall have no
authority to act for or represent the Issuer or the Owner Trustee in any way and
shall not otherwise be deemed an agent of the Issuer or the Owner Trustee.
SECTION 11.14. NO JOINT VENTURE. Nothing contained in this Agreement
(i) shall constitute the Servicer and either of the Issuer or the Owner Trustee
as members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on any of them or (iii) shall be deemed to confer
on any of them any express, implied or apparent authority to incur any
obligation or liability on behalf of the others.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective duly authorized officers as
of the day and year first above written.
MELLON AUTO TRUST 199_-_
By:_________________________________
not in its individual capacity but
solely as Owner Trustee on behalf of
the Trust,
By:____________________________________
Name:
Title:
MELLON BANK, N.A.,
Servicer and Seller,
By:____________________________________
Name:
Title:
MELLON AUTO RECEIVABLES
CORPORATION,
Depositor,
By:____________________________________
Name:
Title:
<PAGE>
Acknowledged and Accepted:
______________________________,
not in its individual capacity
but solely as Trustee,
By:___________________________
Name:
Title:
Acknowledged and Accepted:
______________________________,
not in its individual capacity
but solely as Owner Trustee,
By:___________________________
Name:
Title:
<PAGE>
SCHEDULE A
SCHEDULE OF RECEIVABLES
Delivered to the Owner Trustee and the Trustee at Closing
<PAGE>
SCHEDULE B
LOCATION OF RECEIVABLES
<PAGE>
EXHIBIT A
FORM OF MONTHLY SECURITYHOLDER STATEMENT
MELLON AUTO TRUST 199_-_
___% Asset Backed Notes
___% Asset Backed Certificates
Distribution Date:
Collection Period:
Under the Sale and Servicing Agreement dated as of __________ __, 199_
among Mellon Bank, N.A., as servicer (the "Servicer") and seller (the "Seller"),
Mellon Auto Receivables Corporation, as depositor (the "Depositor"), and Mellon
Auto Trust 199_-_, as issuer (the "Trust"), the Servicer is required to prepare
certain information each month regarding current distributions to Noteholders
and Certificateholders and the performance of the Trust during the previous
month. The information that is required to be prepared with respect to the
Distribution Date and Collection Period listed above is set forth below. Certain
of the information is presented on the basis of an original principal amount of
$1,000 per Note or Certificate, and certain other information is presented based
upon the aggregate amounts for the Trust as a whole. A. Information Regarding
the Current Monthly Distribution.
1. Notes.
(a) The aggregate amount of the
distribution with respect to the
Notes...............................................$________
(b) The amount of the distribution set
forth in paragraph A.1.(a) above in
respect of interest on the Notes....................$________
(c) The amount of the distribution set
forth in paragraph A.1.(a) above in
respect of principal of the Notes...................$________
(d) The amount of the distributions set
forth in paragraph A.1(a) payable
out of amounts withdrawn from the Reserve
Account with respect to the Notes...................$________
(e) The amount of the distribution set
forth in paragraph A.1.(a) above
per $1,000 interest in the Notes....................$________
(f) The amount of the distribution set
forth in paragraph A.1.(b) above
per $1,000 interest in the Notes....................$________
(g) The amount of the distribution set
forth in paragraph A.1.(c) above
per $1,000 interest in the Notes....................$________
(h) The amount of the distribution set
forth in paragraph A.1.(d) above
per $1,000 interest in the Notes....................$________
2. Certificates.
(a) The aggregate amount of the
distribution with respect to the
Certificates.........................................$________
(b) The amount of the distribution set
forth in paragraph A.2.(a) above in
respect of interest on the Certificates..............$________
(c) The amount of the distribution set
forth in paragraph A.2.(a) above in
respect of principal of the Certificates.............$________
(d) The amount of the distributions set
forth in paragraph A.2(a) payable
out of amounts withdrawn from the Reserve
Account with respect to the Certificates.............$________
(e) The amount of the distribution set
forth in paragraph A.2.(a) above
per $1,000 interest in the Certificates..............$________
(f) The amount of the distribution set
forth in paragraph A.2.(b) above
per $1,000 interest in the Certificates..............$________
(g) The amount of the distribution set
forth in paragraph A.2.(c) above
per $1,000 interest in the Certificates..............$________
(h) The amount of the distribution set
forth in paragraph A.2.(d) above
per $1,000 interest in the Certificates..............$________
B. Information Regarding the Performance of the Trust.
1. Pool Balance, Note Principal Balance and Certificate Principal Balance.
(a) The Pool Balance at the close of business on
the last day of the Collection Period..............$________
(b) The Note Balance after
giving effect to payments allocated to
principal as set forth in Paragraph A.1(c).........$________
(c) The Note Pool Factor after
giving affect to the payments set
forth in paragraph A.1(c)..........................$________
(d) The Certificate Balance after giving effect to payments
allocated to principal as set forth in Paragraph
A.2(c).............................................$________
(e) The Certificate Pool Factor after
giving affect to the payments set
forth in paragraph A.2(c)..........................$________
(f) The aggregate Purchase Amount for
all Receivables that were repurchased
in the preceding Collection Period.................$________
(g) The aggregate Payahead Balance on
such Distribution Date.............................$________
(h) The change in the Payahead Balance
from the preceding Distribution Date...............$________
(i) The amount of Outstanding Advances on such
Distribution Date..................................$________
(j) The change in Outstanding Advances
from the preceding Distribution Date...............$________
(k) Total Collections by the Servicer..................$________
(l) All amounts received by the Trust from
the Servicer.......................................$________
2. Servicing Fee.
The aggregate amount of the Servicing
Fee paid to the Servicer with respect
to the preceding Collection Period $________
3. Payment Shortfalls.
(a) The amount of the Noteholders'
Interest Carryover Shortfall after
giving effect to the payments set forth
in paragraph A.1(b) above..........................$________
(b) The amount of the Noteholders'
Interest Carryover Shortfall set forth in paragraph B.3.(a)
above per $1,000 interest with respect to the
Notes:.............................................$_________
(c) The amount of the Certificateholders'
Interest Carryover Shortfall after
giving effect to the payments set forth
in paragraph A.2(b) above............................$________
(d) The amount of the Certificateholders'
Interest Carryover Shortfall set
forth in paragraph B.3.(c) above per
$1,000 interest with respect to
the Certificates:....................................$________
4. Losses and Delinquencies
(a) The change in the aggregate amount
of Cumulative Net Losses from the preceding
Distribution Date....................................$________
(b) The aggregate amount of Cumulative Net Losses
on the Distribution Date set forth above for
the related Collection Period........................$________
(c) The Cumulative Net Loss Ratio on the
Distribution Date set forth above....................$________
(d) The aggregate amount scheduled to
be paid, including unearned finance
and other charges, for which Obligors
are delinquent 60 days or more.......................$________
(e) The Delinquency Percentage on the
Distribution Date set forth above....................$________
5. Reserve Account
(a) The Reserve Account balance as of
the last day of the preceding
Collection Period, including earnings................$________
(b) Earnings included in above balance...................$________
(c) Transfer to Reserve Account from
Collection Account on Distribution
Date.................................................$________
(d) The Reserve Account balance as of
the Distribution Date set forth above
after giving effect to the Collection
Account on such Distribution Date....................$________
6. Delinquency
(a) Percentage of principal balance of
Receivables delinquent 1 to 30 days................ ________%
(b) Percentage of principal balance of
Receivables delinquent 31 to 60 days............... ________%
(c) Percentage of principal balance of
Receivables delinquent 61 to 90 days................________%
<PAGE>
EXHIBIT B
FORM OF SERVICER'S CERTIFICATE
MELLON BANK, N.A.
CERTIFICATE OF SERVICING OFFICER
The undersigned certifies that he is the [title], of Mellon
Bank, N.A., a national banking association organized under the laws of the
United States of America (the "Bank") and that as such he is duly authorized to
execute and deliver this certificate on behalf of the Bank pursuant to Section
4.9 of the Sale and Servicing Agreement, dated as of __________ __, 199_ (the
"Agreement") by and among the Bank,as servicer (the "Servicer") and seller (the
"Seller"), Mellon Auto Receivables Corporation, as depositor (the "Depositor")
and Mellon Auto Trust 199_-_, as issuer (the "Issuer"), (all capitalized terms
used herein without definition having the respective meanings specified in the
Agreement), and further certifies that:
1. The Monthly Securityholder Statement for the period from
_______________________________________________________________________________
_______________________________________________________________________________
2. As of the date hereof, no Servicer Default or
event that with notice or lapse of time or both would become a Servicer Default
has occurred. [If a Servicer Default has occurred, such Servicer Default shall
be specified and its current status reported.]
IN WITNESS WHEREOF, we have affixed hereunto our signatures this day
of, .
MELLON BANK, N.A.
as Servicer
By:_________________________________
Name:
Title:
<PAGE>
EXHIBIT C
TERMINATION - AUCTION PROCEDURES
The following sets forth the auction procedures to be followed in
connection with a sale effected pursuant to Section 9.2 of the Sale and
Servicing Agreement (the "Agreement"), dated as of __________ __, 199_ by and
among Mellon Auto Trust 199_-_ (the "Trust"), Mellon Bank, N.A., as servicer
(the "Servicer") and seller (the "Seller") and Mellon Auto Receivables
Corporation, as depositor (the "Depositor"). Capitalized terms used herein that
are not otherwise defined shall have the meanings ascribed thereto in the
Agreement. All references herein to "Trustee" shall be references to
____________, as Indenture Trustee, pursuant to an Indenture, dated as of
__________ __, 199_, between the Trust and the Indenture Trustee. However, if
the Notes have been paid in full, and the Indenture has been discharged in
accordance with its terms, all references herein to "Trustee" shall be
references to the Owner Trustee.
PRE-AUCTION PROCESS
(a) Upon receiving notice of the Auction, the Advisor will initiate its
general Auction procedures consisting of the following: (i) with the
assistance of the Servicer, prepare a general solicitation package
along with a confidentiality agreement; (ii) derive a list of
qualified bidders, in a commercially reasonable manner; (iii) initiate
contact with all qualified bidders; (iv) send a confidentiality
agreement to all qualified bidders; (v) upon receipt of a signed
confidentiality agreement, send solicitation packages to all
interested bidders on behalf of the applicable Trustee; and (vi)
notify the Servicer of all potential bidders and anticipated
timetable.
(b) The general solicitation package will include: (i) the prospectus from
the public offering of the Notes and Certificates; (ii) a copy of all
monthly servicing reports or a copy of all annual servicing reports
and the prior year's monthly servicing reports; (iii) a form of a
Purchase Agreement and Sale and Servicing Agreement; (iv) a
description of the minimum purchase price required to cause the
Trustee to sell the Auction Property as set forth in Section 9.2 of
the Agreement; (v) a formal bidsheet; (vi) a detailed timetable; and
(vii) a preliminary data tape of the Pool Balance as of the related
Distribution Date reflecting the same data attributes used to create
the Cutoff Date tables for the Prospectus Supplement dated ________
__, 199_ relating to the offering of the Notes and Certificates.
(c) The applicable Trustee, with the assistance of the Servicer and the
Advisor, will maintain an auction package beginning at the time of
closing of the transaction, which will contain terms (i)-(iii) listed
in the preceding paragraph. If the Advisor is unable to perform its
role as advisor to the applicable Trustee, the Servicer acting in its
capacity under the Agreement will select a successor Advisor and
inform the applicable Trustee of its actions.
(d) The Advisor will send solicitation packages to all bidders at least 15
business days before the date of the Auction. Bidders will be required
to submit any due diligence questions in writing to the Advisor for
determination of their relevancy, no later than 10 business days
before the date of the Auction. The Servicer and the Advisor will be
required to satisfy all relevant questions at least five Business Days
prior to the date of the Auction and distribute the questions and
answers to all bidders.
AUCTION PROCESS
(a) _______________________, in its role as Advisor to the applicable
Trustee, will be allowed to bid in the Auction, but will not be
required to do so.
(b) The Servicer will also be allowed to bid in the Auction if it deems
appropriate, but will not be required to do so.
(c) On the date of the Auction, all bids will be due by facsimile to the
offices of the applicable Trustee by 1:00 p.m. New York City time,
with the winning bidder to be notified by 2:00 p.m. New York City
time. All acceptable bids (as described in Section 9.2 of the
Agreement) will be due on a conforming basis on the bid sheet
contained in the solicitation package.
(d) If the applicable Trustee receives fewer than two market value bids
from participants in the market for motor vehicle retail installment
sale contracts and other motor vehicle installment sale contracts
willing and able to purchase the Auction Property, the applicable
Trustee shall decline to consummate the sale.
(e) Upon notification to the winning bidder, a good faith deposit equal to
one percent (1%) of the Pool Balance will be required to be wired to
the applicable Trustee upon acceptance of the bid. This deposit, along
with any interest income attributable to it, will be credited to the
purchase price but will not be refundable. The applicable Trustee will
establish a separate account for the acceptance of the good faith
deposit, until such time as the account is fully funded and all monies
are transferred into the Collection Account, such time not to exceed
one Business Day before the related Distribution Date (as described
above).
(f) The winning bidder will receive on the date of the Auction a copy of
the draft Purchase Agreement, Sale and Servicing Agreement and
Servicer's Representations and Warranties (which shall be
substantially identical to the representations and warranties set
forth in Section ______ of the Agreement).
(g) ______________, in its capacity as Advisor to the applicable Trustee,
will provide to the applicable Trustee a letter concluding whether or
not the winning bid is a fair market value bid. __________________
will also provide such letter if it is the winning bidder. In the case
where _____________ or the Servicer is the winning bidder it will in
its letter provide for market comparable valuations.
(h) The Auction will stipulate that the Servicer be retained to service
the Receivables sold pursuant to the terms of the Purchase and Sale
Agreement and Servicing Agreement.
