<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 19, 1999
REGISTRATION NO. 333-81615
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
AUTONATION RECEIVABLES CORPORATION
(Originator of the trusts described herein)
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 65-092-9038
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
</TABLE>
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200 SOUTH ANDREWS AVENUE
FORT LAUDERDALE, FLORIDA 33301
(954) 769-4555
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------
KATHLEEN W. HYLE
AUTONATION RECEIVABLES CORPORATION
200 SOUTH ANDREWS AVENUE
FORT LAUDERDALE, FLORIDA 33301
(954) 769-4555
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
<TABLE>
<S> <C>
FRANK P. NOCCO, ESQ. KENNETH A. WRIGHT, ESQ.
WEIL, GOTSHAL & MANGES LLP SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
767 FIFTH AVENUE 919 THIRD AVENUE
NEW YORK, NEW YORK 10153 NEW YORK, NY 10022
(212) 310-8000 (212) 735-3000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable on or after the effective date of this registration statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /x/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
AMOUNT TO BE AGGREGATE PROPOSED MAXIMUM
TITLE OF EACH CLASS OF REGISTERED OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED (1)(2) PER UNIT (2)(3) PRICE (3)(4) REGISTRATION FEE
<S> <C> <C> <C> <C>
Asset-Backed Notes and Certificates................ -- -- $1,000,000 $278
</TABLE>
(1) If any registered securities are issued at an original issue discount, then
such greater principal amount as shall result in an aggregate initial
offering price of $1,000,000. In no event will the aggregate initial
offering price of securities registered hereunder exceed $1,000,000 or the
equivalent thereof in one or more foreign currencies or composite
currencies, including the euro.
(2) Not specified as to each class of securities to be registered pursuant to
General Instruction II.D of Form S-3 under the Securities Act.
(3) The proposed maximum offering price per unit or share will be determined
from time to time by the Registrant in connection with, and at the time of,
the issuance by the Registrant of the securities registered hereunder.
(4) Estimate solely for the purposes of computing the registration fee pursuant
to Rule 457(o) of the Rules and Regulations of the Securities and Exchange
Commission under the Securities Act.
------------------------
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 SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED ,
Prospectus Supplement
(To Prospectus dated )
$
ANRC AUTO OWNER TRUST
AUTONATION RECEIVABLES CORPORATION, Seller
AUTONATION FINANCIAL SERVICES CORP., Servicer
THESE SECURITIES ARE HIGHLY STRUCTURED. BEFORE YOU PURCHASE THESE SECURITIES,
BE SURE YOU UNDERSTAND THE STRUCTURE AND THE RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE S-8 IN THIS PROSPECTUS SUPPLEMENT.
The notes are obligations of ANRC Auto Owner Trust and are backed only by
the assets of the trust. The notes are not obligations of AutoNation
Receivables Corporation, AutoNation Financial Services Corp., any of their
affiliates or any governmental agency.
This prospectus supplement may be used to offer and sell the notes only if
accompanied by the prospectus.
THE NOTES:
o The trust is offering four classes of notes.
o The notes are backed by a pledge of the trust's assets. The trust's assets
include fixed rate motor vehicle retail installment sales contracts secured by
new and used automobiles and light-duty trucks.
o The trust will pay interest and principal on the notes on the 15th day of each
month or the first business day after the 15th. The first distribution date is
, .
o will issue an insurance policy that unconditionally and
irrevocably guarantees payments of interest on and principal of the notes to
the extent described in this prospectus supplement.
<TABLE>
<CAPTION>
PRINCIPAL INTEREST FINAL SCHEDULED PRICE TO UNDERWRITING PROCEEDS TO
AMOUNT RATE DISTRIBUTION DATE PUBLIC(1) DISCOUNTS SELLER(2)
<S> <C> <C> <C> <C> <C> <C>
Class A-1 Notes............... $ % , % % %
Class A-2 Notes............... $ % , % % %
Class A-3 Notes............... $ % , % % %
Class A-4 Notes............... $ % , % % %
Total........................ $ % , $ $ $
</TABLE>
(1) Plus accrued interest, if any, from .
(2) Before deducting expenses estimated to be $ .
The notes are offered subject to availability.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED ON THE
ADEQUACY OR ACCURACY OF THE DISCLOSURES IN THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
[ ]
The date of this Prospectus Supplement is
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
WHERE TO FIND INFORMATION IN THESE DOCUMENTS......... S-4
SUMMARY OF TERMS..................................... S-5
RISK FACTORS......................................... S-8
Lack of performance data due to limited
operating history of AutoNation
Financial Services.................... S-8
Absence of secondary market for the notes
could limit your ability to resell.... S-8
Limited assets of the trust could result in
losses on the notes................... S-8
Potential prepayment of the notes may require
reinvestment of principal at a lower
rate of return........................ S-8
Interests of other persons in contracts and
vehicles could reduce the funds
available to make payments on the
notes................................. S-9
Bankruptcy of AutoNation Financial Services
could result in losses or delays in
payments on the notes due to the power
of bankruptcy courts to provide
equitable relief...................... S-9
Bankruptcy of AutoNation Financial Services
could result in losses or delays in
payments on the notes if the
bankruptcy court follows an adverse
legal decision........................ S-10
Geographic concentration of contracts in
[State], [State] and [State] could
result in losses on the notes......... S-11
Noteholders may not declare events of default
under the indenture or decide the
consequences of events of default..... S-11
Events of default under the indenture could
result in losses or acceleration of
payments on the notes................. S-11
Class A-2 notes, class A-3 notes and class A-4
notes bear additional credit risk..... S-11
Potential computer program problems beginning
in the year 2000 could result in
delays in payments on the notes....... S-12
DESCRIPTION OF THE TRUST............................. S-13
ANRC Auto Owner Trust......................... S-13
Capitalization of the Trust................... S-13
The Owner Trustee............................. S-14
Trust Property................................ S-14
AUTONATION FINANCIAL SERVICES' PORTFOLIO OF MOTOR
VEHICLE CONTRACTS............................. S-14
Origination of Motor Vehicle Contracts........ S-14
Delinquency and Loss Experience............... S-14
DESCRIPTION OF THE CONTRACTS......................... S-15
MATURITY AND PREPAYMENT CONSIDERATIONS............... S-19
USE OF PROCEEDS...................................... S-24
DESCRIPTION OF THE NOTES............................. S-24
Issuance and Registration of the Notes........ S-24
Interest Payments............................. S-24
Principal Payments............................ S-25
Optional Redemption........................... S-25
The Indenture Trustee......................... S-26
Events of Default Under the Indenture......... S-26
DESCRIPTION OF THE TRANSFER AND SERVICING
AGREEMENTS.................................... S-28
Sale and Assignment of the Contracts.......... S-28
The Accounts.................................. S-28
Payments on Contracts......................... S-29
Distributions................................. S-29
Early Repayment............................... S-31
Payment Priorities of the Notes............... S-32
The Spread Account............................ S-32
Withdrawals from the Spread Account........... S-33
Overcollateralization......................... S-33
Statements to Noteholders..................... S-34
Reports to Noteholders........................ S-34
Servicing Fee................................. S-34
Default by the Servicer; Rights Upon Default
by the Servicer....................... S-35
Amendment..................................... S-35
Termination................................... S-36
Optional Purchase............................. S-36
Payment in Full of Notes...................... S-36
Description of the Administration Agreement... S-36
DESCRIPTION OF THE INSURANCE POLICY.................. S-37
</TABLE>
S-2
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<TABLE>
<S> <C>
DESCRIPTION OF THE INSURER........................... S-38
The Insurer................................... S-38
Financial Information About
the Insurer........................... S-39
Where You Can Obtain Additional Information
About the Insurer..................... S-39
Year 2000 Readiness of the Insurer............ S-40
Financial Strength Ratings of
the Insurer........................... S-40
LEGAL INVESTMENT..................................... S-40
MATERIAL FEDERAL INCOME TAX CONSEQUENCES............. S-41
ERISA CONSIDERATIONS................................. S-41
UNDERWRITING......................................... S-42
LEGAL MATTERS........................................ S-43
EXPERTS.............................................. S-43
INDEX OF DEFINED TERMS............................... S-44
</TABLE>
S-3
<PAGE>
WHERE TO FIND INFORMATION IN THESE DOCUMENTS
The accompanying prospectus provides general information about ANRC Auto Owner
Trust , including terms and conditions that are generally applicable to
the securities issued by the trust. The specific terms of your notes are
described in this prospectus supplement.
This prospectus supplement begins with two introductory sections describing your
notes and the trust in abbreviated form:
o Summary of Terms provides a brief description of your notes, including
important amounts, dates and other terms and features; and
o Risk Factors describes risks that apply to your notes.
As you read through this prospectus supplement, cross-references will direct you
to more detailed descriptions in the accompanying prospectus and elsewhere in
this prospectus supplement. You can also directly reference key topics by
looking at the table of contents in this prospectus supplement and the
accompanying prospectus.
You can find a listing of the pages where capitalized terms used in this
prospectus supplement are defined beginning on page S-44 in this prospectus
supplement.
IF THE DESCRIPTIONS OF YOUR NOTES VARY BETWEEN THIS PROSPECTUS SUPPLEMENT AND
THE ACCOMPANY ING PROSPECTUS, YOU SHOULD RELY ON THE INFORMATION IN THIS
PROSPECTUS SUPPLEMENT.
TO UNDERSTAND THE STRUCTURE OF THESE SECURITIES, YOU MUST READ CAREFULLY
THE ACCOMPANYING PROSPECTUS AND THIS PROSPECTUS SUPPLEMENT IN THEIR
ENTIRETY.
S-4
<PAGE>
SUMMARY OF TERMS
This summary contains a brief description of the notes. You will find a detailed
description of the terms of the offering of the notes following this summary. To
fully understand the terms of the offering, you will need to read both this
prospectus supplement and the accompanying prospectus in their entirety.
<TABLE>
<S> <C>
Trust: ANRC Auto Owner Trust
Seller of the Contracts: AutoNation Receivables Corporation
Seller's Address: 200 South Andrews Avenue, Fort Lauderdale, Florida 33301
Seller's Telephone Number: (954) 769-4555
Servicer of the Contracts: AutoNation Financial Services Corp.
Subservicer of the Contracts: World Omni Financial Corp.
Owner Trustee:
Indenture Trustee:
Insurer:
Clearance and Settlement: The Depository Trust Company
Assets of the Trust: The trust's assets include:
o fixed rate motor vehicle retail installment sales contracts secured by
new and used automobiles and light-duty trucks;
o collections on the contracts;
o liens on the financed vehicles and the rights to receive proceeds from
claims on insurance policies;
o funds in the accounts of the trust;
o any enhancements issued; and
o proceeds of these assets.
</TABLE>
The Terms of the Notes:
<TABLE>
<S> <C> <C> <C> <C>
CLASS A-1 NOTES CLASS A-2 NOTES CLASS A-3 NOTES CLASS A-4 NOTES
Principal Amount: $ $ $ $
Interest Rate: % p.a % p.a % p.a % p.a
Interest Accrual Method: actual / 360 30 / 360 30 / 360 30 / 360
Cut-Off Date:
Distribution Dates: monthly (15th) monthly (15th) monthly (15th) monthly (15th)
First Distribution Date:
Final Scheduled Distribution Date:
distribution date distribution date distribution date distribution date
Anticipated Ratings / / / /
(Moody's/S&P)*
Credit Enhancement: insurance policy, insurance policy, insurance policy, insurance policy,
spread account and spread account and spread account and spread account and
over- over- over- over-
collateralization collateralization collateralization collateralization
CUSIP Number:
ISIN Number:
Common Code:
</TABLE>
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* It is a condition to issuance that both of these ratings be obtained. However,
a rating agency in its discretion may lower or withdraw its rating in the
future.
S-5
<PAGE>
ANRC AUTO OWNER TRUST
ANRC Auto Owner Trust , a Delaware business trust, is offering the notes
to the public. The trust will use the proceeds from the issuance and sale of the
notes to purchase the contracts and deposit funds into the spread account. The
trust will rely upon collections on the contracts and the funds on deposit in
various accounts to make payments on the notes.
THE NOTES
On the closing date the trust will issue four classes of notes. The trust will
use collections on the underlying trust assets to make interest and principal
payments on the notes and to pay a portion of the fees and expenses owed by the
trust, including AutoNation Financial Services Corp.'s fees as servicer. After
the payment of specified fees and expenses, the trust will allocate collections
first to make interest payments on the notes and then to make payments of
principal. In no case will you receive more than the principal and interest owed
to you under the terms described in this prospectus supplement and the
accompanying prospectus.
THE CONTRACTS
The trust's main source of funds for making payments on the notes will be
collections on the contracts. The contracts are retail installment sales
contracts secured by new and used automobiles and light-duty trucks. Each
contract in the trust is a fully-amortizing fixed-rate contract with scheduled
monthly payments of principal and interest.
SEQUENTIAL PAY FEATURE
The notes feature "sequential pay" classes. On each distribution date, the trust
will allocate principal payments on the notes as follows:
o first, the class A-1 notes will receive principal until they are
paid off;
o once the class A-1 notes are paid off, the class A-2 notes will
begin to receive principal until they are paid off;
o once the class A-2 notes are paid off, the class A-3 notes will
begin to receive principal until they are paid off; and
o once the class A-3 notes are paid off, the class A-4 notes will
begin to receive principal until they are paid off.
In addition, the outstanding principal amount of any class, to the extent not
previously paid, will be payable on the applicable final scheduled distribution
date for that class.
CREDIT ENHANCEMENT
Credit enhancement is provided to the notes by the following:
o an insurance policy issued by , a financial guaranty
provider;
o the spread account; and
o overcollateralization.
These forms of credit enhancement are intended to protect you from net losses
and shortfalls in cash flow.
Insurance Policy. On the closing date, will issue an insurance policy
that unconditionally guarantees the timely payment of interest and the ultimate
payment of principal on the notes.
Spread Account. The spread account serves as a reserve fund upon which the trust
may draw to enhance the likelihood of receipt by noteholders of amounts due them
and to decrease the likelihood of losses. On each distribution date, the trust
will use funds in the spread account to pay the following amounts if collections
on the contracts are insufficient to pay those amounts:
o the servicer's fee and the fees of the trustees;
o interest and principal on the notes; and
o reimbursement for any draws under the insurance policy and other
amounts owed to the insurer.
Overcollateralization. The initial balance of the contracts in the trust will be
$ , which will exceed the initial principal amount of the notes by
$ , or approximately %.
If the cash flow and any credit enhancement do not cover all net losses, your
payments of interest and principal will be reduced and you may suffer a loss of
principal.
S-6
<PAGE>
SCHEDULED PRINCIPAL PAYMENTS AND POTENTIAL EARLY PAYMENTS
The trust expects to pay the entire principal amount of the notes no later than
the final scheduled distribution dates listed below:
Class A-1 ,
Class A-2 ,
Class A-3 ,
Class A-4 ,
However, the trust believes that the outstanding principal amount of each class
of notes will likely be paid in full earlier, and could be paid significantly
earlier than the applicable final scheduled distribution date.
The likelihood of early repayment depends on a variety of factors, including
full repayments of contracts in advance by the related obligors.
OPTIONAL REDEMPTION
The servicer can elect to purchase all of the contracts at any time if their
aggregate principal balance is 10% or less of their aggregate original principal
balance. If the servicer exercises this option, it will deposit the requisite
funds and cause the indenture trustee to apply those funds to redeem the notes
and pay all accrued and unpaid interest and principal on the notes plus other
amounts owed to the servicer, the trustees and the insurer.
TAX STATUS
Weil, Gotshal & Manges LLP is of the opinion that, although there is no specific
authority regarding the characterization for federal income tax purposes of
securities having terms similar to the notes or to an entity similar to the
trust, assuming compliance with the owner trust agreement and the other
transaction documents, on the date of issuance of the notes, for U.S. federal
income tax purposes:
o the notes will be characterized as debt; and
o the trust will not be an association or a publicly traded
partnership taxable as a corporation.
If you purchase the notes, you will agree to treat them as debt for tax
purposes.
ERISA CONSIDERATIONS
The notes are generally eligible for purchase by persons investing assets of
employee benefit plans that are subject to the Employee Retirement Income
Security Act of 1974. The administrators of employee benefit plans should review
the matters discussed under "ERISA Considerations" and also should consult with
their legal advisors before purchasing the notes.
ELIGIBILITY OF CLASS A-1 NOTES FOR PURCHASE BY MONEY MARKET FUNDS
The class A-1 notes are structured to be eligible for purchase by money market
funds under Rule 2a-7 under the Investment Company Act of 1940.
S-7
<PAGE>
RISK FACTORS
You should consider the following risk factors in deciding whether to
purchase the notes.
<TABLE>
<S> <C>
LACK OF PERFORMANCE DATA
DUE TO LIMITED OPERATING
HISTORY OF AUTONATION
FINANCIAL SERVICES AutoNation Financial Services began its operations in
February 1997 and has limited performance data for
the motor vehicle retail install ment sales contracts
it originates. As the portfolio of contracts
originated by AutoNation Financial Services matures,
delinquency percent ages and loan losses may differ
from prior performance. We cannot assure you that the
performance of the contracts in the trust will be
similar to the limited historical performance of the
portfolio as a whole.
ABSENCE OF SECONDARY
MARKET FOR THE NOTES
COULD LIMIT YOUR ABILITY
TO RESELL You may be unable to resell your notes due to the
absence of a secondary market for the notes. The
underwriters may assist in resales of the notes but
are not required to do so. A secondary market for the
notes may not develop. If a secondary market does
develop, it may not continue or it may not be
sufficiently liquid to allow you to resell your
notes.
LIMITED ASSETS OF THE
TRUST COULD RESULT IN
LOSSES ON THE NOTES You may suffer a loss on your notes if the assets of
the trust are insufficient to pay the principal
amount of the notes in full and defaults
in its obligations under the insurance policy. The
only source of funds for payments on the notes will
be the assets of the trust and the insurance policy.
The assets of the trust are limited to the contracts,
the funds on deposit in the trust's bank accounts and
rights under the trust's agreements. You must rely
for payment of the notes solely upon collections on
the contracts, funds on deposit in the trust's bank
accounts and payments made under the insurance
policy. Accordingly, you may not look to any assets
of AutoNation Financial Services, the seller, the
owner trustee, the indenture trustee or any of their
respective affiliates for payment of the notes.
POTENTIAL PREPAYMENT OF
THE NOTES MAY REQUIRE
REINVESTMENT OF PRINCIPAL
AT A LOWER RATE OF RETURN Possible prepayments of contracts by the related
obligors, the constant level of overcollateralization
and possible purchases of contracts by the seller or
AutoNation Financial Services will result in the
acceleration of principal payments on your notes. You
may not be able to reinvest the principal repaid to
you earlier than expected at a rate of return that is
equal to or greater than the rate of return on your
notes.
Although AutoNation Financial Services maintains
historical records on the rate of prepayment on its
contracts, those records are limited due to the
relatively short operating history of AutoNation
Financial Services. The obligors on the contracts may
prepay the contracts voluntarily at any time. In
addition, the
</TABLE>
S-8
<PAGE>
<TABLE>
<S> <C>
contracts are required to be prepaid upon the sale,
insured loss or other disposition of the related
vehicle.
If AutoNation Financial Services breaches any of its
representations and warranties regarding any
contracts, AutoNation Financial Services will be
required to repurchase those contracts from the
seller, and the seller will be required to repurchase
those contracts from the trust. AutoNation Financial
Services will also be required to purchase contracts
from the trust if it breaches its servicing
obligations relating to those contracts. In addition,
AutoNation Financial Services will be entitled to
purchase all of the remaining contracts from the
trust once the aggregate principal balance of the
contracts is 10% or less than the aggregate principal
balance of the contracts on the date they were sold
to the trust.
INTERESTS OF OTHER
PERSONS IN CONTRACTS
AND VEHICLES COULD
REDUCE THE FUNDS
AVAILABLE TO MAKE
PAYMENTS ON THE NOTES Another person could acquire an interest in a
contract that is superior to the trust's interest in
that contract. This could occur because AutoNation
Financial Services will not mark the physical
contracts as belonging to the trust. If another
person acquires an interest in a contract that is
superior to the trust's interest, the collections on
that contract will not be available to make payments
on the notes.
In addition, another person could acquire an interest
in a vehicle financed by a contract that is superior
to the trust's interest in the vehicle. This could
occur because AutoNation Financial Services will not
amend the related certificate of title to identify
the trust as the new secured party. If another person
acquires an interest in a vehicle that is superior to
the trust's interest, the proceeds from the sale of
that vehicle will not be available to make payments
on the notes.
BANKRUPTCY OF AUTONATION
FINANCIAL SERVICES COULD
RESULT IN LOSSES OR
DELAYS IN PAYMENTS ON
THE NOTES DUE TO THE
POWER OF BANKRUPTCY
COURTS TO PROVIDE
EQUITABLE RELIEF If AutoNation Financial Services enters a bankruptcy
proceeding and defaults in its obligations
under the insurance policy, you could experience
losses or delays in the payments on your notes due to
the power of the court in a bankruptcy proceeding to
provide equitable relief. AutoNation Financial
Services will sell the contracts to the seller, and
the seller will sell the contracts to the trust.
AutoNation Financial Services and the seller treat
these transactions as absolute transfers. However, if
AutoNation Financial Services enters a bankruptcy
proceeding, the court has the power to conclude that
the sale of the contracts by AutoNation Financial
Services to the seller was not a "true sale" and that
AutoNation Financial Services still owns the
contracts. The court also has the power to conclude
that AutoNation
</TABLE>
S-9
<PAGE>
<TABLE>
<S> <C>
Financial Services and the seller should be
consolidated for bankruptcy purposes. If the court
were to reach any of these conclusions, you could
experience losses or delays in payments on your notes
because:
o the indenture trustee would not be able to exercise
remedies against AutoNation Financial Services on
your behalf without permission from the court;
o the court might require the indenture trustee to
accept property in exchange for the contracts that
is of less value than the contracts;
o the court might prevent the indenture trustee or
the noteholders from taking some actions such as
selling the contracts or appointing a successor
servicer;
o the court might sell the contracts and pay off the
notes before their maturity;
o tax or government liens on AutoNation Financial
Services' property that arose before the transfer
of the contracts to the trust would be paid from
the collections on the contracts before the
collections were used to make payments on your
notes; and
o the indenture trustee might not have a perfected
security interest in the vehicles securing the
contracts or cash collections held by AutoNation
Financial Services at the time a bankruptcy
proceeding begins.
The seller has taken steps in structuring the trust
to minimize the risk that a court would conclude that
the sale of the contracts to the seller was not a
true sale or that AutoNation Financial Services and
the seller should be consolidated for bankruptcy
purposes.
BANKRUPTCY OF AUTONATION
FINANCIAL SERVICES COULD
RESULT IN LOSSES OR
DELAYS IN PAYMENTS ON THE
NOTES IF THE BANKRUPTCY
COURT FOLLOWS AN ADVERSE
LEGAL DECISION If AutoNation Financial Services enters a bankruptcy
proceeding and defaults in its obligations
under the insurance policy, you could experience
losses or delays in the payments on your notes if the
court in a bankruptcy proceeding follows the
reasoning of an adverse legal decision. In a case
decided by the U.S. Court of Appeals for the Tenth
Circuit in 1993, the court concluded that accounts
transferred by a seller to a buyer should be included
in the bankruptcy estate of the seller even if the
transfer was a true sale. Our counsel has advised us
that the facts of that case are distinguishable and
that the reasoning of that court appears to be
inconsistent with established precedent and the
Uniform Commercial Code. However, if AutoNation
Financial Services enters a bankruptcy proceeding and
the court in the bankruptcy proceeding applies the
reasoning of the court in that case and
defaults in its obligations under the insurance
policy, you could experience losses or delays in the
payments on your notes.
</TABLE>
S-10
<PAGE>
<TABLE>
<S> <C>
GEOGRAPHIC CONCENTRATION
OF CONTRACTS IN [STATE],
[STATE] AND [STATE] COULD
RESULT IN LOSSES ON THE
NOTES Economic conditions in the jurisdictions where the
obligors under the contracts reside may affect the
delinquency, loan loss and repossession experience of
the trust relating to the contracts. Based on the
principal balance of the original pool of contracts
on , % of the contracts were originated
in [State], % of the contracts were originated in
[State] and % of the contracts were originated in
[State]. Adverse economic conditions affecting
[State], [State] or [State] could have a
disproportionately significant effect on the
delinquency, loan loss and repossession experience of
the trust. Adverse economic conditions in those
jurisdictions could also have a negative impact on
the timing and amount of principal and interest
payments on the notes.
NOTEHOLDERS MAY NOT
DECLARE EVENTS OF DEFAULT
UNDER THE INDENTURE OR
DECIDE THE CONSEQUENCES
OF EVENTS OF DEFAULT Noteholders may not declare events of default under
the indenture or decide the consequences of events of
default if has not defaulted under the
insurance policy. Generally, only can declare
an event of default under the indenture. If
declares an event of default, will have the
right to cause the liquidation of the trust and the
redemption of the notes. Following an event of
default, the indenture trustee will continue to
submit claims under the insurance policy for any
shortfalls in the amount needed to make payments on
the notes. However, may instead elect to
repay all or any portion of the outstanding notes,
plus any accrued interest.
EVENTS OF DEFAULT UNDER
THE INDENTURE COULD
RESULT IN LOSSES OR
ACCELERATION OF PAYMENTS
ON THE NOTES If an event of default occurs under the indenture
resulting in the acceleration of the notes, it may
shorten the average term and date of final payment of
the notes. You may not be able to reinvest the
principal repaid to you earlier than expected at a
rate of return that is equal to or greater than the
rate of return on your notes. In addition, you may
not be paid the principal amount of your notes in
full if defaults under the insurance policy
and the assets of the trust are insufficient to pay
the principal amount of all the notes in full.
CLASS A-2 NOTES, CLASS
A-3 NOTES AND CLASS A-4
NOTES BEAR ADDITIONAL
CREDIT RISK The class A-2 notes, the class A-3 notes and the
class A-4 notes bear more credit risk than the class
A-1 notes. Principal payments on the class A-2 notes
will not begin until all principal on the class A-1
notes has been repaid. Similarly, principal payments
on the class A-3 notes will not begin until all
principal on the class A-2 notes has been repaid.
Additionally, principal payments on the class A-4
notes will not begin until all principal on the class
</TABLE>
S-11
<PAGE>
<TABLE>
<S> <C>
A-3 notes has been repaid. If defaults under
the insurance policy after one or more classes of
notes have been fully or partially repaid and before
other classes of notes with a higher numerical
designation have been fully repaid, subsequent losses
on the contracts will have a disproportionately
greater effect on those classes of notes with higher
numerical designations.
POTENTIAL COMPUTER
PROGRAM PROBLEMS
BEGINNING IN THE YEAR
2000 COULD RESULT IN
DELAYS IN PAYMENTS ON
THE NOTES The payment of principal and interest on the notes
could be delayed if AutoNation Financial Services, in
its capacity as the servicer, or the indenture
trustee experience problems in their computer
programs or systems relating to the year 2000. Many
existing computer programs and systems use only two
digits to identify a year. These programs or systems
could fail or produce erroneous results during the
transition from the year 1999 to the year 2000 and
afterwards.
If AutoNation Financial Services, in its capacity as
the servicer, does not have computer systems that are
year 2000 compliant by the year 2000, the ability of
AutoNation Financial Services to service the
contracts may be materially and adversely affected.
If the indenture trustee does not have computer
systems that are year 2000 compliant by the year
2000, its ability to make distributions on the notes
may be materially and adversely affected.
If World Omni Financial Corp., in its capacity as the
subservicer, does not attain year 2000 compliance for
its significant information technology systems by the
year 2000, World Omni believes that it would be
unable to sustain its current level of performance
and customer service. World Omni has undertaken a
comprehensive program to coordinate its compliance
efforts. World Omni does not anticipate that year
2000 issues on World Omni's part will have a material
adverse effect on the trust, the assets of the trust
(including the contracts) or the servicing of those
assets. However, to the extent that World Omni's
systems have year 2000 problems, the amount and
timing of distributions to noteholders could be
affected.
</TABLE>
S-12
<PAGE>
DESCRIPTION OF THE TRUST
Capitalized terms are defined in this prospectus supplement and, if not, in the
accompanying prospectus. Definitions are indicated by boldface type. Both the
accompanying prospectus and this prospectus supplement contain an index of
defined terms listing the page numbers where definitions can be found.
ANRC AUTO OWNER TRUST
ANRC Auto Owner Trust is a business trust formed under the laws of the
state of Delaware pursuant to an amended and restated owner trust agreement,
dated as of , between the owner trustee and the seller.
The assets of the trust will include a pool of motor vehicle retail
installment sales contracts, all of which are secured by new and used
automobiles and light-duty trucks, acquired from the seller pursuant to a sale
and servicing agreement, dated as of , among the trust, the
seller and the servicer. The trust has not and will not engage in any business
activity other than the following:
(1) acquiring, holding and managing the contracts and the other assets
of the trust and proceeds therefrom;
(2) issuing the following notes to noteholders:
o the ANRC Auto Owner Trust , % Class A-1
Asset-Backed Notes;
o the ANRC Auto Owner Trust , % Class A-2
Asset-Backed Notes;
o the ANRC Auto Owner Trust , % Class A-3
Asset-Backed Notes; and
o the ANRC Auto Owner Trust , % Class A-4
Asset-Backed Notes;
(3) making payments and distributions on the notes; and
(4) engaging in other activities that are necessary, suitable or
convenient to accomplish the foregoing or are incidental thereto or
connected therewith.
The trust's principal executive offices are located in
, Delaware, in care of the owner trustee at the address
listed below under "--The Owner Trustee."
CAPITALIZATION OF THE TRUST
The trust will initially be capitalized with equity (exclusive of the funds
deposited in the Spread Account) equal to $ , which is the difference
between the Pool Balance as of the Cut-Off Date and the initial aggregate
principal amount of the notes. The residual interest in the trust (including the
right to receive distributions from the Spread Account) will be held by the
seller.
The following table illustrates the capitalization of the trust as of
(the "CLOSING DATE"):
<TABLE>
<S> <C>
Class A-1 Notes......................................... $
Class A-2 Notes.........................................
Class A-3 Notes.........................................
Class A-4 Notes.........................................
Equity..................................................
----------
Total................................................. $
----------
----------
</TABLE>
S-13
<PAGE>
THE OWNER TRUSTEE
will be the owner trustee. The owner trustee is a
Delaware banking corporation with principal offices located at
The liability of the owner trustee in connection with the issuance and sale
of the notes is limited solely to the express obligations of the owner trustee
set forth in the owner trust agreement and the sale and servicing agreement.
TRUST PROPERTY
The property of the trust will include, among other things, the following:
(1) the contracts, all of which will have been purchased from the
seller and are secured by financed vehicles;
(2) documents relating to the contracts, including all servicing
records in hard or electronic form;
(3) collections received with respect to all originated or purchased
contracts;
(4) liens on the financed vehicles and the right to receive proceeds
from claims on any related insurance policies covering the financed
vehicles or the related obligors;
(5) all amounts on deposit in the Collection Account, the Payment
Account, the Note Distribution Account and the Spread Account, including
the principal amount of all Eligible Investments credited to the Collection
Account and the Spread Account (but excluding any investment income from
Eligible Investments credited to the Collection Account, which will be paid
to the servicer);
(6) the right of the seller to cause AutoNation Financial Services to
repurchase any contracts with respect to which it breaches any of its
representations or warranties or its servicing obligations; and
(7) all proceeds of the foregoing (collectively, the "TRUST
PROPERTY").
Pursuant to an indenture, dated as of , between the
trust and , as indenture trustee, the trust will grant a
security interest in the Trust Property in favor of the indenture trustee on
behalf of the noteholders and for the benefit of the insurer in support of the
obligations owing to the insurer under the insurance agreement, dated as of
, among the insurer, the seller, AutoNation Financial
Services, the trust, the owner trustee and the indenture trustee.
AUTONATION FINANCIAL SERVICES' PORTFOLIO OF MOTOR VEHICLE CONTRACTS
ORIGINATION OF MOTOR VEHICLE CONTRACTS
AutoNation Financial Services Corp. originates motor vehicle retail
installment sales contracts secured by new and used automobiles and light-duty
trucks in connection with providing financing for the purchase of those
vehicles. The motor vehicle contracts in AutoNation Financial Services'
portfolio that were conveyed to the trust (the "RECEIVABLES POOL") are currently
originated from application referrals received from the following dealers:
(1) franchised automotive dealerships or used vehicle megastores owned by
AutoNation, Inc. and the eight used vehicle megastore licensees and (2) seven
third party franchised automotive dealerships. All of the contracts included in
the Trust Property have been sold to the seller by AutoNation Financial Services
and then sold to the trust. See "AutoNation Financial Services' Portfolio of
Motor Vehicle Contracts--Origination of Motor Vehicle Contracts" in the
accompanying prospectus.
DELINQUENCY AND LOSS EXPERIENCE
AutoNation Financial Services considers a contract to be delinquent if at
any time $40 or more is past due thereunder. Efforts to collect delinquent
contract payments are made by AutoNation Financial Services' collection
department personnel, collection agencies and attorneys retained by AutoNation
Financial Services. For a description of AutoNation Financial Services'
collection practices and policies see "AutoNation Financial Services' Portfolio
of Motor Vehicle Contracts--Collection Procedures" in the accompanying
prospectus.
The following tables set forth the delinquency, loss and recovery
experience for each of the periods shown for the portfolio of motor vehicle
contracts originated and serviced by AutoNation Financial Services. The
relatively short amount of time for which AutoNation Financial Services has been
involved in the origination of motor vehicle contracts results in limited
historical performance information with respect to the motor vehicle contracts
it originates and thus, delinquencies and loan losses may differ from existing
levels in the portfolio with the passage of time. Moreover, delinquency and loss
experience may be influenced by a variety of economic, social and other factors.
S-14
<PAGE>
DELINQUENCY EXPERIENCE OF AUTONATION FINANCIAL SERVICES' MOTOR VEHICLE CONTRACT
PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AT DECEMBER 31, AT DECEMBER 31, AT JULY 31, AT JULY 31,
1997 1998 1998 1999
------------------- -------------------- -------------------- ----------------------
NUMBER OF NUMBER OF NUMBER OF NUMBER OF
CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT
--------- ------- --------- -------- --------- -------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Servicing portfolio................ 3,129 $36,777 55,460 $765,081 27,035 $375,043 109,349 $1,533,256
Delinquencies
31-60 days(1)(2)................. 4 $ 43 775 $ 11,321 140 $ 2,103 1,460 $ 20,523
61-90 days(1)(2)................. 1 $ 16 114 $ 1,711 6 112 205 $ 2,891
91+ days(1)(2)................... 1 $ 6 23 $ 341 3 35 36 $ 537
Total delinquencies as a percent of
servicing portfolio.............. 0.19% 0.18% 1.64% 1.75% 0.55% 0.60% 1.56% 1.56%
</TABLE>
- ------------------
(1) Delinquencies include principal amounts only.
(2) The period of delinquency is based on the number of days payments are past
due.
LOAN LOSS EXPERIENCE OF AUTONATION FINANCIAL SERVICES' MOTOR VEHICLE CONTRACT
PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED SEVEN MONTHS ENDED
DECEMBER 31, JULY 31, 1999
------------------- ----------------------
1997(1) 1998 1998 1999
------- -------- -------- ----------
<S> <C> <C> <C> <C>
Number of motor vehicle contracts outstanding(2)................ 3,129 55,460 27,035 109,349
Period end principal outstanding................................ $36,777 $765,081 $375,043 $1,533,256
Average principal outstanding(3)................................ $16,236 $323,768 $131,192 $1,086,018
Number of gross charge-offs..................................... 0 339 49 1,248
Gross charge-offs(4)............................................ $ 0 $ 946 $ 25 $ 5,958
Net charge-offs(5).............................................. $ 0 $ 911 $ 23 $ 5,597
Net charge-offs as a percent of average outstanding(6).......... 0% 0.28% 0.01% 0.88%
</TABLE>
- ------------------
(1) Includes information for the period from April 1997 though December 1997.
(2) Number of contracts as of period end.
(3) Computed by taking a simple average of monthly average outstanding principal
amounts for such period.
(4) Gross charge-offs are equal to the remaining principal balance less proceeds
from the sale of repossessed vehicles.
(5) Net charge-offs are equal to gross charge-offs--less recoveries--on motor
vehicle contracts previously charged-off. Net charge-offs exclude expenses
associated with collection, repossession and disposition of motor vehicle
contracts.
(6) Percentages have been annualized for the seven months ended July 31, 1998
and 1999 and are not necessarily indicative of experience for the year.
The delinquency and net loss rates set forth above reflect, among other
factors, the success of AutoNation Financial Services' collection efforts and
general economic conditions. At July 31, 1999, delinquencies for the servicing
portfolio represented 1.56% of the amount of motor vehicle contracts in
AutoNation Financial Services' servicing portfolio or $24.0 million as compared
to 0.60% at July 31, 1998 or $2.3 million. The net losses for the servicing
portfolio as a percentage of average serviced loans outstanding was 0.88% for
the seven months ended July 31, 1999 compared to 0.01% for the seven months
ended July 31, 1998. However, AutoNation Financial Services has limited
performance data for the motor vehicle retail installment sales contracts it
originates. As AutoNation Financial Services' portfolio of contracts matures,
delinquency percentages and loan losses may differ from prior performance. We
cannot assure you that the performance of the contracts in the trust will be
similar to the limited historical performance of the portfolio set forth above.
DESCRIPTION OF THE CONTRACTS
All of the contracts in the Receivables Pool will be purchased by the
seller from AutoNation Financial Services. All of the contracts have been
originated by AutoNation Financial Services as of (the "CUT-OFF
DATE") from loan application referrals received from dealers. See "AutoNation
Financial Services' Portfolio of Motor Vehicle Contracts" herein and in the
accompanying prospectus. The total principal balance of
S-15
<PAGE>
the contracts in the Receivables Pool as of the close of business on
, was $ . Each of the contracts in the trust will be
a fixed rate contract where the allocation of each payment between interest and
principal is calculated using the simple interest method. For a more detailed
explanation of this calculation method, see "Description of the
Contracts-Calculation Method" in the accompanying prospectus.
As of the Cut-Off Date, contracts included in the trust were originated in
states, the District of Columbia and other United States territories and
possessions. As of the Cut-Off Date, contracts originated in [State] totaled %
of the trust, contracts originated in [State] totaled % of the trust and
contracts originated in [State] totaled % of the trust. As of the Cut-Off
Date, the aggregate principal balances of the contracts originated in any other
single state did not exceed %.
The contracts included in the trust were selected from the motor vehicle
contracts in AutoNation Financial Services' portfolio using the criteria
described below. No selection procedures were used with respect to the contracts
that are adverse to the noteholders or the insurer. Contracts representing
% of the Trust Property are secured by new vehicles, and contracts
representing % of the Trust Property are secured by used vehicles. The
seller may not substitute other contracts for the contracts presently in the
trust at any time during the term of the sale and servicing agreement.
The seller will represent that each contract included in the trust
satisfies several eligibility requirements, including the following:
(1) the contract is secured by a new or used automobile or light-duty
truck;
(2) the contract has an annual percentage rate, also known as an APR, of
at least % and not more than %;
(3) the contract has a remaining maturity as of the Cut-Off Date of not
more than months;
(4) the contract has an original maturity of not more than months;
(5) the contract is a fully-amortizing fixed rate contract which provides
for level scheduled monthly payments determined on the basis of the
simple interest method (except for the first and last payment, which
may be minimally different from the level payments);
(6) the contract has no payment more than days past due as of the
Cut-Off Date;
(7) the contract has a remaining principal balance as of the Cut-Off Date
of not more than $ and not less than $ ;
(8) as of the Cut-Off Date, the seller or the servicer has not identified
the related obligor as being the subject of a bankruptcy, insolvency,
reorganization or other similar proceeding;
(9) the contract is a retail installment sales contract;
(10) the contract was originated in the United States by a dealer for the
retail sale of a financed vehicle in the ordinary course of the
dealer's business;
(11) the contract requires the related obligor to maintain physical damage
and theft insurance covering the related financed vehicle;
(12) the contract complied with AutoNation Financial Services' credit and
collection policies and procedures at the time of its origination by
AutoNation Financial Services;
(13) the contract does not provide for the substitution, exchange or
addition of any financed vehicle subject to the contract;
(14) only one original executed copy of the contract exists; and
(15) the contract constitutes "chattel paper" under the Uniform Commercial
Code as in effect in the applicable jurisdiction.
Set forth below is selected data concerning the contracts as of the Cut-Off
Date which had a pool balance of $ (the "POOL BALANCE").
S-16
<PAGE>
COMPOSITION OF THE CONTRACTS
<TABLE>
<S> <C>
Aggregate principal balance.................................................. $
Number of Contracts..........................................................
Average principal balance outstanding........................................ $
Average original amount financed............................................. $
Original amount financed (range)............................................. to
Weighted average APR......................................................... %
APR (range).................................................................. % to %
Weighted average original term...............................................
Original term (range)........................................................ to mos.
Weighted average remaining term..............................................
Remaining term (range)....................................................... to mos.
</TABLE>
DISTRIBUTION BY APRS OF THE CONTRACTS
<TABLE>
<CAPTION>
% OF
NUMBER OF % OF PRINCIPAL CUT-OFF
APR RANGE CONTRACTS CONTRACTS BALANCE POOL BALANCE
- ----------------------------------------------------------------- --------- --------- --------- ------------
<S> <C> <C> <C> <C>
0.000% to 7.000%...............................................
7.001% to 8.000%...............................................
8.001% to 9.000%...............................................
9.001% to 10.000%...............................................
10.001% to 11.000%...............................................
11.001% to 12.000%...............................................
12.001% to 13.000%...............................................
13.001% to 14.000%...............................................
14.001% to 15.000%...............................................
15.001% to 16.000%...............................................
16.001% to 17.000%...............................................
17.001% to 18.000%...............................................
18.001% to 19.000%...............................................
19.001% to 20.000%...............................................
20.001% to 21.000%...............................................
21.001% and over.................................................
------- ------- ------- ------
Totals......................................................... %(1) %(1)
</TABLE>
- ------------------
(1) Percentages may not add to 100% due to rounding.
S-17
<PAGE>
GEOGRAPHIC CONCENTRATION OF THE CONTRACTS
<TABLE>
<CAPTION>
% OF
NUMBER OF % OF PRINCIPAL CUT-OFF
CONTRACTS CONTRACTS BALANCE POOL BALANCE
--------- --------- --------- ------------
<S> <C> <C> <C> <C>
Alabama..........................................................
Arizona..........................................................
California.......................................................
Colorado.........................................................
Florida..........................................................
Georgia..........................................................
Illinois.........................................................
Indiana..........................................................
Iowa.............................................................
Maryland.........................................................
Michigan.........................................................
Minnesota........................................................
Nevada...........................................................
New Jersey.......................................................
North Carolina...................................................
Ohio.............................................................
Pennsylvania.....................................................
South Carolina...................................................
Tennessee........................................................
Texas............................................................
Virginia.........................................................
Washington.......................................................
------- ------- ------- ------
Totals......................................................... 100.00%(1) 100.00%(1)
</TABLE>
- ------------------
(1) Percentages may not add to 100% due to rounding.
Since the largest balance of contract obligors (based on state of
origination) whose accounts were included in the trust as of
were located in [State], [State] and [State], adverse changes in the economic
conditions in these jurisdictions could have a direct impact on the timing and
amount of payments on the notes.
MODEL YEAR CONCENTRATION OF THE CONTRACTS
<TABLE>
<CAPTION>
% OF
NUMBER OF % OF PRINCIPAL CUT-OFF
CONTRACTS CONTRACTS BALANCE POOL BALANCE
--------- --------- --------- ------------
<S> <C> <C> <C> <C>
1993.............................................................
1994.............................................................
1995.............................................................
1996.............................................................
1997.............................................................
1998.............................................................
1999.............................................................
2000.............................................................
Other(1).........................................................
------- ------- ------- ------
Totals......................................................... 100.00%(2) 100.00%(2)
</TABLE>
(Footnotes on next page)
S-18
<PAGE>
(Footnotes from previous page)
- ------------------
(1) Includes all model years comprising less than % by principal balance of
the Pool Balance.
(2) Percentages may not add to 100% due to rounding.
In addition, $ ( %), $ ( %) and $ ( %) of the
contracts included in the trust relate to financial vehicles manufactured by
, and
, respectively. The balance of the contracts relate to
financial vehicles manufactured by manufacturers comprising less than % of the
Pool Balance. We believe that these concentrations are consistent with those
manufacturers' market shares.
MATURITY AND PREPAYMENT CONSIDERATIONS
The indenture provides that the noteholders may receive payments of
principal on the 15th day of each month (or if that day is not a business day
(i.e., a Saturday, Sunday, a day on which the insurer is closed or a day on
which banking institutions in New York, New York or in the city in which the
indenture trustee's corporate trust office or the owner trustee's corporate
trust office is located are authorized or obligated by law to be closed), on the
next succeeding business day) (each, a "DISTRIBUTION DATE"), but will receive
the full outstanding principal amount of each class of notes no later than in
the case of (1) the class A-1 notes, , (2) in the case of the
class A-2 notes, , (3) in the case of the class A-3 notes,
and (4) in the case of the class A-4 notes,
(collectively, the "FINAL SCHEDULED DISTRIBUTION DATES").
Contracts are or will be prepayable in full by the obligors at any time
without penalty. See "Maturity and Prepayment Considerations" in the
accompanying prospectus regarding the effects of prepayments on the weighted
average life of the contracts. As the rate of payment of principal of each class
of notes depends primarily on the rate of payment (including prepayments) of the
principal of the contracts, final payment of any class of notes is expected to
occur earlier, and could occur significantly earlier, than the respective Final
Scheduled Distribution Dates for the notes. In addition, the rate of payment of
principal of each class of notes will be affected by the portion of collections
on the contracts relating to the Overcollateralization Amount applied to the
payment of principal of the notes. See "Risk Factors--Potential prepayment of
the notes may require reinvestment of principal at a lower rate of return"
herein.
The trust can make no prediction as to the actual prepayment rates that
will be experienced on the contracts in either stable or changing interest rate
environments. In addition, the rate of payment of principal of each class of
notes will be affected by the incidence of delinquencies, defaults and losses on
the contracts, the level of overcollateralization and by any accelerated
payments made on the notes following an event of default under the indenture.
See "Risk Factors--Events of default under the indenture could result in losses
or acceleration of payments on the notes" herein. In addition, while it is
anticipated that there will be monthly principal and interest collections in an
amount sufficient to pay the outstanding principal amount of each class of notes
on the applicable Final Scheduled Distribution Dates, no assurance can be given
in that regard. Full payment of each class of notes by the applicable Final
Scheduled Distribution Dates depends on, among other things, the payment by
obligors of amounts due under the contracts and the fulfillment of the insurer's
obligations under the insurance policy.
Prepayments on motor vehicle receivables can be measured relative to a
prepayment standard or model. The model used in this prospectus supplement, the
absolute prepayment model, represents an assumed rate of prepayment each month
relative to the original number of receivables in a pool of receivables. The
absolute prepayment model 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% absolute
prepayment model rate means that 100 receivables prepay each month. The absolute
prepayment model 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 contracts.
The tables captioned "Percent of Initial Class A-1 Note and Class A-2 Note
Principal Balances at Various Absolute Prepayment Model Percentages" and
"Percent of Initial Class A-3 Note and Class A-4 Note Principal
S-19
<PAGE>
Balances at Various Absolute Prepayment Model Percentages" have been prepared on
the basis of the characteristics of the contracts. Each absolute prepayment
model table assumes that (a) the contracts prepay in full at the specified
constant percentage of the absolute prepayment model monthly, with no defaults,
losses or repurchases, (b) each scheduled monthly payment on the contracts is
made on the last day of each month and each month has 30 days, (c) payments on
the notes are made on each Distribution Date (and each Distribution Date is
assumed to be the 15th day of each applicable month), (d) the balance in the
Spread Account on each Distribution Date is equal to the Spread Account Required
Amount and (e) the servicer does not exercise its option to purchase the
contracts. The contracts have an assumed cut-off date of the Cut-Off Date. Each
absolute prepayment model table indicates the projected weighted average life of
each class of notes and sets forth the percent of the initial principal amount
of each class of notes that is projected to be outstanding after each of the
Distribution Dates shown at various constant absolute prepayment model
percentages.
The absolute prepayment model tables also assume that (a) the contracts
have been aggregated into hypothetical pools with all of the contracts within
each pool having the following characteristics and (b) the level scheduled
monthly payment for each pool (which is based on its principal balance, weighted
average APR, weighted average original term to maturity and weighted average
remaining term to maturity as of the Cut-Off Date) will be such that each pool
will be fully amortized by the end of its remaining term to maturity.
<TABLE>
<CAPTION>
WEIGHTED AVERAGE WEIGHTED AVERAGE
AGGREGATE WEIGHTED ORIGINAL TERM REMAINING TERM
PRINCIPAL AVERAGE TO MATURITY TO MATURITY
POOL BALANCE APR (IN MONTHS) (IN MONTHS)
- --------------------------------- --------- -------- ---------------- ----------------
<S> <C> <C> <C> <C>
1 $ %
2 $ %
3 $ %
4 $ %
5 $ %
$
</TABLE>
The information included in the following tables represents forward-looking
statements and involves risks and uncertainties that could cause actual results
to differ materially from the results hypothesized in the forward-looking
statements. The actual characteristics and performance of the contracts will
differ from the assumptions used in constructing each absolute prepayment model
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 contracts will
prepay at a constant level until maturity or that all of the contracts will
prepay at the same level. Moreover, the diverse terms of contracts within each
of the five hypothetical pools could produce slower or faster principal
distributions than indicated in each absolute prepayment model table at the
various constant absolute prepayment model percentages specified, even if the
original and remaining terms to maturity of the contracts are as assumed. Any
difference between these assumptions and the actual characteristics and
performance of the contracts, or actual prepayment experience, will affect the
percentages of initial balances outstanding over time and the weighted average
lives of each class of the notes.
S-20
<PAGE>
PERCENT OF INITIAL CLASS A-1 NOTE AND CLASS A-2 NOTE PRINCIPAL BALANCES
AT VARIOUS ABSOLUTE PREPAYMENT MODEL PERCENTAGES
<TABLE>
<CAPTION>
CLASS A-1 NOTES CLASS A-2 NOTES
----------------------------------- -----------------------------------
ASSUMED ABSOLUTE PREPAYMENT ASSUMED ABSOLUTE PREPAYMENT
MODEL PRECENTAGE(2) MODEL PRECENTAGE(2)
----------------------------------- -----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
DISTRIBUTION DATES 0.50% 1.00% 1.50% 2.00% 0.50% 1.00% 1.50% 2.00%
- ------------------------------------- ----- ----- ----- ----- ----- ----- ----- -----
Closing Date.........................
September 15, 1999...................
October 15, 1999.....................
November 15, 1999....................
December 15, 1999....................
January 15, 2000.....................
February 15, 2000....................
March 15, 2000.......................
April 15, 2000.......................
May 15, 2000.........................
June 15, 2000........................
July 15, 2000........................
August 15, 2000......................
September 15, 2000...................
October 15, 2000.....................
November 15, 2000....................
December 15, 2000....................
January 15, 2001.....................
February 15, 2001....................
March 15, 2001.......................
April 15, 2001.......................
May 15, 2001.........................
June 15, 2001........................
July 15, 2001........................
August 15, 2001......................
September 15, 2001...................
October 15, 2001.....................
November 15, 2001....................
December 15, 2001....................
January 15, 2002.....................
February 15, 2002....................
March 15, 2002.......................
April 15, 2002.......................
May 15, 2002.........................
June 15, 2002........................
Weighted Average Life
(years)(1) ........................
</TABLE>
- ------------------
(1) The weighted average life of a note is determined by (a) multiplying the
amount of each principal payment of the note by the number of years from the
date of the issuance of the note to the Distribution Date on which the
principal payment is made, (b) adding the results and (c) dividing the sum
by the initial principal balance of the note.
(2) An asterisk (*) means a percent of initial note principal balance of more
than zero and less than 0.50%.
THE ABSOLUTE PREPAYMENT MODEL TABLES HAVE BEEN PREPARED BASED ON THE
ASSUMPTIONS DESCRIBED ABOVE (INCLUDING THE ASSUMPTIONS REGARDING THE
CHARACTERISTICS AND PERFORMANCE OF THE CONTRACTS WHICH WILL DIFFER FROM THE
ACTUAL CHARACTERISTICS AND PERFORMANCE THEREOF) AND SHOULD BE READ IN
CONJUNCTION THEREWITH.
S-21
<PAGE>
PERCENT OF INITIAL CLASS A-3 NOTE AND CLASS A-4 NOTE PRINCIPAL BALANCES
AT VARIOUS ABSOLUTE PREPAYMENT MODEL PERCENTAGES
<TABLE>
<CAPTION>
CLASS A-3 NOTES CLASS A-4 NOTES
-------------------------------- --------------------------------
ASSUMED ABSOLUTE PREPAYMENT ASSUMED ABSOLUTE PREPAYMENT
MODEL PERCENTAGE MODEL PERCENTAGE
-------------------------------- --------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
DISTRIBUTION DATES 0.50% 1.00% 1.50% 2.00% 0.50% 1.00% 1.50% 2.00%
- --------------------------------------------- ----- ----- ----- ----- ----- ----- ----- -----
Closing Date.................................
September 15, 1999...........................
October 15, 1999.............................
November 15, 1999............................
December 15, 1999............................
January 15, 2000.............................
February 15, 2000............................
March 15, 2000...............................
April 15, 2000...............................
May 15, 2000.................................
June 15, 2000................................
July 15, 2000................................
August 15, 2000..............................
September 15, 2000...........................
October 15, 2000.............................
November 15, 2000............................
December 15, 2000............................
January 15, 2001.............................
February 15, 2001............................
March 15, 2001...............................
April 15, 2001...............................
May 15, 2001.................................
June 15, 2001................................
July 15, 2001................................
August 15, 2001..............................
September 15, 2001...........................
October 15, 2001.............................
November 15, 2001............................
December 15, 2001............................
January 15, 2002.............................
February 15, 2002............................
March 15, 2002...............................
April 15, 2002...............................
May 15, 2002.................................
June 15, 2002................................
</TABLE>
- ------------------
THE ABSOLUTE PREPAYMENT MODEL TABLES HAVE BEEN PREPARED BASED ON THE ASSUMPTIONS
DESCRIBED ABOVE (INCLUDING THE ASSUMPTIONS REGARDING THE CHARACTERISTICS AND
PERFORMANCE OF THE CONTRACTS WHICH WILL DIFFER FROM THE ACTUAL CHARACTERISTICS
AND PERFORMANCE THEREOF) AND SHOULD BE READ IN CONJUNCTION THEREWITH.
S-22
<PAGE>
PERCENT OF INITIAL CLASS A-3 NOTE AND CLASS A-4 NOTE PRINCIPAL BALANCES
AT VARIOUS ABSOLUTE PREPAYMENT MODEL PERCENTAGES (CONTINUED)
<TABLE>
<CAPTION>
CLASS A-3 NOTES CLASS A-4 NOTES
-------------------------------- --------------------------------
ASSUMED ABSOLUTE PREPAYMENT ASSUMED ABSOLUTE PREPAYMENT
MODEL PERCENTAGE(2) MODEL PERCENTAGE(2)
-------------------------------- --------------------------------
DISTRIBUTION DATES 0.50% 1.00% 1.50% 2.00% 0.50% 1.00% 1.50% 2.00%
- --------------------------------------------- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
July 15, 2002................................
August 15, 2002..............................
September 15, 2002...........................
October 15, 2002.............................
November 15, 2002............................
December 15, 2002............................
January 15, 2003.............................
February 15, 2003............................
March 15, 2003...............................
April 15, 2003...............................
May 15, 2003.................................
June 15, 2003................................
July 15, 2003................................
August 15, 2003..............................
September 15, 2003...........................
October 15, 2003.............................
November 15, 2003............................
December 15, 2003............................
January 15, 2004.............................
February 15, 2004............................
March 15, 2004...............................
April 15, 2004...............................
May 15, 2004.................................
June 15, 2004................................
July 15, 2004................................
August 15, 2004..............................
September 15, 2004...........................
October 15, 2004.............................
November 15, 2004............................
December 15, 2004............................
January 15, 2005.............................
February 15, 2005............................
March 15, 2005...............................
Weighted Average Life (years) (1)............
</TABLE>
- ------------------
(1) The weighted average life of a note is determined by (a) multiplying the
amount of each principal payment of the note by the number of years from the
date of the issuance of the note to the Distribution Date on which the
principal payment is made, (b) adding the results and (c) dividing the sum
by the initial principal balance of the note.
(2) An asterisk (*) means a percent of initial note principal balance of more
than zero and less than 0.5%.
THE ABSOLUTE PREPAYMENT MODEL TABLES HAVE BEEN PREPARED BASED ON THE
ASSUMPTIONS DESCRIBED ABOVE (INCLUDING THE ASSUMPTIONS REGARDING THE
CHARACTERISTICS AND PERFORMANCE OF THE CONTRACTS WHICH WILL DIFFER FROM THE
ACTUAL CHARACTERISTICS AND PERFORMANCE THEREOF) AND SHOULD BE READ IN
CONJUNCTION THEREWITH.
S-23
<PAGE>
USE OF PROCEEDS
The net proceeds of the initial sale of the notes will be used by the trust
to purchase the contracts from the seller pursuant to the sale and servicing
agreement and to fund the deposits in the Spread Account maintained for the
benefit of the noteholders and the insurer. The net proceeds to be received by
the seller from the sale of the contracts to the trust will be used by the
seller to repay indebtedness incurred, or to pay other amounts owed, in
connection with its acquisition of the contracts from AutoNation Financial
Services and to pay other expenses in connection with the pooling of the
contracts and the issuance of the notes. AutoNation Financial Services will use
the proceeds from the sale of the contracts for general corporate purposes.
DESCRIPTION OF THE NOTES
The notes will be issued pursuant to the terms of the indenture. A copy of
the indenture will be filed with the SEC following the issuance of the notes.
The following summaries, together with the summaries contained under
"Description of the Securities" and "Description of the Indenture" in the
accompanying prospectus, describe all of the material terms of the notes and the
indenture. However, these summaries do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, all of the
provisions of the notes and the indenture. Where particular provisions of or
terms used in the indenture are referred to, the actual provisions (including
definitions of terms) are incorporated by reference as part of the summaries.
The following summaries supplement the description of the general terms and
provisions of the indenture set forth under the heading "Description of the
Indenture" in the accompanying prospectus, to which description reference is
hereby made.
ISSUANCE AND REGISTRATION OF THE NOTES
The notes of each class will be offered for purchase in minimum
denominations of $1,000 and integral multiples thereof, except that one note of
each class may be issued in a different denomination. The notes will initially
be represented by one or more physical certificates registered in the name of
Cede & Co., as nominee of The Depository Trust Company, also known as DTC. The
interests of holders of beneficial interests in the global notes will be
available for purchase in book-entry form only. Unless and until the notes are
issued in definitive registered form under the limited circumstances described
herein, no holder of a beneficial interest in a global note will be entitled to
receive a definitive certificate representing that person's interest in the
notes. All references herein to actions by noteholders shall refer to actions
taken by DTC upon instructions from its participating organizations and all
references herein to payments, distributions, notices, reports and statements to
noteholders shall refer to distributions, notices, reports and statements to DTC
or Cede & Co., as the registered holder of the notes, as the case may be, for
distribution to holders of beneficial interests in a global note in accordance
with DTC procedures. See "Description of the Securities--Book-Entry
Registration" and "--Definitive Securities" in the accompanying prospectus.
Unless and until notes in definitive registered form have been issued,
payments on each Distribution Date will be made through the facilities of DTC
and the related Record Date will be the business day prior to that Distribution
Date. If notes in definitive registered form are issued, the related Record Date
will be the last day of the calendar month preceding the Distribution Date. The
final payment of principal of, and interest on, each note will be made only upon
presentation and surrender of the note at the office or agency of the indenture
trustee maintained for that purpose.
INTEREST PAYMENTS
Interest on the outstanding principal amount of each class of notes will
accrue at a per annum rate equal to the applicable interest rate for that class
of notes and, except as otherwise provided herein, will be distributed to the
noteholders monthly on each Distribution Date, commencing , and on the
applicable Final Scheduled Distribution Date. The interest period with respect
to any Distribution Date will be the period from the previous Distribution Date
or, in the case of the first Distribution Date, from and including the Closing
Date, to but excluding the Distribution Date (each, an "INTEREST ACCRUAL
PERIOD"). Interest on the class A-1 notes will be calculated on the basis of the
actual number of days in the related Interest Accrual Period and a 360-day year.
S-24
<PAGE>
Interest on the class A-2 notes, the class A-3 notes and the class A-4 notes
will be calculated on the basis of a 360-day year consisting of twelve 30-day
months.
The class A-1 notes will bear interest at the rate of % per annum, the
class A-2 notes will bear interest at the rate of % per annum, the
class A-3 notes will bear interest at the rate of % per annum and the
class A-4 notes will bear interest at the rate of % per annum.
Interest accrued but not paid to the holders of any class of notes on any
Distribution Date will be due on the immediately succeeding Distribution Date,
together with, to the extent permitted by applicable law, interest on the
shortfall at the related interest rate for that class of notes. Interest
distributions with respect to the notes will be made as described below under
"Description of the Transfer and Servicing Agreements--Distributions" herein.
PRINCIPAL PAYMENTS
Principal payments will be made to the noteholders, to the extent described
below, on each Distribu tion Date in an amount equal to the Note Principal
Distributable Amount. See "Description of the Transfer and Servicing
Agreements--Distributions" herein.
Principal payments on the notes will be applied on each Distribution Date
from the Note Distribution Account in the following order of priority:
(1) to the holders of the class A-1 notes until the principal amount
of the class A-1 notes has been reduced to zero;
(2) to the holders of the class A-2 notes until the principal amount
of the class A-2 notes has been reduced to zero;
(3) to the holders of the class A-3 notes until the principal amount
of the class A-3 notes has been reduced to zero; and
(4) to the holders of the class A-4 notes until the principal amount
of the class A-4 notes has been reduced to zero.
The principal amount of each class of notes, to the extent not previously
paid, will be due on the related Final Scheduled Distribution Date for that
class of notes. The actual date on which the outstanding principal amount of any
class of notes is paid is expected to be earlier, and could be significantly
earlier, than the Final Scheduled Distribution Date for that class and will be
based on a variety of factors, including the factors described under "Maturity
and Prepayment Considerations" herein and in the accompanying prospectus.
Any assets remaining in the trust after the payment in full of the notes
and of any amounts owed to the servicer, the trustees and the insurer will be
distributed to the seller pursuant to the terms of the owner trust agreement and
the sale and servicing agreement.
OPTIONAL REDEMPTION
Any outstanding notes will be subject to redemption in whole, but not in
part, on any Distribution Date relating to an Optional Purchase. When the
outstanding principal balance of the contracts has declined to 10% or less of
the original Pool Balance, the servicer may, in its sole discretion, exercise
its option to purchase the Trust Property. If the servicer exercises this
option, the redemption price for each class of notes will equal the unpaid
principal amount of that class of notes plus accrued and unpaid interest thereon
at the applicable interest rate. The trust will also pay or cause to be paid all
amounts owed to the insurer, the servicer, the indenture trustee and the owner
trustee in connection with any Optional Purchase. Any optional redemption by the
servicer will effect an early retirement of any outstanding class of notes. See
"Description of the Transfer and Servicing Agreements--Termination" herein.
S-25
<PAGE>
THE INDENTURE TRUSTEE
will be the indenture trustee. The indenture trustee is a
banking corporation and its Corporate Trust Office is located at
.
The indenture trustee will have the rights and duties set forth under
"Description of the Transfer and Servicing Agreements--The Owner Trustee and
Indenture Trustee" in the accompanying prospectus.
EVENTS OF DEFAULT UNDER THE INDENTURE
An event of default under the indenture will include, among other things,
the occurrence of any of the following events:
(1) the delivery to the insurer of a claim for payment under the
insurance policy;
(2) a default for five days or more in the payment of any interest on
any note;
(3) a default in the payment of any principal on the applicable Final
Scheduled Distribution Date for a class of notes (collectively, with
(2) above, a "PAYMENT DEFAULT");
(4) a default in the observance or performance of any covenant or
agreement of the trust made in the indenture and the continuation of any
default for a period of 30 days after notice thereof is given to the trust
by the indenture trustee or the insurer, or to the trust, the insurer and
the indenture trustee by the holders of at least 25% in principal amount of
the notes then outstanding acting together as a single class, in each case
specifying the event of default and requiring it to be remedied;
(5) any representation or warranty made by the trust in the indenture
or in any certificate delivered pursuant thereto or in connection therewith
was incorrect in a material respect as of the time made, and the breach is
not cured within 30 days after notice thereof is given to the trust by the
indenture trustee or the insurer, or to the trust, the insurer and the
indenture trustee by the holders of at least 25% in principal amount of the
notes then outstanding acting together as a single class, in each case
specifying the breach and requiring it to be remedied; or
(6) specified events of bankruptcy, insolvency, receivership or
liquidation with respect to the trust (each, a "TRUST BANKRUPTCY EVENT");
provided that so long as no Insurer Default shall have occurred and be
continuing, neither the indenture trustee nor the noteholders may accelerate the
notes under the indenture. So long as an Insurer Default shall not have occurred
and be continuing, acceleration of the notes under the indenture will occur only
upon delivery by the insurer to the trust and the indenture trustee of notice
that the notes are immediately due and payable. The failure to pay principal on
a class of notes will not result in the occurrence of an event of default under
the indenture until the Final Scheduled Distribution Date for that class of
notes.
Upon the occurrence of an event of default under the indenture, so long as
an Insurer Default shall not have occurred and be continuing, the insurer will
have the right, but not the obligation, to cause the indenture trustee to
liquidate the Trust Property, in whole or in part, on any date or dates
following the acceleration of the notes due to the event of default as the
insurer, in its sole discretion, shall elect. The insurer may not, however,
cause the indenture trustee to liquidate the Trust Property, in whole or in
part, if the proceeds of the liquidation would not be sufficient to pay all
outstanding principal of, and accrued interest on, the notes unless the event of
default arose from a claim made on the insurance policy or from a Trust
Bankruptcy Event. Following the occurrence of any event of default under the
indenture, the indenture trustee will continue to submit claims under the
insurance policy for any shortfalls in amounts available to make payments or
distributions of guaranteed amounts on the notes. However, following the
occurrence of an event of default under the indenture (so long as an Insurer
Default shall not have occurred and be continuing), the insurer, at its sole
option, may elect to pay all or any portion of the outstanding amount of the
notes, plus accrued interest thereon to the date of the payment. See
"Description of the Insurance Policy" herein.
If an Insurer Default has occurred and is continuing, upon the occurrence
of an event of default under the indenture (other than an event of default
occurring solely because of a draw on the insurance policy), the holders of at
least 66 2/3% of the principal amount of the notes then outstanding may declare
the principal of the notes to
S-26
<PAGE>
be immediately due and payable. If an Insurer Default has occurred and is
continuing and an event of default under the indenture shall have occurred and
be continuing (other than an event of default occurring solely because of a draw
on the insurance policy), the holders of at least 66 2/3% of the principal
amount of the notes will have the right to control the exercise of remedies
available with respect to the event of default, including the right to direct
the indenture trustee to maintain possession of the Trust Property or to
liquidate the Trust Property in whole or in part; provided, however, that those
noteholders may not direct the indenture trustee to liquidate the Trust Property
in whole or in part unless (1) the event of default has occurred because of a
Payment Default or a Trust Bankruptcy Event, and in either case the insurer
shall have failed to make a payment required under the insurance policy in
accordance with its terms or (2)(A) an event of default under the indenture has
occurred other than as described in clause (1), (B) the insurer shall not have
failed to make a payment required under the insurance policy in accordance with
its terms and (C) the proceeds of the sale will be sufficient to pay all
principal on the notes, together with accrued interest thereon, and all amounts
owing to the insurer under the insurance agreement. In the event of a sale of
the contracts as described in clause (2) of the preceding sentence, the
insurance policy will not be available to cover losses to noteholders resulting
from the sale and will be terminated and the insurer will have no further
obligation to make any payment thereunder. See "Risk Factors--Events of default
under the indenture could result in losses or acceleration of payments on the
notes" herein.
"INSURER DEFAULT" shall mean the occurrence and continuance of any of the
following events:
(1) the insurer shall have failed to make a payment required under the
insurance policy in accordance with its terms;
(2) the insurer shall have (a) filed a petition or commenced any case or
proceeding in respect of the insurer under any provision or chapter of the
United States Bankruptcy Code or similar state laws, (b) made a general
assignment for the benefit of its creditors or (c) had an order for relief
entered against it under the United States Bankruptcy Code or similar state laws
which is final and nonappealable; or
(3) a court of competent jurisdiction, the New York Department of Insurance
or other competent regulatory authority shall have entered a final and
nonappealable order, judgment or decree (a) appointing a custodian, trustee,
agent or receiver for the insurer or for all or any material portion of its
property or (b) authorizing the taking of possession by a custodian, trustee,
agent or receiver of the insurer (or the taking of possession of all or any
material portion of the property of the insurer).
S-27
<PAGE>
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes selected terms of the sale and servicing
agreement and the owner trust agreement. Copies of the sale and servicing
agreement and the owner trust agreement will be filed with the SEC following the
issuance of the notes. The following summary does not purport to be complete and
is subject to, and qualified in its entirety by reference to, all of the
provisions of the sale and servicing agreement and the owner trust agreement.
Where particular provisions of or terms used in the sale and servicing agreement
or the owner trust agreement are referred to, the actual provisions (including
definitions of terms) are incorporated by reference as part of the summary. The
following summary supplements the description of the general terms and
provisions of the sale and servicing agreement and the owner trust agreement set
forth under the heading "Description of the Transfer and Servicing Agreements"
in the accompanying prospectus, to which description reference is hereby made.
SALE AND ASSIGNMENT OF THE CONTRACTS
Pursuant to the receivables purchase agreement between the seller and
AutoNation Financial Services, prior to the issuance of the notes, AutoNation
Financial Services will sell and assign to the seller its entire interest in the
contracts and the proceeds thereof, including its security interests in the
financed vehicles. In turn, the seller will sell and assign to the trust,
without recourse, the seller's entire interest in the contracts. Each contract
will be identified in a schedule appearing as an exhibit to the sale and
servicing agreement. Concurrently with the sale and assignment of the contracts,
the trust will pledge the assets acquired by it to the indenture trustee
pursuant to the indenture, and definitive certificates representing the notes
will be delivered to the underwriters of the notes in respect of payment to the
seller of the net purchase price of the notes. The trust will also pledge its
rights under the sale and servicing agreement to the indenture trustee as
collateral for the notes, and the trust's rights under the sale and servicing
agreement may be enforced directly by the indenture trustee. See "Description of
the Transfer and Servicing Agree ments--Sale and Assignment of the Contracts" in
the accompanying prospectus.
THE ACCOUNTS
The Collection Account. The indenture trustee will establish and maintain
an account (the "COLLECTION ACCOUNT") in the name of the indenture trustee into
which the servicer will deposit all collections from the related contracts.
Funds in the Collection Account will be invested in Eligible Investments by the
indenture trustee, acting at the direction of the servicer. Eligible Investments
made with respect to the Collection Account will mature no later than the
following Distribution Date after they were invested and any income from amounts
on deposit in the Collection Account which were invested in Eligible Investments
will be paid monthly to the servicer, unless otherwise directed by the servicer.
See "Description of the Transfer and Servicing Agreements--The Collection
Account and Eligible Investments" in the accompanying prospectus.
The Payment Account. The indenture trustee shall establish and maintain an
account (the "PAYMENT ACCOUNT") in the name of the indenture trustee, into which
amounts released from the Collection Account for distribution to noteholders
will be deposited prior to the transfer of those amounts to the Note
Distribution Account.
The Note Distribution Account. The indenture trustee will establish and
maintain an account (the "NOTE DISTRIBUTION ACCOUNT") in the name of the
indenture trustee on behalf of the noteholders, in which amounts released from
the Payment Account for distribution to noteholders will be deposited and from
which all distributions to noteholders will be made.
The Spread Account. The indenture trustee will establish and maintain an
account (the "SPREAD ACCOUNT") in the name of the indenture trustee for the
benefit of the noteholders and the insurer as described under "Description of
the Transfer and Servicing Agreements--The Spread Account" and "--Withdrawals
from the Spread Account" herein.
S-28
<PAGE>
PAYMENTS ON CONTRACTS
All Available Funds relating to the contracts will be deposited in or
credited to the Collection Account by the servicer within two business days of
the receipt of payments from obligors. "AVAILABLE FUNDS" with respect to a
Distribution Date and the related Collection Period will include the following:
(1) amounts received with respect to the contracts in the related
Collection Period representing monthly principal and interest payments;
(2) Full Prepayments and partial prepayments;
(3) any Net Liquidation Proceeds;
(4) any Net Insurance Proceeds;
(5) any amounts deposited by AutoNation Financial Services or the
seller, as applicable, in the Collection Account to purchase or repurchase
contracts because of material defects in documents related to the contracts
or breaches of representations or warranties regarding the contracts made
by the seller in the sale and servicing agreement that materially and
adversely affect the interests of the noteholders or the insurer;
(6) any amounts deposited by the servicer in the Collection Account to
purchase contracts as a remedy for breach of the servicer's
representations, warranties and covenants relating to the servicing of the
contracts; and
(7) any amounts deposited by the servicer in the Collection Account
pursuant to an Optional Purchase.
"NET LIQUIDATION PROCEEDS" means, with respect to any contract that becomes
a Defaulted Contract, the amount received by the servicer during or after the
Collection Period in which that contract becomes a Defaulted Contract (net of
Liquidation Expenses). "LIQUIDATION EXPENSES" are the reasonable out-of-pocket
expenses (not including overhead expenses) incurred by the servicer in
connection with the realization of the full amounts due under any Defaulted
Contract which are not recoverable under any type of motor vehicle insurance
policy. "NET INSURANCE PROCEEDS" are proceeds paid by any insurer under a
comprehensive and collision insurance policy related to a contract (other than
funds used for the repair of the related financed vehicle or otherwise released
to the related obligor in accordance with normal servicing procedures), after
reimbursement to the servicer of expenses recoverable under that insurance
policy.
DISTRIBUTIONS
On the business day immediately preceding each Distribution Date, the
servicer will cause funds equal to the amount of Available Funds available with
respect to that Distribution Date to be withdrawn from the Collection Account
and deposited into the Payment Account. On each Distribution Date, the indenture
trustee, based solely on the statement for that Distribution Date received from
the servicer, will apply the Available Funds on deposit in the Payment Account
available with respect to the related Collection Period together with amounts,
if any, withdrawn from the Spread Account and any amounts representing payment
of the Insured Payment as described herein, to make the following deposits and
distributions in the following amounts and order of priority:
(1) to the servicer, from Available Funds and amounts, if any,
withdrawn from the Spread Account, the Servicing Fee, including any unpaid
Servicing Fees with respect to one or more prior Collection Periods;
(2) to the indenture trustee and the owner trustee, from Available
Funds (after giving effect to the reduction in Available Funds described in
clause (1) above) and amounts, if any, withdrawn from the Spread Account,
any accrued and unpaid fees and expenses of the indenture trustee and the
owner trustee, in each case to the extent those fees and expenses have not
been previously paid by the servicer; provided that such payments pursuant
to this clause (2) will not on any Distribution Date exceed $ and
will not during any calendar year exceed $ ;
(3) to the insurer, from Available Funds (after giving effect to the
reduction in Available Funds described in clauses (1) and (2) above), and
amounts, if any, withdrawn from the Spread Account, the
S-29
<PAGE>
insurance premium (as defined in the insurance agreement) for that
Distribution Date owing to the insurer under the insurance agreement;
(4) to the Note Distribution Account, from Available Funds (after
giving effect to the reduction in Available Funds described in clauses
(1) through (3) above) and amounts, if any, withdrawn from the Spread
Account and any amounts representing payment of the Insured Payment, the
Note Interest Distributable Amount to be distributed to the holders of
notes at their respective interest rates on a pro rata basis;
(5) to the Note Distribution Account, if the Distribution Date is a
Final Scheduled Distribution Date for any class of notes, the Note
Principal Distributable Amount to the extent of the remaining principal
amount of that class of notes, from Available Funds (after giving effect to
the reduction in Available Funds described in clauses (1) through
(4) above) and amounts, if any, withdrawn from the Spread Account and any
amounts representing payment of the Insured Payment, to be paid to the
holders of that class of notes;
(6) to the Note Distribution Account, from Available Funds (after
giving effect to the reduction in Available Funds described in clauses
(1) through (5) above) and amounts, if any, withdrawn from the Spread
Account and any amounts representing payment of the Insured Payment, the
remaining Note Principal Distributable Amount (after giving effect to the
payment, if any, described in clause (5) above), to be distributed first to
the holders of class A-1 notes until the principal amount of the class A-1
notes has been reduced to zero, then to the holders of class A-2 notes
until the principal amount of the class A-2 notes has been reduced to zero,
then to the holders of class A-3 notes until the principal amount of the
class A-3 notes has been reduced to zero and then to the holders of class
A-4 notes until the principal amount of the class A-4 notes has been
reduced to zero;
(7) to the insurer, from Available Funds (after giving effect to the
reduction in Available Funds described in clauses (1) through (6) above)
and amounts, if any, withdrawn from the Spread Account, all remaining
amounts owing to the insurer under the insurance agreement;
(8) to the indenture trustee or the successor servicer, if applicable,
from Available Funds (after giving effect to the reduction in Available
Funds described in clauses (1) through (7) above), the amount of any fees
and reasonable expenses not paid under clause (2) above as a result of the
dollar limitation on fees and reasonable expenses set forth in clause (2);
(9) to the indenture trustee or the successor servicer, if applicable,
from Available Funds (after giving effect to the reduction in Available
Funds described in clauses (1) through (8) above), the amount of any
reasonable expenses not paid by the servicer incurred in connection with
retitling documentation relating to financed vehicles;
(10) to the successor servicer, if applicable, from Available Funds
(after giving effect to the reduction in Available Funds described in
clauses (1) through (9) above), reasonable expenses not paid by the
servicer incurred in connection with the transfer of servicing from the
servicer to the successor servicer and the amount of any additional
servicing fee owing to the successor servicer in excess of the Servicing
Fee;
(11) to the Spread Account, from Available Funds (after giving effect
to the reduction in Available Funds described in clauses (1) through
(10) above), the amount, if any, required to increase the amount therein to
the Spread Account Required Amount;
(12) to the Note Distribution Account, after the occurrence of a
default by the servicer, from Available Funds (after giving effect to the
reduction in Available Funds described in clauses (1) through (11) above)
and, upon the direction of the insurer, all amounts on deposit in the
Spread Account, to pay principal on each class of notes, on a pro rata
basis based on the aggregate principal balance of each class of notes,
until the aggregate principal balance of each class of notes is reduced to
zero; and
(13) any remaining Available Funds will be distributed to the seller,
as holder of the residual interest in the trust.
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EARLY REPAYMENT
If the repayment of principal of and interest on the notes is accelerated
following the occurrence of an event of default under the indenture, amounts
collected will be applied in the following order of priority:
(1) to the servicer, to pay any unpaid Servicing Fee;
(2) to the indenture trustee or the owner trustee, as applicable, to
pay any accrued and unpaid fees and reasonable expenses of the indenture
trustee or the owner trustee;
(3) to the noteholders, to pay any accrued and unpaid interest on each
class of notes on a pro rata basis based on the interest accrued (including
interest accrued on past due interest) on each class of notes;
(4) to the noteholders, to pay principal on each class of notes, on a
pro rata basis based on the aggregate principal balance of each class of
notes, until the aggregate principal balance of each class of notes is
reduced to zero;
(5) to the insurer, to pay amounts owing to the insurer under the
insurance agreement, including the insurance premium; and
(6) any remaining funds will be distributed to the seller, as holder
of the residual interest in the trust.
Amounts on deposit in the Spread Account on a Distribution Date will be
available to make payments and distributions to the appropriate parties on that
Distribution Date as described under "--Withdrawals from the Spread Account"
herein. Under the insurance policy, the insurer is obligated to provide for
payment to the indenture trustee on each Distribution Date of any Insured
Payment.
For the purposes hereof, the following terms will have the following
meanings:
The "AMOUNT FINANCED" means, with respect to a contract, the aggregate
amount advanced by the originator under the contract toward the purchase price
of the related financed vehicle and related costs, including amounts advanced in
respect of accessories, extended service and warranty contracts and other items
customarily financed as part of retail automobile installment sales contracts,
excluding insurance premiums.
A "COLLECTION PERIOD" means, with respect to any Distribution Date, the
calendar month immediately preceding the calendar month in which that
Distribution Date occurs.
A "DEFAULTED CONTRACT" means, with respect to any Collection Period, a
contract (1) which, at the end of that Collection Period, is deemed
uncollectible by the servicer in accordance with its customary procedures, (2)
in respect of which all amounts more than one hundred and twenty (120) days past
due represent in the aggregate $40 or more or (3) in respect of which the
related financed vehicle has been repossessed and liquidated.
"MONTHLY SCHEDULED PAYMENT" means, with respect to any contract in any
given month, the amount of the scheduled payment of principal and interest on
the contract for that month, exclusive of any late payment charges or extension
fees.
The "NOTE INTEREST CARRYOVER SHORTFALL" means, with respect to any
Distribution Date and a class of notes, the sum of (1) excess, if any, of the
Note Interest Distributable Amount for that class for the immediately preceding
Distribution Date over the amount in respect of interest that is actually
deposited in the Note Distribution Account with respect to that class on the
preceding Distribution Date, plus, (2) to the extent permitted by applicable
law, interest on the amount of interest due but not paid to noteholders of that
class on the preceding Distribution Date at the related interest rate for the
related Interest Accrual Period; provided, however, that the Note Interest
Carryover Shortfall for the first Distribution Date shall be zero.
The "NOTE INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date and a class of notes, the sum of (1) an amount equal to the
interest accrued during the related Interest Accrual Period at the related
interest rate for that class of notes on the outstanding principal amount of
that class of notes on the immediately preceding Distribution Date, after giving
effect to all payments of principal to noteholders of that class on or prior to
that Distribution Date (or, in the case of the first Distribution Date, on the
original principal amount of the class of notes) and (2) the Note Interest
Carryover Shortfall for that class of notes for that Distribution Date.
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The "NOTE PRINCIPAL CARRYOVER SHORTFALL" means, as of the close of any
Distribution Date, the excess of the Note Principal Distributable Amount for
that Distribution Date over the amount in respect of principal that is actually
deposited in the Note Distribution Account on that Distribution Date.
The "NOTE PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of (1) the Principal Distributable Amount for that
Distribution Date and (2) any outstanding Note Principal Carryover Shortfall for
the immediately preceding Distribution Date; provided that the Note Principal
Distributable Amount shall not exceed the aggregate outstanding principal amount
of the notes. Notwithstanding the foregoing, the Note Principal Distributable
Amount on the Final Scheduled Distribution Date for each class of notes shall
not be less than the amount that is necessary to reduce the outstanding
principal amount of the related class of notes to zero.
The "PRINCIPAL BALANCE" means, with respect to a contract, as of any date
of determination, the Amount Financed under the terms of the contract minus that
portion of all Monthly Scheduled Payments in respect of the contract received on
or prior to the end of the most recently ended Collection Period and allocable
to principal as determined by the servicer. For purposes of this definition,
allocations between interest and principal of the Monthly Scheduled Payment for
each contract by the servicer shall be made in accordance with the terms of each
contract.
The "PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the amount equal to the sum of the following amounts with
respect to the related Collection Period:
(1) collections received on contracts (other than Defaulted Contracts
and Purchased Contracts) allocable to principal as determined by the
servicer, including full and partial principal prepayments;
(2) the Principal Balance of all contracts (other than Purchased
Contracts) that became Defaulted Contracts during the related Collection
Period; and
(3) the Principal Balance as of the date of purchase of all contracts
that became Purchased Contracts as of the immediately preceding Record
Date.
The "PURCHASE AMOUNT" means, with respect to a Purchased Contract, the
Principal Balance of the contract as of the date of purchase of the contract by
AutoNation Financial Services or the seller, plus accrued and unpaid interest at
the applicable APR.
A "PURCHASED CONTRACT" means a contract that (1) has been purchased by
AutoNation Financial Services or the seller because of material defects in
documents related to the contract or breaches of representations and warranties
made by the seller in the sale and servicing agreement regarding the contract or
by AutoNation Financial Services in the receivables purchase agreement, which
materially and adversely affect the interests of the noteholders or the insurer,
(2) has been purchased by the servicer because of breaches by the servicer of
servicing covenants or (3) has been purchased by the servicer in the event of an
Optional Purchase.
PAYMENT PRIORITIES OF THE NOTES
The rights of the noteholders to receive distributions with respect to the
contracts will be subordinated to the rights of the servicer (to the extent that
the servicer has not been paid all Servicing Fees), the indenture trustee and
the owner trustee (to the extent the indenture trustee and the owner trustee
have not received all fees due and payable to them by the servicer) and the
insurer (to the extent the insurer has not received the insurance premium). In
addition, the rights of the noteholders to receive distributions with respect to
the contracts will be subject to the priorities set forth under
"--Distributions" above. The Spread Account, the Overcollateralization Amount
and the insurance policy are intended to enhance the likelihood of timely
repayment to the noteholders of the full amount of interest and principal owed
to them, and to afford the noteholders limited protection against losses in
respect of the contracts as described in "--The Spread Account,"
"--Overcollateralization" and "Description of the Insurance Policy" below.
THE SPREAD ACCOUNT
The foregoing protection will be effected both by the preferential right of
the noteholders to receive, to the extent described herein, current
distributions with respect to the contracts, and by the establishment of the
Spread Account. Amounts held from time to time in the Spread Account are
intended to enhance the likelihood of receipt by noteholders of amounts due them
and to decrease the likelihood that noteholders will experience losses. The
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Spread Account will be a part of the trust and will be maintained as a
segregated trust account in the name of the indenture trustee. The indenture
trustee will have a perfected security interest therein and in all amounts
deposited in or credited to the Spread Account as well as to all Eligible
Investments made with those deposits and earnings. On the Closing Date, the
Spread Account will be funded by the issuer with an initial deposit in cash from
the proceeds of the sale of the notes. Thereafter, the Spread Account will be
funded by the deposit therein of amounts pursuant to clause (11) under
"--Distributions" above.
Amounts held from time to time in the Spread Account up to the Spread
Account Required Amount will continue to be held for the benefit of holders of
the notes and the insurer and may be invested in Eligible Investments.
Investment income on funds on deposit in the Spread Account will be credited to
the Spread Account. Any loss on investments will be charged to the Spread
Account.
The "SPREAD ACCOUNT REQUIRED AMOUNT" means an amount calculated pursuant to
a formula agreed to by the parties to the insurance agreement and each of the
rating agencies. The Spread Account Required Amount may be calculated pursuant
to any other formula as the parties to the insurance agreement and each of the
rating agencies may agree, and may include any other provisions or contain any
additional requirements as the parties to the insurance agreement may agree,
which each of the rating agencies may require to maintain the ratings of the
notes, and to maintain the rating of the transactions contemplated in the
insurance agreement and the sale and servicing agreement, without consideration
of the insurance policy, at not less than investment grade, as defined by the
rating agencies. The Spread Account Required Amount may increase or decrease
over time, without the consent of any of the noteholders, as a result of floors,
caps and triggers set forth in the insurance agreement. In addition, there can
be no assurance that the Spread Account Required Amount will be reached at any
given time. Consequently, noteholders should not rely on amounts on deposit or
to be deposited in the Spread Account in evaluating the likelihood that the
notes will be repaid.
WITHDRAWALS FROM THE SPREAD ACCOUNT
Amounts held from time to time in the Spread Account will continue to be
held for the benefit of the noteholders and the insurer. On each Distribution
Date, the indenture trustee, based solely on the statement for that Distribution
Date received from the servicer, will withdraw funds from the Spread Account to
the extent that the sum of the amounts to be distributed as set forth in clauses
(1) though (7) under "--Distributions" above with respect to that Distribution
Date exceeds the amount of Available Funds available with respect to that
Distribution Date. The indenture trustee will apply the amount of the withdrawal
to make the deposits and distributions described under "--Distributions" above.
Funds will also be withdrawn from the Spread Account to reimburse the insurer
for any draws under the insurance policy with respect to any Preference Amount.
If the amount on deposit in the Spread Account on any Distribution Date
(after giving effect to all deposits thereto or withdrawals therefrom on that
Distribution Date) is greater than the Spread Account Required Amount, the
indenture trustee will distribute any excess first to the insurer, to the extent
of any amounts owing to the insurer pursuant to the insurance agreement, and
then to the seller, as holder of the residual interest in the trust. Upon any
distributions to the insurer or the seller, the noteholders will have no further
rights in, or claims to, the distributed amounts.
None of the noteholders, the indenture trustee, the owner trustee, the
seller or the insurer will be required to refund any amounts properly
distributed to them, whether or not there are sufficient funds on any subsequent
Distribution Date to make full distributions to the noteholders. The obligations
of the insurer under the insurance policy will not be diminished or otherwise
affected by any amounts distributed to the insurer as described in the preceding
paragraph.
OVERCOLLATERALIZATION
The Pool Balance as of the Cut-Off Date of $ will exceed the initial
principal amount of the notes by $ , or approximately % (the
"OVERCOLLATERALIZATION AMOUNT"). The Overcollateralization Amount is intended to
enhance the likelihood of receipt by noteholders of amounts due them and to
decrease the likelihood that noteholders will experience losses. Any collections
on the contracts relating to the Overcollateralization Amount will be applied in
accordance with the priorities set forth under "--Distributions" above. Unless
offset by losses on the contracts, the application of those collections is
expected to cause the aggregate principal amount of the notes to decrease at a
faster rate than the Pool Balance decreases, thereby increasing the
Overcollateralization Amount.
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STATEMENTS TO NOTEHOLDERS
On each Distribution Date, the indenture trustee will include with each
distribution to a noteholder a statement received from the servicer setting
forth for that Distribution Date the information described in the accompanying
prospectus under "Description of the Securities--Statements to Securityholders"
and the following information:
(1) the Spread Account Required Amount and the amount on deposit in
the Spread Account on that Distribution Date, before and after
giving effect to deposits thereto and withdrawals therefrom to be
made in respect of that Distribution Date; and
(2) the amount of the withdrawal, if any, required to be made from the
Spread Account by the indenture trustee, as described above under
"--Withdrawals from the Spread Account."
REPORTS TO NOTEHOLDERS
Unless notes in definitive registered form are issued (which will only
occur under the limited circumstances described herein and in the accompanying
prospectus), the servicer will send unaudited monthly and annual reports
concerning the trust to the indenture trustee to be delivered to Cede & Co. as
the nominee of The Depository Trust Company and the registered holder of the
notes. See "--Statements to Noteholders" above and "Description of the
Securities--Statements to Securityholders" in the accompanying prospectus. These
reports will not constitute financial statements prepared in accordance with
generally accepted accounting principles. DTC will supply these reports to
noteholders in accordance with its procedures. See "Description of the
Securities--Book-Entry Registration" in the accompanying prospectus. Since
owners of beneficial interests in the global notes will not be recognized as
noteholders, DTC will not forward monthly reports to those owners. Copies of
monthly reports may be obtained by owners of beneficial interests in the global
notes by a request in writing addressed to the indenture trustee. None of the
seller, the servicer or the insurer intends to send any of its financial reports
to noteholders.
SERVICING FEE
The servicer will be entitled to compensation for the performance of its
obligations under the sale and servicing agreement. The servicer shall be
entitled to receive on each Distribution Date an amount equal to the product of
(1) one-twelfth of % per annum multiplied by (2) the Pool Balance as of the
end of the Collection Period preceding the related Collection Period or, in the
case of the first Distribution Date, the Pool Balance as of the Cut-Off Date
(the "SERVICING FEE"). As additional compensation, the servicer or its designee
shall be entitled to retain all late payment charges, extension fees and similar
charges or fees paid in connection with the contracts. The servicer or its
designee will also receive as servicing compensation reinvestment earnings on
Eligible Investments of funds credited to the Collection Account. The servicer
shall pay from its servicing compensation all expenses incurred by it in
connection with its servicing activities under the sale and servicing agreement
and will not be entitled to reimbursement of its expenses except to the extent
they constitute Liquidation Expenses or expenses recoverable under an applicable
insurance policy.
The sale and servicing agreement requires the servicer to use its best
efforts to collect all payments called for under the terms and provisions of
each of the contracts. The servicer, consistent with the foregoing, will be
permitted, in its discretion, to waive charges and grant extensions as described
under "Description of the Transfer and Servicing Agreements--Waivers and
Extensions" in the accompanying prospectus. The servicer may not, with a few
very limited exceptions, extend the maturity date of a contract if there have
been more than two credit-related extensions granted on the contract in the
immediately preceding twelve months or if the sum of the terms of all extensions
of the contract would exceed six months. In addition, in no event may an
extension be granted beyond the latest Final Scheduled Distribution Date for the
notes.
DEFAULT BY THE SERVICER; RIGHTS UPON DEFAULT BY THE SERVICER
The events which constitute a default by the servicer under the sale and
servicing agreement will be those events described in the accompanying
prospectus under "Description of the Transfer and Servicing Agreements--Default
by the Servicer."
Upon the occurrence of a default by the servicer, unless an Insurer Default
shall have occurred and be continuing, only the insurer (and not the indenture
trustee or the noteholders) may terminate the servicer under
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the sale and servicing agreement. In the event that the servicer is terminated
by the insurer, a successor servicer (other than the indenture trustee) may be
appointed by the insurer and will take over all the responsibilities, duties and
liabilities of the servicer under the sale and servicing agreement and will be
entitled to the same compensation arrangements as was the original servicer.
Until the insurer has appointed a successor servicer, the indenture trustee will
be the successor servicer. In the event that the indenture trustee is unwilling
or unable to so act, it may, with the consent of the insurer, which consent will
not be unreasonably withheld, 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 automobile and
light-duty truck receivables.
Unless an Insurer Default shall have occurred and be continuing, the
insurer may, on behalf of the noteholders, waive any default by the servicer in
the performance of its obligations under the sale and servicing agreement and
its consequences. The rights of the noteholders to waive defaults by the
servicer under the sale and servicing agreement are as described under
"Description of the Transfer and Servicing Agreements--Rights Upon Default by
the Servicer" in the accompanying prospectus.
If an Insurer Default has occurred and is continuing, upon the occurrence
of a default by the servicer under the sale and servicing agreement, the
indenture trustee acting at the direction of the holders of notes evidencing not
less than 25% of the outstanding principal amount of the notes, acting together
as a single class, may terminate the servicer under the sale and servicing
agreement. Upon the termination of the servicer at the direction of the
noteholders, the indenture trustee or a successor servicer appointed by the
indenture trustee will succeed to all responsibilities, duties and liabilities
of the servicer under the sale and servicing agreement and will be entitled to
similar compensation arrangements; provided, however, that the indenture
trustee, as successor servicer, will not succeed to AutoNation Financial
Services' obligations to purchase contracts under any circumstances. In the
event that the indenture 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 automobile and light-duty truck receivables. The
successor servicer will have the right to terminate the services of any
subservicer under the related subservicer agreement in respect of the contracts
which the successor servicer will be assuming responsibilities as servicer, and
any termination fees assessed under the related subservicer agreement will be
paid by the predecessor servicer.
AMENDMENT
The sale and servicing agreement, the owner trust agreement and the
administration agreement may be amended by the parties thereto with the consent
of the insurer but without the consent of the noteholders to cure any ambiguity,
correct or supplement any provisions therein which may be inconsistent with any
other provisions therein, or make any other provisions with respect to matters
or questions arising thereunder which are not inconsistent with the provisions
of those agreements; provided that any amendment will not materially and
adversely affect the interest of any noteholder. For a further discussion
regarding amendments to the sale and servicing agreement, the owner trust
agreement and the administration agreement, see "Description of the Transfer and
Servicing Agreement--Amendment" in the accompanying prospectus. Any amendment
shall be deemed not to materially and adversely affect the interest of any
noteholder or the insurer if the person requesting the amendment obtains (1) a
letter from each rating agency which has rated the notes to the effect that the
amendment would not result in a downgrading or withdrawal of the then current
ratings assigned to the notes by that rating agency and (2) an opinion of
counsel to that effect. Subject to the rights of the insurer, the sale and
servicing agreement, the owner trust agreement and the administration agreement
may also be amended by the parties thereto with the consent of the holders of
notes evidencing not less than a majority of the principal amount of the notes
then outstanding, acting together as a single class with the consent of the
insurer, for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of the sale and servicing agreement, the
owner trust agreement or the administration agreement or of modifying, in any
manner, the rights of the noteholders; provided, however, that no amendment may
(1) increase or reduce in any manner the amount of, or accelerate or delay the
timing of, collections of payments on the related contracts or distributions
that are required to be made for the benefit of the noteholders, (2) reduce the
aforesaid percentage of the noteholders which are required to consent to any
amendment of the sale and servicing agreement, the owner trust agreement or the
administration agreement without the consent of the holders of all the
outstanding notes or (3) result in a taxable event to any of the noteholders for
federal income tax purposes or result in the trust being taxable as a
corporation for federal income tax purposes.
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It is intended that the trust will not constitute a separate entity for
federal income tax purposes during the time that the seller holds the entire
equity interest in the trust; provided, however, that at any time that equity
interests in the trust are held by more than one holder, the sale and servicing
agreement, the owner trust agreement and the administration agreement may be
amended, as necessary and in accordance with the preceding paragraph, to reflect
the appropriate treatment of the trust as a partnership for federal income tax
purposes. See "Material Federal Income Tax Consequences" below.
TERMINATION
The obligations of the servicer, the seller, the owner trustee and the
indenture trustee with respect to the related noteholders pursuant to the owner
trust agreement, the sale and servicing agreement or the indenture will
terminate as described under "Description of the Transfer and Servicing
Agreements--Termination" in the accompanying prospectus and as set forth below.
The indenture trustee will give written notice of the termination of the
obligations of the servicer, the seller, the owner trustee or the indenture
trustee to each noteholder of record. The final distribution to each noteholder
will be made only upon surrender and cancellation of that holder's notes at the
office or agency of the indenture trustee specified in the notice of
termination. The indenture trustee will return, or cause to be returned, any
unclaimed funds to the trust.
Promptly following the date on which all principal of and interest on the
notes has been paid in full and the notes have been surrendered to the indenture
trustee, the indenture trustee will, if the insurer has paid any amount in
respect of the notes under the insurance policy that has not been reimbursed to
the insurer, deliver the surrendered notes to the insurer.
OPTIONAL PURCHASE
In order to avoid excessive administrative expenses, the servicer will be
permitted, at its option, to purchase the remaining contracts from the trust on
any Distribution Date as of which the Pool Balance has been reduced to an amount
less than or equal to 10% of the original Pool Balance (an "OPTIONAL PURCHASE").
The price the servicer must pay to exercise the Optional Purchase (the "OPTIONAL
PURCHASE PRICE") will be equal to the greater of (1) the sum of (A) the Pool
Balance on the date of purchase and (B) any accrued and unpaid interest on the
contracts and (2) the sum of (A) the aggregate unpaid principal amount of the
notes, (B) any accrued and unpaid interest thereon and (C) all amounts due to
the indenture trustee under the indenture or otherwise and the insurer under the
insurance agreement or otherwise. Any outstanding notes will be redeemed
concurrently with any Optional Purchase described above.
PAYMENT IN FULL OF NOTES
Upon the payment in full of all outstanding notes and the satisfaction and
discharge of the indenture, the owner trustee will succeed to all the rights of
the indenture trustee, and the seller will succeed to all the rights of the
noteholders, under the sale and servicing agreement, except as otherwise
provided therein.
DESCRIPTION OF THE ADMINISTRATION AGREEMENT
Pursuant to the administration agreement, AutoNation Financial Services
will serve as the administrator and will agree, to the extent provided in the
administration agreement, to provide the notices and to perform other
administrative obligations required by the indenture. As compensation for the
performance of the administrator's obligations under the administration
agreement and as reimbursement for its expenses related thereto, the
administrator will be entitled to an annual administration fee of $ .
The administration fee will be paid by the servicer.
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DESCRIPTION OF THE INSURANCE POLICY
The following information has been supplied by , the insurer,
for inclusion in this prospectus supplement. The insurer does not accept any
responsibility for the accuracy or completeness of this prospectus supplement or
any information or disclosure contained herein, or omitted herefrom, other than
with respect to the accuracy of the information regarding the note guaranty
insurance policy and the insurer set forth under the headings "Description of
the Insurance Policy" and "Description of the Insurer" herein. Additionally, the
insurer makes no representation regarding the notes or the advisability of
investing in the notes.
The insurer, in consideration of the payment of a premium and subject to
the terms of the insurance policy, thereby unconditionally and irrevocably
guarantees to any noteholder that an amount equal to each full and complete
Insured Payment will be received from the insurer by the indenture trustee or
its successor on behalf of the noteholders, for distribution by the indenture
trustee to each noteholder of that noteholder's proportionate share of the
Insured Payment. "INSURED PAYMENT" means, with respect to any Distribution Date,
the sum of (a) any Deficiency Amount for that Distribution Date and (b) any
Preference Amount for that Distribution Date. "DEFICIENCY AMOUNT" means, with
respect to any Distribution Date, the sum of (a) the excess, if any, of (1) the
Note Interest Distributable Amount for that Distribution Date over (2) the sum
of (A) the Available Funds for that Distribution Date (after giving effect to
the distributions described in clauses (1) through (3) under "Description of the
Transfer and Servicing Agreements--Distributions" above with respect to that
Distribution Date) and (B) the amount to be on deposit in the Spread Account for
that Distribution Date (prior to giving effect to any withdrawals with respect
to that Distribution Date) and (b) the Guaranteed Note Principal Amount for that
Distribution Date. "GUARANTEED NOTE PRINCIPAL AMOUNT" means, with respect to any
Distribution Date, the lesser of (a) the excess, if any, of (1) the Note
Principal Distributable Amount for that Distribution Date over (2) the sum of
(A) the Available Funds for that Distribution Date (after giving effect to the
distributions described in clauses (1) through (4) under "Description of the
Transfer and Servicing Agreements--Distributions" above with respect to that
Distribution Date) and (B) the amount to be on deposit in the Spread Account for
that Distribution Date (after giving effect to any withdrawals to make the
distributions described in clause (4) under "Description of the Transfer and
Servicing Agreements--Distributions" above with respect to that Distribution
Date) and (b) the excess, if any, of (1) the outstanding principal amount of the
notes for that Distribution Date (after giving effect to all distributions of
principal on that Distribution Date) over (2) the sum of (A) the Pool Balance as
of the last day of the preceding Collection Period and (B) the amount to be on
deposit in the Spread Account (after giving effect to any withdrawals to make
the distributions described in clauses (4) and (5) under "Description of the
Transfer and Servicing Agreements--Distributions" above with respect to that
Distribution Date); provided, however, on the Final Scheduled Distribution Date
for a class of notes, the Guaranteed Note Principal Amount will include, without
duplication, the outstanding principal amount of that class of notes on that
Final Scheduled Distribution Date (after giving effect to all distributions of
principal on that Final Scheduled Distribution Date). "PREFERENCE AMOUNT" means
any amount previously distributed to a noteholder in respect of the notes that
is recoverable and sought to be recovered as a voidable preference by a trustee
in bankruptcy pursuant to the United States Bankruptcy Code, as amended from
time to time, in accordance with a final nonappealable order of a court having
competent jurisdiction.
The insurer's obligations under the insurance policy, with respect to a
particular Insured Payment, will be discharged to the extent funds equal to the
applicable Insured Payment are received by the indenture trustee, whether or not
those funds are properly applied by the indenture trustee. Insured Payments will
be made only at the time set forth in the insurance policy, and no Insured
Payments will be made regardless of any acceleration of the notes, unless the
acceleration is at the sole option of the insurer.
Notwithstanding the foregoing paragraph, the insurance policy does not
cover shortfalls, if any, attributable to the liability of the trust or the
indenture trustee for withholding taxes, if any (including interest and
penalties in respect of any tax liability).
The insurer will pay any Insured Payment that is a Preference Amount on the
business day following receipt on a business day by the insurer's fiscal agent
of the following:
o a certified copy of the order requiring the return of a preference payment;
o an opinion of counsel satisfactory to the insurer that the order is final and
not subject to appeal;
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o an assignment in a form that is reasonably required by the insurer,
irrevocably assigning to the insurer all rights and claims of the
noteholder relating to or arising under the notes against the debtor
which made the preference payment or otherwise with respect to the
preference payment; and
o appropriate instruments to effect the appointment of the insurer as agent
for the noteholder in any legal proceeding related to the preference
payment, which instruments are in a form satisfactory to the insurer;
provided that if these documents are received after 12:00 noon, New York time,
on that business day, they will be deemed to be received on the following
business day. Payments by the insurer will be disbursed to the receiver or the
trustee in bankruptcy named in the final order of the court exercising
jurisdiction on behalf of the noteholder and not to any noteholder directly
unless the noteholder has returned principal or interest paid on the notes to
the receiver or trustee in bankruptcy, in which case that payment will be
disbursed to the noteholder.
The insurer will pay any other amount payable under the insurance policy no
later than 12:00 noon, New York time, on the later of the business day
immediately preceding the Distribution Date on which the related Deficiency
Amount is due or the third business day following receipt in New York, New York
on a business day by , as fiscal agent for the insurer or any
successor fiscal agent appointed by the insurer of a notice from the indenture
trustee specifying the Insured Payment which is due and owing on the applicable
Distribution Date; provided, that if the notice is received after 12:00 noon,
New York time, on that business day, it will be deemed to be received on the
following business day. If any notice received by the insurer's fiscal agent is
not in proper form or is otherwise insufficient for the purpose of making a
claim under the insurance policy, it will be deemed not to have been received by
the insurer's fiscal agent for the purposes of this paragraph, and the insurer
or the fiscal agent, as the case may be, will promptly so advise the indenture
trustee and the indenture trustee may submit an amended notice.
Insured Payments due under the insurance policy, unless otherwise stated
therein, will be disbursed by the insurer's fiscal agent to the indenture
trustee, on behalf of the noteholders, by wire transfer of immediately available
funds in the amount of the Insured Payment less, in respect of Insured Payments
related to Preference Amounts, any amount held by the indenture trustee for the
payment of the Insured Payment and legally available therefor.
The fiscal agent is the agent of the insurer only and the fiscal agent will
in no event be liable to noteholders for any acts of the fiscal agent or any
failure of the insurer to deposit or cause to be deposited sufficient funds to
make payments due under the insurance policy.
Subject to the terms of the sale and servicing agreement, the insurer will
be subrogated to the rights of each noteholder to receive payments under the
notes to the extent of any payment by the insurer under the insurance policy.
The insurance policy is not cancellable for any reason. The premium on the
insurance policy is not refundable for any reason including payment, or
provision being made for payment, prior to the maturity of the notes.
The insurance policy is being issued under and pursuant to, and will be
construed under, the laws of the State of New York, without giving effect to the
conflict of law principles thereof.
THE INSURANCE POLICY IS NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE
SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW YORK INSURANCE LAW.
DESCRIPTION OF THE INSURER
THE INSURER
will be the insurer. The insurer is the principal operating
subsidiary of , a New York Stock Exchange listed company.
is not obligated to pay the debts of or claims against the insurer.
The insurer is domiciled in the State of and licensed to do business
in and is subject to regulation under the laws of . has
laws prescribing minimum capital requirements, limiting classes and
concentrations of investments and requiring the approval of policy rates and
forms. State
S-38
<PAGE>
laws also regulate the amount of both the aggregate and individual risks that
may be insured, the payment of dividends by the insurer, changes in control and
transactions among affiliates. Additionally, the insurer is required to maintain
contingency reserves on its liabilities in specified amounts and for specified
periods of time.
FINANCIAL INFORMATION ABOUT THE INSURER
The consolidated financial statements of the insurer, a wholly owned
subsidiary of , and its subsidiaries as of December 31, 1998 and
December 31, 1997 and for each of the three years in the period ended
December 31, 1998, prepared in accordance with generally accepted accounting
principles, included in the Annual Report on Form 10-K of for the
year ended December 31, 1998 and the consolidated financial statements of the
insurer and its subsidiaries as of , 1999 and for the month
periods ended , 1999 and , 1998 included in the
Quarterly Report on Form 10-Q of for the period ended ,
1999, are hereby incorporated by reference into this prospectus supplement and
shall be deemed to be a part hereof. Any statement contained in a document
incorporated by reference herein shall be modified or superseded for purposes of
this prospectus supplement to the extent that a statement contained herein or in
any other subsequently filed document which also is incorporated by reference
herein modifies or supersedes that statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this prospectus supplement.
All financial statements of the insurer and its subsidiaries included in
documents filed by pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934, as amended, subsequent to the date of this
prospectus supplement and prior to the termination of the offering of the notes
shall be deemed to be incorporated by reference into this prospectus supplement
and to be a part hereof from the respective dates of filing those documents.
The tables below present selected financial information of the insurer
determined in accordance with statutory accounting practices prescribed or
permitted by insurance regulatory authorities and generally accepted accounting
principles:
<TABLE>
<CAPTION>
STATUTORY ACCOUNTING
PRACTICES
----------------------------
DECEMBER 31, ,
1998 1999
------------ ------------
(AUDITED) (UNAUDITED)
(IN MILLIONS)
<S> <C> <C>
Admitted Assets........... $ $
Liabilities...............
Capital and Surplus.......
</TABLE>
<TABLE>
<CAPTION>
GENERALLY ACCEPTED
ACCOUNTING PRACTICES
----------------------------
DECEMBER 31, ,
1998 1999
------------ ------------
(AUDITED) (UNAUDITED)
(IN MILLIONS)
<S> <C> <C>
Assets.................... $ $
Liabilities...............
Shareholder's Equity......
</TABLE>
WHERE YOU CAN OBTAIN ADDITIONAL INFORMATION ABOUT THE INSURER
Copies of the financial statements of the insurer incorporated by reference
herein and copies of the insurer's 1998 year-end audited financial statements
prepared in accordance with statutory accounting practices are available,
without charge, from the insurer. The address of the insurer is .
The telephone number of the insurer is .
S-39
<PAGE>
YEAR 2000 READINESS OF THE INSURER
is actively managing a high-priority year 2000 (Y2K) program.
has established an independent Y2K testing lab in its
headquarters, with a committee of business unit managers overseeing the project.
has a budget of $ million for its 1998-2000 Y2K efforts.
Expenditures are proceeding as anticipated, and does not expect the
project budget to materially exceed this amount. has initiated a
comprehensive Y2K plan that includes assessment, remediation, testing and
contingency planning. This plan covers "mission-critical" internally developed
systems, vendor software, hardware and third party entities through which
conducts its business. Testing to date indicates that functions
critical to the financial guarantee business, both domestic and international,
were Y2K-ready as of December 31, 1998. Additional testing will continue
throughout 1999.
FINANCIAL STRENGTH RATINGS OF THE INSURER
Moody's Investors Service, Inc. rates the financial strength of the insurer
"Aaa."
Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc., rates the financial strength of the insurer "AAA."
Fitch IBCA, Inc. (formerly known as Fitch Investors Service, L.P.) rates
the financial strength of the insurer "AAA."
Each rating of the insurer should be evaluated independently. The ratings
reflect each respective rating agency's current assessment of the
creditworthiness of the insurer and its ability to pay claims on its policies of
insurance. Any further explanation as to the significance of the above ratings
may be obtained only from the applicable rating agency.
The above ratings are not recommendations to buy, sell or hold the notes,
and the ratings may be subject to revision or withdrawal at any time by the
rating agencies. Any downward revision or withdrawal of any of the above ratings
may have an adverse effect on the market price of the notes. The insurer does
not guaranty the market price of the notes nor does it guaranty that the ratings
on the notes will not be revised or withdrawn.
LEGAL INVESTMENT
The class A-1 notes will be eligible securities for purchase by money
market funds under paragraph (a)(9) of Rule 2a-7 under the Investment Company
Act of 1940, as amended.
S-40
<PAGE>
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
Weil, Gotshal & Manges LLP has delivered its opinion, under current law and
subject to the qualifications set forth therein, that upon the issuance of the
notes, although no authority exists directly relating to the proper
characterization of securities similar to the notes or to an entity similar to
the trust, for federal income tax purposes, (1) the notes will be characterized
as debt and (2) the trust will not be characterized as an association or a
publicly traded partnership taxable as a corporation. Each noteholder, by the
acceptance of a note, will agree to treat the notes as indebtedness for federal,
state and local income, single business and franchise tax purposes. See
"Material Federal Income Tax Consequences" in the accompanying prospectus for
additional information concerning the application of federal income tax laws to
the trust and the notes.
ERISA CONSIDERATIONS
Subject to the considerations set forth below and under "ERISA
Considerations" in the prospectus, the notes may be purchased by an employee
benefit plan or an individual retirement account (a "BENEFIT PLAN") subject to
the Employee Retirement Income Security Act of 1974, as amended, which is
generally referred to as "ERISA" or Section 4975 of the Internal Revenue Code of
1986, as amended. A fiduciary of a Benefit Plan must determine that the purchase
of a note is consistent with its fiduciary duties under ERISA and does not
result in a nonexempt prohibited transaction as defined in Section 406 of ERISA
or Section 4975 of the Internal Revenue Code. Section 406 of ERISA prohibits
parties in interest or disqualified persons ("PARTIES IN INTEREST") with respect
to a Benefit Plan from engaging in transactions (including loans) involving a
Benefit Plan and its assets unless a statutory or administrative exemption
applies to the transaction. Section 4975 of the Internal Revenue Code imposes
excise taxes (or, in some cases, a civil penalty may be assessed pursuant to
section 502(i) of ERISA) on Parties in Interest which engage in non-exempt
prohibited transactions. In addition, Title I of ERISA also requires fiduciaries
of a Benefit Plan subject to ERISA to make investments that are prudent,
diversified and in accordance with the governing plan documents.
The United States Department of Labor has issued a regulation (29 CFR
Section 2510.3-101) concerning the definition of what constitutes the assets of
a Benefit Plan (the "PLAN ASSET REGULATION"). This regulation provides that, as
a general rule, the underlying assets and properties of corporations,
partnerships, trusts and some other entities in which a Benefit Plan purchases
an "equity interest" will be deemed for purposes of ERISA to be assets of the
investing Benefit Plan unless exceptions apply. The Plan Asset Regulation
defines an "equity interest" as any interest in an entity other than an
instrument that is treated as indebtedness under applicable local law and which
has no substantial equity features. Although there is very little authority
directly on point and there can be no assurances in this regard, the seller
believes that the notes offered hereby should not be treated as "equity
interests" for purposes of the Plan Asset Regulation. Specifically, the notes
(a) are expected to be treated as indebtedness under local law and will, in the
opinion of Weil, Gotshal & Manges LLP, be treated as debt, rather than equity,
for federal tax purposes (see "Material Federal Income Tax Consequences" herein)
and (b) should not be deemed to have any "substantial equity features." Those
conclusions are based, in part, upon the traditional debt features of the notes,
including the reasonable expectation of purchasers of the notes that the notes
will be repaid when due, as well as the absence of conversion rights, warrants
and other typical equity features. In the event that the insurer's obligations
under the insurance policy cease or otherwise become unavailable, the notes
might not be treated as debt for purposes of ERISA. Accordingly, on the date
hereof, and thereafter, unless the insurer's obligations under the insurance
policy cease or otherwise become unavailable, the acquisition of the notes by
Benefit Plan investors should not cause the assets of the trust to be treated as
Plan Assets for purposes of Title I of ERISA.
However, the notes may not be purchased with the assets of a Benefit Plan
if the seller, the servicer, the indenture trustee, the owner trustee or any of
their affiliates (a) has investment or administrative discretion with respect to
the Benefit Plan assets; (b) has authority or responsibility to give, or
regularly gives, investment advice with respect to the Benefit Plan assets, for
a fee and pursuant to an agreement or understanding that the advice (1) will
serve as a primary basis for investment decisions with respect to the Benefit
Plan assets and (2) will be based on the particular investment needs for the
Benefit Plan; or (c) is an employer maintaining or contributing to the Benefit
Plan.
S-41
<PAGE>
The Issuer, the servicer or affiliates thereof might be considered or might
become Parties in Interest with respect to a Benefit Plan. In either case, the
acquisition or holding of notes by or on behalf of a Benefit Plan could give
rise to an indirect prohibited transaction within the meaning of ERISA and the
Internal Revenue Code, unless it is subject to one or more exemptions such as
Prohibited Transaction Class Exemption ("PTCE") 84-14, which exempts
transactions effected on behalf of a Benefit Plan by a "qualified professional
asset manager", PTCE 90-1, which exempts transactions involving insurance
company pooled separate accounts, PTCE-91-38, which exempts transactions
involving bank collective investment funds, PTCE 95-60, which exempts
transactions involving insurance company general accounts, or PTCE 96-23, which
exempts transactions effected on behalf of a Benefit Plan by "in-house asset
managers."
EACH PURCHASER OR TRANSFEREE OF A NOTE THAT IS A BENEFIT PLAN WILL BE
DEEMED TO HAVE REPRESENTED THAT THE RELEVANT CONDITIONS FOR EXEMPTIVE RELIEF
UNDER AT LEAST ONE OF THE FOREGOING EXEMPTIONS (OR OTHER APPLICABLE EXEMPTION
PROVIDING SUBSTANTIALLY SIMILAR RELIEF) HAVE BEEN SATISFIED.
EACH BENEFIT PLAN FIDUCIARY SHOULD CONSULT WITH ITS ATTORNEYS AND FINANCIAL
ADVISORS AS TO THE PROPRIETY OF AN INVESTMENT IN THE NOTES IN LIGHT OF THE
CIRCUMSTANCES OF THE PARTICULAR BENEFIT PLAN AND THE RESTRICTIONS OF ERISA AND
SECTION 4975 OF THE INTERNAL REVENUE CODE.
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
between the seller and the underwriters named below, the seller has agreed to
cause the trust to sell to each of the underwriters, and each of the
underwriters has agreed to purchase, the principal amount of the notes set forth
opposite its name in the table below:
<TABLE>
<CAPTION>
PRINCIPAL PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT OF AMOUNT OF AMOUNT OF AMOUNT OF
CLASS A-1 CLASS A-2 CLASS A-3 CLASS A-4
UNDERWRITERS NOTES NOTES NOTES NOTES
- ------------------------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
$ $ $ $
$ $ $ $
$ $ $ $
$ $ $ $
Total $ $ $ $
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
The price to the public, underwriters' discounts and commissions, the
concessions that the underwriters may allow to dealers, and the discounts that
the dealers may reallow to other dealers, each expressed as a percentage of the
principal amount of each class of notes, will be as follows:
<TABLE>
<CAPTION>
UNDERWRITING DISCOUNTS
PRICE TO DISCOUNTS AND CONCESSIONS BETWEEN
PUBLIC COMMISSIONS(1) TO DEALERS DEALERS
-------- -------------- ----------- ---------
<S> <C> <C> <C> <C>
Class A-1 Notes................................ % % % %
Class A-2 Notes................................ % % % %
Class A-3 Notes................................ % % % %
Class A-4 Notes................................ % % % %
</TABLE>
- ------------------
(1) Includes all items considered by the National Association of Securities
Dealers to be underwriting compensation for purposes of the NASD's Rules of
Fair Practice.
S-42
<PAGE>
After the offering is completed, the seller will receive the proceeds,
after deduction of the underwriting and other expenses, listed below:
<TABLE>
<CAPTION>
UNDERWRITING DISCOUNTS
PROCEEDS TO SELLER AND COMMISSIONS(1)
------------------ ----------------------
<S> <C> <C>
Class A-1 Notes................................... $ ( %) $( %)
Class A-2 Notes................................... $ ( %) $( %)
Class A-3 Notes................................... $ ( %) $( %)
Class A-4 Notes................................... $ ( %) $( %)
</TABLE>
- ------------------
(1) Includes all items considered by the National Association of Securities
Dealers to be underwriting compensation for purposes of the NASD's Rules of
Fair Practice.
After the public offering, the public offering price and other selling
terms may be changed by the underwriters. Additional offering expenses payable
by the seller are estimated to be $ .
The underwriters may engage in over-allotment, stabilizing transactions and
syndicate covering transactions with respect to the notes. Over-allotment
transactions involve syndicate sales in excess of the offering size, which
create a syndicate short position. Stabilizing transactions permit bids to
purchase the notes so long as the stabilizing bids do not exceed a specified
maximum. Syndicate covering transactions involve purchases of the notes in the
open market after the distribution has been completed in order to cover
syndicate short positions. These over-allotment transactions, stabilizing
transactions and syndicate covering transactions may cause the price of the
notes to be higher than it would otherwise be in the absence of these
transactions. Neither the seller nor the underwriters represent that the
underwriters will engage in any of these transactions or that these
transactions, once commenced, will not be discontinued without notice at any
time.
In the ordinary course of business, each underwriter and its affiliates may
have engaged and may engage in investment banking and/or commercial banking
transactions with the seller, its affiliates and the trust. In addition, each
underwriter may from time to time take positions in the notes.
The seller and AutoNation Financial Services have agreed to indemnify the
underwriters against specified liabilities, including liabilities under the
Securities Act of 1933, as amended, or to contribute to payments the
underwriters may be required to make in respect thereof.
LEGAL MATTERS
Relevant legal matters with respect to the notes and with respect to the
federal income tax matters discussed under "Material Federal Income Tax
Consequences" in the accompanying prospectus will be passed upon for the seller
by Weil, Gotshal & Manges LLP, New York, New York. In addition, relevant matters
of Florida law will be passed upon for the trust and the seller by Tripp Scott,
P.A., Fort Lauderdale, Florida. Relevant legal matters with respect to the notes
will be passed upon for the underwriters by Skadden, Arps, Slate, Meagher & Flom
LLP, New York, New York. Relevant legal matters relating to the insurer will be
passed upon for the insurer by .
EXPERTS
The consolidated balance sheets of and Subsidiaries as of
December 31, 1998 and 1997 and the related consolidated statements of income,
changes in shareholder's equity, and cash flows for each of the three years in
the period ended December 31, 1998, incorporated by reference in this prospectus
supplement, have been incorporated herein in reliance on the report of
, independent accountants, given on the authority of that firm as
experts in accounting and auditing.
S-43
<PAGE>
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
TERM PAGE
- ---- ----
<S> <C>
Amount Financed........................................................................................... S-31
Available Funds........................................................................................... S-29
Benefit Plan.............................................................................................. S-41
Closing Date.............................................................................................. S-13
Collection Account........................................................................................ S-28
Collection Period......................................................................................... S-31
Cut-Off Date.............................................................................................. S-15
Defaulted Contract........................................................................................ S-31
Deficiency Amount......................................................................................... S-37
Distribution Date......................................................................................... S-19
Final Scheduled Distribution Dates........................................................................ S-19
Guaranteed Note Principal Amount.......................................................................... S-37
Insured Payment........................................................................................... S-37
Insurer Default........................................................................................... S-27
Interest Accrual Period................................................................................... S-24
Liquidation Expenses...................................................................................... S-29
Monthly Scheduled Payment................................................................................. S-31
Net Insurance Proceeds.................................................................................... S-29
Net Liquidation Proceeds.................................................................................. S-29
Note Distribution Account................................................................................. S-28
Note Interest Carryover Shortfall......................................................................... S-31
Note Interest Distributable Amount........................................................................ S-31
Note Principal Carryover Shortfall........................................................................ S-32
Note Principal Distributable Amount....................................................................... S-32
Optional Purchase......................................................................................... S-36
Optional Purchase Price................................................................................... S-36
Overcollateralization Amount.............................................................................. S-33
Parties in Interest....................................................................................... S-41
Payment Account........................................................................................... S-28
Payment Default........................................................................................... S-26
Plan Asset Regulation..................................................................................... S-41
Pool Balance.............................................................................................. S-16
Preference Amount......................................................................................... S-37
Principal Balance......................................................................................... S-32
Principal Distributable Amount............................................................................ S-32
PTCE...................................................................................................... S-42
Purchase Amount........................................................................................... S-32
Purchased Contract........................................................................................ S-32
Receivables Pool.......................................................................................... S-14
Servicing Fee............................................................................................. S-34
Spread Account............................................................................................ S-28
Spread Account Required Amount............................................................................ S-33
Trust Bankruptcy Event.................................................................................... S-26
Trust Property............................................................................................ S-14
</TABLE>
S-44
<PAGE>
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not
permitted.
SUBJECT TO COMPLETION, DATED , 1999
Prospectus
ANRC AUTO OWNER TRUSTS
AUTONATION RECEIVABLES CORPORATION, Seller
AUTONATION FINANCIAL SERVICES CORP., Servicer
ASSET-BACKED NOTES AND CERTIFICATES
THE OWNER TRUSTS:
o may periodically issue asset-backed notes and certificates in one or more
series with one or more classes; and
o will own:
o fixed rate motor vehicle retail installment sales contracts secured by
new and used automobiles and light-duty trucks;
o collections on the contracts;
o security interests in the financed vehicles and the rights to receive
proceeds from claims on insurance policies;
o funds in the accounts of the trust; and
o any enhancements issued in favor of the trust.
THE NOTES:
o will represent obligations of a trust and will be paid only from the assets
of that trust;
o will be rated in one of the four highest rating categories by at least one
nationally recognized rating organization;
o may have one or more forms of enhancement; and
o will be issued as part of a series which may include one or more classes of
notes and certificates.
THE CERTIFICATES:
o will represent beneficial interests in a trust and will be paid only from
the assets of that trust;
o may have one or more forms of enhancement;
o will be issued as part of a series which may include one or more classes of
notes and certificates; and
o may be offered to the public or retained by the seller or one of its
affiliates.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED WHETHER
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is , 1999
Neither the notes, the certificates nor the underlying contracts are insured or
<PAGE>
guaranteed by AutoNation Receivables Corporation, AutoNation Financial Services
Corp. or any governmental agency.
The notes and the certificates will represent obligations of and interests in a
trust only and will not represent obligations of or interests in AutoNation
Receivables Corporation, AutoNation Financial Services Corp. or any of their
affiliates.
This prospectus may be used to offer and sell any series of notes or
certificates only if accompanied by the prospectus supplement for that series.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
OVERVIEW OF THE INFORMATION IN THIS PROSPECTUS AND THE PROSPECTUS
SUPPLEMENT ............................................................... 3
DESCRIPTION OF THE TRUSTS .................................................... 4
DESCRIPTION OF THE TRUSTEES .................................................. 4
AUTONATION FINANCIAL SERVICES' PORTFOLIO OF MOTOR VEHICLE CONTRACTS .......... 5
Origination of Motor Vehicle Contracts ................................... 5
Underwriting of Motor Vehicle Contracts .................................. 5
Insurance ................................................................ 7
Collection Procedures .................................................... 7
Modifications and Extensions ............................................. 8
Delinquency and Loan Loss Information .................................... 8
DESCRIPTION OF THE CONTRACTS ................................................. 9
The Receivables Pool ..................................................... 9
Calculation Method ....................................................... 9
PREFUNDING ARRANGEMENTS ...................................................... 9
MATURITY AND PREPAYMENT CONSIDERATIONS ...................................... 10
POOL FACTOR AND POOL INFORMATION ............................................ 11
USE OF PROCEEDS ............................................................. 11
DESCRIPTION OF THE SELLER ................................................... 11
DESCRIPTION OF AUTONATION FINANCIAL SERVICES CORP. .......................... 13
Year 2000 Issues ........................................................ 13
DESCRIPTION OF WORLD OMNI FINANCIAL CORP. ................................... 14
DESCRIPTION OF AUTONATION, INC. ............................................. 14
DESCRIPTION OF THE SECURITIES ............................................... 14
The Notes ............................................................... 14
The Certificates ........................................................ 15
Ratings of the Securities ............................................... 15
Principal and Interest on the Securities ................................ 16
Book-Entry Registration ................................................. 16
DTC's Year 2000 Efforts ................................................. 17
Definitive Securities ................................................... 17
List of Securityholders ................................................. 18
Statements to Securityholders ........................................... 19
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS ........................ 20
Sale and Assignment of the Contracts .................................... 20
The Collection Account and Eligible Investments ......................... 21
Other Accounts .......................................................... 22
Payments on Contracts ................................................... 22
Payments and Distributions on the
Securities ......................................................... 22
Credit and Cash Flow Enhancement ........................................ 23
Insurance on Financed Motor Vehicles .................................... 23
Servicer Reports to the Trustees and the Insurer ........................ 23
Optional Purchase of Contracts .......................................... 23
Servicing Fee ........................................................... 24
Waivers and Extensions .................................................. 24
Realization Upon Defaulted Contracts .................................... 24
Evidence as to Compliance ............................................... 24
Material Matters Regarding the Servicer ................................. 25
Defaults by the Servicer ................................................ 25
Rights Upon Default by the Servicer ..................................... 26
Amendment ............................................................... 26
Termination ............................................................. 27
The Owner Trustee and Indenture Trustee ................................. 27
Description of the Administration
Agreement .......................................................... 28
DESCRIPTION OF THE INDENTURE ................................................ 29
Modification of Indenture ............................................... 29
Events of Default Under the Indenture; Rights Upon Event of Default ..... 30
Material Covenants ...................................................... 30
Annual Compliance Statement ............................................. 31
Indenture Trustee's Annual Report ....................................... 31
Satisfaction and Discharge of Indenture ................................. 31
The Indenture Trustee ................................................... 32
LEGAL ASPECTS OF THE CONTRACTS .............................................. 32
Security Interests in the Financed Motor Vehicles ....................... 32
Repossession ............................................................ 33
Notice of Sale; Redemption Rights ....................................... 34
Deficiency Judgments and Excess
Proceeds ........................................................... 34
Consumer Protection Laws ................................................ 35
Other Limitations ....................................................... 35
Repurchase Obligation ................................................... 36
MATERIAL FEDERAL INCOME TAX CONSEQUENCES .................................... 37
Tax Characterization of each Trust ...................................... 37
Tax Consequences to Holders of the
Notes .............................................................. 38
Taxation of Non-U.S. Holders of Notes ................................... 41
Information Reporting and Backup Withholding ............................ 41
Tax Consequences to Holders of the Certificates ......................... 42
Taxation of Non-U.S. Holders of
Certificates ....................................................... 46
ERISA CONSIDERATIONS ........................................................ 46
UNDERWRITING ................................................................ 48
LEGAL MATTERS ............................................................... 48
REPORTS TO SECURITYHOLDERS .................................................. 48
WHERE YOU CAN FIND MORE INFORMATION ......................................... 48
INDEX OF DEFINED TERMS ...................................................... 50
</TABLE>
2
<PAGE>
OVERVIEW OF THE INFORMATION IN THIS PROSPECTUS
AND THE PROSPECTUS SUPPLEMENT
We provide information about your securities in two separate documents:
(a) this prospectus, which provides general information, some of which may not
apply to a particular series of notes or certificates, including your series;
and (b) the prospectus supplement, which describes the specific terms of your
series, including information about:
o the type of securities offered;
o the timing and amount of interest and principal payments;
o the contracts underlying your securities;
o the credit enhancement for each class;
o the credit ratings; and
o the method for selling the securities.
WHENEVER INFORMATION IN THE PROSPECTUS SUPPLEMENT IS MORE SPECIFIC THAN THE
INFORMATION IN THIS PROSPECTUS, YOU SHOULD RELY ON THE INFORMATION IN THE
PROSPECTUS SUPPLEMENT.
You should rely only on the information provided in this prospectus and the
prospectus supplement, including the information incorporated by reference. We
have not authorized anyone to provide you with different information.
We include cross-references in this prospectus and in the prospectus
supplement to captions in these materials where you can find further related
discussions. The preceding table of contents and the table of contents included
in the prospectus supplement provide the pages on which these captions are
located.
You can find a listing of the pages where capitalized terms are defined
under the caption "Index of Defined Terms" beginning on page 50 in this
prospectus.
------------------------
TO UNDERSTAND THE STRUCTURE OF THESE SECURITIES, YOU MUST READ CAREFULLY
THIS PROSPECTUS AND THE PROSPECTUS SUPPLEMENT IN THEIR ENTIRETY.
3
<PAGE>
DESCRIPTION OF THE TRUSTS
Each owner trust will from time to time issue asset-backed notes and may
issue asset-backed certificates in one or more series in amounts, at prices and
on terms to be determined at the time of sale and to be set forth in a
supplement to this prospectus.
With respect to each series of securities, AutoNation Receivables
Corporation, a wholly-owned special purpose, bankruptcy remote subsidiary of
AutoNation Financial Services Corp., as seller, will establish a separate trust
pursuant to an owner trust agreement, which may be amended and supplemented from
time to time, between the seller and the owner trustee specified in the related
prospectus supplement for the transactions described herein and in the related
prospectus supplement. The notes will represent indebtedness of the related
trust and will be issued and secured pursuant to an indenture between the trust
and the indenture trustee specified in the related prospectus supplement.
To the extent specified in the related prospectus supplement, the property
of each trust (the "TRUST PROPERTY") will include:
(1) a pool of motor vehicle retail installment sales contracts, all of
which are secured by new and/or used automobiles and/or light-duty trucks;
(2) documents relating to the contracts, including all servicing
records in hard or electronic form;
(3) amounts due under the contracts on or after the Cut-Off Date
specified in the related prospectus supplement;
(4) liens on the related financed motor vehicles and the rights to
receive proceeds from claims on any related insurance policies covering the
financed motor vehicles or the related obligors;
(5) all amounts on deposit in the applicable trust accounts, including
the related Collection Account and any other account identified in the
applicable prospectus supplement, including all Eligible Investments
credited thereto (but excluding any investment income from Eligible
Investments which is to be paid to the servicer of the contracts or as
otherwise specified in the related prospectus supplement);
(6) the benefits of any form of credit enhancement identified in the
applicable prospectus supplement;
(7) the right of the seller to cause AutoNation Financial Services
Corp. to repurchase any contracts with respect to which it breaches any of
its representations or warranties or its servicing obligations;
(8) any other property specified in the related prospectus supplement; and
(9) all proceeds of the foregoing.
To the extent specified in the related prospectus supplement, an insurance
policy, reserve fund, spread account or other form of credit enhancement may be
a part of the property of any given trust or may be held by the owner trustee or
the indenture trustee for the benefit of holders of the related securities.
Each trust will be formed in accordance with the laws of the State of
Delaware. Prior to formation, each trust will have no assets or obligations.
After formation, each trust will not engage in any activity other than acquiring
and holding the related contracts, issuing the related securities, distributing
payments in respect thereof and any other activities described herein, in the
related prospectus supplement and in the owner trust agreement. Each trust will
not acquire any contracts or assets other than the Trust Property.
The principal offices of each trust, the owner trustee and the indenture
trustee will be specified in the applicable prospectus supplement.
DESCRIPTION OF THE TRUSTEES
The owner trustee and the indenture trustee for each trust will be
specified in the related prospectus supplement. The owner trustee's and the
indenture trustee's liability in connection with the issuance and sale of the
related securities will be limited solely to the express obligations of the
owner trustee or indenture trustee as set forth in the related owner trust
agreement, the sale and servicing agreement and the indenture. An owner
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trustee or indenture trustee with respect to a series of securities may resign
or be removed under the circumstances specified in the related prospectus
supplement. Any resignation or removal of an owner trustee or indenture trustee
and appointment of a successor trustee will not become effective until
acceptance of the appointment by that successor.
AUTONATION FINANCIAL SERVICES' PORTFOLIO OF MOTOR VEHICLE CONTRACTS
ORIGINATION OF MOTOR VEHICLE CONTRACTS
AutoNation Financial Services originates motor vehicle retail installment
sales contracts secured by new and used automobiles and light-duty trucks in
connection with providing financing for the purchase of those vehicles. Motor
vehicle contracts in AutoNation Financial Services' portfolio are currently
originated from application referrals received from the following dealers:
(1) franchised automotive dealerships or used vehicle megastores owned by
AutoNation, Inc. and eight used vehicle megastore licensees and (2) seven third
party franchised automotive dealerships. AutoNation Financial Services in the
future may contract with additional third party franchised automotive
dealerships or used car dealerships to provide additional application referrals.
AutoNation owns approximately 400 franchise automotive dealerships in 20 states.
These dealerships own and operate franchises granted by 24 manufacturers of
approximately 36 different brands of automobiles and light-duty trucks. In
addition, AutoNation operates 34 AutoNation USA used vehicle megastores and
licenses eight additional AutoNation USA used vehicle megastores in 13 states.
See "Description of AutoNation, Inc."
Each dealer from which AutoNation Financial Services receives application
referrals has entered into a dealer agreement with AutoNation Financial
Services, whereby the applicable dealer represents, among other things, that:
(1) it will comply with federal and state laws regarding motor vehicle
financing;
(2) it will obtain the requisite financial information of the obligor
required to extend credit; and
(3) it will truthfully disclose to AutoNation Financial Services any
applicable financial information, the identity of the obligor and other
specified information in connection with the loan transaction.
All of the contracts included in the Trust Property of a trust will have
been originated by AutoNation Financial Services from application referrals from
dealers or as specified in the related prospectus supplement.
UNDERWRITING OF MOTOR VEHICLE CONTRACTS
AutoNation Financial Services focuses its originations on the prime auto
lending market, lending to individuals with better credit histories and thereby
assuming a lower risk of delayed payment or non-payment under the motor vehicle
contracts. AutoNation Financial Services underwrites motor vehicle contracts
referred to it from dealers through its Fort Lauderdale, Florida Dealer Service
Center. Contract processing and underwriting at the dealer service center are
open to receive application referrals at all times at which dealers are open for
business.
Dealers submit applications to AutoNation Financial Services for review and
approval either electronically or by facsimile. Electronic credit applications
are submitted via an on-line, real time connection established between the
dealer service center and the dealer. Electronic credit applications transmitted
via the on-line connection allow dealers to enter and transmit the relevant
applicant information directly to the dealer service center without the dealer
service center having to re-enter the information into its system, resulting in
greater efficiency and reduced turnaround time in the application process.
Currently, only AutoNation USA megastores are outfitted with electronic credit
application capabilities. Dealers which do not have on-line capabilities fax
applications to a third party credit application entry company that receives the
applications, enters the information into its computer system and transmits the
application via its own on-line, real time connection to the dealer service
center in the same format as electronic credit applications.
Each applicant for a motor vehicle contract is evaluated individually based
on uniform underwriting standards developed by AutoNation Financial Services.
These underwriting standards are intended to assess a
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potential obligor's ability to repay all amounts due under the motor vehicle
contract and the adequacy of the related financed vehicle as collateral, based
upon a review of the information contained in the motor vehicle contract
application. The material credit information included on the motor vehicle
contract application includes the applicant's income, deposit accounts,
liabilities, a real time credit history obtained from a third party credit
bureau reporting agency, employment history and a description of the financed
vehicle intended to secure the motor vehicle contract. The primary criteria
considered in evaluating the individual applications are:
(1) stability of the obligor with specific regard to the obligor's
length of residence in his or her current home, occupation, length of
employment and whether the obligor rents or owns his or her home;
(2) the obligor's payment history based on information known directly
by AutoNation Financial Services or provided by various credit reporting
agencies with respect to present and past debt;
(3) a debt service to gross monthly income ratio test;
(4) the principal amount requested under the motor vehicle contract
taking into account the age, type and market value of the related financed
vehicle;
(5) an empirically derived credit score; and
(6) a credit bureau score.
AutoNation Financial Services uses an empirically based credit scoring
process to objectively index the applicant's creditworthiness. The credit
scoring process entails the use of statistics to correlate common
characteristics with credit risk. Through the use of credit scoring, AutoNation
Financial Services is able to evaluate credit profiles in order to quantify
credit risk. AutoNation Financial Services' credit scoring process is
periodically reviewed to ensure its validity. In addition to AutoNation
Financial Services' credit scoring system, AutoNation Financial Services uses
consumer reporting agency scores or credit bureau scores to assist in the
underwriting process. The credit bureau score is a factor in evaluating credit
risk and provides the basis for the credit score. A credit analyst reviews each
application, except for a limited number of applications which are automatically
approved upon satisfaction of more stringent approval criteria or which are
denied upon failure to satisfy AutoNation Financial Services' minimum standards.
The AutoNation Financial Services scoring process and consumer reporting agency
scores are intended to provide a basis for lending decisions, but are not meant
to supersede the judgment of the credit analyst. On occasion, AutoNation
Financial Services approves loan applications at variance with its standard
credit guidelines. However, to gain approval, a loan application that does not
comply with all of AutoNation Financial Services' guidelines must have strong
compensating factors that demonstrate the ability of the potential obligor to
pay all amounts to become due under the motor vehicle contract. If an
application for a motor vehicle contract is approved after failing to comply
with AutoNation Financial Services' guidelines, the approval generally occurs
because the credit analyst has conditioned the loan on additional requirements,
such as a larger down payment, reduction in the term of the financing or the
addition of a co-signer to the motor vehicle contract.
After review of an application, a credit analyst and/or manager notifies
the applicable dealer as to whether the application has been approved (subject
to the receipt of the required documentation), denied or is the subject of a
counter-offer. If the response to the dealer requires a counter-offer from
AutoNation Financial Services (which can include an additional down payment,
reduction in the term of the financing, or the addition of a co-signer to the
motor vehicle contract), those stipulations become a condition of the approval.
Subsequent to approval, if AutoNation Financial Services is the chosen source of
financing, AutoNation Financial Services will obtain the necessary documentation
for processing the loan, consisting of the following:
(1) a signed application;
(2) the only original and a copy of the executed motor vehicle
contract;
(3) an agreement by the obligor to provide insurance;
(4) a report of sale or guarantee of title;
(5) an application for registration;
(6) a co-signer notification (if applicable);
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(7) a copy of the contract for any supplemental warranty purchased
with respect to the financed vehicle;
(8) acceptable vehicle valuation documentation consisting of the
dealer invoice or sticker for new cars and reference to the most recently
published National Automobile Dealers Association Used Car Price Guide or
Kelly Blue Book, based on year, make and model of the related financed
vehicle for used cars; and
(9) any other required documentation.
Once the appropriate documentation is obtained for funding, the file
relating to the motor vehicle contract is forwarded to a contract processor for
a pre-funding audit. The contract processor then audits the documents for
completeness and consistency with the application, providing final approval for
purchase of the motor vehicle contract once these requirements have been
satisfied.
The amount advanced under any motor vehicle contract will not exceed, on
average, (1) for a new financed vehicle, 105% of the manufacturer's suggested
retail price plus taxes and title and license fees on the financed vehicle
averaging an additional 7% or (2) for a used financed vehicle, 105% of the
"retail" value stated in the most recently published National Automobile Dealers
Association Used Car Price Guide plus taxes and title and license fees on the
financed vehicle averaging an additional 7%. However, the amount advanced under
a motor vehicle contract may be different than the maximum permissible amount
due to a number of factors, including down payment requirements, trade-in equity
and credit score. In addition, in connection with the financing of new and used
vehicles, AutoNation Financial Services will also finance accessories, extended
service contracts and other insurance products under a motor vehicle contract.
AutoNation Financial Services performs detailed analyses of its portfolio
of motor vehicle contracts to evaluate the effectiveness of its credit
guidelines and scoring process. If external economic factors, credit delinquency
levels or credit loss levels change, credit guidelines are adjusted to maintain
a level of asset quality deemed acceptable by AutoNation Financial Services'
management. Each day, the credit manager and credit supervisors review a group
of motor vehicle contracts to ensure that credit analysts are following
AutoNation Financial Services' established policies and procedures. AutoNation
Financial Services randomly reviews, on a monthly basis, the quality of the
motor vehicle contracts to ensure compliance with established policies and
procedures. In accordance with its reasonable business judgment, AutoNation
Financial Services' credit underwriting standards may change at any time.
INSURANCE
The motor vehicle contracts require obligors to maintain specific levels
and types of insurance coverage to protect each financed vehicle against loss
due to theft or damage. AutoNation Financial Services requires all financed
vehicles to have insurance coverage, including comprehensive fire, theft and
collision coverage, insuring the financed vehicle in an amount at least equal to
the financed vehicle's fair market value. In addition, AutoNation Financial
Services requires the obligor's public liability and property damage insurance
coverage to meet or exceed the applicable state minimum levels of coverage. All
insurance policies must also require the obligor to provide at least 30 days
prior written notice to AutoNation Financial Services before cancellation. The
dealers are responsible for ensuring that each obligor obtains proper insurance
coverage and that AutoNation Financial Services is named as loss payee.
COLLECTION PROCEDURES
AutoNation Financial Services has established a comprehensive set of
collection policies and procedures, the application of which are performed by
World Omni Financial Corp. pursuant to a subservicing agreement between
AutoNation Financial Services and World Omni. These policies and procedures
utilize an automated collection system to assist in collection efforts and the
prompt investigation and evaluation of the causes of any delinquency. The
automated collection system provides relevant obligor information (for example,
current addresses, phone numbers and loan information), records of all contacts
with obligors and, in some cases, automated dialing. This system records the
obligor's promise to pay, allows supervisors to review collection personnel
activity, permits supervisors to modify priorities regarding which obligors to
contact and provides extensive reports concerning motor vehicle contract
delinquencies. Pursuant to AutoNation Financial Services' collection policies
and procedures, any obligor whose motor vehicle contract has become 10 days
delinquent is
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contacted by mail and/or telephone. In the event that the obligor fails to make
a payment sufficient to bring the scheduled payments current under the motor
vehicle contract, personal telephone contact with the obligor is attempted on or
after the 15th day of delinquency. Generally, after a motor vehicle contract is
delinquent for 60 days and all collection efforts have been exhausted,
repossession procedures will be implemented. However, if (1) a motor vehicle
contract is deemed uncollectible, (2) the financed vehicle is deemed by
collection personnel to be in danger of being damaged, destroyed or made
unavailable for repossession or (3) the obligor voluntarily surrenders the
financed vehicle, a repossession may occur without regard to the length or
existence of payment delinquency. Repossessions are generally conducted by third
parties who are engaged in the business of repossessing vehicles for secured
parties. After repossession, the obligor, in accordance with applicable state
law, generally has an additional 10 to 30 days to redeem the financed vehicle
before the financed vehicle is liquidated at auction. Upon the sale of the
repossessed vehicle, AutoNation Financial Services will pursue any remaining
deficiency to the extent deemed practical and to the extent permitted by law.
Losses may occur in connection with delinquent motor vehicle contracts and
can arise in several ways, including the inability to locate the financed
vehicle or the obligor, uninsured losses or because of a discharge of the
obligor in a bankruptcy proceeding. AutoNation Financial Services' current
collection policies and procedures recognize losses (1) at the time a motor
vehicle contract is deemed uncollectible, (2) during the month $40 or more under
a motor vehicle contract becomes 120 days or more past due or (3) if the
financed motor vehicle has been repossessed and liquidated, whichever occurs
first.
MODIFICATIONS AND EXTENSIONS
AutoNation Financial Services' collection policies and procedures may, on a
case-by-case basis, allow for extensions with respect to the due dates (each, a
"DUE DATE") of payments on motor vehicle contracts. With a few very limited
exceptions, these extensions are offered only in the following instances:
(1) if AutoNation Financial Services or its subservicer believes that
the obligor's financial difficulty has been resolved or will no longer
impair the obligor's ability to make future payments;
(2) the extension will result in the obligor's payments being brought
current;
(3) the total number of credit-related extensions granted on the motor
vehicle contract will not exceed six months in the aggregate or the state
maximum, whichever is lower;
(4) there has been no more than two credit-related extensions granted
on the motor vehicle contract in the immediately preceding twelve months;
and
(5) AutoNation Financial Services (or its assignee) had held the motor
vehicle contract for at least six months.
Any deviation from AutoNation Financial Services' collection policies and
procedures regarding the grant of an extension requires the concurrence of a
collection supervisor, collection manager and account manager.
DELINQUENCY AND LOAN LOSS INFORMATION
Information concerning the experience of AutoNation Financial Services
pertaining to delinquencies, loan losses and recoveries with respect to its
portfolio of motor vehicle contracts (including receivables previously sold
which AutoNation Financial Services continues to service) will be set forth in
each prospectus supplement. There can be no assurance that the delinquency, loan
loss and recovery experience on any contracts related to a series of securities
will be comparable to prior experience or to the information provided.
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DESCRIPTION OF THE CONTRACTS
THE RECEIVABLES POOL
The contracts to be purchased by each trust (the "RECEIVABLES POOL") will
be selected by the seller based upon the satisfaction of several criteria,
including that each contract:
(1) is secured by a financed motor vehicle that was insured at the
inception of the loan and, as of the related Cut-off Date, has not been
repossessed without reinstatement;
(2) has not been identified on the computer files of the seller as
relating to an obligor who was the subject of a bankruptcy proceeding as of
the related Cut-off Date;
(3) provides for fully amortizing level scheduled monthly payments and
for the accrual of interest at a fixed rate according to the Simple
Interest Method (except for the first and last payment, which may be
minimally different from the level payments); and
(4) satisfies any additional criteria specified in the related
prospectus supplement.
All of the contracts included in the Trust Property of a trust will have been
originated by AutoNation Financial Services based upon application referrals
from dealers or as specified in the related prospectus supplement. See
"AutoNation Financial Services' Portfolio of Motor Vehicle Contracts." The
seller will not use any selection procedures in selecting the contracts for each
Receivables Pool that are materially adverse to the securityholders of any
series.
Additional information with respect to the Receivables Pool securing each
series of securities will be set forth in the related prospectus supplement
including, to the extent appropriate, the composition of the contracts, the
distribution by annual percentage rate, the distribution by the states where the
contracts were originated and the portion of the Receivables Pool secured by new
vehicles and used vehicles.
CALCULATION METHOD
Each of the contracts included in the Trust Property of a trust will be a
fixed rate contract where the allocation of each payment between interest and
principal is calculated using the Simple Interest Method. Under the "SIMPLE
INTEREST METHOD" interest due on motor vehicle contracts is calculated daily on
the actual principal balance of the contract on that date. For these contracts,
interest accrued as of the Due Date is paid first, and then the remaining
payment is applied to the unpaid principal balance. Accordingly, if an obligor
pays the fixed monthly installment in advance of the Due Date, the portion of
the payment allocable to interest will be less for that period since the
preceding payment will be less than it would be if the payment were made on the
Due Date, and the portion of the payment allocable to reduce the principal
balance will be correspondingly greater. Conversely, if an obligor pays the
fixed monthly installment after its Due Date, the portion of the payment
allocable to interest for the period since the preceding payment will be greater
than it would be if the payment were made on the Due Date, and the portion of
the payment allocable to reduce the principal balance will be correspondingly
smaller. When necessary, an adjustment is made at the maturity of the contract
to the scheduled final payment to reflect the larger or smaller, as the case may
be, allocations of payments to interest or principal under the contract as a
result of early or late payments, as the case may be.
The seller will sell or transfer contracts having an aggregate principal
balance specified in the related prospectus supplement as of the date specified
therein (the "CUT-OFF DATE") to the applicable trust. The purchase price paid by
each trust for each contract included in the Trust Property of the trust will
either reflect the principal balance of the contract as of the Cut-Off Date
calculated under the Simple Interest Method or another amount as specified in
the related prospectus supplement.
PREFUNDING ARRANGEMENTS
To the extent provided in the related prospectus supplement for a series of
securities, the related owner trust agreement, the sale and servicing agreement
and the indenture may provide for a commitment by the related trust to
subsequently purchase additional contracts ("SUBSEQUENT CONTRACTS") from the
seller following the date on which the trust is established and the related
securities are issued (a "PREFUNDING ARRANGEMENT") for a period not to exceed
three months and in an amount not to exceed 20% of the initial principal balance
of the securities.
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With respect to a series of securities, the Prefunding Arrangement will require
that any Subsequent Contracts transferred to the trust conform to the
requirements and conditions provided in the related sale and servicing agreement
including the requirement that the Subsequent Contracts satisfy all of the same
credit and underwriting criteria as the initial contracts. If a Prefunding
Arrangement is utilized in connection with the issuance of a series of
securities, the servicer will establish an account (the "PREFUNDING ACCOUNT") in
the name of the indenture trustee for the benefit of the securityholders into
which a portion of the net proceeds received from the sale of the securities
(the "PREFUNDED AMOUNT") will be deposited and from which funds will be released
during a specified period to purchase Subsequent Contracts from the seller. Upon
each conveyance of Subsequent Contracts to the applicable trust, an amount equal
to the purchase price paid by the seller to AutoNation Financial Services for
the Subsequent Contracts will be released from the Prefunding Account and paid
to the seller.
The utilization of a Prefunding Arrangement for a series of securities is
intended to improve the efficiency of the issuance of the securities and the
sale of the contracts to the related trust through the incremental delivery of
the applicable contracts on the date of initial issuance of the series of
Securities (the "CLOSING DATE") and during a specified period following the
Closing Date for that series of securities. Prefunding Arrangements allow for a
more even accumulation of the contracts by the seller and AutoNation Financial
Services and the issuance of a larger principal amount of securities than would
be the case without a Prefunding Arrangement.
Subsequent Contracts may be of a different credit quality and seasoning. In
addition, following the transfer of Subsequent Contracts to the applicable
trust, the characteristics of the entire pool of contracts included in the trust
may vary from those of the contracts initially transferred to the trust.
MATURITY AND PREPAYMENT CONSIDERATIONS
The weighted average life of the notes and the certificates of any series
will generally be influenced by the rate at which the principal balances of the
contracts are paid, which payments may be in the form of scheduled payments or
prepayments. Each contract is prepayable in full by the obligor at any time
without penalty. Full and partial prepayments on motor vehicle contracts
included in the Trust Property of a trust will be paid or distributed to the
related securityholders on the next day a principal or interest payment is to be
made (each, a "DISTRIBUTION DATE") (or if that day is not a business day (i.e.,
a Saturday, Sunday, a day on which the insurer, if any, is closed or a day on
which banking institutions in New York, New York or in the city in which the
indenture trustee's corporate trust office or the owner trustee's corporate
trust office is located are authorized or obligated by law to be closed), on the
next succeeding business day) following the Collection Period in which they are
received. To the extent that any contract included in the Trust Property of a
trust is prepaid in full (a "FULL PREPAYMENT"), whether by the obligor, or as
the result of a purchase by the servicer or a repurchase by the seller or
otherwise, the actual weighted average life of the contracts included in the
Trust Property of the trust will be shorter than a weighted average life
calculation based on the assumptions that payments will be made on schedule and
that no prepayments will be made. Weighted average life means the average amount
of time until the entire principal amount of a contract is repaid. Full
Prepayments may also result from liquidations due to default, receipt of
proceeds from theft, physical damage, credit life and credit disability
insurance policies, repurchases by the seller as a result of the failure of a
contract to meet the criteria set forth in the related sale and servicing
agreement or purchases by the servicer as a result of a breach of its covenants
with respect to the contracts made by it or its servicing duties in the related
sale and servicing agreement. In addition, early retirement of the securities
may be effected by the servicer exercising its option to purchase the remaining
contracts included in the Trust Property of the trust on any Distribution Date
as of which the Pool Balance (after giving effect to the principal payments and
distributions otherwise to be made on that Distribution Date) has declined to
the percentage of the original Pool Balance specified in the related prospectus
supplement. See "Description of the Transfer and Servicing Agreements-- Optional
Purchase of Contracts."
The rate of Full Prepayments by obligors on the contracts may be influenced
by a variety of economic, social and other factors. These factors include the
unemployment rate, servicing decisions, seasoning of loans, destruction of
vehicles by accident, loss of vehicles due to theft, sales of vehicles, market
interest rates, the availability of alternative financing and restrictions on
the obligor's ability to sell or transfer the financed motor vehicle securing a
contract without the consent of the servicer. Any Full Prepayments reduce the
average life of the contracts.
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AutoNation Financial Services has a limited operating history and limited
historical experience with respect to prepayments and can make no prediction as
to the actual prepayment rates that will be experienced on the contracts
included in the Trust Property of any trust in either stable or changing
interest rate environments. Securityholders of each series will bear all
reinvestment risk resulting from the rate of prepayment of the contracts
included in the Trust Property of the related trust.
POOL FACTOR AND POOL INFORMATION
For each trust, the "POOL FACTOR" will be a six-digit decimal which the
servicer will compute each month indicating the aggregate principal balance of
the related contracts (the "POOL BALANCE") at the end of the month as a fraction
of the aggregate principal balance of (1) the contracts as of the Cut-Off Date
(the "ORIGINAL POOL BALANCE") plus (2) any Subsequent Contracts added to the
trust as of the applicable subsequent Cut-Off Date. The Pool Factor will be
1.000000 as of the Closing Date; thereafter, the Pool Factor will decline to
reflect reductions in the Pool Balance. The amount of a securityholder's pro
rata share of the Pool Balance for a given month can be determined by
multiplying the original denomination of the holder's security by the Pool
Factor for that month.
With respect to each trust, the securityholders of record will receive
monthly reports from the owner trustee or indenture trustee, as applicable,
concerning payments received on the contracts, the Pool Balance, the Pool Factor
and other relevant information. The Depository Trust Company will supply these
reports to securityholders in accordance with its procedures. Since owners of
beneficial interests in a global security of a given series will not be
recognized as securityholders of that series, DTC will not forward monthly
reports to those owners. Copies of monthly reports may be obtained by owners of
beneficial interests in a global security by a request in writing addressed to
the owner trustee or indenture trustee, as applicable. Securityholders of record
during any calendar year will be furnished information for tax reporting
purposes not later than the latest date permitted by federal and/or state law.
See "Description of the Securities--Statements to Securityholders."
USE OF PROCEEDS
The net proceeds from the sale of securities of a given series will be
applied by the applicable trust (1) to purchase the contracts from the seller
pursuant to the related sale and servicing agreement, (2) to deposit the
Prefunded Amount, if applicable, to the Prefunded Account and to fund any other
collateral accounts, (3) to pay other expenses in connection with the issuance
of the securities and (4) for any other purposes set forth in the related
prospectus supplement. The net proceeds to be received by the seller from the
sale of the contracts to the applicable trust will be used by the seller to
repay indebtedness incurred, or to pay other amounts owed, in connection with
its acquisition of the contracts from AutoNation Financial Services and to pay
other expenses in connection with the pooling of the contracts and the issuance
of the securities. AutoNation Financial Services will use the proceeds from the
sale of the contracts for general corporate purposes.
DESCRIPTION OF THE SELLER
The seller, AutoNation Receivables Corporation, a wholly-owned, special
purpose, bankruptcy remote subsidiary of AutoNation Financial Services, was
incorporated under the laws of the State of Delaware on June 18, 1999 and has a
limited operating history. The seller was organized for the limited purpose of
purchasing retail installment sales contracts from AutoNation Financial Services
and transferring those contracts to third parties and any activities incidental
to and necessary or convenient for the accomplishment of that purpose. The
principal offices of the seller are located at 200 South Andrews Avenue, Fort
Lauderdale, Florida 33301. The telephone number of the seller's offices is (954)
769-4555.
AutoNation Financial Services and the seller have taken and will take steps
in structuring the transactions contemplated hereby that are intended to ensure
that the voluntary or involuntary application for relief by AutoNation Financial
Services under the United States Bankruptcy Code or similar state laws
(collectively, the "INSOLVENCY LAWS") will not result in consolidation of the
assets and liabilities of the seller with those of AutoNation Financial
Services. These steps include the creation of the seller as a separate, limited
purpose subsidiary pursuant to a certificate of incorporation containing
limitations on the scope of the seller's activities (including restrictions on
the nature of the seller's business and a restriction on the seller's ability to
commence a
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voluntary case or proceeding under any Insolvency Law without the unanimous
affirmative vote of all of its directors).
In addition, the seller has received the advice of counsel to the effect
that, based on a reasoned analysis of analogous case law (although there is no
precedent based on directly similar facts), subject to the facts, assumptions
and qualifications relied upon by counsel, it would not be a proper exercise by
a court of its equitable discretion to disregard the separate corporate
existence of the seller and to require the consolidation of the assets and
liabilities of the seller with the assets and liabilities of AutoNation
Financial Services in the event of the application of any Insolvency Law to
AutoNation Financial. However, there can be no assurance that the activities of
the seller would not result in a court concluding that the assets and
liabilities of the seller should be consolidated with those of AutoNation
Financial Services. If a court were to reach that conclusion, or a filing were
made under any Insolvency Law by or against the seller, or if an attempt were
made to litigate any of the foregoing issues, delays in payments or
distributions on any outstanding series of securities could occur or reductions
in the amounts of payments or distributions could result.
The contracts included in the Trust Property of each trust will have been
sold by AutoNation Financial Services to the seller pursuant to a receivables
purchase agreement between AutoNation Financial Services and the seller or as
specified in the related prospectus supplement. The contracts to be included in
the Trust Property of each trust will be sold by the seller to the applicable
trust pursuant to a sale and servicing agreement. AutoNation Financial Services
and the seller intend that each transfer of contracts by AutoNation Financial
Services to the seller under the applicable receivables purchase agreement or
otherwise will constitute a "true sale" of the contracts to the seller. If a
transfer of contracts constitutes a "true sale," those contracts and the
proceeds thereof would not be part of the bankruptcy estate of AutoNation
Financial Services under Section 541 of the Bankruptcy Code should AutoNation
Financial Services become the subject of a bankruptcy case subsequent to the
transfer of the contracts to the seller.
The seller has received the advice of counsel to the effect that, based on
a reasoned analysis of analogous case law (although there is no precedent based
on directly similar facts), subject to the facts, assumptions and qualifications
relied upon by counsel, in the event that AutoNation Financial Services were to
become the subject of a voluntary or involuntary case under the Bankruptcy Code
subsequent to the transfer of contracts to the seller, the transfer of the
contracts by AutoNation Financial Services to the seller would be characterized
as a "true sale" of the contracts from AutoNation Financial Services to the
seller and the contracts and the proceeds thereof would not form part of
AutoNation Financial Services' bankruptcy estate pursuant to Section 541 of the
Bankruptcy Code.
In Octagon Gas Systems, Inc. v. Rimmer, 995 F.2d 948 (10th Cir. 1993),
cert. denied, 114 S. Ct. 554 (1993), the United States Court of Appeals for the
10th Circuit suggested that even where a transfer of accounts from a seller to a
buyer constitutes a "true sale," the accounts would nevertheless constitute
property of the seller's bankruptcy estate in a bankruptcy of the seller. If
AutoNation Financial Services were to be placed into receivership and a court
were to follow the Octagon court's reasoning, securityholders might experience
delays in payment or possibly losses on their investment in the securities.
Counsel has advised the seller that the facts of the Octagon case appear to be
inconsistent with established precedent and the Uniform Commercial Code.
Accordingly, the Octagon case should not be binding precedent on a court in a
receivership proceeding.
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DESCRIPTION OF AUTONATION FINANCIAL SERVICES CORP.
AutoNation Financial Services Corp. will act as the servicer with respect
to the contracts. AutoNation Financial Services, a wholly-owned subsidiary of
AutoNation, was incorporated in the State of Delaware on February 6, 1997.
AutoNation Financial Services is dedicated to providing financial products and
services to customers of AutoNation's franchised automotive dealerships and
megastores and to third party dealers. In 1998, its first full year of
operations, AutoNation Financial Services had nearly 62,000 customers and almost
$1 billion in managed assets. The range of AutoNation Financial Services'
products includes retail loan and lease financing, secondary customer referral
programs, vehicle protection and maintenance programs and insurance products.
AutoNation Financial Services is headed by a management team with extensive
experience in the origination and servicing of automobile retail installment
sales contracts and loans. AutoNation Financial Services' principal executive
offices are located at 110 S.E. 6th Street, Fort Lauderdale, Florida 33301.
As of July 31, 1999, AutoNation Financial Services' serviced portfolio
consisted of approximately $1.5 billion of motor vehicle contracts. As of
July 31, 1999, approximately 61% of AutoNation Financial Services' serviced
portfolio consisted of motor vehicle installment contracts secured by used motor
vehicles, and 39% secured by new motor vehicles.
Currently, AutoNation Financial Services does not intend to directly
service the contracts transferred to the trusts. AutoNation Financial Services
presently delegates the majority of its servicing responsibilities with respect
to its serviced portfolio to World Omni pursuant to a subservicing agreement.
Subject to oversight by AutoNation Financial Services, World Omni currently
handles operational accounting and customer inquiries for AutoNation Financial
Services, as well as all collection activities in respect of delinquent
contracts and, where appropriate, repossesses financed motor vehicles securing
Liquidated Contracts. World Omni also performs the prefunding file audit with
respect to each contract to verify that all required documentation has been
received in connection with each contract and that the documentation conforms to
AutoNation Financial Services' requirements. In addition, World Omni acts as
custodian of the documents relating to each contract. Pursuant to the
subservicing agreement, World Omni has agreed to service all contracts
originated during the term of the subservicing agreement by AutoNation Financial
Services until their maturity in accordance with AutoNation Financial Services'
collection procedures. AutoNation Financial Services retains responsibility for
investing and reinvesting of funds and reporting. See "AutoNation Financial
Services' Portfolio of Motor Vehicle Contracts--Collection Procedures".
Notwithstanding the delegation by the servicer of its servicing duties to
World Omni, the servicer will remain primarily liable to the trust under the
sale and servicing agreement for the performance of those duties. However, if at
any time World Omni is in default in the performance of its subservicing
obligations and the indenture trustee is unwilling to act as successor servicer,
AutoNation Financial Services would be required to commence servicing its
portfolio itself or to engage a new subservicer to service the portfolio. At the
present time, AutoNation Financial Services does not have the capacity to
service its serviced portfolio, and therefore would be required to engage a new
third party subservicer. If AutoNation Financial Services were required to
engage a new subservicer, the transfer of servicing functions from World Omni to
the successor subservicer could encounter operational and logistical
difficulties that would impair the servicing of the contracts during the
servicing transition period. Industry experience indicates that increases in
delinquencies and defaults on contracts are likely to result immediately
following servicing transfers.
YEAR 2000 ISSUES
AutoNation Financial Services has an ongoing program designed to address
the potential impact of the year 2000 on the ability of AutoNation Financial
Services' computerized information systems to accurately process information
that may be date sensitive. AutoNation Financial Services has identified its
critical data storage and operating systems and has developed plans designed to
ensure the readiness of its systems to process dates beyond the year 2000. It is
anticipated that AutoNation Financial Services' systems will be year 2000
compliant by the end of 1999.
The inability of AutoNation Financial Services, its vendors or the parties
with whom it contracts to address the necessary year 2000 modifications of
computerized information systems could have a material adverse impact on
AutoNation Financial Services' operations and financial results, including its
ability to collect
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receivables, pay obligations and process loans and obligor data. Any impact on
AutoNation Financial Services could have a material adverse effect on
securityholders.
DESCRIPTION OF WORLD OMNI FINANCIAL CORP.
World Omni Financial Corp., a Florida corporation and wholly-owned
subsidiary of JM Family Enterprises, Inc., services automobile-related retail
lease, retail installment and wholesale loan portfolios originated by it and
other parties, including AutoNation Financial Services. As of December 31, 1998,
World Omni's serviced portfolio (excluding third parties) consisted of
approximately 424,000 leases and retail contracts with an aggregate outstanding
balance of approximately $8.1 billion. Pursuant to the subservicing agreement,
World Omni acts as subservicer of the motor vehicle contracts originated by
AutoNation Financial Services. As of July 31, 1999, AutoNation Financial
Services' portfolio serviced by World Omni consisted of 117,514 leases and
retail contracts with an outstanding balance of approximately $1.74 billion.
World Omni currently services the contracts through its St. Louis operations
center.
The information provided in the preceding paragraph was provided by World
Omni. None of the trust, the seller or AutoNation Financial Services has made
any independent verification of the accuracy or completeness of that
information.
DESCRIPTION OF AUTONATION, INC.
AutoNation, Inc. is a publicly-held company incorporated in the State of
Delaware. Prior to April 6, 1999, AutoNation was known as Republic Industries,
Inc. AutoNation owns approximately 400 franchised automotive dealerships in 20
states. These dealerships own and operate franchises granted by 24 manufacturers
of approximately 36 brands of automobiles and light-duty trucks. AutoNation also
owns and operates 34 AutoNation USA used vehicle megastores and licenses eight
additional AutoNation USA megastores in 13 states. In addition, AutoNation owns
one of the nation's largest combined rental fleets through its subsidiaries,
Alamo Rent-A-Car, Inc., National Car Rental System, Inc. and CarTemps USA. In
July 1999, AutoNation announced its intention to separate these rental
businesses. Accordingly, AutoNation's rental business segment has been accounted
for as discontinued operations. As of July 31, 1999, AutoNation had total assets
of approximately $9,409.3 million and stockholders' equity of $5,736.8 million.
AutoNation's principal executive offices are located at 110 S.E. 6th Street,
Fort Lauderdale, Florida 33301.
DESCRIPTION OF THE SECURITIES
A series of securities may include one or more classes of notes and
certificates. Each trust will issue the notes and the certificates for a
particular series to the holders of record of the notes and the holders of
record of the certificates, respectively. The following summary, together with
the summaries contained under "Description of the Notes" and "Description of the
Certificates" in the prospectus supplement, describe all of the material terms
of the securities. However, this summary does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, all the provisions
of the notes, the certificates, the indenture, the owner trust agreement and the
related prospectus supplement.
THE NOTES
Each series may include one or more classes of notes. The notes will be
issued by the related trust 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 is a part. The related prospectus supplement will specify which class
or classes of notes of a series are being offered thereby.
To the extent specified in the prospectus supplement, notes will be
available for purchase in minimum denominations of $1,000 and in integral
multiples thereof and will be available in book-entry form only. Noteholders
will be able to receive notes in definitive registered form only in the limited
circumstances described herein or in the prospectus supplement. See "Description
of the Securities--Definitive Securities."
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Each class of notes will have a stated note principal balance specified in
the related prospectus supplement (the "NOTE PRINCIPAL BALANCE") and will accrue
interest on the Note Principal Balance at the interest rate specified for that
class of notes. Each class of notes may have a different interest rate, which
may be a fixed, variable or adjustable interest rate, or any combination of the
foregoing. The related prospectus supplement will specify the interest rate for
each class of notes specified as being offered by the prospectus supplement or
the method for determining the interest rate or rates.
With respect to a series that includes two or more classes of notes, as
specified in the related prospectus supplement, each class may differ as to
timing and priority of payments, seniority, allocations of losses, interest
rates or amounts of payments of principal or interest. Payments of principal or
interest in respect of any class or classes may or may not be made upon the
occurrence of specified events or on the basis of collections from designated
contracts. In addition, a series may include one or more classes of notes
entitled to (1) principal payments with disproportionate, nominal or no interest
payments or (2) interest payments with disproportionate, nominal or no principal
payments (the "STRIP NOTES").
If the seller, the servicer or a successor thereto exercises its option to
purchase the contracts of a trust in the manner and on the respective terms and
conditions described under "Description of the Transfer and Servicing
Agreements--Termination," the outstanding notes will be redeemed as set forth in
the related prospectus supplement.
THE CERTIFICATES
Each series may also include one or more classes of certificates. The
certificates will be issued by the related trust pursuant to the terms of an
owner trust agreement, the form of which has been filed as an exhibit to the
registration statement of which this prospectus is a part. The related
prospectus supplement will specify which class or classes of certificates, if
any, of a series are being offered thereby.
If specified in the related prospectus supplement, certificates offered to
the public will be available for purchase in minimum denominations of $1,000 and
in integral multiples thereof and will be available in book-entry form only.
Certificateholders will be able to receive certificates in definitive registered
form only in the limited circumstances described herein or in the prospectus
supplement. See "Description of the Securities--Definitive Securities."
Each class of certificates will have a stated certificate principal balance
specified in the related prospectus supplement (the "CERTIFICATE PRINCIPAL
BALANCE") and may, but need not, accrue interest on the Certificate Principal
Balance at the interest rate specified for that class of certificates. Each
class of certificates may have a different interest rate, which may be a fixed,
variable or adjustable interest rate, or any combination of the foregoing. The
related prospectus supplement will specify the interest rate for each class of
certificates specified as being offered by the related prospectus supplement or
the method for determining the interest rate or rates.
With respect to a series that includes two or more classes of certificates,
as specified in the related prospectus supplement, each class may differ as to
timing and priority of distributions, seniority, allocations of losses, interest
rates or amounts of distributions in respect of principal or interest.
Distributions of principal or interest in respect of any class or classes of
certificates may or may not be made upon the occurrence of specified events or
on the basis of collections from designated contracts. In addition, a series may
include one or more classes of certificates entitled to (1) principal
distributions with disproportionate, nominal or no interest distributions or
(2) interest distributions with disproportionate, nominal or no principal
distributions (the "STRIP CERTIFICATES").
RATINGS OF THE SECURITIES
It will be a condition to the issuance of each class of securities
specified as being offered by the related prospectus supplement that each class
of securities be rated in one of the four highest generic rating categories
established for the securities by at least one nationally recognized statistical
rating agency and receive the rating specified in the related prospectus
supplement by at least one rating agency.
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PRINCIPAL AND INTEREST ON THE SECURITIES
The timing and priority of payment, seniority, allocations of losses,
interest rates and amount of or method of determining payments or distributions
of principal of and interest on each class of securities of a given series will
be described in the related prospectus supplement. The right of holders of any
class of securities to receive payments or distributions of principal and
interest may be senior or subordinate to the rights of holders of any other
class or classes of securities of the related series, as described in the
related prospectus supplement. If specified in the related prospectus
supplement, payments of interest on the securities of a 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
or Strip Certificates as described above under "Description of the
Securities--The Notes" and "--The Certificates." Each class of securities may
have a different interest rate which may be a fixed, variable or adjustable
interest rate (and which may be zero for particular classes of Strip Notes or
Strip Certificates), or may not bear interest, or any combination of the
foregoing. One or more classes of securities of a series may be redeemable in
whole or in part under the circumstances specified in the related prospectus
supplement, including as a result of the servicer exercising its option to
purchase the remaining related contracts.
In the case of a series of securities which includes two or more classes of
securities, the sequential order and priority of payments or distributions in
respect of principal and interest, and any schedule or formula or other
provisions applicable to the determination thereof, of each class will be set
forth in the related prospectus supplement. Payments or distributions in respect
of principal and interest of any class of securities will be made on a pro rata
basis among all the securityholders of that class.
BOOK-ENTRY REGISTRATION
If specified in the related prospectus supplement, each class of securities
offered hereby will be initially represented by one or more global securities
registered in the name of Cede & Co., as nominee for the Depository Trust
Company, also known as DTC. Securityholders may hold beneficial interests in the
securities through DTC directly if they are participants in DTC or indirectly
through organizations which are participants in DTC.
Cede & Co., as nominee for DTC, will hold the global securities of each
series. Transfers between DTC participants will occur in the ordinary way in
accordance with DTC rules.
DTC is a limited purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended. DTC was created to hold securities for its participants and to
facilitate the clearance and settlement of securities transactions between its
participants through electronic book-entry changes in accounts of its
participants, thereby eliminating the need for physical movement of notes or
certificates. DTC's participants include securities brokers and dealers, banks,
trust companies and clearing corporations which may include underwriters, agents
or dealers with respect to the securities of any class or series. DTC is owned
by a number of its participants and the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Indirect access to the DTC system also is available to others such
as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a DTC participant, either directly or indirectly.
The rules applicable to DTC and its participants are on file with the SEC.
Owners of beneficial interests in securities that are in book-entry form
that are not direct or indirect DTC participants but desire to purchase, sell or
otherwise transfer ownership of, or other interests in, securities may do so
only through DTC's direct and indirect participants. In addition,
securityholders of a given series will receive all distributions of principal
and interest in respect of the securities from the indenture trustee or owner
trustee through DTC participants who in turn will receive them from DTC. Under a
book-entry format, owners of beneficial interests in a global security of a
given series may experience some delay in their receipt of payments, since all
payments will be forwarded by the indenture trustee or owner trustee, as
applicable, to Cede & Co., as nominee of DTC. DTC will forward those payments to
its participants which thereafter will forward them to indirect participants or
owners of beneficial interests in a global security. It is anticipated that the
only "securityholder" in respect of any series will be Cede & Co., as nominee of
DTC. Owners of beneficial interests in a global security of a given series will
not be recognized as securityholders of that series, and owners of
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beneficial interests in a global security will be permitted to exercise the
rights of securityholders only indirectly through DTC and its participants who,
in turn, will exercise the rights of owners of beneficial interests in a global
security through DTC.
Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC is required to make book-entry transfers of securities of a
given series among its participants on whose behalf it acts with respect to
those securities and is required to receive and transmit distributions of
principal of, and interest on, those securities. Direct and indirect
participants with which owners of beneficial interests in a global security of a
given series have accounts with respect to the securities of that series
similarly are required to make book-entry transfers and receive and transmit
payments on behalf of their respective owners. Accordingly, although owners of
beneficial interests in a global security will not possess securities, those
owners will receive payments and will be able to transfer their interests.
Because DTC can only act on behalf of its direct participants, who in turn
act on behalf of indirect participants and banks, the ability of an owner of a
beneficial interest in a global security of a given series to pledge securities
of that series to persons or entities that do not participate in the DTC system,
or otherwise take actions in respect of those securities, may be limited due to
the lack of a physical certificate for those securities.
DTC will advise the owner trustee in respect of each series that it will
take any action permitted to be taken by a securityholder of that series only at
the direction of one or more of its participants to whose account with DTC the
securities of that series are credited. Additionally, DTC has advised the seller
that it will take actions with respect to specified percentages of the
securityholder's interest only at the direction of and on behalf of its
participants whose holdings include undivided interests that satisfy those
specified percentages. DTC may take conflicting actions with respect to other
undivided interests to the extent that those actions are taken on behalf of its
participants whose holdings include those undivided interests.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of securities among participants of DTC, it is under no obligation to
perform or continue to perform these procedures and the foregoing procedures may
be discontinued at any time.
DTC'S YEAR 2000 EFFORTS
DTC management is aware that some computer applications, systems and the
like for processing data that are dependent upon calendar dates, including dates
before, on and after January 1, 2000, may encounter "Year 2000 problems." DTC
has informed its participants and other members of the financial community that
it has developed and is implementing a program so that its computer applications
and systems, as the same relate to the timely payment of distributions
(including principal and income payments) to securityholders, book-entry
deliveries and settlement of trades within DTC, continue to function
appropriately. This program includes a technical assessment and a remediation
plan, each of which is complete. Additionally, DTC's plan includes a testing
phase, which is expected to be completed within appropriate time frames.
However, DTC's ability to perform properly its services is also dependent
upon other parties, including but not limited to issuers and their agents, as
well as third party vendors from whom DTC licenses software and hardware, and
third party vendors on whom DTC relies for information or the provision of
services, including telecommunication and electrical utility service providers,
among others. DTC is contacting (and will continue to contact) third party
vendors from whom DTC acquires services to: (1) impress upon them the importance
of their services being year 2000 compliant and (2) determine the extent of
their efforts for year 2000 remediation (and, as appropriate, testing) of their
services. In addition, DTC is in the process of developing such contingency
plans as it deems appropriate.
The information set forth in the preceding two paragraphs has been provided
by DTC for informational purposes only and is not intended to serve as a
representation, warranty or contract modification of any kind.
DEFINITIVE SECURITIES
The securities of a given series will be issued in fully registered,
certificated form to owners of beneficial interests in a global security or
their nominees rather than to DTC or its nominee, only if (1) the seller, the
applicable owner trustee or indenture trustee or the administrator, as
applicable, advises the owner trustee and indenture trustee in writing that DTC
is no longer willing or able to discharge properly its responsibilities as
depositary with respect to the securities, and the seller, the applicable owner
trustee or indenture trustee or the
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administrator are unable to locate a qualified successor, (2) after the
occurrence of an event of default under the related indenture or an event of
default under the related sale and servicing agreement, owners of beneficial
interests in a global security representing in the aggregate more than 50% of
the outstanding principal amount of the securities of that series advise the
applicable owner trustee and indenture trustee through DTC participants in
writing that the continuation of a book-entry system with respect to the
securities through DTC is no longer in the best interest of those owners or
(3) otherwise specified in the prospectus supplement.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the applicable owner trustee and indenture trustee will be
required to notify all owners of beneficial interests in a global security,
through DTC participants, of the availability through DTC of securities in
definitive registered form. Upon surrender by DTC of the definitive global
securities representing the securities and instructions for re-registration, the
applicable owner trustee and indenture trustee will reissue the securities in
definitive registered form, and thereafter the applicable owner trustee and
indenture trustee will recognize the holders of the definitive registered
securities as securityholders.
Payments or distributions of principal of, and interest on, the securities
will be made by a paying agent directly to holders of securities in definitive
registered form in accordance with the procedures set forth herein and in the
related indenture or the related owner trust agreement. Payments or
distributions on each Distribution Date and on the final Distribution Date (as
specified in the related prospectus supplement) will be made to holders in whose
names the definitive securities were registered at the close of business on the
business day immediately prior to that Distribution Date (the "RECORD DATE").
Payments or distributions will be made by check mailed to the address of each
securityholder as it appears on the register maintained by the applicable owner
trustee or indenture trustee or by other means to the extent provided in the
related prospectus supplement. The final payment or distribution on any security
(whether securities in definitive registered form or the security registered in
the name of Cede & Co.), however, will be made only upon presentation and
surrender of the security at the office or agency specified in the notice of
final payment or distribution to securityholders.
Securities in definitive registered form will be transferable and
exchangeable at the offices of the applicable owner trustee or indenture
trustee, or at the offices of a transfer agent or registrar named in a notice
delivered to holders of securities in definitive registered form, which shall
initially be the applicable owner trustee or indenture trustee. No service
charge will be imposed for any registration of transfer or exchange, but the
applicable owner trustee, indenture trustee, transfer agent or registrar may
require payment of a sum sufficient to cover any tax or other governmental
charge imposed in connection therewith.
LIST OF SECURITYHOLDERS
With respect to the notes of any series, the related indenture trustee will
provide to the issuer and the administrator, if any, (1) not more than five days
after the earlier of (a) each Record Date and (b) three months after the last
Record Date, a list of the names and addresses of the holders of the related
notes as of such Record Date and (2) at any other times that the issuer requests
in writing, within 30 days after receipt by the related indenture trustee of the
request, a list of the names and addresses of the holders of the related notes
as of a date not more than ten days prior to the time the list is furnished.
With respect to the certificates of any series, upon written request of the
issuer, the related owner trustee will provide to the issuer and the
administrator, if any, within 30 days after receipt of the issuer's request a
list of the names and addresses of all certificateholders of record as of the
most recent Record Date. Upon written request by three or more holders of the
certificates of a given series or by holders of certificates evidencing not less
than 25% of the aggregate outstanding principal amount of those certificates,
the related owner trustee will afford the requesting certificateholders access
during business hours to the current list of certificateholders for purposes of
communicating with other certificateholders with respect to their rights under
the related owner trust agreement or under the certificates.
Neither the owner trust agreement nor the indenture will provide for the
holding of annual or other meetings of securityholders.
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STATEMENTS TO SECURITYHOLDERS
With respect to each series of securities, on each Distribution Date the
applicable owner trustee or indenture trustee will include with each payment or
distribution to each securityholder a statement setting forth for that
Distribution Date the following information (and any additional information so
specified in the related prospectus supplement):
(1) the amount of the distribution on or with respect to each class of
the securities allocable to principal;
(2) the amount of the distribution on or with respect to each class of
the securities allocable to interest;
(3) the aggregate distribution amount for that Distribution Date;
(4) the premiums payable to the related third-party insurer pursuant
to the related financial guarantee insurance policy, if any, the balance of
any fund or account with respect to any credit or liquidity enhancement on
that Distribution Date, after giving effect to changes thereto on that
Distribution Date and the amount to be deposited in the spread account, if
any;
(5) the number of, and aggregate amount of monthly principal and
interest payments due on, the related contracts which are delinquent as of
the end of the related collection period (as defined in the related
prospectus supplement, the "COLLECTION PERIOD") presented in 30-day
increments;
(6) the aggregate Servicing Fee paid to the servicer with respect to
the related contracts for the related Collection Period;
(7) the amount available in the Collection Account for payment of the
aggregate amount payable or distributable on the securities, the amount of
the Servicing Fee, the amount of any principal or interest shortfall with
respect to each class of securities and the amount required from any
applicable insurer pursuant to the related insurance policy to pay any
shortfall;
(8) the aggregate amount of proceeds received by the servicer, net of
recoverable out-of-pocket expenses, in respect of a contract which is a
"DEFAULTED CONTRACT" (as that term is defined in the related prospectus
supplement).
(9) the net credit losses for the Collection Period;
(10) the number and net outstanding balance of contracts for which the
related financed motor vehicle has been repossessed; and
(11) the Pool Balance.
DTC will supply these reports to securityholders in accordance with its
procedures. Since owners of beneficial interests in a global security of a given
series will not be recognized as securityholders of that series, DTC will not
forward monthly reports to those owners. Copies of monthly reports may be
obtained by owners of beneficial interests in a global security by a request in
writing addressed to the owner trustee or indenture trustee, as applicable.
Within a reasonable period of time after the end of each calendar year
during the term of each trust, but not later than the latest date permitted by
law, the applicable owner trustee or indenture trustee and the paying agent will
furnish to each person who on any Record Date during that calendar year was a
registered securityholder a statement containing relevant information for the
purposes of preparing securityholder federal income tax returns. See "Material
Federal Income Tax Consequences."
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DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes the material terms of (1) each sale and
servicing agreement pursuant to which a trust will purchase contracts from the
seller and the servicer will agree to service those contracts, (2) each owner
trust agreement pursuant to which a trust will be created and certificates will
be issued and (3) each administration agreement pursuant to which AutoNation
Financial Services or another party specified in the related prospectus
supplement will undertake specified administrative duties with respect to a
trust. Forms of the sale and servicing agreement, the owner trust agreement and
the administration agreement have been filed as exhibits to the registration
statement of which this prospectus is a part. This summary does not purport to
be complete and is subject to, and qualified in its entirety by reference to,
all the provisions of each applicable sale and servicing agreement, owner trust
agreement and administration agreement and the related prospectus supplement.
SALE AND ASSIGNMENT OF THE CONTRACTS
Sale and Assignment by AutoNation Financial Services. Prior to the issuance
of a series of securities by the related trust, pursuant to a receivables
purchase agreement, AutoNation Financial Services will sell and assign to the
seller, without recourse, its entire interest in the contracts of the related
Receivables Pool, including its security interest in the related financed motor
vehicles, and any proceeds thereof.
Sale and Assignment by the Seller. Prior to the issuance of a series of
securities by the related trust, the seller will sell and assign to the
applicable owner trustee of that trust, without recourse, pursuant to a sale and
servicing agreement, the seller's entire interest in the contracts and the
proceeds thereof, including its security interests in the related financed motor
vehicles. Each contract will be identified in a schedule appearing as an exhibit
to the sale and servicing agreement. The applicable owner trustee of the trust
will not independently verify the existence and qualification of any contracts.
The owner trustee or indenture trustee in respect of the trust will,
concurrently with the sale and assignment, execute, authenticate and deliver the
definitive notes and/or certificates representing the related securities.
Use of Proceeds. The net proceeds received from the sale of the securities
of a given series will be applied to the purchase of the related contracts from
the seller and, to the extent specified in the related prospectus supplement, to
make the required initial deposit into any reserve fund, spread account or with
respect to any other credit or liquidity enhancement.
Representations and Warranties of the Seller. Pursuant to each sale and
servicing agreement, the seller will represent to the applicable owner trustee
and the trust for the benefit of holders of the securities and any applicable
insurer that:
(1) each contract to be included in the Trust Property of a trust
contains customary and enforceable provisions such that the rights and
remedies of the holder thereof shall be adequate for realization against
the collateral of the benefits of the security;
(2) each contract and the sale of the related financed motor vehicle
at the time it was made complied 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 Federal
Trade Commission Act, the Fair Debt Collection Practices Act, the Fair
Credit Billing Act, the Magnuson-Moss Warranty Act, the Federal Reserve
Board's Regulations B and Z, the Soldiers' and Sailors' Civil Relief Act of
1940, state adaptations of the National Consumer Act and of the Uniform
Consumer Credit Code, and any other consumer credit, equal opportunity and
disclosure laws applicable to that contract and sale;
(3) each contract constitutes the legal, valid and binding payment
obligation in writing of the obligor, enforceable by the holder thereof in
all respects in accordance with its terms, subject, as to enforcement, to
applicable bankruptcy, insolvency, reorganization, liquidation and other
similar laws and equitable principles relating to or affecting the
enforcement of creditors' rights generally;
(4) as of the Closing Date, each contract was secured by a validly
perfected first priority security interest in the financed motor vehicle in
favor of the seller as secured party or all necessary action with
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respect to the contract has been taken to perfect a first priority security
interest in the related financed motor vehicle in favor of the seller as
secured party, which security interest, in either case, is assignable and
has been so assigned by the seller to the trust;
(5) as of the Closing Date, the seller had good and marketable title
to and was the sole owner of each contract free of liens, claims,
encumbrances and rights of others;
(6) as of the Closing Date, there are no rights of rescission, offset,
claim, counterclaim or defense, and the seller has no knowledge of the same
being asserted or threatened, with respect to any contract;
(7) as of the Cut-Off Date, the seller has not received notice that
any obligor under a contract has filed for bankruptcy, and to the best of
the seller's knowledge without any independent investigation, no obligor
under a contract is in bankruptcy or similar proceedings.
(8) as of the Closing Date, the seller had no knowledge of any liens
or claims that have been filed, including liens for work, labor, materials
or unpaid taxes relating to a financed motor vehicle, that would be liens
prior to, or equal or coordinate with, the lien granted by the contract;
(9) except for payment defaults continuing for a period of not more
than 30 days as of the Cut-Off Date, the seller has no knowledge that a
default, breach, violation or event permitting acceleration under the terms
of any contract exists, and the seller has no knowledge that a continuing
condition that with notice or lapse of time would constitute a default,
breach, violation or event permitting acceleration under the terms of any
contract exists, and the seller has not waived any of the foregoing;
(10) each contract requires that the obligor thereunder obtain
comprehensive and collision insurance covering the financed motor vehicle;
(11) each contract was originated by AutoNation Financial Services from a
dealer;
(12) no adverse selection procedures were utilized in selecting the contracts;
(13) scheduled payments under each contract have been applied in
accordance with the method for allocating principal and interest set forth
in the contract (the Simple Interest Method);
(14) there is only one original of each contract in existence, and the
original is being held by the servicer or its agent on behalf of the trust
and any applicable insurer; and
(15) each contract and/or the seller satisfies any additional
conditions or requirements set forth in the related prospectus supplement,
as applicable.
As of the last day of the Collection Period following the Collection Period
(or, if the seller elects, the last day of the Collection Period) during which
the seller becomes aware or receives written notice from the applicable owner
trustee or the servicer that a contract does not meet any of the criteria
required by the sale and servicing agreement, and the failure materially and
adversely affects the interests of the securityholders or any applicable insurer
in a contract, the seller, unless it cures the failed criterion, will repurchase
the contract from the applicable owner trustee at the price specified in the
related prospectus supplement and, if applicable, all amounts due to any
applicable insurer (the "REPURCHASE AMOUNT"). The repurchase obligation will
constitute the sole remedy available to the securityholders or the applicable
owner trustee for the failure of a contract to meet any of the criteria set
forth in the sale and servicing agreement.
THE COLLECTION ACCOUNT AND ELIGIBLE INVESTMENTS
With respect to each trust, the servicer or the indenture trustee will
establish and maintain one or more accounts, in the name of the related
indenture trustee on behalf of the related noteholders and certificateholders
into which all payments made on or with respect to the related contracts will be
deposited (the "COLLECTION ACCOUNT"). Funds in the Collection Account will be
invested in Eligible Investments by the indenture trustee, acting at the
direction of the servicer. "ELIGIBLE INVESTMENTS," as described in the related
prospectus supplement, are generally limited to investments acceptable to each
rating agency rating the applicable securities and which are consistent with the
rating of those securities. Generally, Eligible Investments made with respect to
the Collection Account will mature no later than the business day immediately
preceding the next following
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Distribution Date and income from amounts on deposit in the Collection Account
which are invested in Eligible Investments will be paid to the servicer monthly
unless earlier directed by the servicer.
OTHER ACCOUNTS
Any other accounts to be established with respect to a trust, including any
Prefunding Account, reserve fund, spread account or yield supplement account,
will be described in the related prospectus supplement (together with the
Collection Account, the "TRUST ACCOUNTS"). For any series of securities, funds
in any related reserve fund or any other Trust Accounts as may be identified in
the related prospectus supplement will be invested in Eligible Investments as
provided in the related sale and servicing agreement or indenture.
PAYMENTS ON CONTRACTS
With respect to each trust, all collections on the contracts will be
deposited into or credited to the Collection Account by the servicer within two
business days of the receipt of payments from obligors or as specified in the
related prospectus supplement. Those collections will include the following:
(1) amounts received with respect to the contracts in the related
Collection Period representing monthly principal and interest payments;
(2) Full Prepayments and partial prepayments;
(3) Net Liquidation Proceeds and Net Insurance Proceeds;
(4) any amounts deposited by AutoNation Financial Services or the
seller, as applicable, in the Collection Account to purchase or repurchase
contracts because of material defects in documents related to the contracts
or breaches of representations or warranties regarding the contracts made
by AutoNation Financial Services or the seller in the sale and servicing
agreement that materially and adversely affect the interests of the
securityholders or any applicable insurer;
(5) any amounts deposited by the servicer in the Collection Account to
purchase contracts as to which the servicer has breached its servicing
covenants;
(6) any amounts deposited by the servicer into the Collection Account
as a result of that entity exercising its right under limited circumstances
to purchase all or a portion of the contracts; and
(7) any other amounts specified in the related prospectus supplement.
"NET LIQUIDATION PROCEEDS" are proceeds received by the servicer (minus
Liquidation Expenses) upon liquidation of any Defaulted Contract. "LIQUIDATION
EXPENSES" are the reasonable out-of-pocket expenses (exclusive of overhead
expenses) incurred by the servicer in realizing upon a Defaulted Contract which
are not recoverable under any insurance policy. "NET INSURANCE PROCEEDS" are
proceeds paid by any insurer under a comprehensive and collision or vendor's
single interest insurance policy related to a contract (other than funds used
for the repair of the related financed motor vehicle or otherwise released to
the related obligor in accordance with normal servicing procedures), after
reimbursement to the servicer of expenses recoverable under that insurance
policy.
PAYMENTS AND DISTRIBUTIONS ON THE SECURITIES
With respect to each series of securities, beginning on the Distribution
Date specified in the related prospectus supplement, payments and distributions
of principal of and interest (or, where applicable, of principal or interest
only) on each class of securities entitled thereto will be made by the
applicable indenture trustee to the noteholders and by the applicable owner
trustee to the certificateholders of that series. The timing, calculation,
allocation, order, source, priorities of and requirements for all payments and
distributions to each class of securities of the series will be set forth in the
related prospectus supplement.
With respect to each trust, on each Distribution Date collections on the
related contracts will be withdrawn from the related Collection Account and will
be paid and distributed to the securityholders as provided in the related
prospectus supplement. Credit enhancement will be available to cover any
shortfalls in the amount available for payment or distribution to the
securityholders on that Distribution Date to the extent specified in the
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related prospectus supplement. If specified in the related prospectus
supplement, payments or distributions in respect of one or more classes of
securities of the applicable series may be subordinate to payments or
distributions in respect of one or more other classes of securities of that
series.
CREDIT AND CASH FLOW ENHANCEMENT
The amounts and types of credit and cash flow enhancement arrangements, if
any, and the provider thereof, if applicable, with respect to each class of
securities of a given series, 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 with respect to a trust or any class or classes
of securities may include any one or more of the following: a surety bond or
financial guarantee insurance policy provided by a third-party insurer,
subordination of one or more classes of securities to one or more other classes
of securities, a reserve fund, a spread account, a yield maintenance account,
overcollateralization, letters of credit, credit or liquidity facilities,
guaranteed investment contracts, swaps or other interest rate protection
agreements, repurchase obligations, cash deposits, other agreements or
arrangements with respect to third party payments, or other support as may be
described in the related prospectus supplement or any combination 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 credit enhancement for the benefit of any class or series
of securities is intended to enhance the likelihood of receipt by the
securityholders of that class or series of the full amount of principal and
interest due thereon and to decrease the likelihood that those securityholders
will experience losses. Any form of credit enhancement will have limitations and
exclusions from coverage thereunder, which will be described 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 an allocable share of deficiencies, as described in the related
prospectus supplement. In addition, if a form of credit enhancement covers more
than one class or series of securities, securityholders of any given class will
be subject to the risk that the credit enhancement will be exhausted by the
claims of securityholders of other classes or series.
INSURANCE ON FINANCED MOTOR VEHICLES
Each obligor on a contract will be required to maintain insurance covering
physical damage to the obligor's financed motor vehicle in an amount not less
than the lesser of its maximum insurable value or the unpaid principal balance
under the contract. AutoNation Financial Services will be required to be named
as loss payee under the policy of insurance obtained by the obligor. Each
financed motor vehicle will be required to be insured against loss and damage
due to fire, theft, transportation, collision and other risks covered by
comprehensive coverage. Since obligors may choose their own insurers to provide
the required coverage, the specific terms and conditions of their policies vary.
SERVICER REPORTS TO THE TRUSTEES AND THE INSURER
The servicer will perform monitoring and reporting functions for the
applicable indenture trustee, owner trustee and any insurer, including the
preparation and delivery on a specified periodic date set forth in the related
sale and servicing agreement of a statement setting forth the amounts on deposit
in the Collection Account, the sources of those amounts and the amounts to be
paid to securityholders. The statement will also include information regarding
the contracts, including the number and outstanding principal balance of all
Defaulted Contracts and the number of contracts purchased by the servicer or
repurchased by the seller.
OPTIONAL PURCHASE OF CONTRACTS
Each sale and servicing agreement will provide that the servicer will have
the option to purchase the remaining contracts included in the Trust Property of
a trust on any Distribution Date as of which the related Pool Balance (after
giving effect to the principal payments and distributions otherwise to be made
on that Distribution
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Date) has declined to the percentage of the Original Pool Balance specified in
the related prospectus supplement. Any optional purchase must be effected at the
price specified in the related prospectus supplement, if applicable, plus all
amounts due to any applicable insurer. In addition, AutoNation Financial
Services or the seller will be required to purchase or repurchase, respectively,
contracts in the event that specified representations and warranties regarding
the contracts made by AutoNation Financial Services or the seller, respectively,
are incorrect in any manner that materially and adversely affects the interest
therein of the securityholders or any applicable insurer. Additionally, the
servicer will be required to purchase contracts as to which the servicer has
breached its servicing covenants.
SERVICING FEE
The servicer will be entitled to compensation for the performance of its
obligations under each sale and servicing agreement. If specified in the related
prospectus supplement, the servicer will be entitled to receive on each
Distribution Date an amount (the "SERVICING FEE") equal to the product of
(1) one-twelfth of a specified percentage per annum (as set forth in the related
prospectus supplement) multiplied by (2) the Pool Balance as of the end of the
Collection Period preceding the related Collection Period or, in the case of the
first Distribution Date, the Original Pool Balance. If specified in the related
prospectus supplement, the servicer or its designee shall be entitled to retain,
as additional compensation, all late payment charges, extension fees and similar
items paid in respect of the contracts. The servicer or its designee may also be
entitled to receive, as servicing compensation, reinvestment earnings on
Eligible Investments. The servicer shall pay all expenses incurred by it in
connection with its servicing activities under the sale and servicing agreement
and will not be entitled to reimbursement of its expenses except to the extent
they constitute Liquidation Expenses or expenses recoverable under an applicable
insurance policy.
WAIVERS AND EXTENSIONS
Each sale and servicing agreement will require the servicer to use its best
efforts to collect all payments called for and due under the terms and
provisions of the related contracts held by each trust. Subject to any
limitations set forth in the related prospectus supplement, the servicer,
consistent with its normal procedures, will be permitted, in its discretion, to
(1) waive any late payment charges in connection with delinquent payments on a
contract, (2) waive any prepayment charges, (3) grant an extension in order to
work out a default or an impending default; provided that, with a few very
limited exceptions, following the extension there will have been no more than
two extensions of the related contract in the last 12 months and the sum of the
terms of all extensions of the contract does not exceed six months or (4) take
any other action specified in the related prospectus supplement.
REALIZATION UPON DEFAULTED CONTRACTS
The servicer will liquidate any contract that comes into and continues in
default and as to which no satisfactory arrangements can be made for collection
of delinquent payments. A liquidation may occur through repossession or sale of
the financed motor vehicle securing the applicable contract or otherwise. In
connection with a repossession or other conversion, the servicer will follow the
normal and usual procedures adopted by holders of motor vehicle retail
installment sales contracts. In this regard, the servicer may sell the financed
motor vehicle at an auction or other public or private sale, and may take any
other action permitted by applicable law.
EVIDENCE AS TO COMPLIANCE
Each sale and servicing agreement will provide that a firm of independent
public accountants will annually furnish to the related owner trustee, indenture
trustee and, if applicable, the related insurer, a statement as to compliance by
the servicer during the preceding twelve months (or, in the case of the first
certificate, from the applicable Closing Date) with specified standards relating
to the servicing of the applicable contracts, the servicer's accounting records
and computer files with respect thereto and other matters.
Each sale and servicing agreement will also provide for annual delivery to
the related owner trustee, indenture trustee and, if applicable, the related
insurer, of a certificate signed by an authorized officer of the servicer
stating that the servicer has fulfilled its obligations under the sale and
servicing agreement throughout the preceding twelve months (or, in the case of
the first certificate, from the Closing Date) or, if there has been a
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default in the fulfillment of any obligation, describing the default. The
servicer will also give the related owner trustee, indenture trustee and, if
applicable, the related insurer, notice of any events of termination of the
servicer under the related sale and servicing agreement.
Copies of the statements and certificates described above may be obtained
by securityholders by a request in writing addressed to the applicable owner
trustee or indenture trustee.
MATERIAL MATTERS REGARDING THE SERVICER
Each sale 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 its duties is no longer
permissible under applicable law. No resignation of the servicer will become
effective until the related owner trustee, indenture trustee or a successor
servicer has assumed the servicer's servicing obligations and duties under the
sale and servicing agreement. See "--The Owner Trustee and Indenture Trustee."
Each sale 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 securityholders for taking any
action or for refraining from taking any action pursuant to the sale and
servicing agreement or for errors in judgment; provided, however, that neither
the servicer nor any other person described above will be protected against any
liability that would otherwise be imposed by reason of willful misfeasance, bad
faith or negligence (except errors in judgment) in the performance of duties or
by reason of reckless disregard of obligations and duties thereunder. In
addition, the sale and servicing agreement will provide that the servicer is
under no obligation to appear in, prosecute or defend any legal action that is
not incidental to the servicer's servicing responsibilities under the sale and
servicing agreement and that, in its opinion, may cause it to incur any expense
or liability. The servicer may, however, undertake any reasonable action that it
may deem necessary or desirable in respect of the sale and servicing agreement
and the rights and duties of the parties thereto and the interests of the
securityholders thereunder. Any indemnification or reimbursement of the servicer
could reduce the amount otherwise available for distribution to securityholders.
Any corporation into which the servicer may be merged or consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the servicer is a party or any corporation succeeding to the business of the
servicer, or, with respect to the servicer's obligation as the servicer, will be
the successor of the servicer under the sale and servicing agreement.
DEFAULTS BY THE SERVICER
A default by the servicer under the sale and servicing agreement may include any
of the following:
(1) any failure by the servicer to deposit in or credit to the
Collection Account any amount required to be so deposited or credited,
which failure continues unremedied for three business days after discovery
by the servicer or receipt by the servicer of written notice from the
applicable owner trustee or indenture trustee, or, if applicable, the
related insurer;
(2) any failure by the servicer or the seller duly to observe or
perform in any material respect any other covenants or agreements of the
servicer or the seller in the sale and servicing agreement, which failure
materially and adversely affects the rights of securityholders or the
applicable owner trustee or indenture trustee, or, if applicable, the
related insurer, and which continues unremedied for 30 days after the
seller, the trust or the servicer has knowledge of the failure or the
giving of written notice of the failure (A) to the servicer or the seller,
as the case may be, by the applicable owner trustee or indenture trustee,
or, if applicable, the related insurer or (B) to the servicer or the
seller, as the case may be, and to the applicable owner trustee or
indenture trustee by holders of securities evidencing not less than 25% in
principal amount of those securities, acting together as a single class,
or, if applicable, the related insurer;
(3) specified events of insolvency, readjustment of debt, marshalling
of assets and liabilities or similar proceedings and actions by the
servicer or seller indicating its insolvency, reorganization pursuant to
bankruptcy or similar proceedings or inability to pay its obligations as
they become due;
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(4) any breach of any of the representations and warranties of the
servicer or the seller (except for any breaches relating to contracts
repurchased by the seller or the servicer) which breach has a material
adverse effect on the related securityholders or, if applicable, the
related insurer and which continues for 30 days after the giving of notice
of the breach to the seller or the servicer, as the case may be, by the
applicable owner trustee or indenture trustee or the holders of securities
evidencing not less than 25% in principal amount of those securities,
acting together as a single class, or, if applicable, the related insurer;
(5) if applicable, the determination by the insurer that the quality
of performance of the servicer is not in compliance with either the terms
of the sale and servicing agreement or that the servicer's performance is
not adequate, as measured in accordance with industry standards, in respect
of all motor vehicle contracts serviced by the servicer; and
(6) any other event specified in the related prospectus supplement.
RIGHTS UPON DEFAULT BY THE SERVICER
Matters relating to the termination of the related servicer's rights and
obligations and the waiver of any defaults by the related servicer under the
related sale and servicing agreement will be as described in the accompanying
prospectus supplement under "Description of the Transfer and Servicing
Agreements--Default by the Servicer; Rights Upon Default by the Servicer."
Obligations of the Owner Trustee or Indenture Trustee. With respect to each
trust, the applicable owner trustee or indenture trustee will be under no
obligation to exercise any of the trusts or powers vested in it by the sale and
servicing 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 securityholders, unless
those securityholders have offered to the owner trustee or indenture trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby. No securityholder will have any right
under the sale and servicing agreement to institute any proceeding with respect
thereto, unless the securityholder previously has given to the owner trustee or
indenture trustee, as applicable, written notice of default and unless
(1) holders of notes of the related series evidencing not less than 25% of the
principal amount of those notes then outstanding and (2) holders of certificates
of the related series evidencing not less than 25% of the principal amount of
those certificates then outstanding, in either case with the consent of the
related insurer, if any, have made written request upon the owner trustee or
indenture trustee to institute a proceeding in its own name as owner trustee or
indenture trustee thereunder and have offered to the owner trustee or indenture
trustee reasonable indemnity and the owner trustee or indenture trustee for 30
days has neglected or refused to institute any proceedings.
AMENDMENT
Each of the sale and servicing agreement, the owner trust agreement and the
administration agreement may be amended by the parties thereto with the consent
of the related insurer, if any, but without the consent of the related
securityholders, to cure any ambiguity, correct or supplement any provisions
therein which may be inconsistent with any other provisions therein, or add any
other provisions with respect to matters or questions arising thereunder which
are not inconsistent with the provisions of the sale and servicing agreement,
the owner trust agreement and the administration agreement; provided that any
action will not materially and adversely affect the interest of any of the
securityholders. Any amendment will be deemed not to materially and adversely
affect the interest of any securityholder if the person requesting the amendment
obtains (1) a letter from each rating agency rating the applicable securities to
the effect that the amendment would not result in a downgrading or withdrawal of
the ratings then assigned to the applicable securities by that rating agency and
(2) an opinion of counsel to that effect.
The sale and servicing agreement, the owner trust agreement and the
administration agreement may also be amended by the parties thereto with the
consent of (1) the holders of notes of the related series evidencing not less
than a majority of the principal amount of those notes then outstanding, acting
together as a single class and (2) the holders of certificates of the related
series evidencing not less than a majority of the principal amount of those
certificates then outstanding, acting together as a single class, and in either
case with the consent of the related insurer, if any, for the purpose of adding
any provisions to or changing in any manner or eliminating any
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of the provisions of the sale and servicing agreement, the owner trust agreement
or the administration agreement or of modifying in any manner the rights of the
related noteholders or certificateholders; provided, however, that no amendment
may (1) increase or reduce in any manner the amount of, or accelerate or delay
the timing of, collections of payments on the related contracts or distributions
that are required to be made for the benefit of the noteholders or
certificateholders, (2) reduce the aforesaid percentage of the notes or
certificates of any series which are required to consent to any amendment,
without the consent of the holders of all the outstanding notes or certificates,
as the case may be, of that series or (3) result in a taxable event to any of
the securityholders for federal income tax purposes or result in the trust being
taxable as a corporation for federal income tax purposes.
It is intended that the trust will not constitute a separate entity for
federal income tax purposes during the time that the seller holds the entire
equity interest in the trust; provided, however, that at any time that equity
interests in the trust are held by more than one holder, the sale and servicing
agreement, the owner trust agreement and the administration agreement may be
amended, as necessary and in accordance with the preceding paragraph, to reflect
the appropriate treatment of the trust as a partnership for federal income tax
purposes. See "Material Federal Income Tax Consequences" below.
TERMINATION
With respect to each trust, the obligations of the seller, the servicer,
the related owner trustee and indenture trustee pursuant to the sale and
servicing agreement, the owner trust agreement and the administration agreement
will terminate upon the earlier of (1) the maturity or other liquidation of the
last related contract and the disposition of any amounts received upon
liquidation of any remaining contracts or other assets that are part of the
related Trust Property and (2) (a) the payment to noteholders and
certificateholders of the related series of all amounts required to be paid to
them pursuant to the sale and servicing agreement, the owner trust agreement and
the administration agreement and the disposition of all property held as part of
the related trust, (b) if applicable, the termination of the related insurance
policy in accordance with its terms and the surrender of the insurance policy to
the related insurer for cancellation, (c) the payment of all amounts owed to the
owner trustee or indenture trustee under the sale and servicing agreement, the
owner trust agreement, the administration agreement and the indenture and
(d) if applicable, the payment of all amounts owed to the related insurer in
connection with the related insurance policy.
To the extent specified in the related prospectus supplement, in order to
avoid excessive administrative expense, the servicer will be permitted at its
option to purchase the remaining contracts included in the Trust Property of a
trust on any Distribution Date as of which the related Pool Balance (after
giving effect to the principal payments and distributions otherwise to be made
on that Distribution Date) has declined to the percentage of the Original Pool
Balance specified in the related prospectus supplement at the price specified in
the related prospectus supplement. The applicable owner trustee or indenture
trustee will give written notice of termination to each securityholder of
record. The final payment or distribution to any securityholder will be made
only upon surrender and cancellation of the securityholder's security at an
office or agency of the applicable owner trustee or indenture trustee specified
in the notice of termination. The applicable owner trustee or indenture trustee
will return, or cause to be returned, any unclaimed funds to the trust.
THE OWNER TRUSTEE AND INDENTURE TRUSTEE
With respect to each trust, neither the applicable owner trustee nor the
indenture trustee will make any representations as to the validity or
sufficiency of the related sale and servicing agreement, the related owner trust
agreement, the related administration agreement, the related indenture, the
securities or any related contracts or related documents. As of the applicable
Closing Date, neither the applicable owner trustee nor the indenture trustee
will have examined the contracts. If no event of default has occurred under the
indenture, the owner trustee and indenture trustee will be required to perform
only those duties specifically required of it under the related sale and
servicing agreement, the related owner trust agreement, the related
administration agreement or the related indenture, as applicable. Generally,
those duties are limited to the receipt of the various certificates, reports or
other instruments required to be furnished to the owner trustee or indenture
trustee under the related sale and servicing agreement, the related owner trust
agreement, the related administration agreement or the related indenture, as
applicable, the making of payments or distributions to securityholders in the
amounts
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specified in certificates provided by the servicer and, if applicable, drawing
on the related insurance policy if required to make payments or distributions to
securityholders.
Each owner trustee and indenture trustee, and any of their affiliates, may
hold securities in their own names. In addition, for the purpose of meeting the
legal requirements of local jurisdictions, each owner trustee and indenture
trustee (in some circumstances, acting jointly with the servicer) shall have the
power to appoint co-trustees or separate trustees of all or any part of the
related Trust Property. In the event of the appointment of co-trustees or
separate trustees, all rights, powers, duties and obligations conferred or
imposed upon the owner trustee or indenture trustee by the related sale and
servicing agreement, the related owner trust agreement, the related
administration agreement or the related indenture, as applicable, will be
conferred or imposed upon the owner trustee or indenture trustee and the
separate trustee or co-trustee jointly, or, in any jurisdiction in which the
owner trustee or indenture trustee is incompetent or unqualified to perform
specified acts, singly upon the separate trustee or co-trustee who will exercise
and perform any rights, powers, duties and obligations solely at the direction
of the owner trustee or indenture trustee.
Each applicable owner trustee and indenture trustee may resign at any time,
in which event a successor trustee will be appointed pursuant to the terms of
the related sale and servicing agreement, the related owner trust agreement, the
related administration agreement or the related indenture, as applicable. Each
applicable owner trustee and indenture trustee may be removed if it ceases to be
eligible to continue in its capacity under the related sale and servicing
agreement, the related owner trust agreement, the related administration
agreement or the related indenture, as applicable, or if the owner trustee or
indenture trustee becomes insolvent. Any resignation or removal of the owner
trustee or indenture trustee and appointment of a successor will not become
effective until acceptance of the appointment by the successor trustee.
Each applicable owner trustee and indenture trustee will be entitled to a
fee which will be payable by the servicer either on an annual basis or any other
basis specified in the related prospectus supplement. The related sale and
servicing agreement, the related owner trust agreement, the related
administration agreement and the related indenture, as applicable, will further
provide that the owner trustee and indenture trustee will be entitled to
indemnification by the servicer for, and will be held harmless against, any
loss, liability or expense incurred by the owner trustee or indenture trustee
not resulting from the owner trustee's or indenture trustee's own willful
misfeasance, bad faith or negligence or by reason of breach of any of their
respective representations or warranties set forth in the related sale and
servicing agreement, the related owner trust agreement, the related
administration agreement or the related indenture, as applicable.
AutoNation Financial Services may maintain other banking relationships with
each applicable owner trustee and indenture trustee in the ordinary course of
business.
DESCRIPTION OF THE ADMINISTRATION AGREEMENT
AutoNation Financial Services or another party specified in the related
prospectus supplement, in its capacity as administrator, may enter into an
administration agreement, which may be amended and supplemented from time to
time, with the trust and the related indenture trustee pursuant to which the
administrator will agree, to the extent provided in the administration
agreement, to provide the notices and to perform other administrative
obligations required by the related indenture. With respect to any trust, as
compensation for the performance of the administrator's obligations under the
applicable administration agreement and as reimbursement for its expenses
related thereto, the administrator will be entitled to a monthly administration
fee in an amount to be set forth in the related prospectus supplement. Any
administration fee will be paid by the servicer.
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DESCRIPTION OF THE INDENTURE
The following summary describes some of the terms of each indenture
pursuant to which the notes of a series will be issued. A form of indenture has
been filed as an exhibit to the registration statement of which this prospectus
is a part. This summary does not purport to be complete and is subject to, and
qualified in its entirety by reference to, all the provisions of each applicable
indenture and the related prospectus supplement.
MODIFICATION OF INDENTURE
The trust and the indenture trustee may, with the consent of the
noteholders of the related series evidencing not less than a majority of the
principal amount of those notes then outstanding acting as a single class, and
with the consent of the related insurer, if any, execute a supplemental
indenture for the purpose of adding provisions to, changing in any manner or
eliminating any provisions of, the related indenture, or modifying (except as
provided below) in any manner the rights of the related noteholders.
With respect to the notes of a given series, without the consent of the
holder of each outstanding note affected thereby, no supplemental indenture
will:
(1) change the due date of any installment of principal of, or
interest on, any note or reduce the principal amount thereof, the interest
rate specified thereon or the redemption price with respect thereto or
change any place of payment or the coin or currency in which any note or
any interest thereon is payable;
(2) impair the right to institute suit for the enforcement of
specified provisions of the related indenture regarding payment;
(3) reduce the percentage of the aggregate amount of the outstanding
notes of the series, the consent of the holders of which is required for
any supplemental indenture or the consent of the holders of which is
required for any waiver of compliance with specified provisions of the
related indenture or of defaults thereunder and their consequences as
provided for in the indenture;
(4) modify or alter the provisions of the related indenture regarding
the voting of notes held by the applicable trust, any other obligor on the
notes, the seller or an affiliate of any of them;
(5) reduce the percentage of the aggregate outstanding amount of the
notes, the consent of the holders of which is required to direct the
related indenture trustee to sell or liquidate the contracts if the
proceeds of the sale would be insufficient to pay the principal amount and
accrued but unpaid interest on the outstanding notes of the series;
(6) decrease the percentage of the aggregate principal amount of the
notes required to amend the sections of the related indenture which specify
the applicable percentage of aggregate principal amount of the notes of the
series necessary to amend the indenture or the other related agreements;
(7) 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 the notes or, except as otherwise permitted or contemplated
in the indenture, terminate the lien of the indenture on any collateral or
deprive the holder of any note of the security afforded by the lien of the
indenture;
(8) result in a taxable event to any noteholder for federal income tax
purposes; or
(9) to the extent provided in the related prospectus supplement, add
provisions to, change in any manner or eliminate any provisions of, the
related indenture, or modify in any manner the rights of the related
noteholders, relating to any other matters specified in the related
prospectus supplement.
The related trust and the applicable indenture trustee may also enter into
supplemental indentures, without obtaining the consent of the noteholders of the
related series but with the consent of the related insurer, if any, 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 those noteholders; provided that (1) the
action will not (A) as evidenced by an opinion of counsel, materially and
adversely affect the interest of any noteholder or (B) as confirmed by each
rating agency rating the notes of the related series, cause the then
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current rating assigned to any class of notes to be withdrawn or reduced and
(2) an opinion of counsel as to applicable tax matters is delivered.
EVENTS OF DEFAULT UNDER THE INDENTURE; RIGHTS UPON EVENT OF DEFAULT
With respect to the notes of a given series, an event of default under the
related indenture may consist of:
(1) a default for five days or more in the payment of any interest on any note
of that series;
(2) a default in the payment of the principal of, or any installment
of the principal of, any note of that series when the same becomes due and
payable;
(3) 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 default for a period of 30 days after notice thereof is
given to the trust by the applicable indenture trustee or, if applicable,
the related insurer, or to the trust and the indenture trustee by the
holders of at least 25% of the principal amount of the notes of that series
then outstanding acting together as a single class;
(4) any representation or warranty made by the trust in the related
indenture or in any certificate delivered pursuant thereto or in connection
therewith was incorrect in any material respect as of the time made, and
that breach has not been cured within 30 days after notice thereof is given
to the trust by the applicable indenture trustee or, if applicable, the
related insurer, or to the trust, the related insurer, if any, and the
indenture trustee by the holders of at least 25% of the principal amount of
the notes of that series then outstanding acting together as a single
class;
(5) specified events of bankruptcy, insolvency, receivership or
liquidation of the applicable trust; or
(6) other events, if any, set forth in the related prospectus
supplement.
The failure to pay principal on a class of notes generally will not result in
the occurrence of an event of default under the indenture until the final
scheduled Distribution Date for that class of notes.
With respect to each series that includes notes, the rights and remedies of
the related indenture trustee, the related holders of the notes and the related
insurer, if any, will be described in the related prospectus supplement.
MATERIAL COVENANTS
Each indenture will provide that the related trust may not consolidate with
or merge into any other entity, unless:
(1) the entity formed by or surviving any consolidation or merger is
organized under the laws of the United States, any state thereof or the
District of Columbia;
(2) the entity expressly assumes the 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 the trust
under the indenture;
(3) no event of default under the indenture shall have occurred and be
continuing immediately after the merger or consolidation;
(4) the trust has been advised that the rating of the securities of
the applicable series then in effect would not be reduced or withdrawn by
any rating agency as a result of the merger or consolidation;
(5) the trust has received an opinion of counsel to the effect that
the consolidation or merger would have no material adverse tax consequence
to the trust or to any holder of the securities of the trust; and
(6) any other conditions specified in the related prospectus
supplement have been satisfied.
Additionally, the related indenture will provide that each trust will not,
among other things:
(1) except as expressly permitted by the applicable indenture, the
applicable sale and servicing agreement, the applicable owner trust
agreement, the applicable administration agreement or the other
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related documents with respect to the trust, sell, transfer, exchange or
otherwise dispose of any of the assets of the trust;
(2) 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 Internal Revenue Code of 1986, as amended, or
applicable state law) or assert any claim against any present or former
holder of the notes because of the payment of taxes levied or assessed upon
the trust;
(3) dissolve or liquidate in whole or in part;
(4) 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 the notes under the indenture except as may be
expressly permitted thereby;
(5) permit any lien, charge, excise, claim, security interest,
mortgage or other encumbrance to be created on or extend to or otherwise
arise upon or burden the assets of the trust or any part thereof, or any
interest therein or the proceeds thereof; or
(6) incur, assume or guarantee any indebtedness other than
indebtedness incurred pursuant to the related notes and the related
indenture, or otherwise in accordance with the related documents with
respect to the trust.
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 setting forth the following:
(1) its eligibility and qualification to continue as indenture trustee
under the related indenture;
(2) if the related indenture requires the indenture trustee to make
advances, any amount advanced by it under the indenture;
(3) the amount, interest rate and maturity date of any indebtedness
owing by the trust to the applicable indenture trustee in its individual
capacity;
(4) the property and funds physically held by the indenture trustee in
its capacity as indenture trustee; and
(5) 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 the related notes or, subject to specified limitations, upon
deposit with the indenture trustee of funds sufficient for the payment in full
of all of the notes.
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THE INDENTURE TRUSTEE
Additional matters relating to the indenture trustee are described under
"Description of the Transfer and Servicing Agreements--The Owner Trustee and
Indenture Trustee."
LEGAL ASPECTS OF THE CONTRACTS
The transfer of the contracts by AutoNation Financial Services to the
seller, and by the seller to the applicable trust, and the pledge thereof to an
indenture trustee, the perfection of the security interests in the contracts and
the enforcement of rights to realize on the related financed motor vehicles as
collateral for the contracts are subject to a number of federal and state laws,
including the Uniform Commercial Code as in effect in various states. The
servicer and the seller will take the actions described below to perfect the
rights of the applicable owner trustee and the indenture trustee in the
contracts.
Under each sale and servicing agreement or indenture, as applicable, the
applicable owner trustee or indenture trustee initially will have custody of the
contracts included in the Trust Property of a trust following the sale of the
contracts to the related trust and the pledge thereof to the related indenture
trustee, and will hold the contracts as bailee for the benefit of the trust or
as secured party. The servicermay be appointed by the applicable owner trustee
or indenture trustee to act as the custodian of the contracts. Upon the
appointment of the servicer as the custodian, physical possession of the
contracts will shift from the owner trustee or indenture trustee to the
servicer. While the contracts will not be physically marked to indicate the
ownership interest thereof by the trust, appropriate UCC-1 financing statements
reflecting the sale and assignment of the contracts by AutoNation Financial
Services to the seller and by the seller to the trust will be filed to perfect
that interest and give notice of the trust's ownership interest in, and the
indenture trustee's security interest in, the contracts. If, through
inadvertence or otherwise, any of the contracts were sold to another party who
purchased the contracts in the ordinary course of its business and took
possession of the contracts, the purchaser would acquire an interest in the
contracts superior to the interests of the trust and the indenture trustee if
the purchaser acquired the contracts in good faith, for value and without actual
knowledge of the trust's and the indenture trustee's interests in the contracts.
SECURITY INTERESTS IN THE FINANCED MOTOR VEHICLES
Obtaining Security Interests in Financed Motor Vehicles. In all states in
which the contracts have been originated, retail installment sales contracts
such as the contracts evidence the credit sale of automobiles and/or light-duty
trucks by dealers to consumers. The contracts also constitute personal property
security agreements and include grants of security interests in the vehicles
under the applicable Uniform Commercial Code. Perfection of security interests
in the 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 an automobile or a light-duty truck is perfected by obtaining the certificate
of title to the financed motor vehicle or notation of the secured party's lien
on the vehicle's certificate of title. The seller will warrant to the related
trust in the sale and servicing agreement that AutoNation Financial Services has
taken all steps necessary to obtain a perfected first priority security interest
with respect to all financed motor vehicles securing the contracts and that the
security interest has been assigned to the trust. If AutoNation Financial
Services fails, because of clerical errors or otherwise, to effect or maintain
the notation of the security interest on the certificate of title relating to a
financed motor vehicle, the trust may not have a first priority security
interest in that financed motor vehicle.
Perfection of Security Interests in Financed Motor Vehicles. The seller
will sell the contracts and assign the security interest in each financed motor
vehicle to the related trust. However, because of the administrative burden and
expense, the servicer, the seller and the trust will not amend any certificate
of title to identify the trust as the new secured party on the certificates of
title relating to the financed motor vehicles. Accordingly, AutoNation Financial
Services will continue to be named as the secured party on the certificates of
title relating to the financed motor vehicles. In most states, assignments such
as those under the receivables purchase agreement and the sale and servicing
agreement relating to each trust together with a perfected security interest in
the related financed vehicles is an effective conveyance of the security
interests in the financed vehicles without amendment of the lien noted on the
related certificate of title, and the new secured party succeeds to the
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assignor's rights as the secured party. However, there exists a risk in not
identifying the related trust as the new secured party on the certificate of
title that, through fraud or negligence, the security interest of the trust
could be released or primed.
In the absence of fraud or forgery by the financed motor vehicle owner or
administrative error by state recording officials, notation of the lien of
AutoNation Financial Services will be sufficient to protect the related trust
against the rights of subsequent purchasers of a financed motor vehicle or
subsequent lenders who take a security interest in a financed motor vehicle. If
there are any financed motor vehicles as to which AutoNation Financial Services
has failed to perfect the security interest assigned to the related trust, that
security interest would be subordinate to, among others, subsequent purchasers
of the financed motor vehicles and holders of perfected security interests.
Under the laws of most states, the perfected security interest in a
financed motor vehicle would continue for four months after a vehicle is moved
to a state other than the state in which it is initially registered and
thereafter until the vehicle owner re-registers the vehicle in the new state. A
majority of states require surrender of a certificate of title to re-register a
vehicle. Therefore, the servicer will provide the department of motor vehicles
or other appropriate state or county agency of the state of relocation with the
certificate of title so that the owner can effect the re-registration. If the
financed motor vehicle owner moves to a state that provides for notation of a
lien on the certificate of title to perfect the security interests in the
financed motor vehicle, absent clerical errors or fraud, AutoNation Financial
Services would receive notice of surrender of the certificate of title if its
lien is noted thereon. Accordingly, the secured party will have notice and the
opportunity to re-perfect the security interest in the financed motor vehicle in
the state of relocation. If the financed motor vehicle owner moves to a state
which does not require surrender of a certificate of title for registration of a
motor vehicle, re-registration could defeat perfection. In the ordinary course
of servicing its portfolio of motor vehicle installment sales contracts,
AutoNation Financial Services takes steps to effect re-perfection upon receipt
of notice of registration or information from the obligor as to relocation.
Similarly, when an obligor under a contract sells a financed motor vehicle, the
servicer must provide the owner with the certificate of title, or the servicer
will receive notice as a result of its lien noted thereon and accordingly will
have an opportunity to require satisfaction of the related contract before
release of the lien. Under each sale and servicing agreement, the servicer, at
its expense, will be obligated to take appropriate steps to maintain the
continuous perfection of the security interest of AutoNation Financial Services
in the financed motor vehicle.
Under the laws of most states, statutory liens such as liens for unpaid
taxes, liens for towing, storage and repairs performed on a motor vehicle, motor
vehicle accident liens and liens arising under various state and federal
criminal statutes take priority over a perfected security interest in a financed
motor vehicle. The Internal Revenue Code also grants priority to federal tax
liens over the lien of a secured party. The laws of most states and federal law
permit the confiscation of motor vehicles by governmental authorities under some
circumstances if used in or acquired with the proceeds of unlawful activities,
which may result in the loss of a secured party's perfected security interest in
a confiscated vehicle. With respect to each trust, the seller will represent in
each sale and servicing agreement that, as of the initial issuance of the
securities of the related series, no state or federal liens exist with respect
to any financed motor vehicle securing payment on any related contract. However,
liens could arise, or a confiscation could occur, at any time during the term of
a contract. It is possible that no notice will be given to the servicer in the
event that a lien arises or a confiscation occurs, and any lien arising or
confiscation occurring after the related Closing Date would not give rise to the
seller's repurchase obligations under the related sale and servicing agreement.
REPOSSESSION
In the event of a default by an obligor, the holder of the related retail
installment sales contract has all the remedies of a secured party under the
Uniform Commercial Code, except as specifically limited by other state laws.
Among the Uniform Commercial Code remedies, the secured party has the right to
repossess a financed vehicle by self-help means, unless that means would
constitute a breach of the peace or is otherwise limited by applicable state
law. Unless a financed vehicle is voluntarily surrendered, self-help
repossession is accomplished simply by retaking possession of the financed
vehicle. In cases where the obligor objects or raises a defense to repossession,
or if otherwise required by applicable state law, a court order must be obtained
from the appropriate state court, and the financed vehicle must then be
recovered in accordance with that order. In some jurisdictions,
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the secured party is required to notify the obligor of the default and the
intent to repossess the collateral and to give the obligor a time period within
which to cure the default prior to repossession. Generally, this right to cure
may only be exercised on a limited number of occasions during the term of the
related contract. Other jurisdictions permit repossession without prior notice
if it can be accomplished without a breach of the peace (although in some
states, a course of conduct in which the creditor has accepted late payments has
been held to create a right by the obligor to receive prior notice). In many
states, after the financed vehicle has been repossessed, the obligor may
reinstate the related contract by paying the delinquent installments and other
amounts due.
NOTICE OF SALE; REDEMPTION RIGHTS
In the event of a default by the obligor, some jurisdictions require that
the obligor be notified of the default and be given a time period within which
the obligor may cure the default prior to repossession. Generally, this right of
reinstatement may be exercised on a limited number of occasions in any one-year
period.
The Uniform Commercial Code and other state laws require the secured party
to provide the obligor with reasonable notice of the date, time and place of any
public sale and/or the date after which any private sale of the collateral may
be held. In addition, some states also impose substantive timing requirements on
the sale of repossessed vehicles and/or various substantive timing and content
requirements relating to those notices. In some states, after a financed vehicle
has been repossessed, the obligor may redeem the collateral by paying the
delinquent installments and other amounts due. The obligor has the right to
redeem the collateral prior to actual sale or entry by the secured party into a
contract for sale of the collateral by paying the secured party the unpaid
principal balance of the obligation, accrued interest thereon, reasonable
expenses for repossessing, holding and preparing the collateral for disposition
and arranging for its sale, plus, in some jurisdictions, reasonable attorneys'
fees and legal expenses. In some other states, the obligor may redeem the
collateral by payment of delinquent installments on the unpaid principal balance
of the related obligation.
DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS
The proceeds of resale of the repossessed vehicles generally will be
applied first to the expenses of resale and repossession and then to the
satisfaction of the indebtedness. While some states impose prohibitions or
limitations on deficiency judgments if the net proceeds from resale do not cover
the full amount of the indebtedness, a deficiency judgment can be sought in
those states that do not prohibit or limit those judgments. However, the
deficiency judgment would be a personal judgment against the obligor for the
shortfall, and a defaulting obligor can be expected to have very little capital
or sources of income available following repossession. Therefore, in many cases,
it may not be useful to seek a deficiency judgment or, if one is obtained, it
may be settled at a significant discount. In addition to the notice requirement,
the Uniform Commercial Code requires that every aspect of the sale or other
disposition, including the method, manner, time, place and terms, be
"commercially reasonable." Generally, courts have held that when a sale is not
"commercially reasonable," the secured party loses its right to a deficiency
judgment.
The Uniform Commercial Code also permits the debtor or other interested
party to recover for any loss caused by noncompliance with the provisions of the
Uniform Commercial Code. In addition, prior to a sale, the Uniform Commercial
Code permits the debtor or other interested person to prohibit the secured party
from disposing of the collateral if it is established that the secured party is
not proceeding in accordance with the "default" provisions under the Uniform
Commercial Code. Any deficiency judgment would be a personal judgment against
the obligor for the shortfall, and a defaulting obligor can be expected to have
very little capital or sources of income available following repossession.
Therefore, in many cases, it may not be useful to seek a deficiency judgment or,
if one is obtained, it may be settled at a significant discount or be
uncollectible.
Occasionally, after resale of a repossessed vehicle and payment of all
expenses and indebtedness, there is a surplus of funds. In that case, the
Uniform Commercial Code requires the creditor to remit the surplus to any holder
of a subordinate lien with respect to the vehicle or if no subordinate
lienholder exists, the Uniform Commercial Code requires the creditor to remit
the surplus to the obligor.
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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 and Z, the
Soldiers' and Sailors' Civil Relief Act of 1940, state adoptions of the National
Consumer Act and of the Uniform Consumer Credit Code, state motor vehicle retail
installment sales acts, state "lemon" laws and other similar laws. Also, state
laws impose finance charge ceilings and other restrictions on consumer
transactions and require contract disclosures in addition to those required
under federal law. These requirements impose specific statutory liabilities upon
creditors who fail to comply with their provisions. In some cases, this
liability could affect an assignee's ability to enforce consumer finance
contracts such as the contracts described above.
The so-called "Holder-in-Due-Course" Rule of the Federal Trade Commission
(the "FTC RULE") has the effect of subjecting any assignee of the seller in a
consumer credit transaction (and related creditors and their assignees) to all
claims and defenses which the obligor in the transaction could assert against
the seller. Liability under the FTC Rule is limited to the amounts paid by the
obligor under the contract, and the holder of the contract may also be unable to
collect any balance remaining due thereunder from the obligor. The FTC Rule is
generally duplicated by the Uniform Consumer Credit Code, other state statutes
or the common law in some states.
Most of the contracts will be subject to the requirements of the FTC Rule.
Accordingly, each trust, as holder of the related contracts, will be subject to
any claims or defenses that the purchaser of the applicable financed motor
vehicle may assert against the seller of the financed motor vehicle. As to each
obligor, those claims are limited to a maximum liability equal to the amounts
paid by the obligor on the related contract. The seller will represent in each
sale and servicing agreement that each of the contracts, and the sale of the
related financed motor vehicle thereunder, complied with all material
requirements of applicable laws and the regulations issued pursuant thereto.
Any shortfalls or losses arising in connection with the matters described
in the two preceding paragraphs, to the extent not covered by amounts payable to
the securityholders from amounts available under a credit enhancement mechanism,
could result in losses to the securityholders
Courts have applied general equitable principles to secured parties
pursuing repossession and litigation involving deficiency balances. These
equitable principles may have the effect of relieving an obligor from some or
all of the legal consequences of a default.
In several cases, consumers have asserted that the self-help remedies of
secured parties under the Uniform Commercial Code and related laws violate the
due process protections provided under the 14th Amendment to the Constitution of
the United States. Courts have generally upheld the notice provisions of the
Uniform Commercial Code and related laws as reasonable or have found that the
repossession and resale by the creditor do not involve sufficient state action
to afford constitutional protection to borrowers.
OTHER LIMITATIONS
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including Insolvency Laws, may interfere
with or affect the ability of a secured party to realize upon collateral or to
enforce a deficiency judgment. For example, in a Chapter 13 proceeding under the
Bankruptcy Code, a court may prevent a creditor from repossessing a vehicle,
and, as part of the rehabilitation plan, reduce the amount of the secured
indebtedness to the market value of the vehicle at the time of bankruptcy (as
determined by the court), leaving the creditor as a general unsecured creditor
for the remainder of the indebtedness. A bankruptcy court may also reduce the
monthly payments due under a contract or change the rate of interest and time of
repayment of the indebtedness.
Under the terms of the Soldiers' and Sailors' Relief Act of 1940, an
obligor who enters the military service after the origination of the obligor's
contract (including an obligor who is a member of the National Guard or is in
reserve status at the time of the origination of the obligor's contract and is
later called to active duty) may not be charged interest above an annual rate of
6% during the period of the obligor's active duty status, unless a court
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orders otherwise upon application of the lender. In addition, pursuant to the
Military Reservist Relief Act, under some circumstances, California residents
called into active duty with the reserves can delay payments on retail
installment sales contracts, including the contracts, for a period, not to
exceed 180 days, beginning with the order to active duty and ending 30 days
after release. It is possible that the foregoing could have an effect on the
ability of the servicer to collect the full amount of interest owing on some of
the contracts. In addition, the acts described above impose limitations that
would impair the ability of the servicer to repossess an affected contract
during the obligor's period of active duty status. Thus, in the event that an
affected contract goes into default, there may be delays and losses occasioned
by the inability to exercise the trust's rights with respect to the related
financed motor vehicle in a timely fashion.
Any shortfalls or losses arising in connection with the matters described
in the two preceding paragraphs, to the extent not covered by amounts payable to
the securityholders from amounts available under a credit enhancement mechanism,
could result in losses to the securityholders
REPURCHASE OBLIGATION
Under each sale and servicing agreement, the seller will make
representations and warranties relating to validity, subsistence, perfection and
priority of the security interest in each related financed motor vehicle as of
the related Closing Date. See "Description of the Transfer and Servicing
Agreements--Sale and Assignment of the Contracts." Accordingly, if any defect
exists in the perfection of the security interest in any financed motor vehicle
as of the Closing Date and that defect adversely affects the related trust's
interest in the related contract, the defect would constitute a breach of a
warranty under the sale and servicing agreement and would create an obligation
of the seller to repurchase the contract unless the breach is cured.
Additionally, in the sale and servicing agreement, the servicer will make
representations, warranties and affirmative covenants regarding, among other
things, the maintenance of the security interest in each financed motor vehicle,
the breach of which would create an obligation of the servicer to purchase any
affected contract from the related trust unless the breach is cured.
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MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of the anticipated material federal
income tax consequences of the purchase, ownership and disposition of the notes
and the certificates of any series. The summary does not purport to deal with
United States federal income tax consequences or special rules that are
applicable to holders such as dealers in securities or foreign currency, banks,
other financial institutions, insurance companies, real estate investment
trusts, regulated investment companies, tax exempt entities, persons that hold
the notes or the certificates as a position in a "straddle," or as part of a
synthetic security or "hedge," "conversion transaction" or other integrated
investment, persons that have a "functional currency" other than the U.S. dollar
and investors in pass-through entities. Except to the extent discussed below,
this discussion is not applicable to Non-U.S. Holders (as defined below). In
addition, this summary is generally limited to investors who will hold the notes
and the certificates as "capital assets" (generally, property held for
investment) within the meaning of Section 1221 of the Internal Revenue Code of
1986, as amended. Prospective investors are encouraged to consult their own tax
advisors in determining the federal, state, local, foreign, alternative minimum,
estate and gift and any other tax consequences to them of the purchase,
ownership and disposition of the notes and the certificates.
The following summary is based upon current provisions of the Internal
Revenue Code, the Treasury regulations promulgated thereunder and judicial or
ruling authority, all of which are subject to change, which change may be
retroactive. Moreover, there are no cases or Internal Revenue Service rulings on
many of the issues discussed below or on similar transactions involving debt
instruments and equity issued by a trust with terms similar to those of the
notes and the certificates, respectively, and no ruling on any of the issues
discussed below will be sought from the Internal Revenue Service. The opinions
of our counsel (described below) are not binding on the IRS or the courts. As a
result, the IRS may disagree with all or a part of the discussion below. For
purposes of the following summary, references to the trust, the notes, the
certificates and related terms, parties and documents shall be deemed to refer,
unless otherwise specified herein, to each trust and the notes, certificates and
related terms, parties and documents applicable to that trust.
PERSONS CONSIDERING THE PURCHASE OF NOTES OR CERTIFICATES SHOULD CONSULT
THEIR OWN TAX ADVISORS CONCERNING THE APPLICATION OF THE UNITED STATES FEDERAL
TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY CONSEQUENCES ARISING
UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION.
For purposes of the discussion below, (1) "U.S. HOLDER" means a beneficial
owner of a note or certificate, as the case may be, that is for United States
federal income tax purposes a citizen or resident of the United States, a
corporation, partnership or other entities created or organized in or under the
laws of the United States, or any political subdivision thereof, an estate the
income of which is subject to United States federal income taxation regardless
of its source or a trust with respect to which a court in the United States is
able to exercise primary authority over its administration and one or more U.S.
persons have the authority to control all of its substantial decisions and
(2) "NON-U.S. HOLDER" means a beneficial owner of a note or certificate, as the
case may be, other than a U.S. Holder or an individual subject to rules
applicable to former citizens and residents of the United States.
TAX CHARACTERIZATION OF EACH TRUST
Our tax counsel has prepared or reviewed the statements in the prospectus
under the heading "Material Federal Income Tax Consequences" herein and is of
the opinion that, to the extent that such statements constitute matters of law
or legal conclusions and except to the extent qualified herein, those statements
are correct in all material respects. In addition, upon the issuance of each
series, our tax counsel will deliver an opinion, subject to the assumptions and
qualifications set forth therein, that under current law, the trust on the date
of the issuance of the securities will not be classified as an association (or
publicly traded partnership) taxable as a corporation for federal income tax
purposes. This opinion is based on the assumption that the terms of the owner
trust agreement and related documents will be complied with, and on counsel's
conclusions that (1) the trust does not have the characteristics necessary for a
business trust to be classified as an association taxable as a corporation and
(2) either the nature of the income of the trust will exempt it from the rule
regarding the taxation of publicly traded partnerships as corporations or the
trust will otherwise qualify for an exemption from the rules governing publicly
traded partnerships.
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Opinions of counsel are not binding on the IRS. If the trust were taxable
as a corporation for federal income tax purposes, the trust would be subject to
corporate income tax on its taxable income. The trust's taxable income would
include all its income on the contracts, possibly reduced by its interest
expense on some or all of the classes of notes. Any corporate income tax could
materially reduce cash available to make payments on the notes and distributions
on the certificates. In addition, certificateholders could be liable for any tax
that is unpaid by the trust.
TAX CONSEQUENCES TO HOLDERS OF THE NOTES
Treatment of the Notes as Indebtedness. The parties to the indenture have
agreed, and the noteholders by their purchase of notes will be deemed to have
agreed, to treat the notes as debt for United States federal income tax
purposes. Upon the issuance of each Series, our tax counsel will deliver an
opinion, subject to the assumptions and qualifications set forth therein, that,
although there is no specific authority with respect to the characterization for
federal income tax purposes of securities having terms similar to the notes, the
notes (other than notes held by the trust, the insurer, if any, or any of their
respective affiliates) will be characterized as debt for United States federal
income tax purposes. The discussion below assumes this characterization of the
notes is correct.
Stated Interest. Payments of "qualified stated interest" (defined below)
are includible as ordinary interest income by a holder of a debt obligation at
the time those payments are received or accrued in accordance with the holder's
regular method of tax accounting. The stated interest on the notes will
constitute qualified stated interest and, as a result, the stated interest will
be includible as ordinary income by each U.S. Holder either at the time those
payments are received or accrued depending upon whether the U.S. Holder is a
cash or accrual basis taxpayer, respectively.
Original Issue Discount. Unless a note is a Short-Term Note (as described
below), it will be treated as issued with original issue discount ("OID") if the
excess of the note's "stated redemption price at maturity" over the issue price
equals or exceeds a de minimis amount equal to 1/4 of 1 percent of the note's
stated redemption price at maturity multiplied by the number of complete years
(based on the anticipated weighted average life of a note) to its maturity. A
holder of a note must include OID in gross income as ordinary interest income as
it accrues under a method taking into account an economic accrual of the
discount regardless of the holder's normal method of tax accounting. In general,
OID must be included in income in advance of the receipt of the cash
representing that income. The amount of any de minimis OID must be included in
income as principal payments are received on a note, in the proportion that each
payment bears to the original principal amount of the note.
The issue price of a note will generally be the initial offering price at
which a substantial amount of the notes are sold for money (other than sales to
bond houses and brokers). The trust intends to treat the issue price as
including, in addition, the amount paid by the noteholder for accrued interest,
if any, that relates to a period prior to the Closing Date. Under applicable
Treasury regulations governing the accrual of OID (the "OID REGULATIONS"), the
stated redemption price at maturity is the sum of all payments on the note other
than any "qualified stated interest" payments. Qualified stated interest is
generally defined as interest that is unconditionally payable at least annually
based upon a single fixed rate or certain variable rates.
The holder of a note issued with OID must include in gross income, for all
days during its taxable year on which it holds that note, the sum of the "daily
portions" of the OID. The daily portions are computed by allocating to each day
during a taxable year a pro rata portion of the OID that accrued during the
relevant accrual period(s). In the case of an obligation the principal on which
is subject to prepayment as a result of prepayments on the underlying collateral
(a "PREPAYABLE OBLIGATION"), such as the notes, OID is computed by taking into
account the anticipated rate of prepayments assumed in pricing the debt
instrument (the "PREPAYMENT ASSUMPTION"). The Prepayment Assumption that will be
used in determining the rate of accrual of OID, premium and market discount, if
any, will be provided in the related prospectus supplement. The amount of OID
that will accrue during an accrual period (generally the period between interest
payments or compounding dates) is the excess, if any, of the sum of (a) the
present value of all payments remaining to be made on the note as of the close
of the accrual period and (b) the payments during the accrual period of amounts
included in the stated redemption price of the note, over the "adjusted issue
price" of the note as of the beginning of the accrual
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period. An "accrual period" is the period over which OID accrues, and may be of
any length, provided that each accrual period is no longer than one year and
each scheduled payment of interest or principal occurs on either the last day or
the first day of an accrual period. The trust intends to report OID on the basis
of an accrual period that corresponds to the interval between Distribution
Dates. The adjusted issue price of a note is the sum of its issue price plus
prior accruals of OID, reduced by the total payments made with respect to the
note in all prior periods, other than payments of qualified stated interest. The
present value of the remaining payments is determined on the basis of three
factors: (1) the original yield to maturity of the note (determined on the basis
of compounding at the end of each accrual period and properly adjusted for the
length of the accrual period), (2) events which have occurred before the end of
the accrual period and (3) the original Prepayment Assumption.
The effect of this method is to increase the portions of OID required to be
included in income by a noteholder to take into account prepayments on the
contracts at a rate that exceeds the Prepayment Assumption, and to decrease (but
not below zero for any period) the portions of OID required to be included in
income by a noteholder to take into account prepayments with respect to the
contracts at a rate that is slower than the Prepayment Assumption. Although OID
will be reported to noteholders based on the Prepayment Assumption, no
representation is made to noteholders that the contracts will be prepaid at that
rate or at any other rate.
Acquisition Premium on Notes. A U.S. Holder of a note issued with OID which
acquires the note other than at original issuance for an amount that exceeds the
adjusted issue price of the note but is less than or equal to the sum of all
remaining amounts then payable under the note other than qualified stated
interest will be considered to have paid an "acquisition premium." Under the
acquisition premium rules, the amount of OID which a U.S. Holder must include in
income with respect to the note for any taxable year will be reduced by the
portion of the acquisition premium properly allocable to that year.
Bond Premium. Generally, if a U.S. Holder acquires a note for an amount
that exceeds the sum of all remaining amounts then payable under the note (other
than qualified stated interest), the U.S. Holder may elect to treat the excess
as "amortizable bond premium."
If the bond premium is amortized, the amount of stated interest on the note
that must be included in the U.S. Holder's income for each period ending on an
interest payment date or at the maturity date, as the case may be, will (except
as Treasury regulations may otherwise provide) be reduced by the portion of bond
premium allocable to thatperiod based on the note's yield to maturity. If an
election to amortize bond premium is not made, a U.S. Holder will receive a tax
benefit from the premium only in computing the U.S. Holder's gain or loss upon
the sale or other taxable disposition of the note, or upon the full or partial
payment of principal.
An election to amortize bond premium will apply to amortizable bond premium
on all notes and other bonds the interest on which is includible in the U.S.
Holder's gross income and that are held at, or acquired after, the beginning of
the U.S. Holder's taxable year as to which the election is made. The election
may be revoked only with the consent of the IRS. A U.S. Holder which elects to
amortize bond premium must reduce its adjusted basis in the note by the amount
of the allowable amortization.
Market Discount on Notes. If a U.S. Holder acquires a note at a "market
discount," some or all of any gain recognized by the U.S. Holder upon a
subsequent sale or other disposition of the note, or upon the full or partial
payment of principal, may be treated as ordinary income, and not capital gain.
Subject to a statutory de minimis exception, "market discount" is the excess, if
any, of (1) the stated redemption price at maturity of a debt obligation (or in
the case of a note issued with OID, the "revised issue price") over (2) the
taxpayer's adjusted tax basis in the debt obligation immediately after its
acquisition. The "revised issue price" of a debt obligation generally equals the
sum of its issue price and the total amount of OID includible in the gross
income of all holders for periods before the acquisition of the debt obligation
by the current holder (without regard to any reduction in that income resulting
from any prior purchase at an acquisition premium) and less any cash payments
(other than qualified stated interest) already made in respect of the debt
obligation.
In the case of a note acquired by a U.S. Holder at the note's original
issue, that note will not be considered to have been purchased by the holder at
a market discount if the purchase price paid for the note equals or exceeds the
note's issue price.
A U.S. Holder of a note acquired at a market discount may elect to amortize
the market discount into income, through the use of either the straight-line
inclusion method or the elective constant yield method. The
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election will apply to all notes and other obligations acquired by the electing
holder at a market discount during the taxable year for which the election is
made, and all subsequent taxable years, unless the IRS consents to a revocation
of the election. If an election is made to include market discount in income
currently, the basis of the note in the hands of the holder will be increased by
the market discount thereon as it is included in income.
Unless a U.S. Holder which acquires a note at a market discount elects to
amortize the market discount into income, any gain recognized upon a subsequent
disposition of the notes (other than in connection with some nonrecognition
transactions), or upon the full or partial payment of principal, will be treated
as ordinary income to the extent of the amount of the market discount that would
otherwise have been amortized into income as of the disposition (utilizing the
straight-line method). In addition, a U.S. Holder may be required to defer
deductions for any interest paid on indebtedness incurred or continued to
purchase or carry the note in an amount not exceeding the deferred income, until
that income is realized.
The Clinton administration's 1999 budget proposal includes a provision
which, if passed, would require accrual basis taxpayers to include market
discount in income as it accrues. Under this proposal, a noteholder's yield for
purposes of determining and accruing market discount would be limited to the
greater of (1) the original yield to maturity of the note plus 5 percent or (2)
the applicable federal rate at the time the holder acquired the note plus 5
percent. There can be no certainty, however, as to whether this provision of the
Clinton administration's budget proposal will be enacted or what its effective
date would be.
Total Accrual Election. As an alternative to separately accruing stated
interest, OID, de minimis OID, market discount, de minimis market discount, bond
premium and acquisition premium, a holder of a note (other than a Short-Term
Note, as described below) may elect to include all income that accrues on the
note using the constant yield method. If a noteholder makes this election,
income on a note will be calculated as though (1) the issue price of the note
were equal to the noteholder's adjusted basis in the note immediately after its
acquisition by the noteholder; (2) the note were issued on the noteholder's
acquisition date; and (3) none of the interest payments on the note were
"qualified stated interest." A noteholder may make this election for a note that
has premium or market discount, respectively, only if the noteholder makes, or
has previously made, an election to amortize bond premium or to include market
discount in income currently. See "--Market Discount" and "--Amortizable Bond
Premium."
Short-Term Notes. A holder of a note that has a fixed maturity date of not
more than one year from the issue date of the note (a "SHORT-TERM NOTE") may be
subject to special rules. An accrual basis holder of a Short-Term Note (and some
cash method holders as set forth in Section 1281 of the Internal Revenue 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 Internal Revenue 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. 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 (not including accrued but unpaid interest not previously
included in income) and the holder's adjusted tax basis in the note. The
adjusted tax basis of a note to a particular noteholder will equal the holder's
cost for the note, increased by any market discount, acquisition discount, OID
and gain previously included by the 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 the noteholder
with respect to the note. Any gain or loss and any gain or loss realized upon
prepayment of a note (other than unamortized OID, whether or not accrued) will
be capital gain or loss if the note was held as a capital asset, except for gain
representing accrued interest, accrued market discount or OID not previously
included in income and will be long-term capital gain or loss if the holder held
the note for more
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than one year. The maximum rate of federal income taxation on net long-term
capital gain realized by a non-corporation is 20%. Capital losses generally may
be used only to offset capital gains.
TAXATION OF NON-U.S. HOLDERS OF NOTES
Payments of interest (including OID, if any), principal and premium, if
any, on the notes to any Non-U.S. Holder will not be subject to United States
federal withholding tax, providing that, in the case of interest, that person
(1) does not own, actually or constructively, 10% or more of the total combined
voting power of all classes of the trust's or the seller's equity that is
entitled to vote, (2) is not a controlled foreign corporation related, directly
or indirectly, to the trust or the seller through equity ownership and (3) is
not a bank receiving interest described in Section 881(c)(3)(A) of the Internal
Revenue Code, and provided that the statement requirement described in the next
sentence has been fulfilled with respect to the beneficial owner.
Sections 871(h) and 881(c) of the Internal Revenue Code require that, in order
to obtain the exemption from withholding tax described in the previous sentence,
either the beneficial owner of the note, or a securities clearing organization,
bank or other financial institution that holds customers' securities in the
ordinary course of its trade or business (a "FINANCIAL INSTITUTION") and that is
holding the note on behalf of the beneficial owner, file a statement with the
relevant United States withholding agent to the effect that the beneficial owner
of the note is not a United States person. Under temporary Treasury regulations
which apply to both stated interest and sale or exchange proceeds if either is
paid with respect to a note on or before December 31, 2000, the requirement will
be fulfilled if (1) the beneficial owner of a note certifies on IRS Form W-8,
under penalties of perjury, that it is not a United States person and provides
its name and address and (2) any Financial Institution holding the note on
behalf of the beneficial owner files a statement with the relevant United States
withholding agent to the effect that it has received the statement described
above from the noteholder (and furnishes the relevant United States withholding
agent with a copy thereof). Recently issued final Treasury regulations (the
"FINAL REGULATIONS"), which apply to interest (including OID) and sale or
exchange proceeds paid with respect to a note after December 31, 2000, also
provide that the requirement of Sections 871(h) and 881(c) generally will be
fulfilled if beneficial owners (including partners of some foreign partnerships,
as well as some foreign partnerships) meet the two conditions set forth in the
preceding sentence. However, a beneficial owner that is a foreign estate or
trust (or fiduciary thereof), a foreign partnership that has entered into a
withholding agreement with the IRS, or a Non-U.S. Holder holding a note through
its United States branch will be required to provide its "taxpayer
identification number" in addition to its name and address on Form W-8. Foreign
partnerships and their partners should consult their tax advisors regarding
possible additional reporting requirements.
Notwithstanding the foregoing, if interest or other income received with
respect to the note is effectively connected with a United States trade or
business conducted by a Non-U.S. Holder, the noteholder, although exempt from
the withholding tax described in the preceding paragraph, may be subject to
United States federal income tax on the interest in the same manner as if it
were a U.S. Holder. In addition, if the noteholder is a corporation, it may be
subject to a branch profits tax equal to 30% (or a lower treaty rate) of its
effectively connected earnings and profits for the taxable year, subject to
adjustments.
A Non-U.S. Holder will not be subject to United States federal income tax
on gain realized on the sale, exchange or other disposition of a note, unless
(1) the noteholder is an individual who is present in the United States for
183 days or more in the taxable year of disposition, and either (a) the
individual has a "tax home" (as defined in Internal Revenue Code Section
911(d)(3)) in the United States (unless the gain is attributable to a fixed
place of business in a foreign country maintained by the individual and has been
subject to foreign tax of at least 10%) or (b) the gain is attributable to an
office or other fixed place of business maintained by the individual in the
United States or (2) the gain is effectively connected with the conduct by the
noteholder of a trade or business in the United States.
INFORMATION REPORTING AND BACKUP WITHHOLDING
The indenture trustee will be required to report annually to the IRS, and
to each noteholder of record, relevant information, including the noteholder's
name, address and taxpayer identification number (either the noteholder's Social
Security number or its employer identification number, as the case may be), the
aggregate amount of principal and interest paid and the amount of tax withheld,
if any.
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In the event a U.S. Holder subject to the reporting requirements described
above fails to supply its correct taxpayer identification number in the manner
required by applicable law or underreports its tax liability, "backup"
withholding of tax equal to 31% of each payment of interest and principal on the
notes may be required. This backup withholding is not an additional tax and may
be credited against the noteholder's United States federal income tax liability,
provided that the required information is furnished to the IRS.
Under current Treasury regulations, information reporting and backup
withholding will not apply to payments made to a noteholder that is a Non-U.S.
Holder if the certifications required by Section 871(h) and 881(c) of the
Internal Revenue Code (described above) are received, provided that the payer
does not have actual knowledge that the payee is a United States person.
The Final Regulations modify the backup withholding and information
reporting procedures in some respects for payments made after December 31, 2000.
Prospective investors are urged to consult their tax advisors regarding the
application of the backup withholding and information reporting rules.
Possible Alternative Treatments of the Notes. If, contrary to the opinion
of our 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
trust would not be able to reduce its taxable income by deductions for interest
expense on notes recharacterized as equity). Alternatively, except as otherwise
provide in the related prospectus supplement, the trust might be treated as a
publicly traded partnership that would not be taxable as a corporation because
it would meet the qualifying income tests. Nonetheless, treatment of the notes
as equity interests in a publicly traded partnership could have adverse tax
consequences to some holders. For example, the interest paid to some tax-exempt
entities (including pension funds) would be subject to tax as "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 limitations on their ability to deduct
their share of trust expenses.
TAX CONSEQUENCES TO HOLDERS OF THE CERTIFICATES
The following describes the material federal income tax consequences to the
trust and the certificateholders in the event that equity interests in the trust
are held by two or more persons.
Treatment of the Trust as a Partnership. With respect to any series of
certificates held by two or more parties, the seller and the servicer will
agree, and the certificateholders will be deemed to have agreed 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 seller and the
certificateholders, and the notes being debt of the partnership. However, the
proper characterization of the arrangement involving the trust, the
certificates, the notes, the seller and the servicer is not clear because there
is no authority on transactions closely comparable to that contemplated herein.
A variety of alternative characterizations are possible. For example,
because the certificates generally have features characteristic of debt, the
certificates might be considered debt of the seller or the trust. Any
alternative characterization would not result in materially adverse tax
consequences to certificateholders as compared to the consequences from
treatment of the certificates as equity in a partnership, described below. The
following discussion assumes that the certificates represent equity interests in
a partnership.
Partnership Taxation. Assuming that the trust is classified as a
partnership, the trust will not be subject to federal income tax. Rather, each
certificateholder will be required to separately take into account such holder's
allocated share of income, gains, losses, deductions and credits of the trust.
The trust's income will consist primarily of interest and finance charges earned
on the contracts (including appropriate adjustments for market discount, OID and
bond premium) and any gain upon collection or disposition of contracts. 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 contracts.
The tax items of a partnership are allocable to the partners in accordance
with the Internal Revenue Code, Treasury regulations and the partnership
agreement (here, the owner trust agreement and related documents). The
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owner trust agreement will provide, in general, that the certificateholders will
be allocated taxable income of the trust for each month equal to the sum of
(1) the interest that accrues on the certificates in accordance with their terms
for that month, including interest accruing at the applicable interest rate for
that month and interest on amounts previously due on the certificates but not
yet distributed; (2) any trust income attributable to discount on the contracts
that corresponds to any excess of the principal amount of the certificates over
their initial issue price; (3) prepayment premium payable (if any) to the
certificateholders for that month; and (4) any other amounts of income payable
to the certificateholders for that month. The allocation described above will be
reduced by any amortization by the trust of premium on contracts 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 seller. Based on the economic arrangement of the parties, this approach for
allocating trust income should be permissible under applicable Treasury
regulations, although no assurance can be given that the IRS would not require a
greater amount of income to be allocated to certificateholders. Moreover, even
under the foregoing method of allocation, certificateholders may be allocated
income equal to the entire interest rate relating to the certificates plus the
other items described above even though the trust might not have sufficient cash
to make current cash distributions of that 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 those 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.
Certificateholders will be required to report items of income, loss and
deduction allocated to them by the trust in the taxable year in which or with
which the taxable year of the trust to which those allocations relate ends. The
Internal Revenue Code prescribes rules for determining the taxable year of the
trust. It is likely that, under these rules, the taxable year of the trust will
be the calendar year. However, in the event that all of the certificateholders
possessing a 5 percent or greater interest in the equity or the profits of the
trust share a taxable year that is other than the calendar year, the trust would
be required to use that year as its taxable year.
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 the holder under the Internal Revenue Code.
Limitations on Losses and Deductions. In the event that losses or
deductions are allocated to certificateholders in the circumstances described
above, the following rules will apply. Under the "passive activity" rules of the
Internal Revenue Code, any loss allocated to a certificateholder which is a
natural person, estate, trust, closely held "C" corporation, or personal service
corporation would be a passive activity loss while, for purposes of those rules,
income allocated to that certificateholder would be "portfolio income."
Limitations regarding the deductibility of passive activity losses are imposed
under the Internal Revenue Code. Moreover, any losses allocated to a
certificateholder may be capital losses.
An individual taxpayer's share of expenses of the trust (including fees to
the servicer but not interest expense) would be miscellaneous itemized
deductions and thus allowable as a deduction only to the extent that in the
aggregate all of those expenses exceed two percent of the individual taxpayer's
adjusted gross income. Furthermore, some otherwise allowable itemized deductions
will be reduced, but not by more than 80%, by an amount equal to 3% of the
individual's adjusted gross income in excess of a statutorily defined threshold.
Therefore, those deductions might be disallowed to the individual in whole or in
part and might result in the holder being taxed on an amount of income that
exceeds the amount of cash actually distributed to the holder over the life of
the trust.
The trust intends to make all tax calculations relating to income and
allocations to certificateholders on an aggregate basis. If the IRS were to
require these calculations to be made separately for each contract, the trust
might be required to incur additional expense but it is believed that there
would not be a material adverse effect on certificateholders.
43
<PAGE>
Discount and Premium. It is believed that the contracts were not issued
with OID, and, therefore, the trust should not have OID income. However, the
purchase price paid by the trust for the contracts may be greater or less than
the remaining principal balance of the contracts at the time of purchase. If so,
the contracts 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 contract-by-contract basis.)
If the trust acquires the contracts at a market discount or premium, the
trust will elect to include any discount in income currently as it accrues over
the life of the contracts or to offset any premium against interest income on
the contracts. As indicated above, a portion of the market discount income or
premium deduction may be allocated to certificateholder.
Section 708 Termination. Under Section 708 of the Internal Revenue 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 a termination of the trust occurs, the trust will
be considered to contribute its assets to a new partnership in exchange for an
interest in the new partnership and immediately thereafter, the terminated
partnership will be considered to have distributed interests in the new
partnership to all of its partners (including the purchasing partner who caused
the termination) in proportion to their interests in the terminated partnership
in liquidation of the terminated partnership. The trust will not comply with the
technical requirements that might apply when a constructive termination occurs.
As a result, the trust may be subject to 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.
Distributions to Certificateholders. Certificateholders generally will not
recognize gain or loss with respect to distributions from the trust. A
certificateholder will, however, recognize gain to the extent any money
distributed exceeds the certificateholder's adjusted basis in the certificates
(as described below under "--Disposition of Certificates") immediately before
distribution, and a certificateholder will recognize loss upon termination of
the trust or termination of the certificateholder's interest in the trust if the
trust only distributes money to the certificateholder and the amount distributed
is less than the certificateholder's adjusted basis in the certificates. Any
resulting gain or loss would be long-term capital gain or loss if the holding
period of the certificates were more than one year, assuming that the
certificates are held as capital assets.
Disposition of Certificates. Generally, 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 that 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 those
certificates, and, upon sale or other disposition of some of the certificates,
allocate a portion of the 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). Assuming the certificates
are held as capital assets, the gain or loss will be capital gain or loss and
will be long-term capital gain or loss if the certificates are held for more
than one year.
Any gain on the sale of a certificate attributable to the holder's share of
unrecognized accrued market discount on the contracts 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 special reporting requirements. Thus, to avoid those special reporting
requirements, the trust will elect to include market discount income as it
accrues.
If a certificateholder is required to recognize an aggregate amount of
income (not including income attributable to disallowed itemized deductions
described above) over the life of the certificates that exceeds the aggregate
cash distributions with respect thereto, the 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
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day of that 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 a monthly convention may not be permitted by existing Treasury
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 seller is
authorized to revise the trust's method of allocation between transferors and
transferees to conform to a method permitted by future Treasury regulations.
Section 754 Election. In the event that a certificateholder sells its
certificates at a profit (loss), the purchasing certificateholder will have a
higher (lower) basis in the certificates than the selling certificateholder had.
The tax basis of the trust's assets will not be adjusted to reflect that higher
(or lower) basis unless the trust were to file an election under Section 754 of
the Internal Revenue 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
this election. As a result, certificateholders might be allocated a greater or
lesser amount of trust income than would be appropriate based on their own
purchase price for certificates.
Administrative Matters. The owner trustee is required to keep or have kept
complete and accurate books of the trust. The books will be maintained for
financial reporting and tax purposes on an accrual basis and the fiscal year of
the trust, if not the calendar year, will be set forth in the related prospectus
supplement. The owner 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 those nominees will be required to forward the
relevant information to the beneficial owners of the certificates. Generally,
holders must file tax returns that are consistent with the information return
filed by the trust or be subject to penalties unless the holder notifies the IRS
of all inconsistencies.
Under Section 6031 of the Internal Revenue 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 relevant information on the
nominee, the beneficial owners and the certificates so held. This information
includes (1) the name, address and taxpayer identification number of the nominee
and (2) as to each beneficial owner (A) the name, address and taxpayer
identification number of that person, (B) whether that 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 (C) relevant information on certificates that were held, bought
or sold on behalf of that 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 an 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 seller will be designated as the tax matters partner in the related
owner trust agreement and, in that capacity, will be responsible for
representing the certificateholders in any dispute with the IRS. The Internal
Revenue 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 some 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. While the certificateholders may participate in any adjudicative process
that is undergone at the trust level in arriving at this determination, the
certificateholders will be precluded from separately litigating a proposed
adjustment to the items of the trust. As the tax matters partner, the seller may
enter into a binding settlement on behalf of all certificateholders with a less
than 1 percent interest in the trust (except for any group of certificateholders
with an aggregate interest of 5 percent or more in trust profits that elects to
form a notice group or certificateholders who otherwise notify the
45
<PAGE>
IRS that the seller is not authorized to settle on their behalf). In the absence
of a proceeding at the trust level, a certificateholder under some circumstances
may pursue a claim for credit or refund on its own behalf by filing a request
for administrative adjustment of a trust item. Each certificateholder is advised
to consult its own tax advisor with respect to the impact of these procedures on
its particular case.
TAXATION OF NON-U.S. HOLDERS OF CERTIFICATES
It is not clear whether the trust would be considered to be engaged in a
trade or business in the United States for purposes of federal withholding taxes
with respect to Non-U.S. Holders of certificates ("NON-U.S. CERTIFICATEHOLDERS")
because there is no clear authority dealing with that issue under facts
substantially similar to those described herein. Although it is not expected
that the trust would be engaged in a trade or business in the United States for
these purposes, the trust will withhold as if it were so engaged in order to
protect the trust from possible adverse consequences of a failure to withhold.
The trust expects to withhold on the portion of its taxable income that is
allocable to Non-U.S. Certificateholders pursuant to Section 1446 of the
Internal Revenue Code, as if that income were effectively connected to a U.S.
trade or business, at a rate of 35% for Non-U.S. Certificateholders that are
taxable as corporations and 39.6% for all other Non-U.S. Certificateholders. The
Final Regulations or subsequent adoption of Treasury regulations or the issuance
of other administrative pronouncements may require the trust to change its
withholding procedures. In determining a holder's withholding status, the trust
may rely on IRS Form W-8, IRS Form W-9 or the holder's certification of
nonforeign status signed under penalties of perjury.
Each Non-U.S. Certificateholder might be required to file a U.S. individual
or corporate income tax return (including, in the case of a corporation, the
branch profits tax) on its share of the trust's income. Each Non-U.S.
Certificateholder must obtain a taxpayer identification number from the IRS and
submit that number to the trust on Form W-8 in order to assure appropriate
crediting of the taxes withheld. A Non-U.S. Certificateholder generally would be
entitled to file with the IRS a claim for refund with respect to taxes withheld
by the trust, taking the position that no taxes were due because the trust was
not engaged in a U.S. trade or business. However, interest payments made (or
accrued) to a Non-U.S. Certificateholder generally will be considered guaranteed
payments to the extent those payments are determined without regard to the
income of the trust. If these interest payments are properly characterized as
guaranteed payments, then the interest will not be considered "portfolio
interest." As a result, a Non-U.S. Certificateholder will be subject to United
States federal income tax and withholding tax at a rate of 30 percent, unless
reduced or eliminated pursuant to an applicable treaty. In that case, a Non-U.S.
Certificateholder would only be entitled to claim a refund for that portion of
the taxes in excess of the taxes that should be withheld with respect to the
guaranteed payments.
Backup Withholding. Distributions made on the certificates and proceeds
from the sale of the certificates will be subject to a "backup" withholding tax
of 31% if, in general, the certificateholder fails to comply with relevant
identification procedures, unless the holder is an exempt recipient under
applicable provisions of the Internal Revenue Code.
PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS WITH
REGARD TO THE UNITED STATES FEDERAL TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP
OR DISPOSITION OF INTERESTS IN THE NOTES OR THE CERTIFICATES, AS WELL AS THE
GIFT, ESTATE, ALTERNATIVE MINIMUM TAX CONSEQUENCES AND THE TAX CONSEQUENCES
ARISING UNDER THE LAWS OF ANY STATE, LOCAL, FOREIGN COUNTRY OR OTHER TAXING
JURISDICTION.
ERISA CONSIDERATIONS
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended, which is generally referred to as "ERISA" and Section 4975 of the
Internal Revenue Code prohibit a pension, profit-sharing or other employee
benefit plan, as well as individual retirement accounts and some types of Keogh
Plans (each a "BENEFIT PLAN"), from engaging in transactions involving "plan
assets" with persons that are "parties in interest" under ERISA or "disqualified
persons" under the Internal Revenue Code with respect to that Benefit Plan.
ERISA also imposes duties on persons who are fiduciaries of Benefit Plans
subject to ERISA and prohibits transactions between a Benefit Plan and parties
in interest with respect to those Benefit Plans. Under ERISA, any person who
exercises any authority or control with respect to the management or disposition
of the assets of a Benefit Plan is considered to be a fiduciary of that Benefit
Plan (subject to exceptions not here relevant). A
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violation of these "prohibited transaction" rules may result in an excise tax or
other penalties and liabilities under ERISA and the Internal Revenue Code for
those persons.
Transactions involving a trust might be deemed to constitute prohibited
transactions under ERISA and the Internal Revenue Code with respect to a Benefit
Plan that purchased notes or certificates if assets of the trust were deemed to
be assets of the Benefit Plan. Under a regulation issued by the United States
Department of Labor (the "PLAN ASSETS REGULATION"), the assets of a trust would
be treated as plan assets of a Benefit Plan for the purposes of ERISA and the
Internal Revenue Code if the Benefit Plan acquired an "equity interest" in the
trust and none of the exceptions contained in the Plan Assets Regulation was
applicable. An equity interest is defined under the Plan Assets Regulation as an
interest other than an instrument which is treated as indebtedness under
applicable local law and which has no substantial equity features. The likely
treatment in this context of notes and certificates of a given series will be
discussed in the related prospectus supplement.
Employee benefit plans that are governmental plans (as defined in
Section 3(32) of ERISA) and church plans (as defined in Section 3(33) of ERISA)
are not subject to ERISA requirements.
Based on the reasoning of the United States Supreme Court in John Hancock
Life Ins. Co. v. Harris Trust and Sav. Bank, 114 S. Ct. 517 (1993), an insurance
company's general account may be deemed to include assets of the Benefit Plans
investing in the general account (e.g., through the purchase of an annuity
contract), and the insurance company might be treated as a "party-in-interest"
with respect to a Benefit Plan by virtue of the investment. Any purchaser that
is an insurance company using the assets of an insurance company general account
should also note that the Small Business Job Protection Act of 1996 added new
Section 401(c) of ERISA relating to the status of the assets of insurance
company general accounts under ERISA and Section 4975 of the Internal Revenue
Code. Pursuant to Section 401(c), the Department of Labor was required to issue
final regulations (the "GENERAL ACCOUNT REGULATIONS") not later than
December 31, 1997 with respect to insurance policies issued on or before
December 31, 1998 that are supported by an insurer's general account. The
General Account Regulations are to provide guidance on which assets held by the
insurer constitute "plan assets" for purposes of the fiduciary responsibility
provisions of ERISA and Section 4975 of the Internal Revenue Code.
Section 401(c) also provides that, except in the case of avoidance of the
General Account Regulation and actions brought by the Secretary of Labor
relating to breaches of fiduciary duties that also constitute breaches of state
or federal criminal law, until the date that is 18 months after the General
Account Regulations become final, no liability under the fiduciary
responsibility and prohibited transaction provisions of ERISA and Section 4975
may result on the basis of a claim that the assets of the general account of an
insurance company constitute the plan assets of any plan.
As of the date hereof, proposed regulations have been issued by the
Department of Labor and final regulations are expected to be issued in the near
future, although the timing and nature of any final regulation is uncertain. It
should be noted that if these regulations are adopted substantially in the form
in which proposed, the General Account Regulations may not exempt assets of
insurance company general accounts from treatment as "plan assets" after
December 31, 1998. The plan asset status of insurance company separate accounts
is unaffected by new Section 401(c) of ERISA, and separate account assets
continue to be treated as the plan assets of any plan invested in a separate
account.
DUE TO THE COMPLEXITIES OF THE "PROHIBITED TRANSACTION" RULES AND THE
PENALTIES IMPOSED UPON PERSONS INVOLVED IN PROHIBITED TRANSACTIONS, IT IS
IMPORTANT THAT THE FIDUCIARY OF ANY BENEFIT PLAN CONSIDERING THE PURCHASE OF
SECURITIES CONSULT WITH ITS TAX AND LEGAL ADVISORS REGARDING WHETHER THE ASSETS
OF THE RELATED TRUST WOULD BE CONSIDERED PLAN ASSETS, THE POSSIBILITY OF
EXEMPTIVE RELIEF FROM THE PROHIBITED TRANSACTION RULES AND OTHER ISSUES AND
THEIR POTENTIAL CONSEQUENCES.
ACCEPTANCE OF SUBSCRIPTIONS ON BEHALF OF A BENEFIT PLAN IS IN NO RESPECT A
REPRESENTATION BY A TRUST OR ANY OTHER PARTY THAT THIS INVESTMENT MEETS ALL
RELEVANT LEGAL REQUIREMENTS WITH RESPECT TO INVESTMENTS BY ANY PARTICULAR
BENEFIT PLAN OR THAT THE INVESTMENT IS APPROPRIATE FOR ANY PARTICULAR BENEFIT
PLAN. EACH BENEFIT PLAN FIDUCIARY SHOULD CONSULT WITH ITS ATTORNEYS AND
FINANCIAL ADVISORS AS TO THE PROPRIETY OF AN INVESTMENT IN LIGHT OF THE
CIRCUMSTANCES OF THE PARTICULAR BENEFIT PLAN AND THE RESTRICTIONS OF ERISA AND
SECTION 4975 OF THE INTERNAL REVENUE CODE.
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UNDERWRITING
Subject to the terms and conditions set forth in one or more underwriting
agreements with respect to the securities of a series, the seller will agree to
cause the related trust to sell to the underwriter(s) named therein and in the
related prospectus supplement, and each of the underwriters will severally agree
to purchase, the principal amount of each class of securities, as the case may
be, of the related series set forth in the related underwriting agreement and in
the related prospectus supplement.
In the underwriting agreement with respect to any given series of
securities, the applicable underwriter(s) will agree, subject to the terms and
conditions set forth therein, to purchase all the securities offered by the
related prospectus supplement if any of those securities are purchased.
Each prospectus supplement will either (1) set forth the price at which
each class of securities being offered thereby initially will be offered to the
public and any concessions that may be offered to dealers participating in the
offering of the securities or (2) specify that the related securities are to be
resold by the underwriter(s) in negotiated transactions at varying prices to be
determined at the time of sale. After the initial public offering of any
securities, the public offering prices and concessions may be changed.
Each underwriting agreement will provide that AutoNation Financial Services
and the seller will indemnify the related underwriters against specified civil
liabilities, including liabilities under the Securities Act of 1933, as amended,
or contribute to payments the several underwriters may be required to make in
respect thereof. The place and time of delivery for any series of securities in
respect of which this prospectus is delivered will be set forth in the
accompanying prospectus supplement.
Pursuant to each underwriting agreement with respect to a given series of
securities, the closing of the sale of any class of securities subject to the
underwriting agreement will be conditioned on the closing of the sale of all
other classes of securities of that series.
LEGAL MATTERS
Relevant legal matters relating to the issuance of the securities of any
series will be passed upon for the related trust and the seller by Weil, Gotshal
& Manges LLP, New York, New York. Relevant legal matters relating to the
issuance of the securities will be passed upon for the underwriters by Skadden,
Arps, Slate, Meagher & Flom LLP, New York, New York. In addition, relevant
matters of Florida law will be passed upon for the related trust and the seller
by Tripp Scott, P.A., Fort Lauderdale, Florida.
REPORTS TO SECURITYHOLDERS
Unless and until securities in definitive registered form are issued,
monthly and annual reports containing information concerning the trust and
prepared by the servicer will be sent on behalf of the trust to Cede & Co., as
nominee of DTC and the registered holder of the related global securities,
pursuant to the sale and servicing agreement. These reports will not constitute
financial statements prepared in accordance with generally accepted accounting
principles. The servicer does not intend to send any financial reports of
AutoNation Financial Services to securityholders. The servicer will file with
the SEC any periodic reports with respect to the trust which are required under
the Exchange Act and the rules and regulations of the SEC thereunder.
WHERE YOU CAN FIND MORE INFORMATION
We filed a registration statement with the SEC relating to the securities.
This prospectus is part of the registration statement, but the registration
statement includes additional information.
The servicer will file with the SEC all required annual, monthly and
special SEC reports and other information about the trust.
You may read and copy any reports, statements or other information we file
at the SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C.
20549. You may also request copies of these documents, upon payment of a
duplicating fee, by writing to the SEC. Please call the SEC at (800) SEC-0330
for further
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information on the operation of the public reference rooms. Our filings with the
SEC are also available to the public on the SEC's Internet site
(http://www.sec.gov).
The SEC allows us to "incorporate by reference" information we file with
it, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this prospectus. Information that we file later with the SEC will
automatically update the information in this prospectus. In all cases, you
should rely on the most recently printed information rather than contradictory
information included in this prospectus or the related prospectus supplement.
As a recipient of this prospectus, you may request a copy of any document
we incorporate by reference, except exhibits to the documents (unless the
exhibits are specifically incorporated by reference), at no cost, by writing or
calling us at: (954) 769-4555.
49
<PAGE>
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
TERM PAGE
-------------------------------------------------- --------
<S> <C>
Benefit Plan...................................... 46
Certificate Principal Balance..................... 15
Closing Date...................................... 10
Collection Account................................ 21
Collection Period................................. 19
Cut-Off Date...................................... 9
Defaulted Contract................................ 19
Distribution Date................................. 10
Due Date.......................................... 8
Eligible Investments.............................. 21
Final Regulations................................. 41
Financial Institution............................. 41
FTC Rule.......................................... 35
Full Prepayment................................... 10
General Account Regulations....................... 47
Insolvency Laws................................... 11
Liquidation Expenses.............................. 22
Net Insurance Proceeds............................ 22
Net Liquidation Proceeds.......................... 22
Non-U.S. Certificateholders....................... 46
Non-U.S. Holder................................... 37
Note Principal Balance............................ 15
OID............................................... 38
OID Regulations................................... 38
Original Pool Balance............................. 11
Plan Assets Regulation............................ 47
Pool Balance...................................... 11
Pool Factor....................................... 11
Prefunded Amount.................................. 10
Prefunding Account................................ 10
Prefunding Arrangement............................ 9
Prepayable Obligation............................. 38
Prepayment Assumption............................. 38
Receivables Pool.................................. 9
Record Date....................................... 18
Repurchase Amount................................. 21
Servicing Fee..................................... 24
Short-Term Note................................... 40
Simple Interest Method............................ 9
Strip Certificates................................ 15
Strip Notes....................................... 15
Subsequent Contracts.............................. 9
Trust Accounts.................................... 22
Trust Property.................................... 4
U.S. Holder....................................... 37
</TABLE>
50
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PRINCIPAL OFFICE OF
AUTONATION RECEIVABLES CORPORATION
200 South Andrews Avenue
Fort Lauderdale, Florida 33301
INDENTURE TRUSTEE
OWNER TRUSTEE
LEGAL ADVISOR TO THE SELLER
AS TO UNITED STATES LAW
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
LEGAL ADVISOR TO THE UNDERWRITERS
AS TO UNITED STATES LAW
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
<PAGE>
PROSPECTUS SUPPLEMENT
ANRC AUTO OWNER TRUST
ISSUER
$ %
CLASS A-1 ASSET-BACKED NOTES
$ %
CLASS A-2 ASSET-BACKED NOTES
$ %
CLASS A-3 ASSET-BACKED NOTES
$ %
CLASS A-4 ASSET-BACKED NOTES
AUTONATION RECEIVABLES CORPORATION
SELLER
AUTONATION FINANCIAL SERVICES CORP.
SERVICER
[ ]
UNDERWRITER
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE
IN THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE
TO PROVIDE YOU WITH DIFFERENT INFORMATION.
WE ARE NOT OFFERING THESE NOTES IN ANY STATE WHERE THE OFFER IS NOT PERMITTED.
WE DO NOT CLAIM THE ACCURACY OF THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS AS OF ANY DATE OTHER THAN THE DATES STATED ON THEIR
RESPECTIVE COVERS.
ALL DEALERS WILL DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS WHEN ACTING AS
UNDERWRIT ERS OF THESE NOTES AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS. IN ADDITION, ALL DEALERS SELLING THESE NOTES WILL DELIVER A
PROSPECTUS SUPPLEMENT AND PROSPECTUS UNTIL .
------------------
<PAGE>
PART II
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.
<TABLE>
<S> <C>
Registration Fee.................................................. $278
Printing and Engraving............................................ *
Trustees' Fees.................................................... *
Legal Fees and Expenses........................................... *
Blue Sky Fees and Expenses........................................ *
Accountants' Fees and Expenses.................................... *
Rating Agency Fees................................................ *
Miscellaneous Fees................................................ *
----
Total........................................................ $ *
----
----
</TABLE>
- ------------------
* to be provided by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Set forth below are certain provisions of law and a brief summary of the
relevant provisions of the Certificate of Incorporation and By-Laws of
AutoNation Receivables Corporation (the "Company"). The general effect of such
provisions is to provide indemnification to officers and directors of such
corporation for actions taken in good faith on behalf of the corporation.
Section 145 of the General Corporation Law of Delaware provides that a
corporation may indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the corporation) by reason of the fact that the
person is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by the person in
connection with such action, suit or proceeding if the person acted in good
faith and in a manner the person reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe the person's conduct was
unlawful; provided that the termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent will not create a presumption that the person did not act in good
faith and in a manner which the person reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that the person's
conduct was unlawful.
In addition, a Delaware corporation may indemnify officers and directors in
an action by or in the right of the corporation under the same conditions,
except that no indemnification is permitted without judicial approval if the
officer or director is adjudged to be liable to the corporation. Where an
officer or director is successful on the merits or otherwise in the defense of
any action referred to above, the corporation must indemnify such officer or
director against the expenses that such officer or director actually and
reasonably incurred.
The Certificate of Incorporation of the Company provides that a director of
the Company will not be liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability
(i) for any breach of the director's duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of the law, (iii) under Section
174 of the General Corporation Law of the State of Delaware or (iv) for any
transaction from which the director derived an improper personal benefit.
II-1
<PAGE>
The By-laws of the Company provide that each person who was or is made a
party or is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative ("proceeding"), by reason of the fact that he or she is or was a
director, officer, agent or other employee (to the extent authorized by action
of the Company's Board of Directors) of the Company (which term includes any
predecessor corporation of the Company) or is or was serving at the request of
the Company as a director, officer, employee or agent of another corporation or
of a partnership, limited liability company, joint venture, trust or other
enterprise, including service with respect to employee benefit plans
("indemnitee"), whether the basis of such proceeding is alleged action in an
official capacity as a director, officer, employee or agent or in any other
capacity while serving as a director, officer, employee or agent, will be
indemnified and held harmless by the Company to the fullest extent authorized by
the General Corporation Law of the State of Delaware, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Company to provide broader indemnification
rights than said law permitted the Company to provide prior to such amendment),
against all expenses, liability and loss (including attorneys' fees, judgments,
fines, ERISA excise taxes or penalties and amounts paid in settlement)
reasonably incurred or suffered by such indemnitee in connection therewith and
such indemnification will continue as to an indemnitee who has ceased to be a
director, officer, employee or agent and will inure to the benefit of the
indemnitee's heirs, executors and administrators. Expenses incurred by agents in
defending in any action, suit or proceeding, whether civil, criminal,
administrative or investigative may be paid by the Company upon such terms and
conditions, if any, as the Board of Directors deems appropriate. In addition,
the By-laws of the Company allow it to maintain insurance, to protect itself and
any director, officer, employee or agent of the Company, against any expense,
liability or loss, whether or not the Company would have the power to indemnify
such person against such expense, liability or loss under the General
Corporation Law of Delaware.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS
<TABLE>
<S> <C>
1.1 -- Form of underwriting agreement.
4.2 -- Form of owner trust agreement of ANRC Auto Owner Trust 199 between the seller and the owner trustee.
4.3 -- Form of indenture between ANRC Auto Owner Trust 199 and the indenture trustee (including forms of notes).
5.1 -- Opinion of Weil Gotshal & Manges LLP re: Legality.
8.1 -- Opinion of Weil Gotshal & Manges LLP re: Tax Matters.
10.1 -- Form of sale and servicing agreement among the seller, the servicer and the indenture trustee.
10.2 -- Form of administration agreement among ANRC Auto Owner Trust 199 , the seller, the servicer and the
indenture trustee.
23.1 -- Consent of Weil Gotshal & Manges LLP (contained in Exhibit 5.1).
23.2 -- Consent of Weil Gotshal & Manges LLP (contained in Exhibit 8.1).
24.1 -- Power of attorney.*
25.1 -- Form T-1 of indenture trustee.**
</TABLE>
- ------------------
* previously filed.
** to be filed by amendment.
(B) FINANCIAL STATEMENTS
All financial statements, schedules and historical financial information
have been omitted as they are not applicable.
ITEM 17. UNDERTAKINGS
(a) Rule 415 Offerings. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
II-2
<PAGE>
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Securities and Exchange Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table
in the effective registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered that remain unsold at the
termination of the offering.
(b) Filings Incorporating Subsequent Exchange Act Documents by Reference.
The undersigned registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the trust's
annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act
of 1934 (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Request for Acceleration of Effective Date. Insofar as indemnification
for liabilities arising under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(d) Registration Statement Permitted by Rule 430A. The undersigned
registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, 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 of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
the requirements for filing on Form S-3 and has duly caused this amendment
No. 1 to the registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Fort Lauderdale, State of
Florida, on August 19, 1999.
AUTONATION RECEIVABLES CORPORATION,
as originator of the trusts
By: /s/ KATHLEEN W. HYLE
-----------------------------
Kathleen W. Hyle
President and Director
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED ON AUGUST 19,
1999 BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED.
<TABLE>
<CAPTION>
SIGNATURES TITLE
- ------------------------------------------ ------------------------------------------------------------------
<S> <C>
/s/ KATHLEEN W. HYLE President (Chief Executive Officer) and Director
- ------------------------------------------
Kathleen W. Hyle
/s/ PETER H. SORENSON* Director
- ------------------------------------------
Peter H. Sorenson
/s/ JAMES O. COLE* Secretary and Director
- ------------------------------------------
James O. Cole
/s/ LELAND F. WILSON* Treasurer (Chief Financial Officer and Principal Accounting
- ------------------------------------------ Officer)
Leland F. Wilson
*By: /s/ KATHLEEN W. HYLE
-----------------------------------
Kathleen W. Hyle
Attorney-in-fact
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
- ------- ----------- ----
<S> <C> <C>
1.1 -- Form of underwriting agreement.
4.2 -- Form of owner trust agreement of ANRC Auto Owner Trust between the seller and the owner trustee.
4.3 -- Form of indenture between ANRC Auto Owner Trust and the indenture trustee (including forms of notes).
5.1 -- Opinion of Weil Gotshal & Manges LLP re: Legality.
8.1 -- Opinion of Weil Gotshal & Manges LLP re: Tax Matters.
10.1 -- Form of sale and servicing agreement among the seller, the servicer and the indenture trustee.
10.2 -- Form of administration agreement among ANRC Auto Owner Trust, the seller, the servicer and the
indenture trustee.
23.1 -- Consent of Weil Gotshal & Manges LLP (contained in Exhibit 5.1).
23.2 -- Consent of Weil Gotshal & Manges LLP (contained in Exhibit 8.1).
24.1 -- Power of attorney.*
25.1 -- Form T-1 of indenture trustee.**
</TABLE>
- ------------------
* previously filed.
** to be filed by amendment.
<PAGE>
$_______________
ANRC AUTO OWNER TRUST
$__________ ____% ASSET BACKED NOTES, CLASS A-1
$__________ ____% ASSET BACKED NOTES, CLASS A-2
$__________ ____% ASSET BACKED NOTES, CLASS A-3
$__________ ____% ASSET BACKED NOTES, CLASS A-4
AUTONATION RECEIVABLES CORPORATION
UNDERWRITING AGREEMENT
_________________ , _______
________________________________ ,
as Representative of the Several Underwriters
________________________________
________________________________
Ladies and Gentlemen:
1. Introductory. AutoNation Receivables Corporation, a Delaware
corporation (the "Company"), proposes, subject to the terms and conditions
stated herein, to cause the ANRC Owner Trust ______________ (the "Trust") to
issue and sell $_____________ aggregate principal amount of ____% Asset Backed
Notes, Class A-1 (the "Class A-1 Notes"), $______________ aggregate principal
amount of ____% Asset Backed Notes, Class A-2 (the "Class A-2 Notes"),
$------------- aggregate principal amount of ____% Asset Backed Notes, Class A-3
(the "Class A- 3 Notes") and $______________ aggregate principal amount of ____%
Asset Backed Notes, Class A-4 (the "Class A-4 Notes" and, together with the
Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes, the "Notes"). The
Notes will be issued pursuant to an Indenture, to be dated as of ______________,
______ (the "Inden-
<PAGE>
ture"), between the Trust and _____________, a _____________ banking corporation
as indenture trustee (in such capacity, the "Indenture Trustee").
The assets of the Trust will include, among other things, a pool of
motor vehicle retail installment sales contracts (the "Contracts"), all of which
are secured by new and/or used automobiles and/or light-duty trucks, certain
monies due on Simple Interest Contracts or received thereunder on or after the
Cut-Off Date, such Contracts to be sold to the Trust by the Company and to be
serviced for the Trust by AutoNation Financial Services Corp. ("AutoNation
Financial Services" or, in its capacity as servicer, the "Servicer").
Capitalized terms used but not defined herein have the meanings ascribed thereto
in the Sale and Servicing Agreement, to be dated as of _______________________ ,
______________ (the "Sale and Servicing Agreement"), by and among the Trust, the
Company, AutoNation Financial Services, as Servicer and Custodian and the
Indenture Trustee or, if not defined therein, in the Indenture, the Owner Trust
Agreement or the Receivables Purchase Agreement, as the case may be. As used
herein, "Basic Documents" shall have the meaning specified in the Sale and
Servicing Agreement. The Company hereby agrees with the several Underwriters
named in Schedule A hereto (collectively, the "Underwriters") as follows:
2. Representations and Warranties of the Company and AutoNation
Financial Services Corp.. The Company and AutoNation Financial Services, each
with respect to itself only, represent and warrant to, and agree with, the
several Underwriters that:
(a) A registration statement on Form S-3 (No. 333-_______) relating
to the Notes, including a form of prospectus, has been filed with the
Securities and Exchange Commission (the "Commission") and either (i) has
been declared effective under the Securities Act of 1933, as amended (the
"Securities Act"), and is not proposed to be amended or (ii) is proposed
to be amended by amendment or post-effective amendment. If the Company
does not propose to amend the registration statement, and if any
post-effective amendment to the registration statement has been filed with
the Commission prior to the execution and delivery of this Agreement, the
most recent post-effective amendment has been declared effective by the
Commission or has become effective upon filing pursuant to Rule 462(c)
under the Act ("Rule 462(c)"). For purposes of this Agreement, "Effective
Time" means (i) if the Company has advised ______________________________,
as representative of the several Underwriters (in such capacity, the
"Representative"), that it does not propose to amend the registration
statement, the date and time as of which the regis-
2
<PAGE>
tration statement, or the most recent post-effective amendment thereto (if
any) filed prior to the execution and delivery of this Agreement, was
declared effective by the Commission or has become effective upon filing
pursuant to Rule 462(c), or (ii) if the Company has advised the
Representative that it proposes to file an amendment or post-effective
amendment to the registration statement, the date and time as of which the
registration statement, as amended by such amendment or post-effective
amendment, as the case may be, is declared effective by the Commission.
"Effective Date" means the date of the Effective Time. The registration
statement, as amended at the Effective Time, including all information (if
any), deemed to be a part of the registration statement as of the
Effective Time pursuant to Rule 430A(b) ("Rule 430A(b)") under the Act, is
hereinafter referred to as the "Registration Statement". The form of
prospectus relating to the Notes, as first filed with the Commission
pursuant to and in accordance with Rule 424(b) under the Act ("Rule
424(b)") or, if no such filing is required, as included in the
Registration Statement, is hereinafter referred to as the "Prospectus". No
document has been or will be prepared or distributed in reliance on Rule
434 under the Act.
(b) If the Effective Time is prior to the execution and delivery of
this Agreement: (i) on the Effective Date, the Registration Statement
conformed in all respects to the requirements of the Act and the rules and
regulations of the Commission (collectively, the "Rules and Regulations")
and did not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading, and (ii) on the date of this
Agreement, the Registration Statement conforms, and at the time of filing
of the Prospectus pursuant to Rule 424(b) the Registration Statement and
the Prospectus will conform, in all respects to the requirements of the
Act and the Rules and Regulations, and neither of such documents includes,
or will include, any untrue statement of a material fact or omits or will
omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading. If the Effective Time is
subsequent to the execution and delivery of this Agreement: (i) on the
Effective Date, the Registration Statement and the Prospectus will conform
in all respects to the requirements of the Act and the Rules and
Regulations, (ii) neither of such documents will include any untrue
statement of a material fact or will omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading and (iii) no additional registration statement related to
the Notes pursuant to
3
<PAGE>
Rule 462(b) has been or will be filed. The two preceding sentences do not
apply to statements in, or omissions from, the Registration Statement or
the Prospectus based upon written information furnished to the Company by
any Underwriter through the Representative specifically for use therein,
it being understood and agreed that the only such information is that
described as such in Section 7(b), [the information regarding the Insurer
set forth under the heading "The Insurer" in or incorporated by reference
in the Prospectus and the information set forth under the heading "The
Insurance Policy" in the Prospectus].
(c) Each of the Company and AutoNation Financial Services has been
duly incorporated and is an existing corporation in good standing under
the laws of the State of Delaware, with power and authority (corporate and
other) to own its properties and conduct its business as described in the
Prospectus; and each of the Company and AutoNation Financial Services is
duly qualified to do business as a foreign corporation in good standing in
the State of Florida and in all other jurisdictions in which its ownership
or lease of property or the conduct of its business requires such
qualification and in which the failure to so qualify, taken in the
aggregate, would have a material adverse effect on it.
(d) No consent, approval, authorization or order of, or filing with,
any governmental agency or body or any court is required to be obtained or
made by the Company, AutoNation Financial Services or the Trust for the
consummation of the transactions contemplated by this Agreement and the
Basic Documents in connection with the issuance of the Notes and the
Residual Interest Certificate and the sale by the Company of the Notes,
except such as have been obtained or will be obtained by the Closing Date
and made under the Securities Act, such as may be required under state
securities laws and the filing of any financing statements required to
perfect the Company's, the Trust's and the Indenture Trustee's interest in
the Contracts, which financing statements will be filed in the appropriate
offices prior to the Closing Date (as such term is defined in Section 3
herein).
(e) Neither the Company nor AutoNation Financial Services is in
violation of its Certificate of Incorporation or By-laws or is in default
in the performance or observance of any obligation, agreement, covenant or
condition contained in any agreement or instrument to which it is a party
or by which it or its properties are bound which could have a material
adverse
4
<PAGE>
effect on the ability of either the Company or AutoNation Financial
Services to perform its obligations contemplated herein or in the other
Basic Documents. The execution, delivery and performance of this
Agreement and the other Basic Documents by the Company and AutoNation
Financial Services, and the issuance of the Notes and the Residual
Interest Certificate and the sale by the Company of the Notes and the
compliance by the Company and AutoNation Financial Services with the terms
and provisions hereof and thereof will not, subject to obtaining any
consents or approvals as may be required under the securities or "blue
sky" laws of various jurisdictions, result in a breach or violation of any
of the terms and provisions of, or constitute a default under, any
statute, rule, regulation or order of any governmental agency or body or
any court, domestic or foreign, having jurisdiction over the Company or
AutoNation Financial Services or any of their respective properties, or
any agreement or instrument to which the Company or AutoNation Financial
Services is a party or by which the Company or AutoNation Financial
Services is bound or to which any of the properties of the Company or
AutoNation Financial Services is subject, or the Certificate of
Incorporation or By-laws of the Company and AutoNation Financial
Services, except for conflicts, violations, breaches, acceleration and
defaults which individually or in the aggregate, would not be materially
adverse to the Company or AutoNation Financial Services or materially
adverse to the transaction contemplated by this Agreement or the Basic
Documents, and the Company has full power and authority to authorize the
issuance of the Notes and the Residual Interest Certificate and to sell
the Notes as contemplated by this Agreement, the Indenture and the Owner
Trust Agreement, and each of the Company and AutoNation Financial Services
has full power and authority to enter into this Agreement and the other
Basic Documents and to consummate the transactions contemplated hereby and
thereby.
(f) On the Closing Date, the Company will have directed the Owner
Trustee to authenticate and execute the Residual Interest Certificate and,
when delivered pursuant to the Owner Trust Agreement, the Residual
Interest Certificate will have been duly issued and delivered and will
constitute a valid and legally binding obligation of the Trust, entitled
to the benefits provided in the Owner Trust Agreement and enforceable in
accordance with its terms subject to enforcement of remedies to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and laws affecting creditors' rights and remedies generally, and the
general principals of equity, including principals of commercial
reasonableness and good faith
5
<PAGE>
and fair dealing, regardless of whether the aforementioned is sought in a
proceeding in law or in equity.
(g) Except as disclosed in the Prospectus, there are no pending
actions, suits or proceedings against or affecting the Company or
AutoNation Financial Services or any of their respective properties that,
if determined adversely to the Company or AutoNation Financial Services,
would be reasonably likely to individually or in the aggregate have a
material adverse effect on the condition (financial or other), business or
results of operations of the Company or AutoNation Financial Services,
respectively, or would materially and adversely affect the ability of the
Company or AutoNation Financial Services to perform its obligations under
this Agreement or the other Basic Documents to which it is a party, or
which are otherwise material in the context of the issuance and sale of
the Notes or the issuance of the Residual Interest Certificate; and no
such actions, suits or proceedings are to the Company's or AutoNation
Financial Services' knowledge, contemplated.
(h) As of the Closing Date, the representations and warranties of
the Company and AutoNation Financial Services contained herein and in the
other Basic Documents will be true and correct.
(i) This Agreement and each other Basic Document to which it is a
party has been duly authorized, executed and delivered by each of the
Company and AutoNation Financial Services.
(j) The Company has authorized the conveyance of the Contracts to
the Trust, and, as of the Closing Date, the Company has directed the Trust
to execute and issue the Notes and the Residual Interest Certificate and
to sell the Notes.
(k) The Company's assignment and delivery of the Contracts to the
Trust as of the Closing Date will vest in the Trust all of the Company's
right, title and interest therein, subject to no prior lien, mortgage,
security interest, pledge, adverse claim, charge or other encumbrance.
(l) The Trust's assignment of the Contracts to the Indenture Trustee
pursuant to the Indenture will vest in the Indenture Trustee, for the
benefit of the Noteholders, a first priority perfected security interest
therein,
6
<PAGE>
subject to no prior lien, mortgage, security interest, pledge, adverse
claim, charge or other encumbrance.
(m) The computer disk of the Contracts created as of _____________ ,
_______, and made available to the Representative by the Servicer was
complete and accurate as of the date thereof and includes an identifying
description of the Contracts that are listed on Exhibit A to the Sale and
Servicing Agreement.
(n) Any taxes, fees and other governmental charges in connection
with the execution, delivery and performance of this Agreement, the other
Basic Documents and the Notes and any other agreements contemplated herein
or therein shall have been paid or will be paid by the Company at or prior
to the Closing Date to the extent then due.
(o) The consummation of the transactions contemplated by this
Agreement and the other Basic Documents, and the fulfillment of the terms
hereof and thereof, will not conflict with or result in a breach of any of
the terms or provisions of, or constitute a default under, or result in
the creation of any lien, charge or encumbrance upon any of the property
or assets of the Company or AutoNation Financial Services pursuant to the
terms of any indenture, mortgage, deed of trust, loan agreement,
guarantee, lease financing agreement or similar agreement or instrument
under which the Company or AutoNation Financial Services is a debtor or
guarantor, except for conflicts, violations, breaches, acceleration and
defaults which individually or in the aggregate, would not be materially
adverse to the Company or AutoNation Financial Services or materially
adverse to the transaction contemplated by this Agreement or the Basic
Documents.
(p) The Company is not and, after giving effect to the issuance of
the Residual Interest Certificate and the offering and sale of the Notes
and the application of the proceeds thereof as described in the
Prospectus, will not be required to be registered as an "investment
company" as defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act").
3. Purchase, Sale and Delivery of Notes. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to the
Underwriters, and the
7
<PAGE>
Underwriters agree, severally and not jointly, to purchase from the Company, at
a purchase price of, in the case of (i) the Class A-1 Notes, __.__% of the
principal amount thereof; (ii) the Class A-2 Notes, __.__% of the principal
amount thereof; (iii) the Class A-3 Notes, __.___% of the principal amount
thereof; and (iv) the Class A-4 Notes, __.__% of the principal amount thereof,
the respective principal amounts of each Class of the Notes set forth opposite
the names of the Underwriters in Schedule A hereto.
The Company will deliver against payment of the purchase price, the Notes
of each Class in the form of one or more permanent global securities in
definitive form (the "Global Notes") deposited with the Indenture Trustee as
custodian for The Depository Trust Company ("DTC") and registered in the name
of Cede & Co., as nominee for DTC. Interests in any permanent Global Notes will
be held only in book-entry form through DTC, except in the limited circumstances
described in the Prospectus. Payment for the Notes shall be made by the
Underwriters in Federal (same day) funds by official check or checks or wire
transfer to an account in New York previously designated to the Representative
by the Company at a bank acceptable to the Representative at the offices of
Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York, at 10:00 A.M..,
New York time, on ___________ , ________ , or at such other time not later than
seven full business days thereafter as the Representative and the Company
determine, such time being herein referred to as the "Closing Date", against
delivery to the Indenture Trustee as custodian for DTC of the Global Notes
representing all of the Notes. The Global Notes will be made available for
checking at the above office of Skadden, Arps, Slate, Meagher & Flom LLP at
least 24 hours prior to the Closing Date.
[The Company will deliver the Residual Interest Certificate to the above
office of Skadden, Arps, Slate, Meagher & Flom LLP on the Closing Date. The
Residual Interest Certificate so to be delivered will be in definitive form, in
authorized denominations and registered in the name of the [Company] and will
be made available for checking at the above office of Skadden, Arps, Slate,
Meagher & Flom LLP at least 24 hours prior to the Closing Date.]
Pursuant to Rule 15c6-1(d) under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the parties hereto have agreed that the Closing
Date will be not later than ____________________ , ___________ , unless
otherwise agreed to as described above.
8
<PAGE>
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Notes for sale to the public as set forth
in the Prospectus.
5. Certain Agreements of the Company. The Company agrees with the
several Underwriters:
(a) If the Effective Time is prior to the execution and delivery of
this Agreement, the Company will file the Prospectus with the Commission
pursuant to and in accordance with subparagraph (1) (or, if applicable and
if consented to by the Representative, subparagraph (4)) of Rule 424(b)
not later than the second business day following the execution and
delivery of this Agreement. The Company will advise the Representative
promptly of any such filing pursuant to Rule 424(b).
(b) The Company will advise the Representative promptly of any
proposal to amend or supplement the registration statement as filed or the
related prospectus, or the Registration Statement or the Prospectus, and
will not effect such amendment or supplementation without the
Representative's reasonable consent; and the Company will also advise the
Representative promptly of the effectiveness of the Registration Statement
(if its Effective Time is subsequent to the execution and delivery of this
Agreement) and of any amendment or supplementation of the Registration
Statement or the Prospectus and of the institution by the Commission of
any stop order proceedings in respect of the Registration Statement and
will use its best efforts to prevent the issuance of any such stop order
and to obtain as soon as possible its lifting, if issued.
(c) If, at any time when a prospectus relating to the Notes is
required to be delivered under the Securities Act in connection with sales
by any Underwriter or dealer, any event occurs as a result of which the
Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is necessary at any
time to amend the Prospectus to comply with the Securities Act, the
Company will promptly notify the Representative of such event and will
promptly prepare and file with the Commission (subject to the
Representative's prior review pursuant to Section 5(b)), at its own
expense, an amendment or supplement which will correct such statement or
omission, or an amendment which will effect such compliance.
9
<PAGE>
Neither the Representative's consent to, nor the Underwriters delivery of,
any such amendment or supplement shall constitute a waiver of any of the
conditions set forth in Section 6 hereof.
(d) As soon as practicable, but not later than the Availability Date
(as defined below), the Company will cause the Trust to make generally
available to the Noteholders an earnings statement of the Trust covering a
period of at least 12 months beginning after the Effective Date which will
satisfy the provisions of Section 11(a) of the Securities Act. For the
purpose of the preceding sentence, "Availability Date" means the 120 day
after the end of the Trust's fourth fiscal quarter following the fiscal
quarter that includes such Effective Date.
(e) The Company will furnish to the Representative copies of the
Registration Statement (including all exhibits), each related preliminary
prospectus, and, so long as delivery of a prospectus relating to the Notes
is required to be delivered under the Securities Act in connection with
sales by any Underwriter or dealer, the Prospectus and all amendments and
supplements to such documents, in each case as soon as available and in
such quantities as the Representative reasonably requests. The Prospectus
shall be so furnished on or prior to 3:00 P.M., New York time, on the
business day following the later of the execution and delivery of this
Agreement or the Effective Time. All other such documents shall be so
furnished as soon as available. The Company will pay the expenses of
printing and distributing to the Underwriters all such documents.
(f) The Company will arrange for the qualification of the Notes for
offering and sale and the determination of their eligibility for
investment under the laws of such jurisdictions as the Representative may
reasonably designate and will continue such qualifications in effect so
long as required for the distribution of the Notes; provided that in
connection therewith the Company shall not be required to qualify as a
foreign corporation to do business, to file a general consent to service
of process in any such jurisdiction or subject itself to taxation in any
jurisdiction to which it is not subject.
(g) For a period from the date of this Agreement until the
retirement of the Notes (i) the Company will furnish to the Representative
and, upon request, to each of the other Underwriters, copies of each
certificate and the annual statements of compliance delivered to the
Indenture Trustee
10
<PAGE>
pursuant to Section 3.09 of the Indenture and Sections 3.09 and 3.10 of
the Sale and Servicing Agreement and the annual independent certified
public accountant's servicing reports furnished to the Indenture Trustee
pursuant to Section 3.11 of the Sale and Servicing Agreement, by
first-class mail as soon as practicable after such statements and reports
are furnished to the Indenture Trustee, and (ii) such other forms of
periodic certificates or reports as may be delivered to the Indenture
Trustee, the Owner Trustee or the Noteholders under the Indenture, the
Sale and Servicing Agreement or the other Basic Documents.
(h) So long as any Note is outstanding, the Company will furnish to
the Representative by first-class mail as soon as practicable, (i) all
documents distributed, or caused to be distributed, by the Company to the
Noteholders, (ii) all documents filed or caused to be filed by the Company
with the Commission pursuant to the Exchange Act or any order of the
Commission thereunder and (iii) such other information in the possession
of the Company concerning the Trust as the Representative from time to
time may reasonably request.
(i) Subject to the provisions of Section 9 hereof, the Company will
pay all expenses incident to the performance of its obligations under this
Agreement and will reimburse the Underwriters (if and to the extent
incurred by them) for any filing fees and other expenses (including fees
and disbursements of counsel) incurred by them in connection with
qualification of the Notes for sale in jurisdictions that the
Representative may designate pursuant to Section 5(f) hereof and
determination of their eligibility for investment under the laws of such
jurisdictions as the Representative reasonably designates and the
printing of memoranda relating thereto, for any fees charged by investment
rating agencies for the rating of the Notes, for any travel expenses of
the officers and employees of the Underwriters and any other expenses of
the Underwriters in connection with attending or hosting meetings with
prospective purchasers of the Notes and for expenses incurred in
distributing the preliminary prospectuses and the Prospectus (including
any amendments and supplements thereto).
(j) To the extent, if any, that the rating provided with respect to
the Notes by Moody's Investors Service, Inc. ("Moody's") and Standard &
Poor's, a division of The McGraw-Hill Companies, Inc.("Standard & Poor's",
together with Moody's, the "Rating Agencies"), is conditional upon the
11
<PAGE>
furnishing of documents or the taking of any other action by the Company,
the Company shall furnish such documents and take any such other action.
(k) On or before the Closing Date, the Company and AutoNation
Financial Services shall annotate and indicate unambiguously in the
computer records of the Company and AutoNation Financial Services relating
to the Contracts to show the Trust's absolute ownership of the Contracts,
and from and after the Closing Date neither the Company nor AutoNation
Financial Services shall take any action inconsistent with the Trust's
ownership of such Contracts, other than as permitted by the Sale and
Servicing Agreement.
6. Conditions of the Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the Notes on the Closing Date
will be subject to the accuracy of the representations and warranties on the
part of the Company and AutoNation Financial Services herein, to the accuracy of
the statements of Company and AutoNation Financial Services officers made
pursuant to the provisions hereof, to the performance by the Company and
AutoNation Financial Services of their respective obligations hereunder and to
the following additional conditions precedent:
(a) The Representative shall have received a letter, dated the date
of delivery thereof (which, if the Effective Time is prior to the
execution and delivery of this Agreement, shall be on or prior to the date
of this Agreement or, if the Effective Time is subsequent to the execution
and delivery of this Agreement, shall be prior to the filing of the
amendment or post-effective amendment to the registration statement to be
filed shortly prior to such Effective Time), of_________________________ ,
in form and substance satisfactory to the Representative and counsel for
the Underwriters, confirming that they are independent public accountants
within the meaning of the Act and the applicable Rules and Regulations and
stating in effect that (i) they have performed certain specified
procedures as a result of which they determined that certain information
of an accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the general
accounting records of the Trust, AutoNation Financial Services and the
Company) set forth in the Registration Statement and the Prospectus (and
any supplements thereto), agrees with the accounting records of the Trust,
AutoNation Financial Services and the Company, excluding any questions of
legal interpretation, and (ii) they have performed certain specified
procedures with respect to the Contracts.
12
<PAGE>
For purposes of this subsection, (i) if the Effective Time is
subsequent to the execution and delivery of this Agreement, "Registration
Statement" shall mean the registration statement as proposed to be amended
by the amendment or post-effective amendment to be filed shortly prior to
the Effective Time, including all information (if any) deemed to be a part
of the initial registration statement as of such time pursuant to Rule
430A(b), and (ii) "Prospectus" shall mean the prospectus included in the
Registration Statement. All financial statements and schedules included in
material incorporated by reference into the Prospectus shall be deemed
included in the Registration Statement for purposes of this subsection.
(b) If the Effective Time is not prior to the execution and delivery
of this Agreement, the Effective Time shall have occurred not later than
10:00 P.M., New York time, on the date of this Agreement or such later
date as shall have been consented to by the Representative. If the
Effective Time is prior to the execution and delivery of this Agreement,
the Prospectus shall have been filed with the Commission in accordance
with the Rules and Regulations and Section 5(a). Prior to the Closing
Date, no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall
have been instituted or, to the knowledge of the Company or the
Representative after due inquiry, shall be contemplated by the Commission.
(c) Subsequent to the execution and delivery of this Agreement,
there shall not have occurred (i) any change, or any development or event
involving a prospective change, in or affecting particularly the business,
properties or financial condition of the Company or AutoNation Financial
Services which, in the judgment of a majority in interest of the
Underwriters (including the Representative), materially impairs the
investment quality of each Class of the Notes or makes it impractical or
inadvisable to proceed with completion of the public offering or the sale
of and payment for each Class of the Notes; (ii) any suspension or
limitation of trading in securities generally on the New York Stock
Exchange, or any setting of minimum prices for trading on such exchange;
(iii) any banking moratorium declared by Federal, Delaware or New York
authorities; or (iv) any outbreak or escalation of major hostilities in
which the United States is involved, any declaration of war by Congress or
any substantial national or international calamity or emergency if, in the
judgment of a majority in interest of the Underwriters
13
<PAGE>
(including the Representative), the effect of any such outbreak,
escalation, declaration, calamity or emergency makes it impractical or
inadvisable to proceed with completion of the public offering or the sale
of and payment for each Class of the Notes.
(d) The Representative shall have received such opinions as
reasonably requested of Weil, Gotshal & Manges LLP, special counsel to the
Company and AutoNation Financial Services, dated the Closing Date and
satisfactory in form and substance to the Representative and counsel for
the Underwriters.
(e) The Representative shall have received such opinions as
reasonably requested of Weil, Gotshal & Manges LLP, special tax counsel
for the Company, dated the Closing Date and satisfactory in form and
substance to the Representative and counsel for the Underwriters.
(f) The Representative shall have received such opinions as
reasonably requested of Skadden, Arps, Slate, Meagher & Flom LLP, counsel
for the Underwriters.
(g) The Representative shall have received a certificate, dated the
Closing Date, of the Chairman of the Board, the President, any Vice-
President or a principal financial or accounting officer of each of the
Company and AutoNation Financial Services in which such officers, to the
best of their knowledge after reasonable investigation, shall state that:
the representations and warranties of the Company and AutoNation
Financial Services in this Agreement are true and correct in all material
respects; the Company or AutoNation Financial Services, as applicable, has
complied with all agreements and satisfied all conditions on its part to
be performed or satisfied hereunder at or prior to the Closing Date in all
material respects; the representations and warranties of the Company or
AutoNation Financial Services, as applicable, in the Basic Documents are
true and correct as of the dates specified in such agreements in all
material respects; the Company or AutoNation Financial Services, as
applicable, has complied with all agreements and satisfied all conditions
on its part to be performed or satisfied under such agreements at or prior
to the Closing Date; no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose
have been instituted or are contemplated by the Commission; and,
subsequent to the date of the Prospectus, there has been no
14
<PAGE>
material adverse change, nor any development or event involving a
prospective material adverse change, in the condition (financial or
otherwise), business, properties or results of operations of the Company
or AutoNation Financial Services or their respective businesses except as
set forth in or contemplated by the Prospectus or as described in such
certificate.
(h) The Representative shall have received an opinion of ___________
______________ , counsel to the Indenture Trustee, dated the Closing Date
and satisfactory in form and substance to the Representative and counsel
for the Underwriters.
(i) The Representative shall have received an opinion of ___________
______________ , counsel to the Owner Trustee, dated the Closing Date and
satisfactory in form and substance to the Representative and counsel for
the Underwriters.
(j) The Representative shall have received an opinion of ___________
______________ , special Delaware counsel to the Trust, dated the Closing
Date and satisfactory in form and substance to the Representative and
counsel for the Underwriters.
(k) The Representative shall have received an opinion of Weil,
Gotshal & Manges LLP, counsel to the Company re: Nonconsolidation,
dated the Closing Date and satisfactory in form and substance to the
Representative and counsel for the Underwriters.
(l) The Representative shall have received evidence satisfactory to
it and its counsel that, on or before the Closing Date, UCC-1 financing
statements have been or are being filed in the office of the Secretary of
State of the state of (i) Florida reflecting the transfer of the interest
of AutoNation Financial Services in the Contracts and the proceeds thereof
to the Company and the transfer of the interest of the Company in the
Contracts and the proceeds thereof to the Trust and (ii) Delaware
reflecting the grant of the security interest by the Trust in the
Contracts and the proceeds thereof to the Indenture Trustee.
(m) The Representative shall have received an opinion of Weil,
Gotshal & Manges LLP, special counsel to the Company re: Perfection and
15
<PAGE>
Priority, dated the Closing Date and satisfactory in form and substance to
the Representative and the counsel for the Underwriters.
(n) Each Class of the Notes shall have been rated in the highest
rating category by both Moody's or Standard & Poor's.
(o) The Representative shall have received a letter, dated the
Closing Date, of ________________________ which meets the requirements of
subsection (a) of this Section, except that the specified date referred to
in such subsection will be a date not more than five days prior to such
Closing Date for purposes of this subsection.
(p) On or prior to the Closing Date, the Residual Interest
Certificate shall have been issued to the Company.
(q) The Representative shall have received from Weil, Gotshal &
Manges LLP and each other counsel for the Company, a letter dated the
Closing Date to the effect that the Underwriters may rely upon each
opinion rendered by such counsel to either Standard & Poor's or Moody's in
connection with the rating of any Class of the Notes, as if each such
opinion were addressed to the Underwriters.
(r) The Representative shall have received an opinion of Tripp
Scott, P.A., special Florida counsel to the Company and AutoNation
Financial Services re: Security Interest, dated the Closing Date and
satisfactory in form and substance to the Representative and the counsel
for the Underwriters.
The Company will furnish the Representative with such conformed copies of
such opinions, certificates, letters and documents as the Representative
reasonably requests.
The Representative may, in its sole discretion, waive on behalf of the
Underwriters compliance with any conditions to the obligations of the
Underwriters hereunder.
16
<PAGE>
7. Indemnification and Contribution.
(a) The Company and AutoNation Financial Services will, jointly and
severally, indemnify and hold harmless each Underwriter against any
losses, claims, damages or liabilities, joint or several, to which such
Underwriter may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration
Statement, the Prospectus, or any amendment or supplement thereto, or any
related preliminary prospectus, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading and will reimburse each Underwriter for any legal or other
expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred; provided that neither the Company
nor AutoNation Financial Services will be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement in or omission
or alleged omission from any of such documents in reliance upon and in
conformity with written information furnished to the Company or
AutoNation Financial Services by any Underwriter through the
Representative specifically for use therein, it being understood and
agreed that the only such information furnished by any Underwriter
consists of the information described as such in subsection (b) below,
[the information regarding the Insurer set forth under the heading "The
Insurer" in or incorporated by reference in the Prospectus and the
information set forth under the heading "The Insurance Policy" in the
Prospectus]; and provided, further, that with respect to any untrue
statement or omission or alleged untrue statement or omission made in any
preliminary prospectus, the indemnity agreement contained in this
subsection (a) shall not inure to the benefit of any Under writer from
whom the person asserting any such losses, claims, damages or liabilities
purchased the Notes concerned, to the extent that the untrue statement or
omission or alleged untrue statement or omission was eliminated or
remedied in the Prospectus, which Prospectus was required to be delivered
by such Underwriter under the Securities Act to such person and was not so
delivered if the Company or AutoNation Financial Services had previously
furnished copies thereof to such Underwriter.
17
<PAGE>
(b) Each Underwriter will severally and not jointly indemnify and
hold harmless the Company and AutoNation Financial Services against any
losses, claims, damages or liabilities to which the Company or AutoNation
Financial Services may become subject, under the Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration
Statement, the Prospectus, or any amendment or supplement thereto, or any
related preliminary prospectus, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through the
Representative specifically for use therein, and will reimburse any legal
or other expenses reasonably incurred by the Company or AutoNation
Financial Services in connection with investigating or defending any such
loss, claim, damage, liability or action as such expenses are in curred,
it being understood and agreed that the only such information furnished
by any Underwriter consists of the following information in the Prospectus
furnished on behalf of each Underwriter: ______________________ .
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under subsection (a) or (b) above, notify the
indemnifying party of the commencement thereof; but the omission so to
notify the indemnifying party will not relieve it from any liability which
it may have to any indemnified party otherwise than under subsection (a)
or (b) above. In case any such action is brought against any indemnified
party and it notifies the indemnifying party of the commencement thereof,
the indemnifying party will be entitled to participate therein and, to the
extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party),
and after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof and after acceptance by the
indemnified party of such counsel, the indemnifying party will not be
18
<PAGE>
liable to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened
action in respect of which any indemnified party is or could have been a
party if indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability on any claims that are the subject
matter of such action.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute
to the amount paid or payable by such indemnified party as a result of the
losses, claims, damages or liabilities referred to in subsection (a) or
(b) above (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on
the other from the offering of the Notes or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company
on the one hand and the Underwriters on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion as
the total net proceeds from the offering (before deducting expenses)
received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters. The relative fault shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company or the Under writers and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The amount paid by an indemnified party as a result
of the losses, claims, damages or liabilities referred to in the first
sentence of this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any action or claim which is the subject
of this subsection (d). Notwithstanding the provisions of this subsection
(d), no Underwriter shall be required to contrib-
19
<PAGE>
ute any amount in excess of the amount by which the total price at which
the Notes underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages which such Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall
be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this
subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) The obligations of the Company or AutoNation Financial Services
under this Section shall be in addition to any liability which the Company
or AutoNation Financial Services may otherwise have and shall extend, upon
the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Securities Act; and the obligations
of the Underwriters under this Section shall be in addition to any
liability which the respective Underwriters may otherwise have and shall
extend, upon the same terms and conditions, to each director of the
Company or AutoNation Financial Services, to each officer of the Company
and AutoNation Financial Services who has signed the Registration
Statement and to each person, if any, who controls the Company or
AutoNation Financial Services within the meaning of the Securities Act.
8. Default of Underwriters. If any Underwriter or Underwriters default in
their obligations to purchase Notes hereunder on the Closing Date and the
aggregate principal amount of Notes that such defaulting Underwriter or
Underwriters agreed but failed to purchase does not exceed 10% of the total
principal amount of Notes that the Underwriters are obligated to purchase on
such Closing Date, the Representative may make arrangements satisfactory to the
Company for the purchase of such Notes by other persons, including any of the
Underwriters, but if no such arrangements are made by such Closing Date, the
nondefaulting Underwriters shall be obligated severally, in proportion to their
respective commitments hereunder, to purchase the Notes that such defaulting
Underwriters agreed but failed to purchase on such Closing Date. If any
Underwriter or Underwriters so default and the aggregate principal amount of
Notes with respect to which such default or defaults occur exceeds 10% of the
total principal amount of Notes that the Underwriters are obligated to purchase
on such Closing Date and arrangements satisfactory to the Representative and the
Company for the purchase of such Notes by other persons are
20
<PAGE>
not made within 36 hours after such default, this Agreement will terminate
without liability on the part of any non-defaulting Underwriter or the Company,
except as provided in Section 9. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter from liability for
its default.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Company or AutoNation Financial Services or their respective officers and of the
several Underwriters set forth in or made pursuant to this Agreement will remain
in full force and effect, regardless of any investigation, or statement as to
the results thereof, made by or on behalf of any Underwriter or the Company or
AutoNation Financial Services or any of their respective representatives,
officers or directors or any controlling person, and will survive delivery of
and payment for the Notes. If this Agreement is terminated pursuant to Section 8
or if for any reason the purchase of the Notes by the Underwriters is not
consummated, the Company shall remain responsible for the expenses to be paid or
reimbursed by it pursuant to Section 5 and the respective obligations of the
Company, AutoNation Financial Services and the Underwriters pursuant to Section
7 shall remain in effect. If the purchase of the Notes by the Underwriters is
not consummated for any reason other than solely because of the termination of
this Agreement pursuant to Section 8 or the occurrence of any event specified in
clause (ii), (iii) or (iv) of Section 6(c), the Company and AutoNation Financial
Services, jointly and severally, will reimburse the Underwriters for all out-of-
pocket expenses (including fees and disbursements of counsel) reasonably
incurred by them in connection with the offering of the Notes.
10. Notices. All communications hereunder will be in writing and, if sent
to the Underwriters, will be mailed, delivered or sent by facsimile and
confirmed to the Representative at_____________________ , Attention:____________
(facsimile: (____) _____________________) or, if sent to the Company, will be
mailed, delivered or sent by facsimile transmission and confirmed to it at 200
South Andrews Avenue, Fort Lauderdale, Florida 33301, Attention: ____________ ,
(facsimile: (954) _______________), and if to AutoNation Financial Services,
will be mailed, delivered or sent by facsimile transmission and confirmed to
it at 200 South Andrews Avenue,Fort Lauderdale, Florida 33301, Attention:
____________________ , (facsimile: (954) _________________); provided that any
notice to an Underwriter pursuant to Section 7 will be mailed, delivered or
telecopied and confirmed to such Underwriter.
21
<PAGE>
11. No Bankruptcy Petition. Each Underwriter agrees that, prior to the
date which is one year and one day after the payment in full of all securities
issued by the Company or by a trust for which the Company was the depositor
which securities were rated by any nationally recognized statistical rating
organization, it will not institute against, or join or intentionally cooperate
with any other person in instituting against, the Company any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
proceedings under any Federal or state bankruptcy or similar law.
12. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the officers and
directors and controlling persons referred to in Section 7, and no other person
will have any right or obligation hereunder.
13. Representation of Underwriters. The Representative will act for the
several Underwriters in connection with this financing, and any action under
this Agreement taken by the Representative will be binding upon all the
Underwriters.
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original but all such
counter parts shall together constitute one and the same Agreement.
15. Applicable Law; Submission to Jurisdiction.
(a) This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
(b) Each of the Company and AutoNation Financial Services hereby submits
to the nonexclusive jurisdiction of the Federal and state courts in the Borough
of Manhattan in The City of New York in any suit or proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby.
22
<PAGE>
If the foregoing is in accordance with the Representative's understanding
of our agreement, kindly sign and return to each of the Company and AutoNation
Financial Services one of the counterparts hereof, whereupon it will become a
binding agreement between the Company, AutoNation Financial Services and the
several Underwriters in accordance with its terms.
Very truly yours,
AUTONATION RECEIVABLES
CORPORATION
By: ____________________________
Name:
Title:
AUTONATION FINANCIAL
SERVICES CORP.
By: ____________________________
Name:
Title:
The foregoing Underwriting Agreement is hereby confirmed and accepted as of the
date first above written:
______________________________, acting on behalf of itself
and as the Representative of the several Underwriters
By:___________________________
Name:
Title:
A-1
<PAGE>
SCHEDULE A
Underwriter Amount of Amount of Amount of Amount of
----------- Class A-1 Class A-2 Class A-3 Class A-4
Notes Notes Notes Notes
--------- -------- -------- --------
$ $ $ $
$ $ $ $
$ $ $ $
Total: $ $ $ $
A-2
<PAGE>
- --------------------------------------------------------------------------------
AMENDED AND RESTATED
OWNER TRUST AGREEMENT
between
AUTONATION RECEIVABLES CORPORATION,
as Depositor
______________________________,
as Owner Trustee
Dated as of ______________, ____
ANRC AUTO OWNER TRUST _________
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS...................................................1
SECTION 1.01. Capitalized Terms..................1
SECTION 1.02. Other Definitional Provisions......4
SECTION 1.03. Usage of Terms.....................4
SECTION 1.04. Section References.................4
SECTION 1.05. Accounting Terms...................4
ARTICLE II
ORGANIZATION..................................................5
SECTION 2.01. Name...............................5
SECTION 2.02. Office.............................5
SECTION 2.03. Purposes and Powers................5
SECTION 2.04. Appointment of Owner Trustee.......6
SECTION 2.05. Initial Capital Contribution of
Trust Estate....................6
SECTION 2.06. Declaration of Trust...............6
SECTION 2.07. Title to Trust Property............7
SECTION 2.08. Situs of Trust.....................7
SECTION 2.09. Representations and Warranties of
the Depositor...................8
SECTION 2.10. [RESERVED].........................9
ARTICLE III
CERTIFICATE..................................................10
SECTION 3.01. Initial Ownership.................10
SECTION 3.02. The Residual Interest Certificate
and the Notes..................10
SECTION 3.03. Execution, Authentication and
Delivery of the Residual
` Interest Certificate
i
<PAGE>
and the Notes..................10
SECTION 3.04. Restrictions on Transfer..........11
SECTION 3.05. Mutilated, Destroyed, Lost or
Stolen Residual Interest
Certificate.......................11
SECTION 3.06. Maintenance of Office or Agency...12
ARTICLE IV
ACTIONS BY OWNER TRUSTEE.....................................13
SECTION 4.01. Prior Notice to Depositor with
Respect to Certain Matters.....13
SECTION 4.02. Action by the Depositor with
Respect to Certain Matters.....14
SECTION 4.03. Action by the Depositor with
Respect to Bankruptcy..........15
SECTION 4.04. Restrictions on Power.............15
ARTICLE V
APPLICATION OF TRUST FUNDS: CERTAIN DUTIES...................16
SECTION 5.01. [RESERVED]........................16
SECTION 5.02. Application of Trust Funds........16
SECTION 5.03. Method of Payment.................16
SECTION 5.04. No Segregation of Monies; No
Interest.......................16
SECTION 5.05. Accounting and Reports to the
Noteholders, Owners, the
Internal Revenue Service and
Others.........................17
SECTION 5.06. Signature on Returns; Tax Matters
Partner........................17
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE........................18
SECTION 6.01. General Authority.................18
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SECTION 6.02. General Duties....................18
SECTION 6.03. Action Upon Instruction...........19
SECTION 6.04. No Duties Except as Specified in
this Agreement or in
Instructions...................20
SECTION 6.05. No Action Except Under Specified
Documents or Instructions......20
SECTION 6.06. Restrictions......................20
ARTICLE VII
CONCERNING THE OWNER TRUSTEE.................................21
SECTION 7.01. Acceptance of Trusts and Duties...21
SECTION 7.02. Furnishing of Documents...........24
SECTION 7.03. Representations and Warranties....24
SECTION 7.04. Reliance; Advice of Counsel.......25
SECTION 7.05. Not Acting in Individual
Capacity.......................26
SECTION 7.06. Owner Trustee Not Liable for
Residual Interest Certificate,
Notes or Contracts.............26
SECTION 7.07. Owner Trustee May Own Notes.......26
ARTICLE VIII
COMPENSATION AND INDEMNIFICATION OF OWNER
TRUSTEE......................................................27
SECTION 8.01. Owner Trustee's Fees and
Expenses.......................27
SECTION 8.02. Indemnification...................27
SECTION 8.03. Payments to the Owner Trustee.....27
ARTICLE IX
TERMINATION OF TRUST AGREEMENT...............................28
SECTION 9.01. Termination of Trust Agreement....28
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ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER
TRUSTEE......................................................29
SECTION 10.01. Eligibility Requirements for
Owner Trustee..................29
SECTION 10.02. Resignation or Removal of Owner
Trustee........................29
SECTION 10.03. Successor Owner Trustee..........30
SECTION 10.04. Merger or Consolidation of Owner
Trustee........................31
SECTION 10.05. Appointment of Co-Trustee or
Separate Trustee..............31
ARTICLE XI
MISCELLANEOUS................................................34
SECTION 11.01. Supplements and Amendments.......34
SECTION 11.02. No Legal Title to Trust Estate in
Depositor......................35
SECTION 11.03. Limitations on Rights of Others..36
SECTION 11.04. Notices..........................36
SECTION 11.05. Severability of Provisions.......36
SECTION 11.06. Counterparts.....................36
SECTION 11.07. Successors and Assigns...........36
SECTION 11.08. No Petition......................37
SECTION 11.09. No Recourse......................37
SECTION 11.10. Headings.........................37
SECTION 11.11. Governing Law....................37
SECTION 11.12. Depositor Payment Obligation.....37
SECTION 11.13. Certain Matters Regarding the
Insurer........................38
SECTION 11.14. Fiduciary Duties.................38
SECTION 11.15. Third Party Beneficiary..........38
EXHIBIT A.........................................................A-1
EXHIBIT B.........................................................B-1
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This AMENDED AND RESTATED OWNER TRUST AGREEMENT, dated as of
________________, _____________ (as amended, supplemented or otherwise modified
and in effect from time to time, this "Agreement"), is between AUTONATION
RECEIVABLES CORPORATION, a Delaware corporation, as depositor (together with its
successors and assigns in such capacity, the "Depositor"), and ______________, a
________________, as owner trustee (together with its successors and assigns in
such capacity, the "Owner Trustee").
ARTICLE I
DEFINITIONS
SECTION 1.01. Capitalized Terms. Except as otherwise provided in
this Agreement, whenever used in this Agreement the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
"Administration Agreement" shall mean that certain Administration
Agreement, dated as of _______________________, ____________, by and among the
Trust, the Depositor, the Indenture Trustee and AutoNation Financial Services,
as administrator.
"Administrator" shall mean the Person acting as "Administrator"
under the Administration Agreement.
"Agreement" shall have the meaning specified in the
recitals hereto.
"Applicants" shall have the meaning assigned to such
term in Section 3.07.
"AutoNation Financial Services" shall mean AutoNation Financial
Services Corp. and its successors and assigns.
"Basic Documents" shall have the meaning set forth in
the Indenture.
"Benefit Plan" shall mean (i) an employee benefit plan (as such term
is defined in Section 3(3) of ERISA) that is subject to the provisions of Title
I of ERISA, (ii) a plan described in Section 4975(e)(1) of the Code or (iii) any
entity whose underlying assets include plan assets by reason of a plan's
investment in the entity.
<PAGE>
"Business Trust Statute" shall mean Chapter 38 of Title 12 of the
Delaware Code, 12 Del. C. Section 3801, et seq., as the same may be amended from
time to time.
"Certificate of Trust" shall mean the Certificate of Trust filed for
the Trust pursuant to Section 3810(a) of the Business Trust Statute,
substantially in the form of Exhibit A hereto.
"Closing Date" shall mean __________________________, ____________.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
Treasury Regulations promulgated thereunder.
"Depositor" shall mean AutoNation Receivables Corporation, in its
capacity as depositor hereunder, and its successors.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Expenses" shall have the meaning assigned to such term in Section
8.02.
"Indemnified Parties" shall have the meaning assigned to such term
in Section 8.02.
"Indenture" shall mean the indenture dated as of ___________, ____,
between the Trust, as Issuer, and ___________________, as Indenture Trustee.
"Insurer" shall mean ________________________, a
_____________________, and its permitted successors and assigns in such
capacity.
"Notes" shall mean the Class A-1 Notes, the Class A-2 Notes, the
Class A-3 Notes and the Class A-4 Notes, in each case issued pursuant to the
Indenture.
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"Owner Trustee" shall mean _________________________, a
________________________, not in its individual capacity but solely as owner
trustee under this Agreement, and any successor Owner Trustee hereunder.
"Owner Trustee Corporate Trust Office" shall mean the office of the
Owner Trustee at which its corporate trust business shall be principally
administered, which initially shall be _______________________, Attention:
___________________, or such other office at such other address as the Owner
Trustee may designate from time to time by notice to the Servicer, the Depositor
and the Insurer.
"Person" shall mean a legal person, including any individual,
corporation, estate, partnership, limited liability company or limited
liability partnership, joint venture, association, joint stock company, business
trust, trust (including any beneficiary thereof), unincorporated organization or
government or any agency or political subdivision thereof.
"Residual Interest Certificate" shall mean the certificate
evidencing the beneficial interest of the Depositor in the Trust, substantially
in the form attached hereto as Exhibit B.
"Responsible Officer" shall mean any officer of the Owner Trustee
within the Owner Trustee Corporate Trust Office, including any vice president,
assistant vice president, assistant treasurer, assistant secretary or other
officer or assistant officer of the Owner Trustee, customarily performing
functions similar to those performed by the people who at such time shall be
officers and has direct responsibility for the administration of this Agreement.
"Sale and Servicing Agreement" shall mean that certain Sale and
Servicing Agreement, dated as of _________________________, ___________, by and
among the Trust, as Issuer, the Depositor, as Seller, AutoNation Financial
Services, as Servicer and the Indenture Trustee, as the same may be amended,
supplemented or otherwise modified and in effect from time to time.
"Secretary of State" shall mean the Secretary of State of the State
of Delaware.
"Seller" shall mean AutoNation Receivables Corporation, a Delaware
corporation, in its capacity as seller under the Sale and Servicing Agreement,
and its permitted successors and assigns.
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"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 owner trust established by this
Agreement.
"Trust Estate" shall have the meaning set forth in the Sale and
Servicing Agreement.
"Trust Property" shall have the meaning set forth in
Section 2.01 of the Sale and Servicing Agreement.
SECTION 1.02. Other Definitional Provisions. Capitalized terms used
herein that are not otherwise defined herein shall have the meanings ascribed
thereto in, or incorporated by reference into, the Sale and Servicing Agreement
or, if not defined therein, in the Indenture.
SECTION 1.03. Usage of Terms. With respect to all terms in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to "writing" include
printing, typing, lithography and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
amendments, modifications and supplements thereto or any changes therein entered
into in accordance with their respective terms and not prohibited by this
Agreement; references to Persons include their permitted successors and assigns;
and the term "including" means "including without limitation".
SECTION 1.04. Section References. All section references, unless
otherwise indicated, shall be to Sections in this Agreement.
SECTION 1.05. Accounting Terms. All accounting terms used but not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles in the United States of America.
4
<PAGE>
ARTICLE II
ORGANIZATION
SECTION 2.01. Name. The Trust created hereby shall be known as ANRC
Auto Owner Trust _______________, in which name the Owner Trustee may conduct
the activities of the Trust, make and execute contracts and other instruments on
behalf of the Trust and sue and be sued, and in which name the Owner Trustee may
perform its duties hereunder.
SECTION 2.02. Office. The office of the Trust shall be in care of
the Owner Trustee at the Owner Trustee Corporate Trust Office or at such other
address in Delaware as the Owner Trustee may designate by written notice to the
Depositor, the Depositor, the Servicer and the Insurer.
SECTION 2.03. Purposes and Powers. The sole purpose of the Trust is
to conserve the Trust Estate and collect and disburse the periodic income there
from for the use and benefit of the Depositor, and in furtherance of such
purpose to engage in the following ministerial activities:
(i) to issue the Notes pursuant to the Indenture and the Residual
Interest Certificate pursuant to this Agreement and to sell the Notes;
(ii) with the proceeds of the sale of the Notes, to purchase the
Contracts, to fund the Spread Account and to pay the organizational,
start-up and transactional expenses of the Trust and to pay the balance to
the Depositor pursuant to the Sale and Servicing Agreement;
(iii) to assign, grant, transfer, pledge, mortgage and convey
("Grant") the Trust Estate pursuant to the Indenture and to hold, manage
and distribute to the Depositor pursuant to the Sale and Servicing
Agreement any portion of the Trust Estate released from the lien of, and
remitted to the Trust pursuant to, the Indenture;
(iv) to enter into and perform its obligations under the Basic
Documents to which it is to be a party;
(v) subject to compliance with the Basic Documents, to engage in
such other activities as may be required in connection with conservation
of
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the Trust Estate and the making of distributions to the Noteholders and
the Depositor; and
(vi) to engage in those activities, including entering into
agreements, that are necessary to accomplish the foregoing or are
incidental thereto or connected therewith.
The Trust is hereby authorized to engage in the foregoing
activities. The Trust shall not engage in any activity other than in connection
with the foregoing or other than as required or authorized by the terms of this
Agreement or the Basic Documents.
SECTION 2.04. Appointment of Owner Trustee. The Depositor hereby
appoints the Owner Trustee as trustee of the Trust effective as of the date
hereof, to have all the rights, powers and duties set forth herein and in the
Business Trust Statute, and the Owner Trustee hereby accepts such appointment.
The Owner Trustee is hereby authorized and directed to file the Certificate of
Trust with the Secretary of State.
SECTION 2.05. 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, in an amount equal to $_____________. 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 Trust
Estate and shall be held by the Owner Trustee. The Depositor shall pay
organizational expenses of the Trust as they may arise or shall, upon the
request of the Owner Trustee, promptly reimburse the Owner Trustee for any such
expenses paid by the Owner Trustee.
SECTION 2.06. Declaration of Trust. The Owner Trustee hereby
declares that it will hold the Trust Estate in trust upon and subject to the
conditions set forth herein for the sole purpose of conserving the Trust Estate
and collecting and disbursing the periodic income therefrom for the use and
benefit of the Depositor, subject to the obligations of the Trust under the
Basic Documents. It is the intention of the parties hereto that the Trust
constitute a business trust under the Business Trust Statute and that this
Agreement constitute the governing instrument of such business trust. It is also
the intention of the parties hereto that, solely for income and franchise tax
purposes, on and after the Closing Date, so long as the Trust has only one
holder of the Residual Interest Certificate, the Trust shall be disregarded as a
separate entity and shall be treated as a division of the Depositor. At such
time as the Trust
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<PAGE>
has more than one holder of any certificate issued by the Trust (including any
holders of the Residual Interest Certificate) the Trust will be treated as a
partnership. The Depositor and the Owner Trustee agree to take no action
inconsistent with such tax treatment. The Trust shall not elect to be treated as
an association under Section 301.7701-3(a) of the regulations of the United
States Department of the Treasury for federal income tax purposes. 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 foregoing characterization of the Trust for
such tax purposes. Effective as of the date hereof, the Owner Trustee shall have
all rights, powers and duties set forth herein and in the Business Trust Statute
for the sole purpose and to the extent necessary to accomplish the purposes of
the Trust as set forth in Section 2.03.
SECTION 2.07. Title to Trust Property. Subject to the Indenture,
legal title to all the 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 Trust Estate to be vested in a trustee or trustees, in
which case title shall be deemed to be vested in the Owner Trustee and/or a
separate trustee, as the case may be.
The Depositor shall not have legal title to any part of the Trust
Estate. No transfer, by operation of law or otherwise, of any right, title or
interest of the Depositor to and in its ownership interest in the Trust Estate
shall operate to terminate this Agreement or entitle any transferee to an
accounting or to the transfer to it of legal title to any part of the Trust
Estate.
SECTION 2.08. Situs of Trust. The Trust will be located and
administered in the State of Delaware. All bank accounts maintained on behalf of
the Trust shall be located in the State of Delaware or the State of New York.
The Trust shall not have any employees in any state other than Delaware;
provided that nothing herein shall restrict or prohibit the Owner Trustee from
having employees within or without the State of Delaware. Payments will be
received by the Trust only in Delaware or New York and payments will be made by
the Trust only from Delaware or New York. The only office of the Trust will be
at the Owner Trustee Corporate Trust Office. The Owner Trustee Office shall not
at any time be located in the State of Florida and no Owner Trustee, present or
future, may at any time relocate the Owner Trustee Office.
7
<PAGE>
SECTION 2.09. Representations and Warranties of the
Depositor.
(a) The Depositor hereby represents and warrants to the Owner
Trustee and the Insurer that:
(i) The Depositor is duly organized and validly existing as a
corporation organized and existing and in good standing under the laws of
the State of Delaware, with power and authority to own its properties and
to conduct its business and had at all relevant times, and has, power,
authority and legal right to acquire and own the Contracts.
(ii) The Depositor is duly qualified to do business as a foreign
corporation in good standing and has obtained all necessary licenses and
approvals in all jurisdictions in which the ownership or lease of property
or the conduct of its business requires such qualifications.
(iii) The Depositor has the power and authority to execute and
deliver this Agreement and to carry out its terms; the Depositor has full
power and authority to sell and assign the property to be sold and
assigned to and deposited with the Owner Trustee on behalf of the Trust as
part of the Trust Estate and has duly authorized such sale and assignment
and deposit with the Owner Trustee on behalf of the Trust by all necessary
corporate action. The execution, delivery and performance of this
Agreement have been duly authorized by the Depositor by all necessary
corporate action. The Depositor has duly executed and delivered this
Agreement, and this Agreement constitutes the legal, valid and binding
obligation of the Depositor enforceable against the Depositor in
accordance with its terms.
(iv) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with,
result in the breach of any of the terms and provisions of, nor constitute
(with or without notice or lapse of time) a default under, the certificate
of incorporation or bylaws of the Depositor, or any indenture, agreement
or other instrument to which the Depositor is a party or by which it is
bound; nor result in the creation or imposition of any lien upon any of
the properties of the Depositor pursuant to the terms of any such
indenture, agreement or other instrument (other than pursuant to the Basic
Documents); nor violate any law or any order, rule or regulation
applicable to the Depositor of any court or of any federal or state
regulatory body, administrative agency or other govern-
8
<PAGE>
mental instrumentality having jurisdiction over the Depositor or its
properties.
(v) There are no proceedings or investigations pending, or to the
Depositor's best knowledge threatened, before any court, regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Depositor or its properties: (A) asserting the
invalidity of this Agreement, any of the other Basic Documents or the
Residual Interest Certificate, (B) seeking to prevent the issuance of the
Residual Interest Certificate or the consummation of any of the
transactions contemplated by this Agreement or any of the other Basic
Documents, (C) seeking any determination or ruling that might materially
and adversely affect the performance by the Depositor of its obligations
under, or the validity or enforceability of, this Agreement, any of the
other Basic Documents or the Residual Interest Certificate or (D)
involving the Depositor and which might materially and adversely affect
the federal income tax or other federal, state or local tax attributes of
the Residual Interest Certificate.
SECTION 2.10. [RESERVED]
9
<PAGE>
ARTICLE III
CERTIFICATE
SECTION 3.01. Initial Ownership. Upon the formation of the Trust by
the contribution by the Depositor pursuant to Section 2.05, the Depositor shall
be the sole beneficiary of the Trust.
SECTION 3.02. The Residual Interest Certificate and the Notes.
(a) On the Closing Date, the Residual Interest Certificate shall be
executed by the Owner Trustee on behalf of the Trust by manual or facsimile
signature of an authorized officer of the Owner Trustee, and authenticated by
the Owner Trustee by the manual or facsimile signature of an authorized officer
of the Owner Trustee and shall be deemed to have been validly issued when so
executed and authenticated. The Residual Interest Certificate, bearing the
manual or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Owner Trustee shall
be validly issued by the Trust, notwithstanding that such individuals or any of
them have ceased to be so authorized prior to the execution, authentication and
delivery of the Residual Interest Certificate or did not hold such offices at
the date of the Residual Interest Certificate. The Residual Interest Certificate
shall be dated the date of its authentication.
(b) The Notes shall be executed by the Owner Trustee on behalf of
the Trust by manual or facsimile signature of an authorized officer of the Owner
Trustee, and shall be authenticated as provided in the Indenture. Notes bearing
the manual or facsimile signature of an individual who was, at the time when
such signature was affixed, authorized to sign on behalf of the Owner Trustee
shall be deemed to have been validly executed by the Trust, notwithstanding that
such individual has ceased to be so authorized prior to the execution and
delivery of such Notes or did not hold such office at the date of such Notes.
SECTION 3.03. Execution, Authentication and Delivery of the Residual
Interest Certificate and the Notes. The Owner Trustee shall cause to be
executed, authenticated and delivered upon the order of the Depositor, in
exchange for the Contracts and the other assets of the Trust, simultaneously
with the sale, assignment and transfer to the Trust of the Contracts, and such
other assets, (a) the Residual Interest Certificate evidencing the entire
ownership of the Owner Trust and
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(b) Notes executed by the Trust in aggregate principal amount of, in the case of
the (i) Class A-1 Notes, $ ____________________, (ii) Class A-2 Notes,
$_______________, (iii) Class A-3 Notes, $______________, and (iv) Class A-4
Notes, $____________. The Owner Trustee is hereby authorized to direct, on
behalf of the Trust the Indenture Trustee to authenticate and deliver the Notes
upon the written order of the Depositor. The Residual Interest Certificate shall
not be entitled to any benefit under this Agreement, or be valid for any
purpose, unless there appears on such Residual Interest Certificate a
certificate of authentication substantially in the form set forth in the form of
Certificate attached hereto as Exhibit B executed by the Owner Trustee or
another authenticating agent of the Owner Trustee, by manual or facsimile
signature, and such certificate upon the Residual Interest Certificate shall be
conclusive evidence, and the only evidence, that such Residual Interest
Certificate has been duly authenticated and delivered hereunder. Upon issuance,
authorization and delivery pursuant to the terms hereof, the Residual Interest
Certificate will be entitled to the benefits of this Agreement. The Residual
Interest Certificate shall be dated the date of its authentication.
SECTION 3.04. Restrictions on Transfer. The Residual Interest
Certificate (or any interest therein) may not be sold, transferred, assigned,
participated, pledged or otherwise disposed of by the Depositor to any Person
unless (i) the transfer is made pursuant to an applicable exemption from
registration under the Securities Act and in compliance with any applicable
ERISA restrictions and (ii) prior to such transfer, (A) an Opinion of Counsel in
form and content acceptable to the Owner Trustee and to the Indenture Trustee is
delivered to the Owner Trustee and to the Indenture Trustee stating, among other
things, that such transfer shall not cause the Trust to be classified as an
association (or publicly traded partnership) taxable as a corporation for
federal income tax purposes and (B) prior notice is given to each Rating Agency.
SECTION 3.05. Mutilated, Destroyed, Lost or Stolen Residual Interest
Certificate. If (a) the mutilated Residual Interest Certificate is surrendered
to the Owner Trustee, or the Owner Trustee receives evidence to its satisfaction
of the destruction, loss or theft of the Residual Interest Certificate, and (b)
there is delivered to the Owner Trustee such security or indemnity as may be
required by it to save it harmless, then, in the absence of notice that such
Residual Interest Certificate has been acquired by a bona fide purchaser, the
Owner Trustee on behalf of the Trust shall execute and the Owner Trustee or its
authenticating agent, shall authenticate and deliver, in exchange for or in lieu
of any such mutilated, destroyed, lost or stolen Residual Interest Certificate,
a new Residual Interest Certificate. In connection with the issuance of a new
Residual Interest Certificate under this Section 3.05, the Owner
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Trustee may require the payment by the Depositor of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto.
Any duplicate Residual Interest Certificate issued pursuant to this Section 3.05
shall constitute complete and indefeasible evidence of ownership in the Trust,
as if originally issued, whether or not the lost, stolen or destroyed Residual
Interest Certificate shall be found at any time.
SECTION 3.06. Maintenance of Office or Agency. The Owner Trustee
shall maintain in The City of New York an office or offices or agency or
agencies where notices and demands to or upon the Owner Trustee in respect of
the Residual Interest Certificate and the Basic Documents may be served. The
Owner Trustee hereby designates the office of ______________________________,
Attention: _____________________________, as its office for such purposes.
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ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.01. Prior Notice to Depositor with Respect to Certain
Matters. Subject to the provisions and limitations of Section 4.04, with respect
to the following matters, the Owner Trustee shall not take any action unless at
least 30 days before the taking of such action, the Owner Trustee shall have
notified the Depositor in writing of the proposed action and the Depositor shall
not have notified the Owner Trustee in writing prior to the taking of such
action that the Depositor has withheld consent or provided alternative
direction:
(a) the initiation of any claim or lawsuit by the Trust (except
claims or lawsuits brought in connection with the collection of the Contracts)
and the compromise of any action, claim or lawsuit brought by or against the
Trust (except with respect to the aforementioned claims or lawsuits for
collection of the Contracts);
(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 Depositor;
(e) the amendment, change or modification of the Administration
Agreement, except to cure any ambiguity or to amend or supplement any provision
in a manner or add any provision that would not materially adversely affect the
interests of the Depositor; or
(f) the appointment pursuant to the Indenture of a successor Note
Registrar, paying agent for the Notes or Indenture Trustee, or the consent to
the assignment by the Note Registrar, Paying Agent for the Notes or the
Indenture Trustee of its obligations under the Indenture.
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(g) the consent to the calling or waiver of any default of any Basic
Document.
(h) the consent to the assignment by the Indenture Trustee or
Servicer of their respective obligations under any Basic Document, unless
permitted in the Basic Documents.
(i) cause the Trust to incur, assume or guaranty any indebtedness
other than as set forth in this Agreement or the Basic Documents.
(j) possess Trust assets, or assign the Trust's right to property,
for other than a Trust purpose.
(k) cause the Trust to lend any funds to any entity, unless
permitted in this Agreement or the Basic Documents.
In addition, the Trust shall not commingle its assets with those of
any other entity. The Trust shall maintain its financial and accounting books
and records separately from those of any other entity. Except as expressly set
forth herein, the Trust shall not pay any indebtedness, operating expenses or
liabilities of any other entity. The Trust shall maintain appropriate minutes or
other records of all appropriate actions and shall maintain its offices separate
from the offices of the Depositor and the Servicer.
SECTION 4.02. Action by the Depositor with Respect to Certain
Matters. Subject to the provisions and limitations of Section 4.04, the Owner
Trustee shall not have the power, except upon the direction of the Depositor and
with the prior written consent of the Insurer (so long as no Insurer Default
shall have occurred and be continuing), to (a) remove the Administrator pursuant
to Section 8 of the Administration Agreement, (b) appoint a successor
Administrator pursuant to Section 8 of the Administration Agreement, (c) remove
the Servicer pursuant to Section 7.01 of the Sale and Servicing Agreement, (d)
except as expressly provided in the Basic Documents, sell the Contracts after
the termination of the Indenture, (e) initiate any claim, suit or proceeding by
the Trust or compromise any claim, suit or proceeding brought by or against the
Trust, (f) authorize the merger or consolidation of the Trust with or into any
other business trust or entity (other than in accordance with Section 3.10 of
the Indenture) or (g) amend the Certificate of Trust. The Owner Trustee may only
take the actions referred to in the preceding sentence upon written
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instructions signed by the Depositor and, so long as no Insurer Default shall
have occurred and is continuing, with the prior written consent of the
Insurer.
SECTION 4.03. Action by the Depositor 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 prior written consent of the
Insurer and the prior approval of the Depositor and the delivery to the Owner
Trustee by the Depositor of a certificate certifying that the Depositor
reasonably believes that the Trust is insolvent.
SECTION 4.04. Restrictions on Power. The Owner Trustee shall not be
required to take or to refrain from taking any action if such action or inaction
would be contrary to any obligation of the Trust, or of the Owner Trustee under
this Agreement or any of the other Basic Documents or would be contrary to the
purpose of this Trust as set forth in Section 2.03, nor shall the Owner Trustee
be obligated to follow any such direction, if given.
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ARTICLE V
APPLICATION OF TRUST FUNDS: CERTAIN DUTIES
SECTION 5.01. [RESERVED]
SECTION 5.02. Application of Trust Funds.
(a) On each Distribution Date, the Owner Trustee shall direct the
Paying Agent to distribute to the Depositor distributions as provided in Section
4.03(b) of the Sale and Servicing Agreement with respect to such
Distribution Date.
(b) On each Distribution Date, the Owner Trustee, shall cause the
Paying Agent to send to each Depositor the statement or statements provided to
the Owner Trustee by the Servicer pursuant to Section 4.05 of the Sale and
Servicing Agreement with respect to such Distribution Date.
(c) In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to the Depositor, such tax shall reduce the
amount otherwise distributable to the Depositor in accordance with this Section
5.01. The amount of any withholding tax imposed with respect to the Depositor
shall be treated as cash distributed to the Depositor at the time it is withheld
by the Trust for remittance to the appropriate taxing authority.
SECTION 5.03. Method of Payment. Subject to Section 9.01(c)
respecting the final payment upon retirement of the Residual Interest
Certificate, distributions required to be made to the Depositor on the related
Record Date shall be made by wire transfer or check mailed to the Depositor.
SECTION 5.04. No Segregation of Monies; No Interest. Subject to
Section 5.01, monies received by the Owner Trustee hereunder need not be
segregated in any manner except to the extent required by law or the Sale and
Servicing Agreement and may be deposited under such general conditions as may be
prescribed by law, and the Owner Trustee shall not be liable for any interest
thereon.
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SECTION 5.05. Accounting and Reports to the Noteholders, Owners, the
Internal Revenue Service and Others. Unless otherwise required under the Code,
the Owner Trustee shall (a) maintain (or cause to be maintained) the books of
the Trust on a calendar year basis and the accrual method of accounting, (b)
deliver to the Depositor, as may be required by the Code and applicable Treasury
Regulations, such information as may be required (including, if applicable,
Schedule K-1) to enable the Depositor to prepare its federal and state income
tax returns, (c) file such tax returns, if any, relating to the Trust
(including, if applicable, a partnership information return, IRS Form 1065) and
make such elections as from time to time may be requested by the Depositor (so
long as such request is not detrimental to the Noteholders or the Insurer) under
any applicable state or federal statute or any rule or regulation thereunder so
as to maintain the Trust's characterization as a division of the Depositor, (d)
cause such tax returns to be signed in the manner required by law and (e)
collect or cause to be collected and paid over to the applicable authorities any
withholding tax as described in and in accordance with Section 5.02(c) with
respect to income or distributions to Depositor.
SECTION 5.06. Signature on Returns; Tax Matters Partner.
(a) The Owner Trustee shall sign on behalf of the Trust the tax
returns of the Trust, unless applicable law requires the Depositor as holder of
the Residual Interest Certificate to sign such documents, in which case such
documents shall be signed by the Depositor.
(b) At such time as the Trust is treated as a partnership, the
Depositor shall be designated the "tax matters partner" of the Trust pursuant to
Section 6231(a)(7)(A) of the Code and applicable Treasury Regulations.
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ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.01. General Authority. Subject to the provisions and
limitations of Sections 2.03 and 2.06, the Owner Trustee is authorized and
directed to execute and deliver on behalf of the Trust the Basic Documents to
which the Trust is to be a party and each certificate or other document attached
as an exhibit to or contemplated by the Basic Documents to which the Trust is to
be a party and any amendment thereto or other agreement, as evidenced
conclusively by the Owner Trustee's execution thereof. In addition to the
foregoing, the Owner Trustee is authorized, but shall not be obligated, to take
all actions required of the Trust pursuant to the Basic Documents. The Owner
Trustee is further authorized from time to time to take such action as the
Administrator directs in writing with respect to the Basic Documents.
SECTION 6.02. General Duties. Subject to the provisions and
limitations of Sections 2.03 and 2.06:
(a) it shall be the duty of the Owner Trustee to discharge (or cause
to be discharged through the Administrator or such agents as shall be appointed
with the consent of the Insurer) all of its responsibilities pursuant to the
terms of this Agreement and the other Basic Documents to which the Trust is a
party and to administer the Trust in the interest of the Depositor, 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 other Basic
Documents to the extent the Administrator has agreed in the Administration
Agreement to perform any act or to discharge any duty of the Owner Trustee or
the Trust hereunder or under any Basic Document, and the Owner Trustee shall not
be held liable for the default or failure of the Administrator to carry out its
obligations under the Administration Agreement.
(b) it shall be the duty to execute documents provided to it to
qualify and preserve the Issuer's qualification to do business in each
jurisdiction, if any, in which such qualification is or shall be necessary to
protect the validity and enforceability of the Indenture, the Notes, the
Contracts and any other instrument and agreement included in the Trust Estate;
provided, that the Owner Trustee may rely on advice of counsel with respect to
such obligation.
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SECTION 6.03. Action Upon Instruction.
(a) The Owner Trustee shall not be required to take any action
hereunder or under any other 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 other Basic Document or is otherwise contrary to
law.
(b) Whenever the Owner Trustee is unable to decide between
alternative courses of action permitted or required by the terms of this
Agreement or under any other Basic Document, the Owner Trustee shall promptly
give notice (in such form as shall be appropriate under the circumstances) to
the Depositor and the Insurer 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 Depositor 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 reasonably may be
specified in such notice or may be necessary under the circumstances) it may,
but shall be under no duty to, take or refrain from taking such action not
inconsistent with this Agreement and the other Basic Documents, as it shall deem
to be in the best interest of the Depositor, and shall have no liability to any
Person for such action or inaction.
(c) In the event that the Owner Trustee is unsure as to the
application of any provision of this Agreement or any other 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 Depositor
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 ten days of such notice (or within such shorter
period of time as reasonably may be specified in such notice or may be necessary
under the circumstances) it may, but shall be under no duty to, take or refrain
from taking such action not inconsistent with this Agreement or the other Basic
Documents, as it shall deem
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to be in the best interests of the Depositor, and shall have no liability to any
Person for such action or inaction.
SECTION 6.04. No Duties Except as Specified in this Agreement or in
Instructions. The Owner Trustee shall not have any duty or obligation to manage,
make any payment with respect to, register, record, sell, dispose of or
otherwise deal with the Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Owner Trustee is a party, except as expressly provided by the terms
of this Agreement or in any document or written instruction received by the
Owner Trustee pursuant to Section 6.03; and no implied duties or obligations
shall be read into this Agreement or any other Basic Document against the Owner
Trustee. The Owner Trustee shall have no responsibility for filing any financing
or continuation statement in any public office at any time or to otherwise
perfect or maintain the perfection of any security interest or lien granted to
it hereunder or to prepare or file any Commission filing for the Trust or to
record this Agreement or any other 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 Trust
Estate that result from actions by, or claims against, the Owner Trustee in its
individual capacity that are not related to the ownership or the administration
of the Trust Estate or the Grant of any portion thereof to the Indenture Trustee
pursuant to the Indenture.
SECTION 6.05. No Action Except Under Specified Documents or
Instructions. The Owner Trustee shall not manage, control, use, sell, dispose of
or otherwise deal with any part of the Trust Estate except in accordance with
(i) the powers granted to and the authority conferred upon the Owner Trustee
pursuant to this Agreement, (ii) the other Basic Documents and (iii) any
document or instruction delivered to the Owner Trustee pursuant to Section 6.03.
SECTION 6.06. Restrictions. The Owner Trustee shall not take any
action (i) that is inconsistent with the purposes of the Trust set forth in
Section 2.03 or (ii) that, to the actual knowledge of the Owner Trustee, would
result in the Trust's becoming taxable as a corporation for Federal or state
income tax purposes. The Depositor shall not direct the Owner Trustee to take
action that would violate the provisions of this Section 6.06.
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ARTICLE VII
CONCERNING THE OWNER TRUSTEE
SECTION 7.01. Acceptance of Trusts and Duties. The Owner Trustee
accepts the trusts hereby created and agrees to perform its duties hereunder
with respect to such trusts but only upon the terms of this Agreement and the
other Basic Documents. The Owner Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set forth in this
Agreement, no implied covenants or obligations shall be read into this Agreement
against the Owner Trustee and, in the absence of bad faith on the part of the
Owner Trustee, the Owner Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
certificates, opinions or documents (whether in their original or facsimile
form) furnished to the Owner Trustee and conforming to the requirements of this
Agreement. The Owner Trustee agrees to disburse all monies actually received by
it constituting part of the Trust Estate upon the terms of this Agreement and
the other Basic Documents. The Owner Trustee shall not be answerable or
accountable hereunder or under any other Basic Document under any circumstances,
except (i) for its own willful misconduct or negligence; (ii) in the case of the
inaccuracy of any representation or warranty contained in Section 7.03 expressly
made by the Owner Trustee (iii) for its failure to use ordinary care in the
handling of funds. 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 unless grossly negligent in
asserting pertinent facts;
(b) the Owner Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with this
Agreement, the Basic Documents or the written direction of the Administrator or
any Depositor;
(c) no provision of this Agreement or any other 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 other Basic Document if the Owner Trustee shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity
reasonably satisfactory to it against such risk or liability is not reasonably
assured or provided to it;
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(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 Trust Estate, or for or in respect of the validity or
sufficiency of the Basic Documents, other than the certificate of authentication
on the Residual Interest Certificate, and the Owner Trustee shall not assume or
incur any liability, duty or obligation to any Noteholder or to the Depositor,
other than as expressly provided for herein or expressly agreed to by the Owner
Trustee in the other Basic Documents;
(f) the Owner Trustee shall not be liable for the default or
misconduct of the Administrator, the Depositor, the Insurer, the Indenture
Trustee or the Servicer under any of the Basic Documents or otherwise and the
Owner Trustee shall have no obligation or liability to perform the obligations
of the Trust under this Agreement or the other Basic Documents that are required
to be performed by the Administrator under the Administration Agreement, the
Indenture Trustee under the Indenture or the Servicer or the Depositor under the
Sale and Servicing Agreement;
(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 other Basic Document, at the request, order or direction
of the Depositor, unless the Depositor has 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
other Basic Document shall not be construed as a duty, and the Owner Trustee
shall not be answerable for other than its negligence or willful misconduct in
the performance of any such act;
(h) the Owner Trustee shall not be required to take notice or be
deemed to have notice or knowledge of any default, any Event of Default or
Servicer Default under any of the Basic Documents unless a Responsible Officer
of the Owner Trustee shall have received written notice thereof or shall have
knowledge thereof. In the absence of knowledge or receipt of such notice, the
Owner Trustee
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may conclusively assume that there is no default, Event of Default or Servicer
Default;
(i) the Owner Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution, opinion of
counsel, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal, bond or
other paper or document (whether in its original or facsimile form) believed by
it to be genuine and to have been signed or presented by the proper party or
parties;
(j) the Owner Trustee may consult with counsel of its own selection
and any advice or opinion of counsel shall be full and complete authorization
and protection in respect of any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such advice or opinion of
counsel;
(k) the Owner Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing to do so by the
Administrator or Depositor; provided that if the payment within a reasonable
time to the Owner Trustee of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the opinion of the
Owner Trustee not reasonably assured to it by the security afforded to them by
the terms of this Agreement, the Owner Trustee may require reasonable indemnity
reasonably satisfactory to it against such cost, expense or liability as a
condition to taking any such action;
(l) the Owner Trustee shall not be required to give any bond or
surety in respect of the execution of the Trust created hereby or the powers
granted hereunder; and
(m) the Owner Trustee may execute any of its trusts or powers
hereunder or perform any of its respective duties hereunder either directly or
by or through agents, attorneys or custodians of its own selection, provided the
Owner Trustee shall remain liable for any misconduct or negligence on the part
of any such agent, attorney or custodian.
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SECTION 7.02. Furnishing of Documents. The Owner Trustee shall
furnish to the Depositor, promptly upon receipt of a written request therefor,
duplicates or copies of all reports, notices, requests, demands, certificates,
financial statements and any other instruments furnished to the Owner Trustee
under the Basic Documents.
SECTION 7.03. Representations and Warranties.
(a) The Owner Trustee hereby represents and warrants to
the Depositor and the Insurer:
(i) It is a banking corporation duly organized and validly existing
in good standing under the laws of the State of Delaware. It has all
requisite corporate power and authority to execute, deliver and perform
its obligations under this Agreement.
(ii) 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.
(iii) 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 law, governmental rule or
regulation governing the banking or trust powers of the Owner Trustee or
any judgment or order binding on it, or constitute any default under its
charter documents or bylaws or to the best of its knowledge without
independent investigation, any indenture, mortgage, contract, agreement
or instrument to which it is a party or by which any of its properties may
be bound or result in the creation or imposition of any lien, charge or
encumbrance on the Trust Estate resulting from actions by or claims
against the Owner Trustee individually which are unrelated to this
Agreement or the other Basic Documents.
(iv) it has the power and authority to execute and deliver this
Agreement and the other Basic Documents to which it is a party and to
carry out their respective terms; and the execution, delivery, and
performance of this Agreement and the other Basic Documents to which it is
a party have been duly authorized by all necessary corporate action.
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(v) This Agreement and the other Basic Documents to which it is a
party constitute a legal, valid, and binding obligations of the Owner
Trustee enforceable in accordance with their respective terms, except as
such enforceability may be limited by bankruptcy, insolvency,
reorganization, or other similar laws affecting the enforcement of
creditors' rights in general and by general principles of equity,
regardless of whether such enforceability shall be considered in a
proceeding in equity or at law.
SECTION 7.04. Reliance; Advice of Counsel.
(a) The Owner Trustee shall not incur liability to anyone in acting
upon any signature, instrument notice, resolution, request, consent order,
certificate, report, opinion, bond or other document or paper (whether in its
original or facsimile form) believed by it to be genuine and believed by it to
be signed by the proper party or parties. The Owner Trustee may accept a
certified copy of a resolution of the board of directors or other governing body
of any corporate party as conclusive evidence that such resolution has been duly
adopted by such body and that the same is in full force and effect. As to any
fact or matter the method of determination of which is not specifically
prescribed herein, the Owner Trustee may for all purposes hereof conclusively
rely on a certificate, signed by the president or any vice president or by the
treasurer or other authorized officers of the relevant party, as to such fact or
matter and such certificate shall constitute full protection to the Owner
Trustee for any action taken or omitted to be taken by it in good faith in
reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Agreement or the other
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 at
the sole expense of the Depositor. 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.
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SECTION 7.05. Not Acting in Individual Capacity. Except as otherwise
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 other Basic Document shall look only to
the Trust Estate for payment or satisfaction thereof.
SECTION 7.06. Owner Trustee Not Liable for Residual Interest
Certificate, Notes or Contracts. The recitals contained herein and in the Notes
(other than the signatures of the Owner Trustee and the statements made by the
Owner Trustee in Section 7.03) shall be taken as the statements of the
Depositor, and the Owner Trustee assumes no responsibility for the correctness
thereof. Except as set forth in Section 7.03, the Owner Trustee makes no
representations as to the validity or sufficiency of this Agreement or any other
Basic Document (other than the signatures of the Owner Trustee) or the Notes, or
of any Contract 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 Contract, or the perfection and priority of any
security interest created by any Contract in any Financed Vehicle or the
maintenance of any such perfection and priority, or for or with respect to the
sufficiency of the Trust Estate or its ability to generate the payments to be
distributed to 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 Contract on any computer or other record thereof; the validity
of the assignment of any Contract to the Trust or of any intervening assignment;
the completeness of any Contract; the performance or enforcement of any
Contract; the compliance by the Depositor, the Insurer or the Servicer with any
warranty or representation made under any Basic Document or in any related
document or the accuracy of any such warranty or representation; or any action
of the Administrator, the Indenture Trustee or the Servicer or any subservicer
taken in the name of the Owner Trustee.
SECTION 7.07. Owner Trustee May Own Notes. The Owner Trustee in its
individual or any other capacity may become the owner or pledgee of Notes and
may deal with the Depositor, the Insurer, the Administrator, the Indenture
Trustee and the Servicer in banking transactions with the same rights as it
would have if it were not Owner Trustee.
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ARTICLE VIII
COMPENSATION AND INDEMNIFICATION OF OWNER TRUSTEE
SECTION 8.01. Owner Trustee's Fees and Expenses. The Owner Trustee
shall receive as compensation for its services hereunder such fees as have been
separately agreed upon before the date hereof between the Depositor and the
Owner Trustee and the Owner Trustee shall be entitled to be reimbursed by the
Depositor for its other reasonable expenses hereunder, including the reasonable
compensation, expenses and disbursements of such agents, representatives,
experts and counsel as the Owner Trustee may employ in connection with the
exercise and performance of its rights and its duties hereunder.
SECTION 8.02. Indemnification. The Depositor shall be liable as
primary obligor for, and shall fully indemnify the Owner Trustee and its
respective officers, directors, employees, 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 other Basic Documents, the Trust Estate, the
administration of the Trust Estate or the action or inaction of the Owner
Trustee hereunder, except only that the Depositor shall not be liable for or
required to indemnify an Indemnified Party from and against Expenses arising or
resulting from any of the matters described in the fourth sentence of Section
7.01. The Depositor will in no event be entitled to make any claim upon the
Trust Property for the payment or reimbursement of any Expenses. The indemnities
contained in this Section 8.02 shall survive the resignation or termination of
the Owner Trustee and the termination of this Agreement. In the event of any
claim, action or proceeding for which indemnity will be sought pursuant to this
Section 8.02, the choice of legal counsel by the Owner Trustee shall be subject
to the approval of the Depositor, which approval shall not be unreasonably
withheld.
SECTION 8.03. 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 Trust Estate immediately after such payment.
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ARTICLE IX
TERMINATION OF TRUST AGREEMENT
SECTION 9.01. Termination of Trust Agreement.
(a) This Agreement (other than the provisions of Articles V and
VIII) and the Trust shall terminate and be of no further force or effect upon
the earlier of (i) final distribution of all monies or other property or
proceeds of the Trust Estate in accordance with the terms of the Indenture, the
Sale and Servicing Agreement and Article V hereof and (ii) the expiration of 21
years from the death of the survivor of the descendants of George Herbert Walker
Bush, former President of the United States of America, living on the date
hereof. The bankruptcy, liquidation, dissolution, death or incapacity of the
Depositor shall not (i) operate to terminate this Agreement or the Trust, (ii)
entitle the Depositor'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 Trust Estate or (iii) otherwise affect the
rights, obligations and liabilities of the parties hereto.
(b) Except as provided in Section 9.01(a), neither the Depositor nor
the Insurer shall be entitled to revoke or terminate the Trust.
(c) Upon the winding up of the Trust and its termination, the Owner
Trustee shall, upon receipt of a written request therefor, 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 the Business Trust
Statute.
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ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEE
SECTION 10.01. Eligibility Requirements for Owner Trustee. The Owner
Trustee shall at all times be a corporation satisfying the provisions of Section
3807(a) of the Business Trust Statute; authorized to exercise corporate trust
powers; (iii) have a combined capital and surplus of at least $50,000,000 and
shall be subject to supervision or examination by federal or state authorities;
and (iv) have (or have a parent that has) a rating of at least Baa3 by Moody's
and BBB- by Standard & Poor's. If such corporation shall publish reports of
condition at least annually pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purpose of this
Section 10.01, 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 10.01,
the Owner Trustee shall resign immediately in the manner and with the effect
specified in Section 10.02.
SECTION 10.02. Resignation or Removal of Owner Trustee. The Owner
Trustee may at any time resign and be discharged from the trusts hereby created
by giving written notice thereof to the Administrator and the Insurer. Upon
receiving such notice of resignation, the Administrator shall promptly appoint a
successor Owner Trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Owner Trustee and one copy to the
successor Owner Trustee; provided that the Depositor and the Insurer shall have
received written confirmation from each Rating Agency that the proposed
appointment will not result in an increased capital charge to the Insurer by
either Rating Agency. 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 or the Insurer may petition, at the
expense of the Depositor, any court of competent jurisdiction for the
appointment of a successor Owner Trustee.
If, at any time, the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.01 and shall fail to resign after
written request therefor by the Administrator or the Insurer, or if at any time
the Owner Trustee shall be legally unable to act, or shall be adjudged bankrupt
or insolvent, or a
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receiver of the Owner Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Owner Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Administrator or the Insurer may remove the Owner Trustee.
If the Owner Trustee shall be removed under the authority of the immediately
preceding sentence, the Administrator shall promptly appoint a successor Owner
Trustee acceptable to the Insurer by written instrument, in duplicate, one copy
of which instrument shall be delivered to the outgoing Owner Trustee so removed
and one copy to the successor Owner Trustee, and shall pay all fees owed to the
outgoing Owner Trustee. 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 or the Insurer may petition,
at the expense of the Depositor, any court of competent jurisdiction for the
appointment of a successor Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until acceptance of appointment by the successor Owner
Trustee pursuant to Section 10.03 and payment of all fees and expenses owed to
the outgoing Owner Trustee. The Administrator shall provide notice of such
resignation or removal of the Owner Trustee to the Depositor, the Indenture
Trustee, the Insurer, the Noteholders and to each Rating Agency.
SECTION 10.03. Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Sections 10.01 or 10.02 shall execute, acknowledge and
deliver to the Administrator, the Insurer 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 (and the fees and expenses of its agents and counsel) deliver to
the successor Owner Trustee all documents and statements and monies held by it
under this Agreement; and the Administrator and the predecessor Owner Trustee
shall execute and deliver such instruments and do such other things as may
reasonably be required for fully and certainly vesting and confirming in the
successor Owner Trustee all such rights, powers, duties and obligations.
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No successor Owner Trustee shall accept appointment as provided in
this Section 10.03 unless at the time of such acceptance such successor Owner
Trustee shall be eligible pursuant to Section 10.01.
Upon acceptance of appointment by a successor Owner Trustee pursuant
to this Section 10.03, the Administrator shall mail notice thereof to the
Insurer, the Depositor, the Servicer, the Indenture Trustee, the Noteholders and
each Rating Agency. If the Administrator shall fail to mail such notice within
10 days after acceptance of such appointment by the successor Owner Trustee, the
successor Owner Trustee shall cause such notice to be mailed at the expense of
the Administrator.
Any successor Owner Trustee appointed pursuant to this Section 10.03
shall promptly file an amendment to the Certificate of Trust with the Secretary
of State identifying the name and principal place of business of such successor
Owner Trustee in the State of Delaware.
SECTION 10.04. Merger or Consolidation of Owner Trustee. Any
corporation into which the Owner Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Owner Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Owner Trustee, shall be the successor of the Owner Trustee
hereunder, without the execution or filing of any instrument or any further act
on the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, that such corporation shall be eligible pursuant to
Section 10.01 and, provided, further, that (a) the Owner Trustee shall mail
notice of such merger or consolidation to each Rating Agency and the Insurer and
(b) the Owner Trustee shall file any necessary amendments to the Certificate of
Trust with the Delaware Secretary of State.
SECTION 10.05. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Estate or any Financed Vehicle may at the time be located, the
Administrator and the Owner Trustee acting jointly shall have the power and
shall execute and deliver all instruments to appoint one or more Persons
approved by the Administrator, the Insurer and Owner Trustee to act as
co-trustee, jointly with the Owner Trustee, or as separate trustee or separate
trustees, of all or any part of the Trust Estate, and to vest in such Person, in
such capacity, such title to the Trust or any part thereof and,
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<PAGE>
subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the Administrator and the Owner Trustee may
consider necessary or desirable. If the Administrator shall not have joined in
such appointment within 15 days after the receipt by it of a request so to do,
the Owner Trustee and the Insurer shall have the power to make such appointment.
No co-trustee or separate trustee under this Agreement shall be required to meet
the terms of eligibility as a successor Owner Trustee, provided that such
co-trustee or successor trustee must be acceptable to the Rating Agencies and no
notice of the appointment of any co-trustee or separate trustee shall be
required pursuant to Section 10.03.
Each separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and conditions:
(a) all rights, powers, duties and obligations conferred or imposed
upon the Owner Trustee shall be conferred upon and exercised or performed by the
Owner Trustee and such separate trustee or co-trustee jointly (it being
understood that such separate trustee or co-trustee is not authorized to act
separately without the Owner Trustee joining in such act), except to the extent
that under any law of any jurisdiction in which any particular act or acts are
to be performed, the Owner Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust Estate or any portion
thereof in any such jurisdiction) shall be exercised and performed singly by
such separate trustee or co-trustee, but solely at the direction of the Owner
Trustee;
(b) no trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this Agreement; and
(c) the Administrator, the Insurer 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,
32
<PAGE>
subject to all the provisions of this Agreement, specifically including every
provision of this Agreement relating to the conduct of, affecting the liability
of or affording protection to, the Owner Trustee. Each such instrument shall be
filed with the Owner Trustee and a copy thereof given to the Administrator and
the Insurer.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee as its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its
estates, properties, rights, remedies and trusts shall vest in and be exercised
by the Owner Trustee, to the extent permitted by law, without the appointment of
a new or successor co-trustee or separate trustee.
33
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ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Supplements and Amendments.
(a) This Agreement may be amended by the Depositor and the Owner
Trustee with the prior written consent of the Insurer so long as no Insurer
Default has occurred and is continuing and the Notes are outstanding, but
without the consent of any of the Noteholders or the Depositor, to cure any
ambiguity, to correct or supplement any provisions herein which may be
inconsistent with any of the provisions herein or make any other provisions with
respect to matters or questions arising hereunder that shall not be inconsistent
with the provisions of this Agreement; provided that (i) as evidenced by an
Officer's Certificate of the Depositor addressed and delivered to the Owner
Trustee any such action shall not materially and adversely affect the interests
of any Noteholder or the Depositor (unless the prior written consent of each
Noteholder and the Depositor affected thereby is obtained) and (ii) any such
action shall be deemed not to materially and adversely affect the interest of
any Noteholder or the Depositor if the Person requesting the amendment obtains
(A) a letter from each Rating Agency to the effect that the amendment would not
result in a downgrading or withdrawal of the ratings then assigned to the Notes
by such Rating Agency and (B) an opinion of counsel satisfactory to the Owner
Trustee and the Indenture Trustee to such effect.
(b) Subject to Section 11.14, this Agreement may also be amended
from time to time with the prior written consent of the Insurer by the Depositor
or the Owner Trustee, with prior written notice to the Rating Agencies, with the
consent of for so long as the Notes are Outstanding, Noteholders representing
not less than 51% of the Outstanding Principal Amount acting together as a
single class (which consent of any Holder of a Note given pursuant to this
Section 11.01 or pursuant to any other provision of this Agreement shall be
conclusive and binding on such Holder and on all future Holders of such Note, as
the case may be, issued upon the transfer thereof or in exchange thereof or in
lieu thereof whether or not notation of such consent is made thereon) provided
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 Contacts or
distributions that shall be required to be made for the benefit of the
Noteholders or the Depositor, (ii) reduce the aforesaid percentage of the
Outstanding Principal Amount of the Notes required to consent to any such
amendment, without
34
<PAGE>
the consent of the Holders of all outstanding Notes affected thereby or (iii)
result in a taxable event to the holder of the Residual Interest Certificate for
federal income tax purposes or result in the trust being taxable as a
corporation for federal income tax purposes.
(c) Prior to the execution of any such amendment or consent, the
Owner Trustee shall furnish written notification of the substance of such
amendment or consent, together with a copy thereof, to the Indenture Trustee,
the Insurer, the Administrator and each Rating Agency.
(d) 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 the Depositor. It shall not be necessary for the
consent of the Noteholders, the Depositor or the Indenture Trustee pursuant to
this Section to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof.
(e) 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.
(f) In connection with the execution of any amendment to this
Agreement or any other Basic Document to which the Issuer is a party and for
which amendment the Owner Trustee's consent is sought, the Owner Trustee shall
be entitled to receive and conclusively rely upon an Opinion of Counsel to the
effect that such amendment is authorized or permitted by the Basic Documents and
that all conditions precedent in the Basic Documents for the execution and
delivery thereof by the Issuer or the Owner Trustee as the case may be, have
been satisfied. The Owner Trustee may, but shall not be obligated to, enter into
any such amendment that affects the Owner Trustee's own rights, duties or
immunities under this Agreement or otherwise.
SECTION 11.02. No Legal Title to Trust Estate in Depositor. The
Depositor shall not have legal title to any part of the Trust Estate. No
transfer, by operation of law or otherwise, of any right, title, and interest of
the Depositor to and in its ownership interest in the 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 Trust
Estate.
35
<PAGE>
SECTION 11.03. Limitations on Rights of Others. Except for Section
2.07, the provisions of this Agreement are solely for the benefit of the Owner
Trustee, the Depositor, the Insurer, the Administrator and, to the extent
expressly provided herein, the Indenture Trustee and the Noteholders, and
nothing in this Agreement (other than Section 2.07), whether express or implied,
shall be construed to give to any other Person any legal or equitable right,
remedy or claim in the Trust Estate or under or in respect of this Agreement or
any covenants, conditions or provisions contained herein.
SECTION 11.04. Notices. All demands, notices and communications
under this Agreement shall be in writing personally delivered, sent by facsimile
or mailed by certified mail, return receipt requested, and shall be deemed to
have been duly given upon receipt in the case of (a) the Owner Trustee, at the
Owner Trustee Corporate Trust Office; (b) the Depositor, at AutoNation
Receivables Corporation, _________________________; (c) the Insurer, at
______________________; or (d) as to each party, at such other address as shall
be designated by such party in a written notice to each other party.
SECTION 11.05. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Residual
Interest Certificate.
SECTION 11.06. Counterparts. This Agreement may be executed in
several counterparts, each of which shall be an original and all of which
together shall constitute but one and the same instrument.
SECTION 11.07. Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, each of the
Depositor, the Insurer, the Owner Trustee, and their respective successors and
permitted assigns and the Depositor and its successors and permitted assigns,
all as herein provided. Any request, notice, direction, consent, waiver or other
instrument or action by a Depositor shall bind the successors and assigns of the
Depositor.
36
<PAGE>
SECTION 11.08. No Petition.
(a) The Depositor will not at any time institute against the Trust
any bankruptcy proceedings under any United States federal or state bankruptcy
or similar law in connection with any obligations relating to the Residual
Interest Certificate, the Notes, this Agreement or any of the other Basic
Documents.
(b) The Owner Trustee, by entering into this Agreement, the
Depositor by accepting the Residual Interest Certificate, and the Indenture
Trustee and each Noteholder, by accepting the benefits of this Agreement, hereby
covenant and agree that they will not at any time institute against the Seller,
the Depositor or the Trust, or join in any institution against the Seller, the
Depositor or the Trust of, any bankruptcy proceedings under any United States
federal or state bankruptcy or similar law in connection with any obligations
relating to the Residual Interest Certificate, the Notes, this Agreement or any
of the other Basic Documents.
SECTION 11.09. No Recourse. The Depositor by accepting the Residual
Interest Certificate acknowledges that the Residual Interest Certificate does
not represent an interest in or obligation of the Servicer, the Seller, the
Administrator, the Owner Trustee, the Indenture Trustee or any of their
respective Affiliates and no recourse may be had against such parties or their
assets, except as may be expressly set forth or contemplated in this Agreement
or the other 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.
SECTION 11.12. Depositor Payment Obligation. The Depositor shall be
responsible for payment of the Administrator's compensation pursuant to Section
3 of the Administration Agreement and shall reimburse the Administrator for all
expenses and liabilities of the Administrator incurred thereunder; provided,
however, that such amounts shall not be payable from the Trust Estate or the
Trust Property, except for amounts payable to the Depositor pursuant to Section
4.03(a).
37
<PAGE>
SECTION 11.13. Certain Matters Regarding the Insurer. So long as an
Insurer Default shall not have occurred and be continuing, the Insurer shall
have the right to exercise all rights, including voting rights, which the
Noteholders are entitled to exercise pursuant to this Agreement, without any
consent of such Noteholders; provided that without the consent of each
Noteholder affected thereby, the Insurer shall not exercise such rights to amend
this Agreement in any manner that would (i) reduce the amount of, or delay the
timing of, collections of payments on the Contracts or distributions which are
required to be made on any Note, (ii) adversely affect in any material respect
the interests of the Holders of any Notes, or (iii) alter the rights of any such
Holder to consent to such amendment.
Notwithstanding any provision in this Agreement to the contrary, in
the event an Insurer Default shall have occurred and be continuing, the Insurer
shall not have the right to take any action under this Agreement or to control
or direct the actions of the Trust, the Depositor or the Owner Trustee pursuant
to the terms of this Agreement, nor shall the consent of the Insurer be required
with respect to any action (or waiver of a right to take action) to be taken by
the Trust, the Depositor, the Owner Trustee or the Holders of the Notes;
provided, that the consent of the Insurer shall be required at all times the
Notes are Outstanding and an Insurer Default has not occurred and is not
continuing with respect to any amendment of this Agreement.
SECTION 11.14. Fiduciary Duties. The duties and responsibilities of
the Owner Trustee shall be limited to those expressly provided for in this
Agreement. The parties hereto agree that except for the purpose of the foregoing
sentence, the Owner Trustee shall not have management responsibilities or owe
any fiduciary duties to the Insurer.
SECTION 11.15. Third Party Beneficiary. The parties hereto intend
for the Insurer to be, and the Insurer hereby is, an express third party
beneficiary of this Agreement, entitled to enforce all provisions hereof to the
same extent as if it were a party to this Agreement.
38
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Owner Trust Agreement to be duly executed by their respective officers
hereunto duly authorized, as of the day and year first above
written.
AUTONATION RECEIVABLES
CORPORATION, as Depositor
By:
----------------------------------
Name:
Title:
------------------------------------,
not in its individual capacity, but
solely as Owner Trustee
By:
----------------------------------
Name:
Title:
39
<PAGE>
EXHIBIT A
CERTIFICATE OF TRUST OF
ANRC AUTO OWNER TRUST _________
This Certificate of Trust of ANRC Auto Owner Trust __________ (the
"Trust") is being duly executed and filed by the undersigned, as trustee, to
form a business trust under the Delaware Business Trust Act (12 Del. Code,
Section 3 801 et seq. (the "Act")).
1. Name. The name of the business trust formed hereby is ANRC Auto
Owner Trust ________________.
2. Delaware Trustee. The name and business address of the trustee of
the Trust in the State of Delaware is ____________________, Attention: Corporate
Trust Administration.
3. Effective Date. This Certificate of Trust shall be effective
__________________, _______________.
IN WITNESS WHEREOF, the undersigned has duly executed this
Certificate of Trust in accordance with Section 3811(a)(1) of the
Act.
__________________________________________,
not in its individual capacity, but solely
as Owner Trustee
By:
----------------------------
Name:
Title:
A-1
<PAGE>
EXHIBIT B
FORM OF RESIDUAL INTEREST CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE NOTES TO
THE EXTENT DESCRIBED IN THE SALE AND SERVICING AGREEMENT REFERRED TO HEREIN.
EACH HOLDER OF THIS CERTIFICATE OR ANY BENEFICIAL INTEREST THEREIN
SHALL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT SUCH PERSON (1) IS NOT A
PERSON WHICH IS AN EMPLOYEE BENEFIT PLAN, TRUST OR ACCOUNT SUBJECT TO TITLE I OF
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR
SECTION 4975 OF THE CODE OR A GOVERNMENTAL PLAN, DEFINED IN SECTION 3(32) OF
ERISA SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT,
SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE (ANY SUCH PERSON BEING
A "PLAN") AND (II) IS NOT AN ENTITY, INCLUDING AN INSURANCE COMPANY SEPARATE
ACCOUNT OR GENERAL ACCOUNT, WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY
REASON OF A PLAN'S INVESTMENT IN THE ENTITY.
THIS CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF
AUTONATION RECEIVABLES CORPORATION, AUTONATION FINANCIAL SERVICES CORP. OR ANY
OF THEIR RESPECTIVE AFFILIATES (PROVIDED THAT THIS CERTIFICATE DOES REPRESENT AN
INTEREST IN THE TRUST, AS DEFINED BELOW), AND IS NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION.
B-1
<PAGE>
ANRC AUTO OWNER TRUST ________
RESIDUAL INTEREST CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined below, the
property of which includes, among other things, a pool of retail installment
sale contracts secured by new and used automobiles and light duty trucks sold to
the Trust by AutoNation Receivables Corporation.
NUMBER C-1 ____% Interest
THIS CERTIFIES THAT _______________ is the registered owner of a
____________ Dollars ($_________________) nonassessable, fully-paid, fractional
undivided residual interest in the ANRC Auto Owner Trust ____________ (the
"Trust") formed by AutoNation Receivables Corporation, a Delaware corporation
(together with its permitted successors and assigns in such capacity, the
"Depositor").
The Trust was created pursuant to a Trust Agreement, dated as of
_________, ____ (as amended, supplemented or otherwise modified and in effect
from time to time, the "Owner Trust Agreement"), between AutoNation Receivables
Corporation (the "Depositor") and __________________________________ as owner
trustee (together with its permitted successors and assigns in such capacity,
the "Owner Trustee"), a summary of certain of the pertinent provisions of which
is set forth below. Capitalized terms used herein that are not otherwise defined
shall have the meanings ascribed thereto in, or incorporated by reference into,
the Owner Trust Agreement.
This Residual Interest Certificate is the duly authorized
Certificate evidencing a beneficial interest in the Trust (the "Residual
Interest Certificate"). Also issued by the Trust under that certain Indenture,
dated as of ___________, _____ (as amended, supplemented or otherwise modified
and in effect from time to time, the "Indenture"), between the Trust and
_________________________, as Indenture Trustee, are four classes of Notes
designated as "Class A-1 Notes", Class A-2 Notes", "Class A-3 Notes", and "Class
A-4 Notes" (collectively, the "Notes"). This Residual Interest Certificate is
issued under and is subject to the terms, provisions and conditions of the Owner
Trust Agreement, to which Owner Trust Agreement the Owner by virtue of its
acceptance hereof assents and by which such Owner is bound. The property of the
Trust includes, among other things, a pool of retail installment sale contracts
(the
B-2
<PAGE>
"Contracts") for new and used automobiles and light duty trucks (the "Financed
Vehicles").
The holder of this Residual Interest Certificate acknowledges that
its rights to receive distributions in respect of this Residual Interest
Certificate are subordinated to the rights of the Noteholders to the extent
described in the Sale and Servicing Agreement and the Indenture.
Distributions will be made as provided in the Sale and Servicing
Agreement and only after the Notes have been paid in full.
It is the Intention of the Seller, the Servicer and the Depositor
that the Trust be disregarded as a separate entity and shall be treated as a
division of the Depositor and that none of the Seller, the Servicer or the
Depositor will take any action to the contrary.
The Depositor, by its acceptance of this Residual Interest
Certificate, covenants and agrees that it will not at any time institute against
the Trust or the Depositor, or join in any institution against the Trust or the
Depositor of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States federal or
state bankruptcy or similar law in connection with any obligations relating to
the Residual Interest Certificate, the Notes, the Owner Trust Agreement or any
of the other Basic Documents.
Reference is hereby made to the further provisions of this Residual
Interest 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 Residual Interest Certificate shall not entitle the holder hereof to any
benefit under the Owner Trust Agreement or any other Basic Document or be valid
for any purpose.
This Residual Interest Certificate shall be governed by, and
construed in accordance with, the laws of the State of Delaware without
reference to its conflict of laws provisions.
B-3
<PAGE>
[REVERSE OF CERTIFICATE]
The Residual Interest Certificate does not represent an obligation
of, or an interest in, the Seller, the Depositor, the Servicer, the Owner
Trustee or any of their respective Affiliates and no recourse may be had against
such parties or their assets, except as expressly set forth or contemplated
herein or in the Owner Trust Agreement or the other Basic Documents. In
addition, this Residual Interest Certificate is not guaranteed by any
governmental agency or instrumentality and is limited in right of payment to
certain collections and recoveries with respect to the Contracts (and certain
other amounts), in each case as more specifically set forth herein and in the
Sale and Servicing Agreement. Copies of the Sale and Servicing Agreement and the
Owner Trust Agreement may be examined 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 Owner Trust Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the parties thereto and the rights of the Owner under the Owner
Trust Agreement at any time by the parties thereto with the consent of the
Insurer and, for so long as the Notes are outstanding, Noteholders representing
not less than 51% of the Outstanding Principal Amount acting together as a
single class. The Owner Trust Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Notes.
The Residual Interest Certificate (or any interest therein) may not
be sold, transferred, assigned, participated, pledged or otherwise disposed of
by the Depositor to any Person unless (i) the transfer is made pursuant to an
applicable exemption from registration under the Securities Act of 1933, as
amended, and in compliance with any applicable ERISA restrictions and (ii) prior
to such transfer, (A) an Opinion of Counsel in form and content acceptable to
the Owner Trustee and to the Indenture Trustee is delivered to the Owner Trustee
and to the Indenture Trustee stating, among other things, that such transfer
shall not cause the Trust to be classified as an association (or publicly traded
partnership) taxable as a corporation for federal income tax purposes and (B)
and prior notice is given to each Rating Agency.
The Owner Trustee, the Paying Agent and any of their respective agents may
treat the Person in whose name this Residual Interest Certificate is registered
as the owner hereof for all purposes, and none of the Owner Trustee, the Paying
Agent or any such agent shall be affected by any notice to the contrary.
B-4
<PAGE>
The obligations and responsibilities created by the Owner Trust
Agreement and the Trust created thereby shall terminate upon the disposition of
all property held as part of the Trust Estate. The Servicer may at its option
purchase the Trust Property at a price specified in the Sale and Servicing
Agreement, and such purchase of the Contracts and other property of the Trust
will effect early retirement of the Notes; provided such right of purchase is
exercisable only as of any Distribution Date as of which the Pool Balance as of
such Distribution Date is less than or equal to 10% of the Original Pool
Balance.
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and
not in its individual capacity, has caused this Residual Interest Certificate to
be duly executed.
Dated: __________, ____ ANRC AUTO OWNER TRUST _____
By: _____________________, not in its
individual capacity but solely as
Owner Trustee
By:
-----------------------------------
Authorized Signatory
B-5
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is the Residual Interest Certificates referred to in the
within-mentioned Owner Trust Agreement.
______________________, not in its individual
capacity but solely as Owner Trustee
By:
--------------------------------
Authorized Signatory
B-6
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code,
of assignee)
- --------------------------------------------------------------------------------
the within Residual Interest Certificate, and all rights thereunder, hereby
irrevocably constituting and
appointing ________________________________________________________________ to
transfer said Residual Interest Certificate with full power of substitution in
the premises.
Dated:
-----------------
Signature Guaranteed:
- ---------------------------- ---------------------------------------------
NOTICE: Signature(s) must be NOTICE: The signature to this assignment
guaranteed by an eligible must correspond with the name of the
guarantor institution. registered owner as it appears on the face of
the within Residual Interest Certificate in
every particular, without alteration or
enlargement or any change whatever.
B-7
<PAGE>
EXHIBIT 4.3
================================================================================
INDENTURE
between
ANRC AUTO OWNER TRUST ________,
as Issuer
and
_________________________,
as Indenture Trustee
Dated as of _____________, ____
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions....................................................3
SECTION 1.02. Incorporation by Reference of Trust Indenture Act.............11
SECTION 1.03. Rules of Construction.........................................12
ARTICLE II
THE NOTES
SECTION 2.01. Form..........................................................13
SECTION 2.02. Execution, Authentication and Delivery........................13
SECTION 2.03. Temporary Notes...............................................14
SECTION 2.04. Registration; Registration of Transfer and Exchange...........14
SECTION 2.05. Mutilated, Destroyed, Lost or Stolen Notes....................16
SECTION 2.06. Persons Deemed Owner..........................................17
SECTION 2.07. Payment of Principal and Interest; Defaulted Interest.........18
SECTION 2.08. Cancellation..................................................19
SECTION 2.09. Book-Entry Notes..............................................20
SECTION 2.10. Notices to Clearing Agency....................................21
SECTION 2.11. Definitive Notes..............................................21
SECTION 2.12. Release of Collateral.........................................22
SECTION 2.13. Tax Treatment.................................................22
SECTION 2.14. ERISA.........................................................22
ARTICLE III
COVENANTS
SECTION 3.01. Payment of Principal and Interest.............................24
SECTION 3.02. Maintenance of Office or Agency...............................24
SECTION 3.03. Money for Payments to be Held in Trust........................24
SECTION 3.04. Existence.................................................... 27
SECTION 3.05. Protection of Collateral......................................27
SECTION 3.06. Opinions as to Collateral.....................................28
SECTION 3.07. Performance of Obligations; Servicing of Contracts............28
SECTION 3.08. Negative Covenants............................................30
SECTION 3.09. Annual Statement as to Compliance.............................31
SECTION 3.10. Issuer May Consolidate, etc. Only on Certain Terms............32
SECTION 3.11. Successor Transferee..........................................35
SECTION 3.12. No Other Business.............................................35
SECTION 3.13. Servicer's Obligations........................................35
SECTION 3.14. Restricted Payments...........................................35
i
<PAGE>
Page
----
SECTION 3.15. Notice of Events of Default...................................36
SECTION 3.16. Further Instruments and Acts..................................36
SECTION 3.17. No Borrowing..................................................36
SECTION 3.18. Compliance with Laws..........................................36
SECTION 3.19. Amendments of Sale and Servicing Agreement and Owner Trust
Agreement.....................................................36
SECTION 3.20. Guarantees, Loans, Advances and Other Liabilities.............36
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.01. Satisfaction and Discharge of Indenture.......................38
SECTION 4.02. Application of Trust Money....................................39
SECTION 4.03. Repayment of Monies Held by Paying Agent......................40
ARTICLE V
EVENTS OF DEFAULT; REMEDIES
SECTION 5.01. Events of Default.............................................41
SECTION 5.02. Rights Upon Event of Default..................................42
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee.............................................44
SECTION 5.04. Remedies......................................................47
SECTION 5.05. Optional Preservation of the Contracts........................48
SECTION 5.06. Priorities....................................................49
SECTION 5.07. Limitation of Suits...........................................50
SECTION 5.08. Unconditional Rights of Noteholders to Receive Principal
and Interest..................................................51
SECTION 5.09. Restoration of Rights and Remedies............................51
SECTION 5.10. Rights and Remedies Cumulative................................51
SECTION 5.11. Delay or Omission Not a Waiver................................51
SECTION 5.12. Control by Noteholders........................................52
SECTION 5.13. Waiver of Past Defaults.......................................52
SECTION 5.14. Undertaking for Costs.........................................53
SECTION 5.15. Waiver of Stay or Extension Laws..............................53
SECTION 5.16. Action on Notes...............................................53
SECTION 5.17. Performance and Enforcement of Certain Obligations ...........54
ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.01. Duties of Indenture Trustee...................................55
SECTION 6.02. Rights of Indenture Trustee...................................58
SECTION 6.03. Individual Rights of Indenture Trustee........................60
SECTION 6.04. Indenture Trustee's Disclaimer................................60
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Page
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SECTION 6.05. Notice of Defaults............................................60
SECTION 6.06. Reports by Indenture Trustee to Holders.......................60
SECTION 6.07. Compensation and Indemnity....................................60
SECTION 6.08. Replacement of Indenture Trustee..............................61
SECTION 6.09. Successor Indenture Trustee by Merger.........................63
SECTION 6.10. Appointment of Co-Indenture Trustee or Separate Indenture
Trustee ......................................................64
SECTION 6.11. Eligibility; Disqualification.................................65
SECTION 6.12. Preferential Collection of Claims Against Issue ..............66
SECTION 6.13. Representations and Warranties of Indenture Trustee ..........66
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.01. Indenture Trustee to Furnish Issuer Names and Addresses
of Noteholders................................................67
SECTION 7.02. Preservation of Information; Communications to Noteholders....67
SECTION 7.03. Reports by Issuer.............................................67
SECTION 7.04. Fiscal Year...................................................68
SECTION 7.05. Reports by Indenture Trustee..................................68
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.01. Collection of Money...........................................69
SECTION 8.02. Trust Accounts................................................69
SECTION 8.03. Release of Collateral.........................................71
SECTION 8.04. Opinion of Counsel............................................71
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures Without Consent of Noteholders .......73
SECTION 9.02. Supplemental Indentures With Consent of Noteholders ..........74
SECTION 9.03. Execution of Supplemental Indentures..........................76
SECTION 9.04. Effect of Supplemental Indenture..............................76
SECTION 9.05. Conformity With Trust Indenture Act...........................77
SECTION 9.06. Reference in Notes to Supplemental Indentures ................77
ARTICLE X
REDEMPTION OF NOTES
SECTION 10.01. Redemption...................................................78
SECTION 10.02. Form of Redemption Notice....................................78
SECTION 10.03. Notes Payable on Redemption Date.............................79
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ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Compliance Certificates and Opinions, etc....................80
SECTION 11.02. Form of Documents Delivered to Indenture Trustee ............82
SECTION 11.03. Acts of Noteholders..........................................83
SECTION 11.04. Notices, etc., to Indenture Trustee, Issuer, Insurer and
Rating Agencies..............................................83
SECTION 11.05. Notices to Noteholders; Waiver...............................84
SECTION 11.06. Alternate Payment and Notice Provisions......................85
SECTION 11.07. Conflict With Trust Indenture Act............................85
SECTION 11.08. Effect of Headings and Table of Contents.....................86
SECTION 11.09. Successors and Assigns.......................................86
SECTION 11.10. Separability.................................................86
SECTION 11.11. Benefits of Indenture........................................86
SECTION 11.12. Legal Holidays...............................................86
SECTION 11.13. Governing Law................................................86
SECTION 11.14. Counterparts.................................................87
SECTION 11.15. Recording of Indenture.......................................87
SECTION 11.16. Trust Obligation.............................................87
SECTION 11.17. No Petition..................................................87
SECTION 11.18. Inspection...................................................88
SECTION 11.19. Limitation of Liability of Owner Trustee....................88
SECTION 11.20. Certain Matters Regarding the Insurer........................88
EXHIBITS
Schedule A -- Schedule of Contracts
Exhibit A -- Form of Depository Agreement
Exhibit B -- Form of Class A-1 Note
Exhibit C -- Form of Class A-2 Note
Exhibit D -- Form of Class A-3 Note
Exhibit E -- Form of Class A-4 Note
<PAGE>
THIS INDENTURE, dated as of ________, _____ (as amended,
supplemented or otherwise modified and in effect from time to time, this
"Agreement"), is between ANRC Auto Owner Trust _____________, a Delaware
business trust, as the Issuer, and _____________, _____________ a banking
corporation, as the Indenture Trustee.
Each party agrees as follows for the benefit of the other parties
and the Insurer and for the equal and ratable benefit of the holders of the
Issuer's ___% Auto Loan Backed Notes, Class A-1 (the "Class A-1 Notes"), ___%
Auto Loan Backed Notes, Class A-2 (the "Class A-2 Notes"), ___% Auto Loan Backed
Notes, Class A-3 (the "Class A-3 Notes") and ___% Auto Loan Backed Notes, Class
A-4 (the "Class A-4 Notes" and, together with the Class A-1 Notes, the Class A-2
Notes and the Class A-3 Notes, the "Notes"):
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee on the Closing
Date, on behalf of and for the benefit of the Holders of the Notes and the
Insurer, without recourse, all of the Issuer's right, title and interest in, to
and under the Collateral.
The foregoing Grant is made in trust to secure the payment of
principal of and interest on, and any other amounts owing in respect of, the
Notes, equally and ratably without prejudice, priority or distinction, and to
secure compliance with the provisions of this Indenture and the Insurance
Agreement, all as provided in this Indenture and the Insurance Agreement.
The Indenture Trustee, as Indenture Trustee on behalf of the Holders
of the Notes and the Insurer, 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 and the Insurer may be
adequately and effectively protected.
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ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
(a) Except as otherwise specified herein or as the context may
otherwise require, (i) capitalized terms that are used herein that are not
otherwise defined herein shall have the meanings assigned to them in the Sale
and Servicing Agreement (as defined below) and (ii) the following terms have the
respective meanings set forth below for all purposes of this Indenture.
"Act" shall have the meaning specified in Section 11.03(a).
"Administration Agreement" shall mean the Administration Agreement,
dated as of _____________, _____________, by and among the Administrator, the
Issuer, the Seller and the Indenture Trustee, as the same may from time to time
be amended, supplemented or otherwise modified and in effect.
"Administrator" shall mean AutoNation Financial Services Corp., or
any successor Administrator under the Administration Agreement.
"Authorized Officer" shall mean, with respect to the Issuer, any
officer of the Owner Trustee who is authorized to act for the Owner Trustee in
matters relating to the Issuer and who is identified on the list of Authorized
Officers delivered by the Owner Trustee to the Indenture Trustee on the Closing
Date (as such list may be modified or supplemented from time to time thereafter)
and, so long as the Administration Agreement is in effect, any officer of the
Administrator who is authorized to act for the Administrator in matters relating
to the Issuer and to be acted upon by the Administrator pursuant to the
Administration Agreement and who is identified on a list of Authorized Officers
delivered by the Administrator to the Indenture Trustee on the Closing Date (as
such list may be modified or supplemented from time to time thereafter).
"Basic Documents" shall mean the Certificate of Trust, the Owner
Trust Agreement, the Sale and Servicing Agreement, the Administration Agreement,
the Depository Agreement, the Insurance Agreement, the Insurance Policy, the
Securities Account Control Agreement and this Indenture and other documents and
certificates delivered in connection therewith.
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"Book-Entry Notes" shall mean 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 2.09.
"Certificate of Trust" shall mean the Certificate of Trust of the
Issuer substantially in the form of Exhibit A to the Owner Trust Agreement.
"Class" shall mean a class of Notes whose form is identical except
for variation in denomination, principal amount or owner.
"Class A-1 Notes" shall mean the Class A-1 Notes, substantially in
the form of Exhibit B.
"Class A-2 Notes" shall mean the Class A-2 Notes, substantially in
the form of Exhibit C.
"Class A-3 Notes" shall mean the Class A-3 Notes, substantially in
the form of Exhibit D.
"Class A-4 Notes" shall mean the Class A-4 Notes, substantially in
the form of Exhibit E.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and Treasury Regulations promulgated thereunder.
"Collateral" shall mean the Trust Property.
"Controlling Party" shall mean the Insurer, so long as no Insurer
Default shall have occurred and be continuing, and the Indenture Trustee, for
the benefit of the Noteholders, for so long as an Insurer Default shall have
occurred and be continuing.
"Default" shall mean any occurrence that is, or with notice or the
lapse of time or both would become, an Event of Default.
"Definitive Notes" shall have the meaning specified in Section 2.09.
"Depository Agreement" shall mean the agreement dated as of
_________, ____, by and among the Issuer, the Indenture Trustee, the Owner
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Trustee and DTC, as the initial Clearing Agency substantially in the form of
Exhibit A hereto, as the same may be amended, supplemented or otherwise modified
and in effect from time to time.
"DTC" shall mean the Depository Trust Company.
"Event of Default" shall have the meaning specified in Section 5.01.
"Executive Officer" shall mean, with respect to any corporation or
bank, the Chief Executive Officer, Chief Operating Officer, Chief Financial
Officer, President, Executive Vice President, any Vice President, the Secretary,
the Treasurer or Assistant Treasurer of such corporation or bank; and with
respect to any partnership, any general partner thereof.
"Fees" shall mean amounts due to be paid to the Owner Trustee in
connection with its performance as Owner Trustee in connection with ANRC Auto
Owner Trust _____.
"Grant" shall mean to mortgage, pledge, bargain, sell, warrant,
alienate, remise, release, convey, assign, transfer, create and 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
monies 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.
"Indebtedness" shall mean, with respect to any Person at any time,
(i) indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, notes or other instruments, or for the deferred
purchase price of property or services (including trade obligations); (ii)
obligations of such Person as lessee under leases which should have been or
should be, in accordance with generally accepted accounting principles, recorded
as capital leases; (iii) current liabilities of such Person in respect of
unfunded vested benefits under plans covered by Title IV of ERISA; (iv)
obligations issued for or liabilities incurred on the account
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of such Person; (v) obligations or liabilities of such Person arising under
acceptance facilities; (vi) obligations of such Person under any guaranties,
endorsements (other than for collection or deposit in the ordinary course of
business) and other contingent obligations to purchase, to provide funds for
payment, to supply funds to invest in any Person or otherwise to assure a
creditor against loss; (vii) obligations of such Person secured by any lien on
property or assets of such Person, whether or not the obligations have been
assumed by such Person; or (viii) obligations of such Person under any interest
rate or currency exchange agreement.
"Indenture" shall mean this Agreement, as amended, supplemented or
otherwise modified and in effect from time to time.
"Indenture Trustee" shall mean _________________, a
_________________, as Indenture Trustee under this Indenture, or any successor
Indenture Trustee under this Indenture.
"Independent" when used with respect to any specified Person, shall
mean such a Person who (i) is in fact independent of the Issuer, the Seller and
any of their respective Affiliates, (ii) is not a director, officer or employee
of the Issuer, the Seller or any of their respective Affiliates, (iii) is not a
person related to any officer or director of the Issuer, the Seller or any of
their respective Affiliates, (iv) is not a holder (directly or indirectly) of
more than 10% of any voting securities of the Issuer, the Seller or any of their
respective Affiliates, and (v) is not connected with the Issuer, the Seller or
any of their respective Affiliates as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar functions.
"Independent Certificate" shall mean a certificate or opinion to be
delivered to the Indenture Trustee and the Insurer under the circumstances
described in, and otherwise complying with, the applicable requirements of
Section 11.01, made by an Independent appraiser or other expert appointed by an
Issuer Order and approved by the Indenture Trustee and the Insurer, 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.
"Insurer Default" shall have the meaning set forth in the Sale and
Servicing Agreement.
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"Issuer" shall mean ANRC Auto Owner Trust _________________ or any
successor appointed pursuant to the terms of this Indenture as Issuer under this
Indenture.
"Issuer Order" and "Issuer Request" shall mean a written order or
request signed in the name of the Issuer by any one of its Authorized Officers
and delivered to the Indenture Trustee.
"Noteholder" or "Holder" shall mean (a) the Person in whose name a
Note is registered on the Note Register or (b) if the Insurer has made a payment
under the Insurance Policy, the Insurer to the extent provided in Section 11.20
of this Indenture and the proviso to the definition of Insurance Policy in the
Sale and Servicing Agreement.
"Note Owner" shall mean, with respect to a Book-Entry Note, the
Person who is the owner of the beneficial interest of such Book-Entry Note, as
reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly as a Clearing Agency
participant or as an indirect participant, in each case in accordance with the
rules of such Clearing Agency).
"Note Register" and "Note Registrar" have the respective meanings
specified in Section 2.04.
"Officer's Certificate" shall mean a certificate signed by any
Authorized Officer of the Issuer, under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.01, and
delivered to, the Indenture Trustee and the Insurer.
"Opinion of Counsel" shall mean one or more written opinions of
counsel who may, except as otherwise expressly provided in this Indenture, be
employees of or counsel to the Depositor or the Issuer or any of their
respective Affiliates and who shall be satisfactory to the Indenture Trustee
and, if addressed to the Insurer, satisfactory to the Insurer, and which shall
comply with any applicable requirements of Section 11.01, and shall be in form
and substance satisfactory to the Indenture Trustee, and if addressed to the
Insurer, satisfactory to the Insurer.
"Originator" shall mean AutoNation Financial Services Corp. and its
permitted successors and assigns.
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"Outstanding" shall mean, as of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture except:
(i) Notes theretofore cancelled by the Note Registrar or
delivered to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in
the necessary amount has been theretofore deposited with the Indenture
Trustee or any Paying Agent in trust for the Holders of such Notes
(provided, however, that if such Notes are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision for
such notice has been made, satisfactory to the Indenture Trustee, has been
made); 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 Indenture Trustee is presented that any such
Notes are held by a bona fide purchaser;
provided, however, that Notes that have been paid with proceeds of the Insurance
Policy shall continue to remain Outstanding for purposes of this Indenture until
the Insurer has been paid as subrogee hereunder or reimbursed pursuant to the
Insurance Agreement, as evidenced by a written notice from the Insurer delivered
to the Indenture Trustee, and the Insurer shall be deemed to be the Holder of
such Notes to the extent of any payments made thereon by the Insurer; provided
further, that in determining whether the Holders of the requisite Outstanding
Principal Amount have given any request, demand, authorization, direction,
notice, consent or waiver hereunder or under any other Basic Document, Notes
owned by the Issuer, the Seller or any of their respective Affiliates shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Indenture Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only Notes
that a Responsible Officer of the Indenture Trustee has actual knowledge are so
owned shall be so disregarded. Notes so owned that have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Indenture Trustee the pledgee's right so to act with respect
to such Notes and that the pledgee is not the Issuer, the Seller or any of their
respective Affiliates.
8
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"Outstanding Principal Amount" shall mean the aggregate principal
amount of all Notes of one Class or of all Classes, as the case may be,
Outstanding at the date of determination.
"Owner Trust Agreement" shall mean the Amended and Restated Owner
Trust Agreement, dated as of _______ __, ____, between the Seller and the Owner
Trustee, as the same may be amended, supplemented or otherwise modified and in
effect from time to time.
"Paying Agent" shall mean the Indenture Trustee or any other Person
that meets the eligibility standards for the Indenture Trustee specified in
Section 6.11, is acceptable to the Insurer and is authorized by the Issuer to
make the distributions from the Note Distribution Account, including payment of
principal of or interest on the Notes on behalf of the Issuer.
"Payment Date" shall mean the __th day of each calendar month, or,
if any such date is not a Business Day, the next succeeding Business Day,
commencing on_______ __, ____
"Predecessor Note" shall mean, with respect to any particular Note,
every previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note; and, for the purpose of this definition, any
Note authenticated and delivered under Section 2.05 in lieu of a mutilated,
lost, destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Proceeding" shall mean any suit in equity, action at law or other
judicial or administrative proceeding.
"Rating Agency" shall mean each of Moody's and Standard & Poor's,
and if either Moody's or Standard & Poor's no longer maintain a rating on the
Notes, such other nationally recognized statistical rating organization
designated by the Depositor and acceptable to the Insurer..
"Rating Agency Condition" shall mean, with respect to any action,
that (i) each Rating Agency shall have been given ten Business Days (or such
shorter period as is acceptable to the Rating Agency) prior notice thereof and
that the Rating Agencies shall have notified the Seller, the Servicer, the
Insurer and the Issuer in writing that such action will not result in a
qualification, reduction or withdrawal of
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its then-current rating of any Class of Notes, and (ii) each Rating Agency shall
have confirmed to the Insurer that the shadow rating of the Insurer (so long as
the Insurer is the Controlling Party) with respect to the Notes will not be
lowered.
"Rating Event" shall mean the qualification, reduction or withdrawal
by either Rating Agency of its then-current rating of any Class of Notes,
without regard to the Insurance Policy.
"Record Date" shall mean, with respect to a Distribution Date or the
Redemption Date, the close of business on the Business Day immediately prior to
such Distribution Date or Redemption Date, or, in the event that Definitive
Notes are issued, the close of business on the last day of the calendar month
immediately preceding the month in which such Distribution Date or Redemption
Date occurs.
"Redemption Date" shall mean the Distribution Date specified by the
Servicer or the Issuer pursuant to Section 10.01.
"Redemption Price" shall mean in the case of a redemption of the
Notes pursuant to Section 10.01, an amount equal to the unpaid principal amount
of the Notes redeemed plus accrued and unpaid interest thereon at the respective
Note Rates of each Class of Notes being so redeemed to but excluding the
Redemption Date.
"Registered Holder" shall mean the Person in whose name a Note is
registered on the Note Register on the applicable Record Date.
"Sale and Servicing Agreement" shall mean the Sale and Servicing
Agreement, dated as of _________________, _________________, by and among the
Issuer, the Seller, the Indenture Trustee and the Servicer, as the same may from
time to time be amended, supplemented or otherwise modified and in effect.
"Securities Account Control Agreement" shall mean the Securities
Account Control Agreement, dated as of _________________, _________________,
between the Debtor and the Indenture Trustee, as the same may from time to time
be amended, supplemented or otherwise modified and in effect.
"Seller" shall have the meaning set forth in the Sale and Servicing
Agreement.
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"State" shall mean any one of the 50 states of the United States of
America or the District of Columbia.
"Successor Servicer" shall have the meaning specified in Section
3.07(e).
"Termination Date" shall mean the latest of (i) the date on which
the Notes have been paid in full and the Indenture Trustee has returned the
Insurance Policy to the Insurer for cancellation, (ii) the date on which the
Insurer shall have received payment and performance of all amounts and
obligations owed to or on behalf of the Insurer under this Indenture and the
Insurance Agreement and (iii) the date on which the Indenture Trustee shall have
received payment and performance of all amounts and obligations which the Issuer
and the Administrator may owe to or on behalf of the Indenture Trustee for the
benefit of the Noteholders under the Basic Documents or the Notes.
"Trust Indenture Act" or "TIA" shall mean the Trust Indenture Act of
1939, as amended, as in force on the date hereof, unless otherwise specifically
provided.
SECTION 1.02. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" shall mean the Securities and Exchange Commission.
"Indenture Securities" shall mean the Notes.
"Indenture Security Holder" shall mean a Noteholder.
"Indenture to be Qualified" shall mean this Indenture.
"Indenture Trustee" or "Institutional Trustee" shall mean the
Indenture Trustee.
"Obligor" on the indenture securities shall mean the Issuer and any
other obligor on the indenture securities.
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All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission rule
have the meaning assigned to them by such definitions.
SECTION 1.03. Rules of Construction. Unless the context otherwise
requires:
(i) a term shall have the meaning assigned to it;
(ii) as used in this Indenture and in any certificate or other
document made or delivered pursuant hereto or thereto, an accounting term
not otherwise defined shall have the meaning assigned to it in accordance
with generally accepted accounting principles as in effect from time to
time. To the extent that the definitions of accounting terms in this
Indenture 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 Indenture or in any such
certificate or other document shall control;
(iii) "or" is not exclusive;
(iv) "including" shall mean including without limitation;
(v) words in the singular include the plural and words in the
plural include the singular;
(vi) any agreement, instrument or statute defined or referred
to herein or in any instrument or certificate delivered in connection
herewith shall mean such agreement, instrument or statute as from time to
time amended, modified or supplemented and includes (in the case of
agreements or instruments) references to all attachments thereto and
instruments incorporated therein; references to a Person are also to its
permitted successors and assigns; and
(vii) the words "hereof," "herein" and "hereunder" and words
of similar import when used in this Indenture shall refer to this
Indenture as a whole and not to any particular provision of this
Indenture; Section, subsection and Exhibit references contained in this
Indenture are references to Sec-
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tions, subsections and Exhibits in or to this Indenture unless otherwise
specified.
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ARTICLE II
THE NOTES
SECTION 2.01. Form. The Class A-1 Notes, the Class A-2 Notes, the
Class A-3 Notes and the Class A-4 Notes, in each case together with the
Indenture Trustee's certificate of authentication, shall be in substantially the
forms set forth as Exhibits B, C, D and E to this Indenture 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.
Each Note shall be dated the date of its authentication. The terms
of the Notes set forth in Exhibits B, C, D and E hereto are part of the terms of
this Indenture.
SECTION 2.02. Execution, Authentication and Delivery. The Notes
shall be executed on behalf of the Issuer by the Owner Trustee, as provided in
the Owner Trust Agreement by any of the Owner Trustee's 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 Owner Trustee shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Indenture Trustee shall, upon receipt of an Issuer Order,
authenticate and deliver for original issue the following aggregate principal
amount of Notes: (i) $________ of Class A- 1 Notes, (ii) $________ of Class A-2
Notes, (iii) $________ of Class A-3 Notes and (iv) $________ of Class A-4 Notes.
The aggregate principal amount of Class A-1 Notes, Class A-2 Notes, Class A-3
Notes and Class A-4 Notes outstanding at any time may not exceed such respective
amounts, except as otherwise provided in Section 2.05.
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Each Note shall be dated the date of its authentication. The Notes
shall be issuable as registered Notes in the minimum denomination of $1,000 and
in integral multiples of $1,000 in excess thereof, except that one Note of each
Class may be issued in a different denomination.
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 in the
forms of Notes attached as exhibits to this Indenture executed by the Indenture
Trustee by the manual signature of one of its authorized signatories, and such
certificate upon any Note shall be conclusive evidence, and the only evidence,
that such Note has been duly authenticated and delivered hereunder.
SECTION 2.03. Temporary Notes. Pending the preparation of definitive
Notes, the Issuer may execute, and upon receipt of an Issuer Order the Indenture
Trustee shall authenticate and deliver, temporary Notes that are printed,
lithographed, typewritten, mimeographed or otherwise produced, of the tenor of
the definitive Notes in lieu of which they are issued and with such variations
not inconsistent with the terms of this Indenture as the officers executing such
Notes may determine, as evidenced by their execution of such Notes.
If temporary Notes are issued, the Issuer 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 3.02, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Notes, the Issuer shall
execute and the Indenture Trustee shall authenticate and deliver in exchange
therefor a like tenor and principal amount of definitive Notes of authorized
denominations. Until so exchanged, the temporary Notes shall in all respects be
entitled to the same benefits under this Indenture as definitive Notes.
SECTION 2.04. Registration; Registration of Transfer and Exchange.
The Issuer shall cause to be kept a register (the "Note Register") in which,
subject to such reasonable regulations as it may prescribe, the Issuer shall
provide for the registration of Notes and the registration of transfers of
Notes. The Indenture Trustee shall be "Note Registrar" for the purpose of
registering Notes and transfers of Notes as herein provided. Upon any
resignation of any Note Registrar, the Issuer
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shall promptly appoint a successor or, if it elects not to make such an
appointment, assume the duties of Note Registrar.
If a Person other than the Indenture Trustee is appointed by the
Issuer as Note Registrar, the Issuer will give the Indenture Trustee and the
Insurer prompt written notice of the appointment of such Note Registrar and of
the location, and any change in the location, of the Note Register, and the
Indenture Trustee and the Insurer shall have the right to inspect the Note
Register at all reasonable times and to obtain copies thereof, and the Indenture
Trustee and the Insurer shall have the right to rely upon a certificate executed
on behalf of the Note Registrar by an Executive Officer thereof as to the names
and addresses of the Holders of the Notes and the principal amounts and number
of such Notes.
Upon surrender for registration of transfer of any Note at the
office or agency of the Issuer to be maintained as provided in Section 3.02, the
Issuer shall execute, and the Indenture Trustee shall authenticate and the
Noteholder shall obtain from the Indenture Trustee, in the name of the
designated transferee or transferees, one or more new Notes of the same Class in
any authorized denominations, of a like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes
of the same Class in any authorized denominations, of a like aggregate principal
amount, upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, the Issuer shall execute,
and the Indenture Trustee shall authenticate and the Noteholder shall obtain
from the Indenture Trustee, the Notes which the Noteholder making the exchange
is entitled to receive.
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument of
transfer in form satisfactory to the Indenture Trustee duly executed by, the
Holder thereof or such Holder's attorney duly authorized in writing, with such
signature guaranteed by a commercial bank or trust company located, or having a
correspondent located, in the city of New York or the city in which the
Corporate Trust Office
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is located, or by a member firm of a national securities exchange, and such
other documents as the Indenture Trustee may require.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer or the Indenture Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Notes, other than exchanges pursuant to Section 2.03, 2.07(c) or
9.06 not involving any transfer.
The preceding provisions of this Section notwithstanding, the Issuer
shall not be required to make and the Note Registrar need not register transfers
or exchanges of Notes selected for redemption or of any Note (i) for a period of
15 days preceding the due date for any payment with respect to the Note or (ii)
after the Indenture Trustee sends a notice of redemption with respect to such
Note in accordance with Section 10.01.
The provisions of this Section 2.04 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
transfer of Notes.
SECTION 2.05. Mutilated, Destroyed, Lost or Stolen Notes. If (i) any
mutilated Note is surrendered to the Indenture Trustee, or the Indenture Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Note, and (ii) there is delivered to the Indenture Trustee and the Insurer such
security or indemnity as may be required by them to hold the Issuer, the
Indenture Trustee and the Insurer harmless, then, in the absence of notice to
the Issuer, the Note Registrar or a Responsible Officer of the Indenture Trustee
that such Note has been acquired by a bona fide purchaser, the Issuer shall
execute and upon its request the Indenture Trustee shall authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Note, a replacement Note of the same Class; provided that if any such
destroyed, lost or stolen Note, but not a mutilated Note, shall have become or
within 15 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, the Insurer and the
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Indenture Trustee shall be entitled to recover such replacement Note (or such
payment) from the Person to whom it was delivered or any Person taking such
replacement Note from such Person to whom such replacement Note was delivered or
any assignee of such Person, except a bona fide purchaser, and shall be entitled
to recover upon the security or indemnity provided therefor to the extent of any
loss, damage, cost or expense incurred by the Issuer, the Insurer or the
Indenture Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section 2.05,
the Issuer or the Indenture Trustee may require the payment by the Holder of
such Note of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other reasonable expenses (including
the fees and expenses of the Indenture Trustee or the Note Registrar and/or
counsel) in connection therewith.
Every replacement Note issued pursuant to this Section in
replacement of any mutilated, destroyed, lost or stolen Note shall constitute an
original additional contractual obligation of the Issuer, whether or not the
mutilated, destroyed, lost or stolen Note shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.06. Persons Deemed Owner. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Indenture Trustee, the
Insurer and any of their respective agents may treat the Person in whose name
any Note is registered (as of the day of determination) as the owner of such
Note for the purpose of receiving payments of principal of and interest, if any,
on such Note and for all other purposes whatsoever, whether or not such Note be
overdue, and none of the Issuer, the Insurer, the Indenture Trustee nor any of
their respective agents shall be affected by notice to the contrary.
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SECTION 2.07. Payment of Principal and Interest; Defaulted Interest.
(a) Each Class of Notes shall accrue interest during each Interest
Accrual Period at the related Note Rate, and such interest shall be payable
monthly on each Distribution Date as specified therein, subject to Section 3.01.
Interest accrued on any Note but not paid on any Distribution Date will be due
on the immediately succeeding Distribution Date, together with, to the extent
permitted by applicable law, interest on such shortfall at the related Note
Rate. Interest on the Class A-1 Notes shall be calculated on the basis of the
actual number of days in the related Interest Accrual Period and a 360-day year.
Interest on the Class A-2 Notes, Class A-3 Notes and the Class A-4 Notes will be
calculated on the basis of a 360-day year consisting of twelve 30-day months.
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 2.11, 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, a Redemption Date or on the related Final Scheduled
Distribution Date, as the case may be (and except for the Redemption Price for
any Note called for redemption pursuant to Section 10.01), which shall be
payable as provided below. The funds represented by any such checks returned
undelivered shall be held in accordance with Section 3.03.
(b) The principal of each Note shall be payable on each Distribution
Date to the extent provided in the form of the related Note set forth as an
Exhibit hereto. Notwithstanding the foregoing, the entire unpaid principal
amount of the Notes of a Class of Notes shall be due and payable, if not
previously paid, on the earlier of :
(i) the Final Scheduled Distribution Date of such Class;
(ii) the Redemption Date;
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(iii) if an Event of Default shall have occurred and be
continuing, so long as an Insurer Default shall not have occurred and be
continuing, the date on which the Insurer shall have declared the Notes to
be immediately due and payable in the manner provided in Section 5.02; or
(iv) if an Event of Default shall have occurred and be
continuing, and an Insurer Default has occurred and is continuing, the
date on which the Holders of Notes representing not less than 66 2/3% of
the Outstanding Principal Amount have declared the Notes to be immediately
due and payable in the manner provided in Section 5.02.
All principal payments on each Class of Notes shall be made pro rata to the
Noteholders of such Class entitled thereto. The Indenture Trustee shall notify
the Person in whose name a Note is registered at the close of business on the
Record Date preceding the Distribution Date on which the Issuer expects that the
final installment of principal of and interest on such Note will be paid. Such
notice shall be mailed within five Business Days of such Distribution Date (or,
in the case of Notes registered in the name of Cede & Co., as nominee of DTC,
such notice shall be provided within one Business Day of such Distribution Date)
or receipt of notice of termination of the Trust pursuant to Section 9.01(c) of
the Owner Trust Agreement and shall specify that such final installment will be
payable only upon presentation and surrender of such Note and shall specify the
place where such Note may be presented and surrendered for payment of such
installment. Notices in connection with redemptions of Notes shall be mailed to
Noteholders as provided in Section 10.02.
(c) Promptly following the date on which all principal of and
interest on the Notes has been paid in full and the Notes have been surrendered
to the Indenture Trustee, the Indenture Trustee shall, if the Insurer has paid
any amount in respect of the Notes under the Insurance Policy that has not been
reimbursed to the Insurer, deliver such surrendered Notes to the Insurer.
SECTION 2.08. Cancellation. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Indenture Trustee, be delivered to the Indenture Trustee
and shall be promptly cancelled by the Indenture Trustee. The Issuer may at any
time deliver to the Indenture Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Issuer may have acquired in any
manner whatsoever, and all Notes so delivered shall be promptly cancelled by the
Indenture Trustee. No Notes shall be authenticated in lieu of or in exchange for
any Notes cancelled as
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provided in this Section, except as expressly permitted by this Indenture. All
cancelled Notes may be held or disposed of by the Indenture Trustee in
accordance with its standard retention or disposal policy as in effect at the
time unless the Issuer shall direct by an Issuer Order that they be destroyed or
returned to it; provided that such Issuer Order is timely and the Notes have not
been previously disposed of by the Indenture Trustee.
SECTION 2.09. Book-Entry Notes. The Notes, upon original issuance,
will be issued in the form of a typewritten Note or Notes representing the
Book-Entry Notes, to be delivered to DTC, the initial Depository, 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 2.11. Unless and until
definitive, fully registered Notes (the "Definitive Notes") have been issued to
Note Owners pursuant to Section 2.11:
(i) the provisions of this Section 2.09 shall be in full force
and effect;
(ii) the Note Registrar and the Indenture Trustee shall be
entitled to deal with the Clearing Agency for all purposes of this
Indenture (including the payment of principal of and interest on the Notes
and the giving of instructions or directions hereunder) as the sole holder
of the Notes, and shall have no obligation to the Note Owners;
(iii) to the extent that the provisions of this Section
conflict with any other provisions of this Indenture, the provisions of
this Section shall control;
(iv) the rights of Note Owners shall be exercised only through
the Clearing Agency and shall be limited to those established by law and
agreements between such Note Owners and the Clearing Agency and/or the
Clearing Agency Participants. Pursuant to the Depository Agreement, unless
and until Definitive Notes are issued pursuant to Section 2.11, the
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
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(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 Principal Amount, the Clearing
Agency shall be deemed to represent such percentage only to the extent
that it has received instructions to such effect from Note Owners and/or
Clearing Agency Participants owning or representing, respectively, such
required percentage of the beneficial interest in the Notes and has
delivered such instructions to the Indenture Trustee.
SECTION 2.10. 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
2.11, the Indenture Trustee shall give all such notices and communications
specified herein to be given to Holders of the Notes to the Clearing Agency, and
shall have no obligation to the Note Owners.
SECTION 2.11. Definitive Notes. If (i) the Administrator advises the
Indenture Trustee in writing that the Clearing Agency is no longer willing or
able to properly discharge its responsibilities as described in the Depository
Agreement, and the Administrator or the Indenture Trustee is unable to locate a
qualified successor, or (ii) after the occurrence of an Event of Default or a
Servicer Default, Note Owners representing in the aggregate more than 50% of the
Outstanding Principal Amount of all Classes of Notes advise the Indenture
Trustee through the Clearing Agency Participants in writing that the
continuation of a book-entry system through the Clearing Agency is no longer in
the best interests of the related Note Owners, then the Indenture Trustee shall
notify all Note Owners, through the Clearing Agency, of the availability of
Definitive Notes to Note Owners requesting the same. Upon surrender to the
Indenture Trustee of the Note or Notes evidencing the Book Entry Notes by the
Clearing Agency, accompanied by registration instructions from the Clearing
Agency, the Issuer shall execute and the Indenture Trustee shall authenticate
the Definitive Notes and deliver such Definitive Notes in accordance with the
instructions of the Clearing Agency. None of the Issuer, the Note Registrar or
the Indenture Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Upon the issuance of Definitive Notes of a Class, the
Indenture Trustee shall recognize the Holders of the Definitive Notes as
Noteholders hereunder.
The Indenture Trustee shall not be liable if the Indenture Trustee
or the Administrator is unable to locate a qualified successor Clearing Agency.
The
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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.
SECTION 2.12. Release of Collateral. Subject to Section 11.01 and
except as otherwise provided by the terms of the Basic Documents, the Indenture
Trustee shall release property from the lien of this Indenture only upon receipt
of an Issuer Request accompanied by an Officer's Certificate, an Opinion of
Counsel and Independent Certificates in accordance with Sections 314(c) and
314(d)(1) of the TIA or an Opinion of Counsel in lieu of such Independent
Certificates to the effect that the TIA does not require any such Independent
Certificates. The Indenture Trustee shall surrender the Insurance Policy to the
Insurer for cancellation upon satisfaction of the conditions in Section 4.01
hereof.
SECTION 2.13. Tax Treatment. The Issuer has entered into this
Indenture, and the Notes will be issued, with the intention that, for federal,
state and local income, single business and franchise tax purposes, the Notes
will qualify as indebtedness secured by the Trust Estate. The Issuer, by
entering into this Indenture, and each Noteholder, by its acceptance of its Note
(and each Note Owner by its acceptance of an interest in the applicable
Book-Entry Note), agree to treat the Notes for federal, state and local income,
single business and franchise tax purposes as indebtedness.
SECTION 2.14. ERISA. Each purchaser or transferee of a Note that is
a Benefit Plan shall be deemed to have represented that the relevant conditions
for exemptive relief under Prohibited Transaction Class Exemption ("PTCE")
84-14, PTCE 90-1, PTCE 91-38, PTCE 95-60 or PTCE 96-23 or other applicable
exemption providing substantially similar relief have been satisfied.
SECTION 2.15. CUSIP Numbers. The Issuer in issuing the Notes may use
"CUSIP numbers" (if they are generally in use), and, if so, the Indenture
Trustee shall use CUSIP numbers in notices of redemption as a convenience to
Noteholders; provided that any such notice may state that no representation is
made as to the correctness of such numbers either as printed on the Notes or as
contained in any notice of a redemption and that reliance may be placed only on
the other identification numbers printed on the Notes, and any such redemption
shall not be affected by any defect in or omission of such numbers. The Issuer
will promptly notify the Indenture Trustee of any change in the CUSIP numbers.
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SECTION 2.16. Issuer's Obligations Absolute. Nothing contained in
this Indenture shall impair, as between the Issuer and the Indenture Trustee,
the obligation of the Issuer to pay to the Indenture Trustee all amounts payable
in respect of the Notes as and when the same shall become due and payable in
accordance with the terms hereof, or prevent the Indenture Trustee from
exercising all rights, powers and remedies otherwise permitted by this Indenture
and by applicable law upon an Event of Default under this Indenture.
SECTION 2.17. Authenticating Agent. (a) The Indenture Trustee may
appoint one or more authenticating agents with respect to the Notes which shall
be authorized to act on behalf of the Indenture Trustee in authenticating the
Notes in connection with the issuance, delivery, registration of transfer,
exchange or repayment of the Notes. Whenever reference is made in this Agreement
to the authentication of Notes by the Indenture Trustee or the Indenture
Trustee's certificate of authentication, such reference shall be deemed to
include authentication on behalf of the Indenture Trustee by an authenticating
agent and a certificate of authentication executed on behalf of the Indenture
Trustee by an authenticating agent. Each authenticating agent must be acceptable
to the Depositor.
(b) Any institution succeeding to the corporate agency business of
an authenticating agent shall continue to be an authenticating agent without the
execution or filing of any paper or any further act on the part of the Indenture
Trustee or such authenticating agent.
(c) An authenticating agent may at any time resign by giving written
notice of resignation to the Indenture Trustee and to the Seller. The Indenture
Trustee may at any time terminate the agency of an authenticating agent by
giving notice of termination to such authenticating agent and to the Seller.
Upon receiving such a notice of resignation or upon such a termination, or in
case at any time an authenticating agent shall cease to be acceptable to the
Indenture Trustee or the Seller, the Indenture Trustee promptly may appoint a
successor authenticating agent. Any successor authenticating agent upon
acceptance of its appointment hereunder shall become vested with all the rights,
powers and duties of its predecessor hereunder, with like effect as if
originally named as an authenticating agent. No successor authenticating agent
shall be appointed unless acceptable to the Indenture Trustee and the Seller.
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ARTICLE III
COVENANTS
SECTION 3.01. Payment of Principal and Interest. The Issuer will
duly and punctually pay or cause to be paid the principal of and interest, if
any, on the Notes in accordance with the terms of the Notes and this Indenture.
Without limiting the foregoing, subject to Section 8.02(c), the Issuer will
cause to be distributed all amounts on deposit in the Note Distribution Account
on a Distribution Date deposited therein pursuant to the Sale and Servicing
Agreement for the benefit of (i) the Class A-1 Notes, to the Class A-1
Noteholders, (ii) the Class A-2 Notes, to the Class A-2 Noteholders, (iii) the
Class A-3 Notes, to the Class A-3 Noteholders and (iv) the Class A-4 Notes, to
the Class A-4 Noteholders. Amounts properly withheld under the Code by any
Person from a payment to any Noteholder of interest and/or principal shall be
considered as having been paid by the Issuer to such Noteholder for all purposes
of this Indenture.
SECTION 3.02. Maintenance of Office or Agency. The Issuer will
maintain or will cause the Administrator or the Indenture Trustee to maintain in
the City of New York, an office or agency where Notes may be surrendered for
registration of transfer or exchange, and where notices and demands to or upon
the Issuer in respect of the Notes and this Indenture may be served. The Issuer
hereby initially appoints the Indenture Trustee to serve as its agent for the
foregoing purposes. The Issuer will give prompt written notice to the Indenture
Trustee of the location, and of any change in the location, of any such office
or agency. If at any time the Issuer shall fail to maintain any such office or
agency or shall fail to furnish the Indenture Trustee with the address thereof,
such surrenders, notices and demands may be made or served at the Corporate
Trust Office, and the Issuer hereby appoints the Indenture Trustee as its agent
to receive all such surrenders, notices and demands.
SECTION 3.03. Money for Payments to be Held in Trust.
(a) As provided in Section 8.02, all payments of amounts due and
payable with respect to any Notes that are to be made from amounts withdrawn
from the Collection Account, the Payment Account and the Note Distribution
Account shall be made on behalf of the Issuer by the Indenture Trustee or by
another Paying Agent, and no amounts so withdrawn from the Collection Account,
the Payment
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Account and the Note Distribution Account for payments of Notes shall be paid
over to the Issuer except as provided in this Section.
The Notes shall be non-recourse obligations of the Issuer and shall
be limited in right of payment to amounts available from the Collateral and the
Insurance Policy as provided in this Indenture and the Issuer shall not
otherwise be liable for payments on the Notes. No Person shall be personally
liable for any amounts payable under the Notes. If any other provision of this
Indenture conflicts or is deemed to conflict with the provisions of this
paragraph, the provisions of this paragraph shall control.
On the Business Day immediately preceding each Distribution Date and
the Redemption Date, the Servicer shall cause funds to be withdrawn from the
Collection Account and deposited into the Payment Account pursuant to Section
4.02(e) of the Sale and Servicing Agreement, and on each Distribution Date, the
Indenture Trustee shall make the deposits to the Note Distribution Account
required by Section 4.03(a) of the Sale and Servicing Agreement.
The Issuer will cause each Paying Agent other than the Indenture
Trustee to execute and deliver to the Indenture Trustee and the Insurer (so long
as the Insurer is the Controlling Party) an instrument in which such Paying
Agent shall agree with the Indenture Trustee (and if the Indenture Trustee acts
as Paying Agent, it hereby so agrees), subject to the provisions of this
Section, that such Paying Agent will:
(i) hold all sums held by it for the payment of amounts due
with respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and pay such sums to such Persons as herein
provided;
(ii) give the Indenture Trustee notice of any default by the
Issuer (or any other obligor upon the Notes) in the making of any payment
required to be made with respect to the Notes;
(iii) at any time during the continuance of any such default,
upon the written request of the Indenture Trustee, forthwith pay to the
Indenture Trustee all sums so held in trust by such Paying Agent;
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(iv) immediately resign as Paying Agent and forthwith pay to
the Indenture Trustee all sums held by it in trust for the payment of
Notes if at any time it ceases to meet the standards required to be met by
a Paying Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to
the withholding from any payments made by it on any Notes of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the satisfaction and
discharge of this Indenture or for any other purpose, by Issuer Order direct any
Paying Agent to pay to the Indenture Trustee all sums held in trust by such
Paying Agent, such sums to be held by the Indenture Trustee upon the same trusts
as those upon which the sums were held by such Paying Agent; and upon such
payment by any Paying Agent to the Indenture Trustee, such Paying Agent shall be
released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any
money held by the Indenture Trustee or any Paying Agent in trust for the payment
of any amount due with respect to any Note and remaining unclaimed for two years
after such amount has become due and payable shall be discharged from such trust
and be paid to the Issuer upon receipt of an Issuer Request; and the Holder of
such Note shall thereafter, as an unsecured general creditor, look only to the
Issuer for payment thereof (but only to the extent of the amounts so paid to the
Issuer), and all liability of the Indenture Trustee, the Insurer or such Paying
Agent with respect to such trust money shall thereupon cease; provided that the
Indenture Trustee or such Paying Agent, before being required to make any such
repayment, shall at the expense and direction of the Issuer cause to be
published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in The City of New
York, notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication,
any unclaimed balance of such money then remaining will be repaid to or for the
account of the Issuer. The Indenture Trustee may 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 monies due and payable but not
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claimed is determinable from the records of the Indenture Trustee or of any
Paying Agent, at the last address of record for each such Holder).
SECTION 3.04. Existence. The Issuer will keep in full effect its
existence, rights and franchises as a business trust under the laws of the State
of Delaware (unless, subject to the prior written consent of the Insurer, it
becomes, or any successor Issuer hereunder is or becomes, organized under the
laws of any other State, 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, and the Collateral and each other
instrument included in the Collateral.
SECTION 3.05. Protection of Collateral. The Issuer intends the
security interest Granted pursuant to this Indenture in favor of the Indenture
Trustee on behalf of the Noteholders and the Insurer to be prior to all other
liens in respect of the Collateral, and the Issuer shall take all actions
necessary to obtain and maintain, for the benefit of the Indenture Trustee on
behalf of the Noteholders and the Insurer, a first lien on and a first priority,
perfected security interest in the Collateral. The Issuer will from time to time
take all actions necessary, including without limitation preparing, executing,
delivering and filing all such supplements and amendments hereto and all such
financing statements, continuation statements, instruments of further assurance
and other instruments, if applicable, all as prepared by the Servicer and
delivered to the Issuer, and will take such other action necessary or advisable
to:
(i) Grant more effectively all or any portion of the
Collateral;
(ii) maintain or preserve the lien and security interest (and
the priority thereof) created by this Indenture or carry out more
effectively the purposes hereof;
(iii) perfect, publish notice of or protect the validity of
any Grant made or to be made by this Indenture;
(iv) enforce any of the Collateral;
(v) preserve and defend title to the Collateral and the rights
of the Indenture Trustee, the Insurer and the Noteholders in such
Collateral against the claims of all persons and parties; or
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(vi) pay all taxes or assessments levied or assessed upon the
Collateral when due.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute all financing statements, continuation statements or
other instruments required to be executed pursuant to this Section.
SECTION 3.06. Opinions as to Collateral.
(a) On the Closing Date, the Issuer shall furnish to the Indenture
Trustee and the Insurer an Opinion of Counsel to the effect that, in the opinion
of such counsel, either (i) all financing statements and continuation statements
have been executed and filed that are necessary to create and continue the
Indenture Trustee's first priority perfected security interest in the Collateral
for the benefit of the Noteholders and the Insurer, and reciting the details of
such filings or referring to prior Opinions of Counsel in which such details are
given, or (ii) no such action shall be necessary to perfect such security
interest.
(b) Within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months after
the Cut Off Date, the Issuer shall furnish to the Indenture Trustee and the
Insurer an Opinion of Counsel, dated as of a date during such 90-day period, to
the effect that, in the opinion of such counsel, either (i) all financing
statements and continuation statements have been executed and filed that are
necessary to create and continue the Indenture Trustee's first priority
perfected security interest in the Collateral for the benefit of the Noteholders
and the Insurer, and reciting the details of such filings or referring to prior
Opinions of Counsel in which such details are given, or (ii) no such action
shall be necessary to perfect such security interest.
SECTION 3.07. Performance of Obligations; Servicing of Contracts.
(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 Collateral or that would result in the
amendment, hypothecation, subordination, termination or discharge of, or impair
the validity or effectiveness of, any such instrument or agreement, except as
expressly provided in this Indenture, the other Basic Documents or such other
instrument or agreement.
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(b) The Issuer may contract with or otherwise obtain the assistance
of other Persons acceptable to the Insurer so long as the Insurer is the
Controlling Party (including, without limitation, the Administrator under the
Administration Agreement) to assist it in performing its duties and obligations
under this Indenture, and any performance of such duties by a Person identified
to the Indenture Trustee and the Insurer in an Officer's Certificate shall be
deemed to be action taken by the Issuer. The Indenture Trustee shall not be
responsible for the action or inaction of the Servicer or the Administrator.
Initially, the Issuer has contracted with the Servicer and the Administrator to
assist the Issuer in performing its duties under this Indenture.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the other Basic
Documents and in the instruments and agreements included in the Collateral,
including but not limited to filing or causing to be filed all UCC financing
statements and continuation statements required to be filed by the terms of this
Indenture and the Sale and Servicing Agreement in accordance with and within the
time periods provided for herein and therein. Except as otherwise expressly
provided therein, the Issuer shall not waive, amend, modify, supplement or
terminate any Basic Document or any provision thereof without the consent of the
Indenture Trustee, the Insurer (unless an Insurer Default shall have occurred
and be continuing) and the Holders of at least a majority of the Outstanding
Principal Amount of the Notes.
(d) If the Issuer shall have actual knowledge of the occurrence of a
Servicer Default, the Issuer shall promptly notify the Indenture Trustee, the
Insurer and each Rating Agency thereof, and shall specify in such notice the
action, if any, the Issuer is taking with respect of such default. If a Servicer
Default shall arise from the failure of the Servicer to perform any of its
duties or obligations under the Sale and Servicing Agreement with respect to the
Contracts, the Issuer shall take all reasonable steps available to it to remedy
such failure.
(e) If a Servicer Default occurs, the Servicer may be terminated as
provided in Section 7.01 of the Sale and Servicing Agreement. Upon the
termination of the Servicer by the Indenture Trustee or the Noteholders pursuant
to Section 7.01 of the Sale and Servicing Agreement, (i) if the Notes have not
been paid in full, the Indenture Trustee shall be the Successor Servicer, and
(ii) if the Notes have been paid in full, the Owner Trustee, acting at the
direction of the Depositor shall appoint a Successor Servicer. The Successor
Servicer shall succeed to all the responsibili-
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ties, duties and liabilities of the Servicer under the Sale and Servicing
Agreement; provided, however, should the Indenture Trustee act as Successor
Servicer, it shall have no obligation whatsoever to purchase Contracts pursuant
to Section 3.07 of the Sale and Servicing Agreement. Notwithstanding the
foregoing, if the Notes have not been paid in full, the Indenture Trustee may,
if it shall be unwilling to act, or shall, if it shall be legally unable to so
act, appoint, or petition a court of competent jurisdiction (with any related
costs to be at the sole expense of the Issuer) to appoint, any established
financial institution, having a net worth of not less than $50,000,000 and whose
regular business shall include the servicing of automotive retail installment
sales contracts, as the successor to the Servicer under the Sale and Servicing
Agreement. If the Indenture Trustee shall succeed to the Servicer's duties as
servicer of the Contracts as provided herein, it shall do so in its individual
capacity and not in its capacity as Indenture Trustee and, accordingly, the
provisions of Article VI shall be inapplicable to the Indenture Trustee in its
duties as the successor to the Servicer and the servicing of the Contracts. In
case the Indenture Trustee shall become successor to the Servicer under the Sale
and Servicing Agreement, the Indenture Trustee shall be entitled to appoint as
Servicer one of its Affiliates, provided that it shall not be liable for the
actions and omissions of any such Affiliate in such capacity as Successor
Servicer appointed with due care.
(f) Upon any termination of the Servicer's rights and powers
pursuant to the Sale and Servicing Agreement, the Issuer shall promptly notify
the Indenture Trustee and the Insurer. As soon as a Successor Servicer is
appointed, the Issuer shall notify the Indenture Trustee and the Insurer of such
appointment, specifying in such notice the name and address of such Successor
Servicer.
(g) The Issuer agrees that it will not waive timely performance or
observance by the Servicer or the Seller of their respective duties under the
Basic Documents: (i) without the prior written consent of the Insurer (unless an
Insurer Default shall have occurred and be continuing) or (ii) if the effect
thereof would adversely affect the Holders of the Notes.
SECTION 3.08. Negative Covenants. Until the Termination Date,
the Issuer shall not:
(i) except as expressly permitted by this Indenture or the
other Basic Documents, sell, transfer, exchange or otherwise dispose of
any of the properties or assets of the Issuer, including those included in
the Col-
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lateral, unless directed to do so by the Indenture Trustee with the prior
written consent of the Insurer;
(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 applicable state
law) or assert any claim against any present or former Noteholder by
reason of the payment of the taxes levied or assessed upon the Trust or
any of its assets;
(iii) (A) permit the validity or effectiveness of this
Indenture to be impaired, or permit the lien created by 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 Collateral 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 created by 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 Collateral; or
(iv) voluntarily dissolve or liquidate in whole or in part.
SECTION 3.09. Annual Statement as to Compliance. The Issuer will
deliver to the Indenture Trustee and the Insurer, on or before 120 days after
the end of each fiscal year of the Issuer (commencing with the fiscal year ended
_________, ________), 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
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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 (A) shall be a Person organized and
existing under the laws of the United States of America or any State or
the District of Columbia, (B) shall not be an "investment company" as
defined in the Investment Company Act and (C) shall expressly assume, by
an indenture supplemental hereto, executed and delivered to the Indenture
Trustee and the Insurer, in form and substance satisfactory to the
Indenture Trustee and the Insurer (so long as no Insurer Default shall
have occurred and be continuing), 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 and each other Basic
Document on the part of the Issuer to be performed or observed, all as
provided herein;
(ii) immediately after giving effect to such consolidation or
merger, 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 consolidation or merger;
(iv) the Issuer shall have received an Opinion of Counsel
which shall be delivered to and shall be satisfactory to the Indenture
Trustee and the Insurer (so long as the Insurer is the Controlling Party)
to the effect that such consolidation or merger will not have any material
adverse tax consequence to the Trust, the Insurer or any Noteholder;
(v) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been taken;
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(vi) the Issuer shall have delivered to the Indenture Trustee
and the Insurer (so long as the Insurer is the Controlling Party) an
Officer's Certificate and an Opinion of Counsel (which shall describe the
actions taken as required by clause (v) above or that no such actions will
be taken) 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 compiled with (including any filings required by the Exchange Act);
and
(vii) the Issuer shall have given the Insurer (so long as the
Insurer is the Controlling Party) written notice of such consolidation or
merger at least 20 Business Days prior to the consummation of such action
and, so long as the Insurer is the Controlling Party, shall have received
the prior written approval of the Insurer of such consolidation or merger
and the Issuer or the Person (if other than the Issuer) formed by or
surviving such consolidation or merger has a net worth, immediately after
such consolidation or merger, that is (A) greater than zero and (B) not
less than the net worth of the Issuer immediately prior to giving effect
to such consolidation or merger.
(b) The Issuer shall not convey or transfer any of its properties or
assets, including those included in the Collateral, to any Person (except as
expressly permitted by the Basic Documents), unless:
(i) the Person that acquires by conveyance or transfer the
properties and assets of the Issuer shall (A) be a United States citizen
or a Person organized and existing under the laws of the United States or
any State or the District of Columbia, (B) not be an "investment company"
as defined in the Investment Company Act, (C) expressly assume, by an
indenture supplemental hereto, executed and delivered to the Indenture
Trustee and the Insurer, in form and substance satisfactory to the
Indenture Trustee and the Insurer (so long as the Insurer is the
Controlling Party), 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 and each other Basic Document on the part
of the Issuer to be performed or observed, all as provided herein, (D)
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 and the Insurer, (E)
unless otherwise provided in such supplemental indenture, expressly agree
to indemnify, defend and hold harmless the Issuer against and from any
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loss, liability or expense arising under or related to this Indenture and
the Notes and (F) expressly agree by means of such supplemental indenture
that such Person (or if a group of Persons, then one specified Person)
shall make all filings with the Commission (and any other appropriate
Person) required by the Exchange Act in connection with the Notes;
(ii) immediately after giving effect to such conveyance or
transfer, 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 conveyance or transfer;
(iv) the Issuer shall have received an Opinion of Counsel
which shall be delivered to and shall be satisfactory to the Indenture
Trustee and the Insurer (so long as the Insurer is the Controlling Party)
to the effect that such conveyance or transfer will not have any material
adverse tax consequence to the Trust, the Insurer or any Noteholder;
(v) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been taken;
(vi) the Issuer shall have delivered to the Indenture Trustee
and the Insurer (so long as the Insurer is the Controlling Party) an
Officer's Certificate and an Opinion of Counsel (which shall describe the
actions taken as required by clause (v) above or that no such actions will
be taken) 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 filings required by the Exchange Act);
and
(vii) so long as no Insurer Default shall have occurred and be
continuing, the Issuer shall have given the Insurer (so long as the
Insurer is the Controlling Party) written notice of such conveyance or
transfer of properties or assets at least 20 Business Days prior to the
consummation of such action and shall have received the prior written
approval of the Insurer of such conveyance or transfer and the Person
acquiring by conveyance or transfer the properties or assets of the Issuer
has a net worth, immediately after such conveyance or transfer, that is
(A) greater than zero and (B) not less than
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the net worth of the Issuer immediately prior to giving effect to such
conveyance or transfer.
SECTION 3.11. Successor 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 or properties of
the Issuer pursuant to Section 3.10(b), the Issuer will be released from every
covenant and agreement of this Indenture to be observed or performed on the part
of the Issuer with respect to the Notes immediately upon the delivery of written
notice to the Indenture Trustee and the Insurer stating that the Issuer 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
Contracts in the manner contemplated by this Indenture and the other Basic
Documents and activities incidental thereto.
SECTION 3.13. Servicer's Obligations. The Issuer shall use its best
efforts to cause the Servicer to comply with the Servicer's obligations under
the Sale and Servicing Agreement.
SECTION 3.14. 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 Depositor 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 that the
Issuer may make, or cause to be made, (A) distributions to the Servicer, the
Indenture Trustee, the Owner Trustee, the Insurer and the Noteholders as
contemplated by, and to the extent funds are available for such purpose under,
the Sale and Servicing Agreement, this Indenture or the Owner Trust Agreement
and (B) payments to the Indenture Trustee and the Owner Trustee pursuant to
Section I (a)(ii) of the Administration Agreement. The Issuer will not, directly
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or indirectly, make payments to or distributions from the Collection Account,
the Payment Account, the Note Distribution Account or the Spread Account except
in accordance with this Indenture and the other Basic Documents.
SECTION 3.15. Notice of Events of Default. The Issuer agrees to give
the Indenture Trustee, the Owner Trustee, the Insurer and each Rating Agency
prompt written notice of each Event of Default hereunder and each default on the
part of the Servicer or the Seller of their respective obligations under the
Sale and Servicing Agreement.
SECTION 3.16. Further Instruments and Acts. Upon request of the
Indenture Trustee or the Insurer (so long as the Insurer is the Controlling
Party), 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.
SECTION 3.17. No Borrowing. The Issuer shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except as expressly provided for pursuant to the terms of the Basic
Documents and the Notes.
SECTION 3.18. Compliance with Laws. The Issuer shall comply with the
requirements of all applicable laws, the non-compliance with which would,
individually or in the aggregate, materially and adversely affect the ability of
the Issuer to perform its obligations under the Notes, this Indenture or any
other Basic Document.
SECTION 3.19. Amendments of Sale and Servicing Agreement and Owner
Trust Agreement. The Issuer shall not agree to any amendment to Section 9.01 of
the Sale and Servicing Agreement or Section 9.01 of the Owner Trust Agreement to
eliminate the requirements thereunder that the Holders of the Notes consent to
amendments thereto as provided therein.
SECTION 3.20. Guarantees, Loans, Advances and Other Liabilities.
Except as contemplated by the Sale and Servicing Agreement, the Owner Trust
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 payment or performance on any obligation or
capability of so doing or otherwise), endorse or otherwise become contingently
liable, directly or indirectly, in
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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.
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ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.01. Satisfaction and Discharge of Indenture. This
Indenture shall cease to be of further effect with respect to the Notes (except
as to (i) rights of registration of transfer and exchange, (ii) substitution of
mutilated, destroyed, lost or stolen Notes, (iii) rights of Noteholders to
receive payments of principal thereof and interest thereon (including any such
right of the Insurer pursuant to Section 2.08(c) or the definition of
"Outstanding"), (iv) Sections 3.03, 3.04, 3.05, 3.07, 3.08, 3.10, 3.11, 3.12,
3.17, 3.18, 3.19, 3.21, 3.22 and 6.06, (v) the rights, obligations and
immunities of the Indenture Trustee hereunder (including the rights of the
Indenture Trustee under Section 6.07 and the obligations of the Indenture
Trustee under Section 4.02), (vi) the rights of Noteholders as beneficiaries
hereof with respect to the property so deposited with the Indenture Trustee
payable to all or any of them and (vii) the obligation of the Indenture Trustee
to make claims under the Insurance Policy, which shall survive the Class A-4
Final Scheduled Distribution Date and extend through any preference period
applicable with respect to the Notes or any payments made in respect of the
Notes), and the Indenture Trustee, on demand of and at the expense of the
Issuer, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture with respect to the Notes, when:
(A) either:
(1) all Notes theretofore authenticated and delivered (other
than (i) Notes that have been destroyed, lost or stolen and that have been
replaced or paid as provided in Section 2.05 and (ii) Notes for whose
payment money has theretofore been deposited in trust or segregated and
held in trust by the Issuer and thereafter repaid to the Issuer or
discharged from such trust, as provided in Section 3.03) have been
delivered to the Indenture Trustee for cancellation and the Insurance
Policy has been returned to the insurer for cancellation; or
(2) all Notes not theretofore delivered to the Indenture
Trustee for cancellation:
(i) have become due and payable,
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(ii) will become due and payable at the Class A-4 Final
Scheduled Distribution Date within one year, or
(iii) are to be called for redemption within one year
under arrangements satisfactory to the Indenture
Trustee for the giving of notice of redemption by
the Indenture Trustee in the name, and at the
expense, of the Issuer,
and the Issuer, in the case of clauses (i), (ii) or (iii) above, has irrevocably
deposited or caused to be irrevocably deposited with the Indenture Trustee cash
or direct obligations of or obligations guaranteed by the United States of
America (which will mature prior to the date such amounts are payable), in trust
in an Eligible Account for such purpose, in an amount sufficient to pay and
discharge the entire indebtedness on (a) such Notes not theretofore delivered to
the Indenture Trustee for cancellation when due to the Class A-4 Final Scheduled
Distribution Date or Redemption Date (if Notes shall have been called for
redemption pursuant to Section 10.01), as the case may be, (b) all amounts due
to the Insurer pursuant to the Basic Documents and as subrogee of the rights of
the Holders of the Notes and (c) all amounts due to the Indenture Trustee under
the Basic Documents;
(B) the Issuer has paid or performed or caused to be paid or
performed all amounts and obligations which the Issuer may owe to or on behalf
of (1) the Indenture Trustee for the benefit of the Noteholders under this
Indenture or the Notes and (2) the Insurer under this Indenture and the Basic
Documents; and
(C) the Issuer has delivered to the Indenture Trustee and the
Insurer an Officer's Certificate, an Opinion of Counsel and (if required by the
TIA, of the Indenture Trustee) an Independent Certificate from a firm of
certified public accountants, each meeting the applicable requirements of
Section 11.01(a) and, subject to Section 11.02, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with and the Rating Agency Condition has been
satisfied.
SECTION 4.02. Application of Trust Money. All monies deposited with
the Indenture Trustee pursuant to Section 4.01 shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent, as the
Indenture Trustee may
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determine, the Holders of the particular Notes for the payment or redemption of
which such monies have been deposited with the Indenture Trustee, of all sums
due and to become due thereon for principal and interest; provided such monies
need not be segregated from other funds except to the extent required herein or
in the Sale and Servicing Agreement or required by law.
SECTION 4.03. Repayment of Monies Held by Paying Agent. In
connection with the satisfaction and discharge of this Indenture with respect to
the Notes, all monies then held by any Paying Agent other than the Indenture
Trustee under the provisions of this Indenture with respect to such Notes shall,
upon demand of the Issuer, be paid to the Indenture Trustee to be held and
applied according to Section 3.03 and thereupon such Paying Agent shall be
released from all further liability with respect to such monies.
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ARTICLE V
EVENTS OF DEFAULT; REMEDIES
SECTION 5.01. Events of Default. "Event of Default," shall mean 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):
(a) the delivery to the Insurer of a claim for payment under the
Insurance Policy;
(b) default in the payment of the interest on any Note when the same
becomes due and payable, and such default shall continue for a period of five
days or more;
(c) default in the payment of any principal due and payable on the
applicable Final Scheduled Distribution Date for such Class of Notes;
(d) 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), and such default shall continue or not be
cured for a period of 90 days after notice thereof shall have been given, by
registered or certified mail, to the Issuer by the Indenture Trustee or the
Insurer or to the Issuer, the Insurer and the Indenture Trustee by the Holders
of at least 25% of the Outstanding Principal Amount of the Notes, acting
together as a single class, in each case specifying such default and requiring
it to be remedied and stating that such notice is a notice of Default hereunder;
(e) any representation or warranty made by the Issuer in this
Indenture or in any certificate delivered pursuant hereto or in connection
herewith 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 the Issuer by the Indenture Trustee or the Insurer, or to the Issuer, the
Insurer and the Indenture Trustee by the holders of at least 25% of the
Outstanding Principal Amount of the Notes acting together as a single class, in
each case specifying such breach and requiring it to be remedied and stating
that such notice is a notice of Default hereunder;
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(f) 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 Collateral 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 Collateral, or
ordering the winding-up or liquidation of the Issuer's affairs; or
(g) 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 Collateral, 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; provided that so long as no Insurer
Default shall have occurred and be continuing, neither the Indenture Trustee nor
the Noteholders may declare an Indenture Event of Default under the Indenture.
So long as an Insurer Default shall not have occurred and be continuing, an
Event of Default shall occur only upon delivery by the Insurer to the Indenture
Trustee of notice of the occurrence of an Event of Default. The failure to pay
principal on a class of Notes shall not result in the occurrence of an Event of
Default until the Final Scheduled Distribution Date for such class of Notes.
The Issuer shall deliver to the Indenture Trustee and the Insurer,
within five days after obtaining knowledge of the occurrence thereof, written
notice in the form of an Officer's Certificate of any event which with the
giving of notice or the lapse of time would become an Event of Default, its
status and what action the Issuer is taking or proposes to take with respect
thereto.
SECTION 5.02. Rights Upon Event of Default.
(a) So long as no Insurer Default has occurred and is continuing, if
an Event of Default shall have occurred and be continuing, then the Insurer
shall have the right, but not the obligation, upon prior written notice to each
Rating Agency, to declare by written notice to the Issuer and the Indenture
Trustee that all, but not less than all of the Notes become immediately due and
payable, and upon any
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such declaration the unpaid principal amount of the Notes, together with accrued
and unpaid interest thereon, shall become immediately due and payable. The
failure to pay principal on a class of Notes will not result in the occurrence
of an Indenture Event of Default until the Final Scheduled Distribution Date of
such class of Notes. The Insurer may not, however, cause the Indenture Trustee
to liquidate the Collateral, in whole or in part, if the proceeds of such
liquidation would not be sufficient to pay all outstanding principal of, and
accrued interest on, the Notes unless the Event of Default arose from a claim
made on the Insurance Policy or from an Event of Default specified in Section
5.01(f) or (g). The Indenture Trustee will have no discretion with respect to
the acceleration of the Notes under the foregoing circumstances. In the event of
any such acceleration of the Notes, the Indenture Trustee shall continue to make
claims under the Insurance Policy with respect to the Notes.
(b) If an Insurer Default shall have occurred and be continuing and
an Event of Default specified in Section 5.01(b), (c), (d), (e), (f) or (g)
shall have occurred and be continuing, the Indenture Trustee shall, if so
requested in writing by the Holders of Notes representing at least 66 2/3% of
the aggregate Outstanding Principal Amount of the Notes, declare that the Notes
become immediately due and payable, and upon any such declaration the unpaid
Outstanding Principal Amount of the Notes, together with accrued and unpaid
interest thereon, shall become immediately due and payable.
(c) Following any Event of Default, the Insurer, at its sole option,
may elect to pay all or any portion of the Outstanding Principal Amount of the
Notes, plus accrued interest thereon to the date of payment.
(d) At any time after such declaration of acceleration of maturity
has been made and before a judgment or decree for payment of the money due has
been obtained by the Indenture Trustee as provided in this Article V, either the
Insurer (so long as an Insurer Default has not occurred and is continuing) or
the Holders of the Notes representing a majority of the Outstanding Principal
Amount of the Notes (if an Insurer Default has occurred and is continuing), by
written notice to the Issuer and the Indenture Trustee, may rescind and annul
such declaration and its consequences if:
(i) the Issuer has paid or deposited with the Indenture
Trustee a sum sufficient to pay:
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(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 remitted by the Indenture Trustee or advanced, together
with interest thereon, by the Insurer hereunder or by the Insurer under the
Insurance Policy, plus all amounts due to the Insurer under the Basic Documents
and the reasonable compensation, expenses, disbursements and advances of the
Indenture Trustee, the Owner Trustee and the Insurer and its agents and counsel;
and
(ii) All Events of Default have been cured or waived as
provided in Section 5.12.
No such rescission shall affect any subsequent default or impair any right
consequent thereto.
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement
by Indenture Trustee.
(a) The Issuer covenants that, if the Notes are accelerated in
accordance with Section 5.02, the Issuer will, upon demand of the Indenture
Trustee, pay to the Indenture Trustee, 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 applicable Note Rate and in addition thereto such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses and disbursements of the
Indenture Trustee and its agents and counsel.
(b) If an Event of Default shall have occurred and be continuing,
the Indenture Trustee shall (i) if no Insurer Default shall have occurred and be
continuing, at the direction of the Insurer, or (ii) if an Insurer Default shall
have occurred and be continuing, at the direction of the Holders of Notes
representing at least 66 2/3% of the Outstanding Principal Amount of the Notes,
as more particularly provided in Section 5.04, proceed to protect and enforce
the rights of the Noteholders, by such appropriate Proceedings as the Indenture
Trustee shall deem most effective to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power
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granted herein, or to enforce any other proper remedy or legal or equitable
right vested in the Indenture Trustee by this Indenture or by law.
(c) 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 Collateral, 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 Indenture Trustee, irrespective of whether the
principal of any Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Indenture Trustee shall
have made any demand pursuant to the provisions of this Section 5.03, shall be
entitled and empowered (but only at the written direction of the Insurer so long
as it is the Controlling Party), by intervention in such Proceedings or
otherwise:
(i) to file and prove a claim or claims for the whole amount
of principal and interest owing and unpaid in respect of the Notes and to
file such other papers or documents as may be necessary or advisable in
order to have the claims of the Indenture Trustee (including any claim for
reasonable compensation to the Indenture Trustee and each predecessor
Indenture Trustee, and their respective agents, attorneys and counsel, and
for reimbursement of all expenses and liabilities incurred by the
Indenture Trustee and each predecessor Indenture Trustee, except as a
result of negligence or bad faith) and of the Noteholders allowed in such
Proceedings;
(ii) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders of Notes in any election of a trustee, a
standby trustee or Person performing similar functions in any such
Proceedings;
(iii) to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute all amounts
received with respect to the claims of the Noteholders and of the
Indenture Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of
the
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Indenture 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 Indenture Trustee, and, in the event that the Indenture Trustee
shall consent to the making of payments directly to such Noteholders, to pay to
the Indenture Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred by the Indenture Trustee and each predecessor Indenture
Trustee except as a result of negligence or bad faith on the part of the
Indenture Trustee.
(d) Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or vote for or accept or adopt on
behalf of any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar Person.
(e) All rights of action and of asserting claims under this
Indenture, or under any of the Notes, may be enforced by the Indenture Trustee
without the possession of any of the Notes or the production thereof in any
trial or other Proceedings relative thereto, and any such action or Proceedings
instituted by the Indenture Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment, subject to the payment of the
expenses, disbursements and compensation of the Indenture Trustee, each
predecessor Indenture Trustee and their respective agents and attorneys, shall
be for the ratable benefit of the Holders of the Notes and the Insurer.
(f) In any Proceedings brought by the Indenture Trustee (including
any Proceedings involving the interpretation of any provision of this
Indenture), the Indenture Trustee shall be held to represent all the
Noteholders, and it shall not be necessary to make any Noteholder a party to any
such Proceedings.
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SECTION 5.04. Remedies.
(a) If (i) an Event of Default shall have occurred and be
continuing, the Indenture Trustee shall (subject to Section 5.04(b) and Section
5.05), if no Insurer Default shall have occurred and be continuing, at the
direction of the Insurer, or (ii) if an Event of Default specified in Section
5.01 (b), (c), (d), (e), (f) or (g) shall have occurred and be continuing, the
Indenture Trustee shall (subject to Section 5.04(b) and Section 5.05), if an
Insurer Default shall have occurred and be continuing, at the direction of the
Holders of Notes representing at least 66 2/3% of the Outstanding Principal
Amount of the Notes, take one or more of the following actions as so directed:
(i) institute Proceedings in its own name and as or on behalf
of a 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 monies adjudged due;
(ii) institute Proceedings from time to time for the complete
or partial foreclosure of this Indenture with respect to the Collateral;
(iii) exercise any remedies of a secured party under the UCC
and any other remedy available to the Indenture Trustee and take any other
appropriate action to protect and enforce the rights and remedies of the
Indenture Trustee on behalf of the Noteholders and the Insurer under this
Indenture or the Notes;
(iv) sell or cause the Servicer to otherwise liquidate the
Collateral or any portion thereof or rights or interests therein, at one
or more public or private sales called and conducted in any manner
permitted by law and deliver the proceeds of such sale or liquidation to
the Indenture Trustee for distribution in accordance with the terms of
this Indenture; and
(v) maintain possession of the Collateral.
(b) Notwithstanding the foregoing,
(i) in the event that the Indenture Trustee is acting at the
direction of the Insurer, so long as no Insurer Default shall have
occurred and
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be continuing, if an Event of Default specified in Section 5.01 (b), (c),
(d) or (e) shall have occurred and be continuing, the Insurer shall not
have the right to cause the Indenture Trustee or the Servicer to, and
neither the Indenture Trustee nor the Servicer shall, liquidate the
Collateral in whole or in part if the proceeds of such sale or liquidation
would not be sufficient to pay all outstanding principal of and accrued
interest on the Notes; and
(ii) in the event that the Indenture Trustee is acting at the
direction of the Holders of Notes representing at least 66 2/3% of the
Outstanding Principal Amount of the Notes, the Noteholders shall not have
the right to direct the Indenture Trustee or the Servicer to, and neither
the Indenture Trustee nor the Servicer shall, liquidate the Collateral in
whole or in part unless (A) an Event of Default as specified in Section
5.01 (b), (c), (f) or (g) shall have occurred and be continuing and in any
case the Insurer shall have failed to make a payment required under the
Insurance Policy in accordance with its terms or (B) (1) an Indenture
Event of Default as specified in Section 5.01(d) or (e) shall have
occurred and be continuing, (2) the Insurer shall not have failed to make
a payment required under the Insurance Policy in accordance with its terms
and (3) the proceeds of such sale or liquidation would be sufficient to
pay all outstanding principal of and accrued interest on the Notes and all
amounts owing to the Insurer pursuant to the terms of the Insurance
Agreement In the event of a liquidation of the Collateral pursuant to
clause (ii), the Insurance Policy will not be available to cover losses to
Noteholders resulting from such liquidation, and the Insurance Policy
shall be terminated and the Insurer shall have no further obligation to
make any payment thereunder.
(c) In determining the sufficiency or insufficiency of the proceeds
of a sale or liquidation of the Collateral to pay all amounts required pursuant
to Section 5.04(b)(i) or (ii) above, the Indenture Trustee may, but need not, at
the sole expense of the Issuer 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 Collateral
for such purpose.
SECTION 5.05. Optional Preservation of the Contracts. If the Notes
have been declared to be due and payable under Section 5.02 following an Event
of Default and such declaration and its consequences have not been rescinded and
annulled, the Indenture Trustee shall, absent direction to the contrary from the
Insurer or the Noteholders pursuant to Section 5.04, maintain possession of the
Collateral.
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SECTION 5.06. Priorities.
(a) If the Notes have been declared to be due and payable under
Section 5.02 following an Event of Default and such declaration and its
consequences have not been rescinded and annulled, any money collected by the
Indenture Trustee with respect to the Collateral or the Notes pursuant to this
Article or otherwise and any money that may then be held or thereafter received
by the Indenture Trustee with respect to the Collateral or the Notes (excluding
any payments made under the Insurance Policy), shall be applied in the following
order and priority:
first, to the Servicer, to pay any unpaid Servicing Fee;
second, to pay any accrued and unpaid Fees and reasonable
out-of-pocket expenses of the Owner Trustee and the Indenture
Trustee without preference or priority of any kind;
third, to the Noteholders, to pay accrued interest on each
Class of Notes on a pro rata basis, without preference or priority
of any kind, based on the interest accrued (including, to the extent
permitted by applicable law, interest accrued on any interest
accrued but not timely paid) on each Class of Notes at the related
Note Rate for such Class;
fourth, to the Noteholders, to pay principal on each Class of
Notes on a pro rata basis, without preference or priority of any
kind, based on the Outstanding Principal Amount of each Class of
Notes, until the Outstanding Principal Amount of each Class of Notes
is reduced to zero; and
fifth, to the Insurer, to pay amounts owing to the Insurer
under the Insurance Agreement or any of the Basic Documents
(including, without limitation, the Insurance Premium).
(b) The Indenture Trustee may, upon notification to the Issuer and
the Insurer, 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
Indenture Trustee shall mail or send by facsimile to each Noteholder and the
Insurer a notice that states the record date, the payment date and the amount to
be paid.
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SECTION 5.07. Limitation of Suits. No Holder of any Note shall have
any right to institute any Proceeding, judicial or otherwise, with respect to
this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless:
(i) such Holder has previously given written notice to the
Indenture Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the Outstanding
Principal Amount of the Notes have made written request to the Indenture
Trustee to institute such Proceeding in respect of such Event of Default
in its own name as Indenture Trustee hereunder;
(iii) such Holder or Holders have offered to the Indenture
Trustee reasonable indemnity against the costs, expenses and liabilities
to be incurred in complying with such request;
(iv) the Indenture Trustee for 60 days after its receipt of
such notice, request and offer of indemnity has failed to institute such
Proceedings;
(v) no direction inconsistent with such written request has
been given to the Indenture Trustee during such 60-day period by the
Holders of a majority of the Outstanding Principal Amount of the Notes,
voting together as a single class; and
(vi) the Insurer has given its prior written consent or an
Insurer Default shall have occurred and be continuing.
It is understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Notes,
each representing less than a majority of the Outstanding Principal Amount of
the Notes, the Indenture Trustee in its sole discretion may determine what
action, if any, shall
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be taken, notwithstanding any other provisions of this Indenture and any such
action shall be binding on all parties.
SECTION 5.08. 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 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 5.09. Restoration of Rights and Remedies. If the Indenture
Trustee, the Insurer or any Noteholder has instituted any Proceeding to enforce
any right or remedy under this Indenture and such Proceeding has been
discontinued or abandoned for any reason or has been determined adversely to the
Indenture Trustee, the Insurer or such Noteholder, then and in every such case
the Issuer, the Indenture Trustee, the Insurer and the Noteholders shall,
subject to any determination in such Proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Indenture Trustee, the Insurer and the Noteholders shall
continue as though no such Proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative. No right or remedy
herein conferred upon or reserved to the Indenture Trustee, the Insurer 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 5.11. Delay or Omission Not a Waiver. No delay or omission
of the Indenture Trustee, the Insurer or any Holder of any Note to exercise any
right or remedy accruing upon any Default or Event of Default shall impair any
such right or remedy or constitute a waiver of any such Default or Event of
Default or an acquiescence therein. Every right and remedy given by this Article
V or by law to the Indenture Trustee, the Insurer or to the Noteholders may be
exercised from time to time, and as often as may be deemed expedient, by the
Indenture Trustee, the Insurer or by the Noteholders, as the case may be.
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SECTION 5.12. Control by Noteholders. If the Insurer is not the
Controlling Party, the holders of a majority of the Outstanding Principal Amount
of the Notes shall have the right to direct the time, method and place of
conducting any Proceeding for any remedy available to the Indenture Trustee with
respect to the Notes or exercising any trust or power conferred on the Indenture
Trustee; provided that:
(i) such direction shall not be in conflict with any rule of
law or with this Indenture;
(ii) any direction to the Indenture Trustee to sell or
liquidate the Collateral shall be subject to the terms of Section 5.04;
and
(iii) the Indenture Trustee may take any other action deemed
proper by the Indenture Trustee that is not inconsistent with such
direction.
Notwithstanding the rights of Noteholders set forth in this Section, subject to
Section 6.01, the Indenture Trustee need not take any action that it determines,
in its sole discretion, might involve it in liability or might materially
adversely affect the rights of any Noteholders not consenting to such action.
SECTION 5.13. Waiver of Past Defaults. Prior to the declaration of
the acceleration of the maturity of the Notes as provided in Section 5.02, the
Insurer or the Holders of Notes representing not less than a majority of the
Outstanding Principal Amount of the Notes with the consent of the Insurer may
waive any past Default or Event of Default and its consequences except a Default
(a) in the payment of principal or interest on any of the Notes or (b) in
respect of a covenant or provision hereof that cannot be modified or amended
without the consent of the Holder of each Note, as applicable. In the case of
any such waiver, the Issuer, the Indenture Trustee, the Insurer 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, unless otherwise specified in such waiver;
but no such
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waiver shall extend to any subsequent or other Default or Event of Default or
impair any right consequent thereto.
SECTION 5.14. 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 Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to (i) any suit instituted by the
Indenture Trustee or the Insurer, (ii) any suit instituted by any Noteholder, or
group of Noteholders, in each case holding in the aggregate more than 10% of the
Outstanding Principal Amount of the Notes or (iii) 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 5.15. 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 and 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 advantages of any such law, and covenants that
it will not hinder, delay or impede the execution of any power herein granted to
the Indenture Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
SECTION 5.16. Action on Notes. The Indenture Trustee's right to seek
and recover judgment on the Notes or under this Indenture shall not be affected
by the seeking, obtaining or application of any other relief under or with
respect to this Indenture. Neither the lien of this Indenture nor any rights or
remedies of the Indenture Trustee, the Insurer or the Noteholders shall be
impaired by the recovery of any judgment by the Indenture Trustee or the Insurer
against the Issuer or by the levy of any execution under such judgment upon any
portion of the Collateral or upon any of the assets of the Issuer. Any money or
property collected by the Indenture Trustee shall be applied in accordance with
Section 5.06.
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SECTION 5.17. Performance and Enforcement of Certain Obligations.
(a) Promptly following a request from the Indenture Trustee or the
Insurer to do so and at the Administrator's expense, the Issuer shall take all
such lawful action as the Indenture Trustee or the Insurer may request to compel
or secure the performance and observance by 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 Indenture Trustee or
the Insurer, including the transmission of notices of default on the part of the
Seller or the Servicer thereunder and the institution of legal or administrative
actions or proceedings to compel or secure performance by the Seller or the
Servicer of each of their obligations under the Sale and Servicing Agreement.
(b) If the Indenture Trustee is the Controlling Party and if an
Event of Default has occurred and is continuing, the Indenture Trustee may, and
at the direction (which direction shall be given in writing and may include a
facsimile) of the Holders of 66 2/3% of the Outstanding Principal Amount of the
Notes shall, exercise all rights, remedies, powers, privileges and claims of the
Issuer against the Seller 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 Seller 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.
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ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.01. Duties of Indenture Trustee.
(a) If an Event of Default has occurred and is continuing, and of
which the Indenture Trustee shall have actual knowledge or has received notice,
the Indenture Trustee shall exercise the rights and powers vested in it by this
Indenture and with the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs; provided that if the Indenture Trustee shall assume
the duties of the Servicer pursuant to Section 3.07(e), the Indenture Trustee in
performing such duties shall use the degree of care and skill customarily
exercised by a prudent institutional servicer with respect to automobile retail
installment sales contracts that it services for itself or others.
(b) Except during the continuance of an Event of Default of which a
Responsible Officer of the Indenture Trustee shall have actual knowledge or
written notice:
(i) the Indenture Trustee undertakes to perform such duties
and only such duties as are specifically set forth in this Indenture and
no implied covenants or obligations (including, without limitation, to
exercise any discretionary powers granted by this Indenture) shall be read
into this Indenture against the Indenture Trustee; and
(ii) in the absence of bad faith or negligence on its part,
the Indenture Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Indenture Trustee and conforming
to the requirements of this Indenture; provided the Indenture Trustee
shall examine the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture and the other Basic
Documents to which the Indenture Trustee is a party; provided, further,
that the Indenture Trustee shall not be responsible for the accuracy or
content of any of the aforementioned documents and the Indenture Trustee
shall have no obligation to verify, re-compute or recal-
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culate any numerical information provided to it pursuant to the Basic
Documents.
(c) The Indenture Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act or its own wilful
misconduct, except that:
(i) this paragraph does not limit the effect of Section
6.01(b);
(ii) the Indenture Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer unless it is
proved that the Indenture Trustee was negligent in ascertaining the
pertinent facts; and
(iii) the Indenture Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in accordance with
the direction of any requisite majority of Noteholders authorized to give
direction to the Indenture Trustee pursuant to this Indenture.
(d) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to paragraphs (a), (b) and (c) of this Section
6.01.
(e) The Indenture Trustee shall not be liable for interest on any
money received by it except as the Indenture Trustee may agree in writing with
the Issuer.
(f) Money held in trust by the Indenture Trustee need not be
segregated from other funds except to the extent required by law or the terms of
this Indenture or the Sale and Servicing Agreement.
(g) No provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder or in the exercise of any of
its rights or powers, if it shall have reasonable grounds to believe that
repayments of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Indenture Trustee
shall be subject to the provisions of this Section and to the provisions of the
TIA.
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(i) The Indenture Trustee shall, and hereby agrees that it will (i)
perform all of the obligations and duties required of it under the Sale and
Servicing Agreement and (ii) hold the Insurance Policy in trust, and will hold
any proceeds of any claim on the Insurance Policy in trust solely for
application to the Notes as provided in the Sale and Servicing Agreement.
(j) Except as otherwise required or permitted by the TIA, nothing
contained herein shall be deemed to authorize the Indenture Trustee to engage in
any business operations or any activities other than those set forth in this
Indenture. Specifically, the Indenture Trustee shall have no authority to engage
in any business operations, acquire any assets other than those specifically
included in the Collateral under this Indenture or otherwise vary the assets
held by the Trust. Similarly, the Indenture Trustee shall have no discretionary
duties other than performing those ministerial acts set forth above necessary to
accomplish the purpose of this Trust as set forth in this Indenture.
(k) The Indenture Trustee shall not be liable in its individual
capacity with respect to any action taken, suffered or omitted to be taken by it
in good faith in accordance with this Indenture or the Basic Documents or at the
direction of a majority of the Outstanding Principal Amount of Notes, relating
to the time, method and place of conducting any Proceeding for any remedy
available to the Indenture Trustee, or exercising or omitting to exercise any
trust or power conferred upon the Indenture Trustee, under this Indenture.
(l) The Indenture Trustee shall not be required to take notice or be
deemed to have notice or knowledge of any Default or Event of Default unless a
Responsible Officer of the Indenture Trustee shall have actual knowledge thereof
or shall have received written notice thereof. In the absence of actual
knowledge or receipt of such notice, the Indenture Trustee may conclusively
assume that there is no Default or Event of Default.
(m) Subject to the other provisions of this Indenture and the Basic
Documents, the Indenture Trustee shall have no duty (i) to see to any recording,
filing, or depositing of this Agreement or any agreement referred to herein or
any financing statement or continuation statement evidencing a security
interest, or to see to the maintenance of any such recording or filing or
depositing or to any rerecording, refiling or redepositing of any thereof, (ii)
to see to any insurance, (iii) to see to the payment or discharge of any tax,
assessment, or other governmental charge or any lien or encumbrance of any kind
owing with respect to, assessed or
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levied against, any part of the Collateral, or (iv) to confirm or verify the
contents of any reports or certificates delivered to the Indenture Trustee
pursuant to this Indenture believed by the Indenture Trustee to be genuine and
to have been signed or presented by the proper party or parties.
(n) Anything in this Agreement to the contrary notwithstanding, in
no event shall the Indenture Trustee be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profits), even if the Indenture Trustee has been advised of the
likelihood of such loss or damage regardless of the form of action.
SECTION 6.02. Rights of Indenture Trustee.
(a) Except as otherwise provided in the second succeeding sentence,
the Indenture Trustee may conclusively rely and shall be protected in acting
upon or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, note, direction,
demand, election or other paper or document believed by it to be genuine and to
have been signed or presented by the proper person. The Indenture Trustee need
not investigate any fact or matter stated in the document. Notwithstanding the
foregoing, the Indenture Trustee, subject to Section 6.01(b)(ii) upon receipt of
all resolutions, certificates, statements, opinions, reports, documents, orders
or other instruments furnished to the Indenture Trustee that shall be
specifically required to be furnished pursuant to any provision of this
Indenture or any of the other Basic Documents, as applicable, shall examine them
to determine whether they comply as to form to the requirements of this
Indenture or any of the other Basic Documents, as applicable.
(b) Before the Indenture Trustee acts or refrains from acting, it
may require an Officer's Certificate (with respect to factual matters) or an
Opinion of Counsel, as applicable. The Indenture 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 Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian or nominee and the Indenture Trustee shall
not be responsible for any misconduct or negligence on the part of any such
agent, attorney, custodian or nominee appointed by the Indenture Trustee with
due care.
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(d) The Indenture Trustee shall not be liable for any action it
takes or omits to take in good faith which it believes to be authorized or
within its rights or powers; provided that the Indenture Trustee's conduct does
not constitute willful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the advice
or opinion of counsel with respect to legal matters relating to this Indenture
and the other Basic Documents 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 or thereunder in good faith and in
accordance with the advice or opinion of such counsel.
(f) The Indenture Trustee shall be under no obligation to exercise
any of the trusts or powers vested in it by this Indenture or to institute,
conduct or defend any litigation hereunder or in relation hereto at the request,
order or direction of any of the Noteholders, pursuant to the provisions of this
Indenture, unless such Noteholders shall have offered to the Indenture Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby; nothing contained herein shall,
however, relieve the Indenture Trustee of the obligation, during the continuance
of an Event of Default of which a Responsible Officer of the Indenture Trustee
shall have actual knowledge, to exercise such of the rights and powers vested in
it by this Indenture, and to 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.
(g) The Indenture Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond or other paper or document, unless requested in writing to do so
by a majority of Noteholders; provided that if the payment within a reasonable
time to the Indenture Trustee of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the opinion of the
Indenture Trustee, not reasonably assured to the Indenture Trustee by the
security afforded to it by the terms of this Agreement, the Indenture Trustee
may require reasonable indemnity against such cost, expense or liability as a
condition to taking any such action.
(h) The right of the Indenture Trustee to perform any discretionary
act enumerated in this Indenture shall not be construed as a duty, and the
Indenture
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Trustee shall not be answerable for other than its willful misconduct,
negligence or bad faith in the performance of such act.
SECTION 6.03. Individual Rights of Indenture Trustee. The Indenture
Trustee in its individual or any other capacity may become the owner or pledgee
of Notes and may otherwise deal with the Issuer or its Affiliates with the same
rights it would have if it were not Indenture Trustee. Any Paying Agent, Note
Registrar, co-registrar or co-paying agent may do the same with like rights.
However, the Indenture Trustee is required to comply with Sections 6.11 and
6.12.
SECTION 6.04. Indenture Trustee's Disclaimer. The Indenture Trustee
shall not be responsible for and makes no representation as to the validity or
adequacy of this Indenture, the other Basic Documents, the Collateral 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 this
Indenture or in any document issued in connection with the sale of the Notes or
in the Notes other than the Indenture Trustee's certificate of authentication.
SECTION 6.05. Notice of Defaults. If a Default occurs and is
continuing and a Responsible Officer of the Indenture Trustee has actual
knowledge or has received written notice thereof, the Indenture Trustee shall
mail to each Noteholder and the Insurer notice of the Default within 90 days
after it occurs and to the Insurer, notice of such default promptly after it
occurs. Except in the case of a Default in payment of principal of or interest
on any Note (including payments pursuant to the redemption of Notes), the
Indenture Trustee may withhold the notice to the Noteholders if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of Noteholders.
SECTION 6.06. Reports by Indenture Trustee to Holders. The Indenture
Trustee shall deliver to each Noteholder such information as may be required to
enable such holder to prepare its federal and state income tax returns.
SECTION 6.07. Compensation and Indemnity. The Issuer shall pay to
the Indenture Trustee from time to time reasonable compensation for its
services. The Indenture Trustee's compensation shall not be limited by any law
on compensation of a trustee of an express trust. The Issuer shall cause the
Servicer to reimburse the Indenture Trustee for all reasonable out-of-pocket
expenses incurred or made by it, including costs of collection, in addition to
the compensation for its services. Such expenses shall include the reasonable
compensation and expenses and disburse-
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ments and advances of the Indenture Trustee's agents, counsel, accountants and
experts. The Issuer shall, or shall cause the Administrator to, indemnify the
Indenture Trustee against any and all loss, liability or expense (including
attorneys' fees) incurred by it in connection with the administration of this
trust and the performance of its duties hereunder, except that the Issuer or the
Administrator shall not be liable for or required to indemnify the Indenture
Trustee from and against expenses arising or resulting from negligence, bad
faith or wilful misconduct on the part of the Indenture Trustee. The Indenture
Trustee shall notify the Issuer and the Administrator promptly in writing of any
claim for which it may seek indemnity. Failure by the Indenture Trustee to so
notify the Issuer and the Administrator shall not relieve the Issuer or the
Administrator of its obligations hereunder . The Issuer shall, or shall cause
the Administrator to, defend any such claim, and the Indenture Trustee may have
separate counsel and the Issuer shall, or shall cause the Administrator to, pay
the fees and expenses of such counsel. Neither the Issuer nor the Administrator
need reimburse any expense or indemnify against any loss, liability or expense
incurred by the Indenture Trustee through the Indenture Trustee's own willful
misconduct, negligence or bad faith.
The Issuer's obligations to the Indenture Trustee pursuant to this
Section shall survive the resignation or removal of the Indenture Trustee and
the discharge of this Indenture. When the Indenture Trustee incurs expenses
after the occurrence of a Default specified in Section 5.01 (f) or (g) with
respect to the Issuer, the expenses are intended to constitute expenses of
administration under Title 11 of the United States Code or any other applicable
federal or state bankruptcy, insolvency or similar law.
SECTION 6.08. Replacement of Indenture Trustee. The Indenture
Trustee may resign at any time by so notifying the Issuer, the Servicer and the
Insurer. The Issuer may, with the consent of the Insurer, and, at the request of
the Insurer unless an Insurer Default shall have occurred and be continuing,
shall, remove the Indenture Trustee, if:
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) a court having jurisdiction in the premises in respect of
the Indenture Trustee in an involuntary case or proceeding under federal
or state banking or bankruptcy laws, as now or hereafter constituted, or
any other applicable federal or state bankruptcy, insolvency or other
similar law, shall have entered a decree or order granting relief or
appointing a receiver,
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liquidator, assignee, custodian, trustee, conservator, sequestrator (or
similar official) for the Indenture Trustee or for any substantial part of
the Indenture Trustee's property, or ordering the winding-up or
liquidation of the Indenture Trustee's affairs, provided any such decree
or order shall have continued unstayed and in effect for a period of 30
consecutive days;
(iii) the Indenture Trustee commences a voluntary case under
any federal or state banking or bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, or consents to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
conservator, sequestrator or other similar official for the Indenture
Trustee or for any substantial part of the Indenture Trustee's property,
or makes any assignment for the benefit of creditors or fails generally to
pay its debts as such debts become due or takes any corporate action in
furtherance of any of the foregoing;
(iv) the Indenture Trustee otherwise becomes incapable of
acting; or
(v) the Indenture Trustee breaches any representation,
warranty or covenant made by it under any Basic Document.
If the Indenture Trustee resigns or is removed or if a vacancy
exists in the office of Indenture Trustee for any reason (the Indenture Trustee
in such event being referred to herein as the retiring Indenture Trustee), the
Issuer shall promptly appoint a successor Indenture Trustee acceptable to the
Insurer.
A successor Indenture Trustee shall deliver a written acceptance of
its appointment to the retiring Indenture Trustee, the Insurer and to the
Issuer. Thereupon the resignation or removal of the retiring Indenture Trustee
shall become effective, and the successor Indenture Trustee shall have all the
rights, powers and duties of the Indenture Trustee under this Indenture. The
Issuer or the successor Indenture Trustee shall mail a notice of its succession
to Noteholders. The retiring Indenture Trustee shall promptly transfer all
property held by it as Indenture Trustee to the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 60 days
after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Issuer, the Insurer or the Holders of a majority of the
Outstanding Princi-
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pal Amount of the Notes may petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11, any
Noteholder, with the prior written consent of the Insurer, may petition any
court of competent jurisdiction for the removal of the Indenture Trustee and the
appointment of a successor Indenture Trustee.
Any resignation or removal of the Indenture Trustee and appointment
of a successor Indenture Trustee pursuant to the provisions of this Section
shall not become effective until acceptance of appointment by the successor
Indenture Trustee pursuant to this Section. Notwithstanding the replacement of
the Indenture Trustee pursuant to this Section, the retiring Indenture Trustee
shall be entitled to payment or reimbursement of such amounts as such Person is
entitled pursuant to Section 6.07.
SECTION 6.09. Successor Indenture Trustee by Merger. If the
Indenture Trustee consolidates with, merges or converts into, or transfers all
or substantially all its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or transferee
corporation without any further act shall be the successor Indenture Trustee;
provided, that such corporation or banking association shall be otherwise
qualified and eligible under Section 6.11. The Indenture Trustee shall provide
the Insurer and each Rating Agency prompt notice of any such transaction.
In case at the time such successor by merger, conversion or
consolidation to the Indenture Trustee shall succeed to the trusts created by
this Indenture while any of the Notes shall have been authenticated but not
delivered, any such successor to the Indenture Trustee may adopt the certificate
of authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee; and in all such cases such certificates
shall have the full force which is anywhere in the Notes or in this Indenture
that the certificate of the Indenture Trustee shall have.
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SECTION 6.10. Appointment of Co-Indenture Trustee or Separate
Indenture Trustee.
(a) Notwithstanding any other provision of this Indenture, at any
time, for the purpose of meeting any legal requirement of any jurisdiction in
which any part of the Collateral may at the time be located, the Indenture
Trustee, with the consent of the Insurer (so long as it is the Controlling
Party) 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, jointly with
the Indenture Trustee, or separate trustee or separate trustees, of all or any
part of the Trust Property, and to vest in such Person or Persons, in such
capacity and for the benefit of the Noteholders and the Insurer, such title to
the Collateral, or any part hereof, and, subject to the other provisions of this
Section, such powers, duties, obligations, rights and trusts as the Indenture
Trustee or the Insurer (so long as it is the Controlling Party) may consider
necessary or desirable. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor Indenture Trustee under
Section 6.11 and no notice to Noteholders of the appointment of any co-trustee
or separate trustee shall be required under Section 6.08 hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed upon and
exercised or performed by the Indenture Trustee and such separate trustee
or co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Indenture
Trustee joining in such act), except to the extent that under any law of
any jurisdiction in which any particular act or acts are to be performed
the Indenture Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust 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
Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder; and
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(iii) the Indenture Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture
Trustee shall be deemed to have been given to each of the then separate trustees
and co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Indenture 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 co-appointment, either jointly with the Indenture
Trustee or separately, as may be provided therein, subject to all the provisions
of this Indenture, specifically including every provision relating to the
conduct of, affecting the liability of, or affording protection to, the
Indenture Trustee. Every such instrument shall be filed with the Indenture
Trustee.
(d) Any separate trustee or co-trustee may at any time constitute
the Indenture Trustee, its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Indenture on its behalf and in its name. If any separate trustee
or co-trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Indenture Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee. Notwithstanding anything to the
contrary in this Indenture, the appointment of any separate trustee or
co-trustee shall not relieve the Indenture Trustee of its obligations and duties
under this Indenture.
SECTION 6.11. Eligibility; Disqualification.
(a) The Indenture Trustee shall be acceptable to the Insurer and
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. The Indenture Trustee
shall provide copies of such reports to the Insurer upon request. The Indenture
Trustee shall comply with TIA Section 310(b); provided that there shall be
excluded from the operation of TIA Section 310(b)(1) any indenture or indentures
under which other securities of the Issuer are outstanding if the requirements
for such exclusion set forth in TIA Section 310(b)(1) are met.
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(b) If the long term debt rating of the Indenture Trustee shall not
be at least Baa3 from Moody's and BBB from Standard & Poor's, the Rating
Agencies and the Insurer shall be given notice of such lower long-term debt
rating.
SECTION 6.12. Preferential Collection of Claims Against Issuer. The
Indenture Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). An Indenture Trustee who has resigned
or been removed shall be subject to Section 3 11 (a) to the extent indicated.
SECTION 6.13. Representations and Warranties of Indenture Trustee.
The Indenture Trustee hereby makes the following representations and warranties
on which the Issuer and Noteholders shall rely:
(a) the Indenture Trustee is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
formation; and
(b) the Indenture Trustee has full power, authority and legal right
to execute, deliver, and perform this Indenture and shall have taken all
necessary action to authorize the execution, delivery and performance by it of
this Indenture.
SECTION 6.14. Waiver of Setoffs. The Indenture Trustee hereby
expressly waives any and all rights of setoff that the Indenture Trustee may
otherwise at any time have under applicable law with respect to the Trust
Account Property and agrees that the amounts in the Trust Accounts shall at all
times be held and applied solely in accordance with the provisions hereof and of
the Sale and Servicing Agreement.
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ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.01. Indenture Trustee to Furnish Issuer Names and
Addresses of Noteholders. The Indenture Trustee will furnish or cause to be
furnished to the Issuer and the Administrator (i) not more than five days after
the earlier of (a) each Record Date and (b) three months after the last Record
Date, a list, in such form as the Issuer may reasonably require, of the names
and addresses of the Holders of Notes as of such Record Date and (ii) at such
other times as the Issuer may request in writing, within 30 days after receipt
by the Indenture Trustee of any such request, a list of similar form and content
as of a date not more than ten days prior to the time such list is furnished;
provided that so long as the Indenture Trustee is the Note Registrar, no such
list shall be required to be furnished. The Indenture Trustee or, if the
Indenture Trustee is not the Note Registrar, the Issuer shall furnish to the
Insurer in writing on an annual basis and at such times as the Insurer may
reasonably request a copy of the list.
SECTION 7.02. Preservation of Information; Communications to
Noteholders.
(a) The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders of Notes
contained in the most recent list furnished to the Indenture Trustee as provided
in Section 7.01 and the names and addresses of Holders of Notes received by the
Indenture Trustee in its capacity as Note Registrar. The Indenture Trustee may
destroy any list furnished to it as provided in such Section 7.01 upon receipt
of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b) with
other Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall
have the protection of TIA Section 312(c).
SECTION 7.03. Reports by Issuer.
(a) The Issuer shall:
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(i) file with the Indenture Trustee, within 15 days after the
Issuer is required to file the same with the Commission, copies of the
annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) 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 Indenture Trustee and the Commission in
accordance with rules and regulations prescribed from time to time by the
Commission such additional information, documents and reports with respect
to compliance by the Issuer with the conditions and covenants of this
Indenture as may be required from time to time by such rules and
regulations; and
(iii) supply to the Indenture Trustee (and the Indenture
Trustee shall transmit by mail to all Noteholders described in TIA Section
313(c)) such summaries of any information, documents and reports required
to be filed by the Issuer pursuant to clauses (i) and (ii) of this Section
7.03(a) as may be required by rules and regulations prescribed from time
to time by the Commission.
SECTION 7.04. Fiscal Year. Unless the Issuer otherwise determines,
the fiscal year of the Issuer shall end on December 31 of each calendar year.
SECTION 7.05. Reports by Indenture Trustee. To the extent that any
of the events described in TIA Section 313(a) shall have occurred, the Indenture
Trustee shall, within 60 days after each December 15 beginning with December 15,
2000, mail to the Issuer, the Insurer and each Noteholder as required by TIA
Section 313(c) a brief report dated as of such date that complies with TIA
Section 313(a). The Indenture Trustee also shall comply with TIA Section 313(b).
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ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.01. Collection of Money.
(a) General. Except as otherwise expressly provided herein, the
Indenture Trustee may demand payment or delivery of, and shall receive and
collect, directly and without intervention or assistance of any fiscal agent or
other intermediary, all money and other property payable to or receivable by the
Indenture Trustee pursuant to this Indenture. The Indenture Trustee shall apply
all such money received by it as provided in this Indenture. Except as otherwise
expressly provided in this Indenture, if any default occurs in the making of any
payment or performance under any agreement or instrument that is part of the
Collateral, the Indenture Trustee may take such action as may be appropriate to
enforce such payment or performance, including the institution and prosecution
of appropriate Proceedings. Any such action shall be without prejudice to any
right to claim a Default or Event of Default under this Indenture and any right
to proceed thereafter as provided in Article V.
(b) Claims Under Insurance Policy. The Notes will be insured by the
Insurance Policy pursuant to the terms set forth therein, notwithstanding any
provisions to the contrary contained in this Indenture or the Sale and Servicing
Agreement. All amounts received under the Insurance Policy shall be used solely
for the payment to Noteholders of principal and interest on the Notes.
SECTION 8.02. Trust Accounts.
(a) On or prior to the Closing Date, the Issuer shall cause the
Indenture Trustee to establish and maintain in the name of the Indenture
Trustee, for the benefit of the Noteholders and the Insurer, the Trust Accounts
as provided in Section 4.01 of the Sale and Servicing Agreement.
(b) On the Business Day immediately preceding each Distribution
Date, based solely on the Distribution Date Statement, the Indenture Trustee
shall withdraw from the Collection Account an amount equal to the amount of
Available Funds available with respect to such Distribution Date and deposit
such amount into the Payment Account, as provided in Section 4.02(e) of the Sale
and Servicing Agreement. On each Distribution Date, the Indenture Trustee will
apply the Avail-
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able Funds available with respect to the related Collection Period, together
with amounts, if any, withdrawn from the Spread Account or representing payment
of the Insured Payment, to make the deposits to the Note Distribution Account
required pursuant to Section 4.03(a) of the Sale and Servicing Agreement.
(c) On each Distribution Date and the Redemption Date, the Indenture
Trustee shall distribute all amounts on deposit in the Note Distribution Account
in respect of such Distribution Date to Noteholders in the following order of
priority:
(i) to the Holders of each Class of Notes, on a pro rata
basis, the Note Interest Distributable Amount for such Distribution Date;
(ii) if such Distribution Date is the Final Scheduled
Distribution Date with respect to a Class of Notes, to the Holders of such
Class of Notes, pro rata among the Noteholders of each such Class, the
Note Principal Distributable Amount to the extent of the remaining
Outstanding Principal Amount of such Class of Notes;
(iii) to the Holders of the Class A-1 Notes, the remaining
Note Principal Distributable Amount (after giving effect to the payment,
if any, described in clause (ii) above), until the Outstanding Principal
Amount of the Class A-1 Notes is reduced to zero;
(iv) to the Holders of the Class A-2 Notes, the remaining Note
Principal Distributable Amount (after giving effect to the payments, if
any, described in clauses (ii) and (iii) above), until the Outstanding
Principal Amount of the Class A-2 Notes is reduced to zero;
(v) to the Holders of the Class A-3 Notes, the remaining Note
Principal Distributable Amount (after giving effect to the payments, if
any, described in clauses (ii), (iii) and (iv) above), until the
Outstanding Principal Amount of the Class A-3 Notes is reduced to zero;
and
(vi) to the Holders of the Class A-4 Notes, the remaining Note
Principal Distributable Amount (after giving effect to the payments, if
any, described in clauses (ii), (iii), (iv) and (v) above), until the
Outstanding Principal Amount of the Class A-4 Notes is reduced to zero.
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(d) The Indenture Trustee shall make claims under the Insurance
Policy pursuant to Section 4.02(c) of the Sale and Servicing Agreement and in
accordance with the Insurance Policy. In making any such claim, the Indenture
Trustee shall comply with all the terms and conditions of the Insurance Policy.
Upon receipt of the Insured Payment, the Indenture Trustee shall distribute such
Insured Payment as part of the Note Distributable Amount under this Indenture.
SECTION 8.03. Release of Collateral.
(a) Subject to the payment of its fees and expenses pursuant to
Section 6.07, the Indenture Trustee may, and when required by the provisions of
this Indenture shall, execute instruments to release property from the lien of
this Indenture, or convey the Indenture Trustee's interest in the same, in a
manner and under circumstances that are not inconsistent with the provisions of
this Indenture. No party relying upon an instrument executed by the Indenture
Trustee as provided in this Article shall be bound to ascertain the Indenture
Trustee's authority, inquire into the satisfaction of any conditions precedent
or see to the application of any monies.
(b) The Indenture Trustee shall, at such time as there are no Notes
Outstanding and all sums due the Indenture Trustee pursuant to Section 6.07 have
been paid in full and all due to the Insurer under the Basic Documents have been
paid, release any remaining portion of the Collateral that secured the Notes
from the lien of this Indenture and release to the Issuer or any other Person
entitled thereto any funds then on deposit in the Trust Accounts. The Indenture
Trustee shall release property from the lien of this Indenture pursuant to this
Section 8.03(b) only upon receipt by it and the Insurer 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 Sections 314(c) and
314(d)(1) meeting the applicable requirements of Section 11.01.
SECTION 8.04. Opinion of Counsel. The Indenture Trustee and the
Insurer, so long as it is the Controlling Party, shall receive at least seven
days prior written notice when requested by the Issuer to take any action
pursuant to Section 8.03(a), accompanied by copies of any instruments involved,
and the Indenture Trustee and the Insurer, so long as it is the Controlling
Party, shall also require, as a condition to such action, an Opinion of Counsel,
in form and substance satisfactory to the Indenture Trustee and the Insurer, so
long as it is the Controlling Party (and not at the expense of the Indenture
Trustee or the Insurer), stating the legal effect of any such action, outlining
the steps required to complete the same, and concluding
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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 that such Opinion of Counsel shall not be required to
express an opinion as to the fair value of the Collateral. Counsel rendering any
such opinion may rely, without independent investigation, on the accuracy and
validity of any certificate or other instrument delivered to the Indenture
Trustee in connection with any such action.
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ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures Without Consent of
Noteholders.
(a) Without the consent of the Holders of any Notes but with the
consent of the Insurer (so long as the Insurer is the Controlling Party) and
with prior notice to each Rating Agency, the Issuer and the Indenture Trustee,
when authorized by an Issuer Order, and the other parties hereto 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 TIA as in force at the date of the
execution thereof), in form satisfactory to the Indenture Trustee, for any of
the following purposes:
(i) to correct or amplify the description of any property at
any time subject to the lien of this Indenture, or better to assure,
convey and confirm unto the Indenture Trustee any property subject or
required to be subjected to the lien created by this Indenture, or to
subject to the lien created by this Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another Person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein and
in the Notes contained;
(iii) to add to the covenants of the Issuer, for the benefit
of the Holders of the Notes and the Insurer, or to surrender any right or
power herein conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any supplemental indenture which may be
inconsistent with any other provision herein or in any supplemental
indenture or the Basic Documents or to make any other provisions with
respect to matters or questions arising under this Indenture or in any
supplemental indenture which will not be inconsistent with other
provisions of the Indenture or supplemental
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indenture; provided that such action shall not adversely affect the
interests of the Holders of the Notes;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the Notes and
to add to or change any of the provisions of this Indenture as shall be
necessary to facilitate the administration of the trusts hereunder by more
than one trustee, pursuant to the requirements of Article VI; or
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the qualification
of this Indenture under the TIA or under any similar federal statute
hereafter enacted and to add to this Indenture such other provisions as
may be expressly required by the TIA.
The Indenture Trustee is hereby authorized to join in the execution
of any such supplemental indenture and to make any further appropriate
agreements and stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by an
Issuer Order, may, also without the consent of any of the Holders of the Notes
but with the consent of the Insurer and with prior notice to each Rating Agency,
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 that (1) such action shall
not (A) as evidenced by an Opinion of Counsel, materially and adversely affect
the interests of any Noteholder or (B) as confirmed by each Rating Agency rating
the Notes of the related series, cause the then current rating assigned to any
class of such Notes to be withdrawn or reduced without regard to the Insurance
Policy and (2) an opinion of counsel as to applicable tax matters is delivered.
SECTION 9.02. Supplemental Indentures With Consent of Noteholders.
The Issuer and the Indenture Trustee, when authorized by an Issuer Order, also
may, with prior notice to each Rating Agency, with the consent of the Insurer
and with the consent of the Holders of not less than a majority of the
Outstanding Principal Amount of the Notes, acting as a single class, by Act of
such Holders delivered to the Issuer and the Indenture Trustee, enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to, or
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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 that, subject to the express rights of the Insurer under the
Basic Documents, no such supplemental indenture shall, without the consent of
the Holder of each Outstanding Note affected thereby:
(a) change the date of payment of any installment of principal of,
or interest on, any Note or reduce the principal amount thereof, the note rate
thereon or the Redemption Price with respect thereto, or change any place of
payment where, or the coin or currency in which, any Note or the interest
thereon is payable;
(b) 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);
(c) reduce the percentage of the Outstanding Principal 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;
(d) modify or alter the provisions of the second proviso to the
definition of the term "Outstanding";
(e) reduce the percentage of the Outstanding Principal Amount of the
Notes, the consent of the Holders of which is required to direct the Indenture
Trustee to sell or liquidate the Collateral pursuant to Section 5.04;
(f) decrease the percentage of the Outstanding Principal Amount of
the Notes required to amend this Indenture or the other Basic Documents;
(g) permit the creation of any lien ranking prior to or on a parity
with the lien created by this Indenture with respect to any part of the
Collateral for such Notes or, except as otherwise permitted or contemplated
herein, terminate the lien created by this Indenture on any property at any time
subject hereto or deprive the Holder of any Note of the security provided by the
lien created by this Indenture; or
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(h) result in a taxable event to any Noteholder for federal income
tax purposes.
The Indenture Trustee may in its discretion determine whether or not
any Notes would be affected by any supplemental indenture and any such
determination shall be conclusive upon the Holders of all Notes, whether
theretofore or thereafter authenticated and delivered hereunder. The Indenture
Trustee shall not be liable for any such determination made in good faith.
It shall not be necessary for any act of Noteholders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such act shall approve the substance thereof.
Promptly after the execution by the parties hereto of any
supplemental indenture pursuant to this Section, the Indenture Trustee shall
mail to the Holders of the Notes to which such amendment or supplemental
indenture relates a notice setting forth in general terms the substance of such
supplemental indenture. Any failure of the Indenture Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
SECTION 9.03. Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article or the modifications thereby of the trusts created by
this Indenture, the Indenture Trustee shall be entitled to receive, and subject
to Sections 6.01 and 6.02 shall be fully protected in relying upon, an Opinion
of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Indenture Trustee may, but shall
not be obligated to, enter into any such supplemental indenture that affects the
Indenture Trustee's own rights, duties, liabilities or immunities under this
Indenture or otherwise. The Indenture Trustee shall provide a fully executed
copy of any supplemental indenture to this Indenture to the Insurer.
SECTION 9.04. 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 parties hereto and the Holders of the Notes shall thereafter be determined,
exercised and enforced hereunder subject in all respects to such modifications
and amendments,
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and all the terms and conditions of any such supplemental indenture shall be and
be deemed to be part of the terms and conditions of this Indenture for any and
all purposes.
SECTION 9.05. Conformity With Trust Indenture Act. Every amendment
of this Indenture and every supplemental indenture executed pursuant to this
Article shall conform to the requirements of the Trust Indenture Act as then in
effect so long as this Indenture shall then be qualified under the Trust
Indenture Act.
SECTION 9.06. Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article may, and if required by the Indenture Trustee shall,
bear a notation in form approved by the Indenture Trustee and the Insurer as to
any matter provided for in such supplemental indenture. If the Issuer or the
Indenture Trustee shall so determine, new notes so modified as to conform, in
the opinion of the Indenture Trustee and the Issuer, to any such supplemental
indenture may be prepared and executed by the Issuer and authenticated and
delivered by the Indenture Trustee in exchange for Outstanding Notes.
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ARTICLE X
REDEMPTION OF NOTES
SECTION 10.01. Redemption. In the event that the Servicer pursuant
to Section 8.01(a) of the Sale and Servicing Agreement purchases the corpus of
the Trust, the Notes are subject to redemption in whole, but not in part, on the
Distribution Date on which such repurchase occurs, for a purchase price equal
to the Redemption Price; provided that the Issuer has available funds
sufficient to pay the Redemption Price plus all amounts owed to the Insurer, the
Servicer, the Indenture Trustee and the Owner Trustee under the Basic Documents.
The Seller, the Servicer or the Issuer shall furnish the Insurer and each Rating
Agency prior notice of such redemption. If the Notes are to be redeemed pursuant
to this Section 10.01, the Servicer or the Issuer shall furnish notice of such
election to the Indenture Trustee not later than 20 days prior to the Redemption
Date and shall deposit, one day prior to the Redemption Date, with the Indenture
Trustee in the Note Distribution Account the Redemption Price of the Notes to be
redeemed and shall pay to the Insurer all amounts due to it under the Basic
Documents, whereupon all such Notes shall be due and payable on the Redemption
Date upon the furnishing of a notice complying with Section 10.02 to each Holder
of the Notes.
SECTION 10.02. Form of Redemption Notice. Notice of redemption
under Section 10.01 shall be given by the Indenture Trustee by first-class mail,
postage prepaid or by facsimile, mailed or transmitted not less than five days
prior to the applicable Redemption Date to each Holder of Notes, as of the close
of business on the Record Date preceding the applicable Redemption Date, at such
Holder's address appearing in the Note Register. In addition, the Administrator
shall notify the Insurer and Rating Agencies upon the redemption of any Class of
Notes, pursuant to Section l(a)(i) of the Administration Agreement.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price; and
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(iii) the place where such Notes are to be surrendered for
payment of the Redemption Price (which shall be the office or agency of
the Issuer to be maintained as provided in Section 3.02).
Notice of redemption of the Notes shall be given by the Indenture
Trustee in the name and at the expense of the Issuer. Failure to give notice of
redemption, or any defect therein, to any Holder of any Note shall not impair
or affect the validity of the redemption of any other Note.
SECTION 10.03. Notes Payable on Redemption Date. The Notes or
portions thereof to be redeemed shall, following notice of redemption (if any)
as required by Section 10.02, 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.
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ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Compliance Certificates and Opinions, etc.
(a) Upon any application or request by the Issuer to the Indenture
Trustee to take any action under any provision of this Indenture, the Issuer
shall furnish to the Indenture Trustee and the Insurer (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 11.01. Notwithstanding the
foregoing, 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 Indenture Trustee that is to be made the basis for the
release of any
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property subject to the lien created by this Indenture, the Issuer shall, in
addition to any obligation imposed in Section 11.01(a) or elsewhere in this
Indenture, furnish to the Indenture Trustee and the Insurer an Officer's
Certificate certifying or stating the opinion of the signer thereof as to the
fair value (within 90 days of such deposit) to the Issuer of the Collateral or
other property or securities to be so deposited.
(ii) Whenever the Issuer is required to furnish to the
Indenture Trustee and the Insurer an Officer's Certificate certifying or
stating the opinion of any signer thereof as to the matters described in
clause (i) above, the Issuer shall also deliver to the Indenture Trustee
and the Insurer an Independent Certificate as to the named matters, if the
fair value to the Issuer of the property to be so deposited and of all
other such property 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 Officer's Certificates delivered pursuant to clause (i) above
and this clause (ii), is 10% or more of the Out standing Principal Amount
of the Notes, but such Officer's Certificate need not be furnished with
respect to any property 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 (1%) of the Outstanding Principal Amount
of the Notes.
(iii) Whenever any property or securities are to be released
from the lien created by this Indenture, the Issuer shall also furnish to
the Indenture Trustee and the Insurer 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 created by this Indenture in
contravention of the provisions hereof.
(iv) Whenever the Issuer is required to furnish to the
Indenture Trustee and the Insurer an Officer's Certificate certifying or
stating the opinion of any signer thereof as to the matters described in
clause (iii) above, the Issuer shall also furnish to the Indenture Trustee
and the Insurer an Independent Certificate as to the same matters if the
fair value of the property or securities and of all other property or
securities released from the lien created by this Indenture since the
commencement of the then current fiscal year, as set forth in the
Officer's Certificate required by clause (iii) above and this clause (iv),
equals 10% or more of the Outstanding Principal Amount of the
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Notes, but such Officer's 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 Principal Amount of the Notes.
SECTION 11.02. Form of Documents Delivered to Indenture Trustee. In
any case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer
may be based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his 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 Seller or the Issuer, stating that the information with
respect to such factual matters is in the possession of the Servicer, the Seller
or the Issuer, unless such officer or counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have
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such application granted or to the sufficiency of such certificate or report.
The foregoing shall not, however, be construed to affect the Indenture
Trustee's right to rely upon the truth and accuracy of any statement or opinion
contained in any such document as provided in Article VI.
SECTION 11.03. Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Indenture Trustee, and, where it is hereby expressly required,
to the Issuer. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "Act" of the
Noteholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 6.01) conclusive in
favor of the Indenture Trustee and the Issuer, if made in the manner provided in
this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of every
Note issued upon the registration thereof or in exchange therefor or in lieu
thereof, in respect of anything done, omitted or suffered to be done by the
Indenture Trustee or the Issuer in reliance thereon, whether or not notation of
such action is made upon such Note.
SECTION 11.04. Notices, etc., to Indenture Trustee, Issuer, Insurer
and Rating Agencies.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or Act of Noteholders or other documents provided or permitted by this
In-
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denture shall be in writing and if such request, demand, authorization,
direction, notice, consent, waiver or Act of Noteholders is to be made upon,
given or furnished to or filed with:
(i) the Indenture Trustee by any Noteholder, the Insurer or by
the Issuer shall be sufficient for every purpose hereunder if in writing,
personally delivered, sent by facsimile transmission and confirmed or
mailed by overnight service, to or with the Indenture Trustee at its
Corporate Trust Office;
(ii) the Issuer by the Indenture Trustee, the Insurer or by
any Noteholder shall be sufficient for every purpose hereunder if in
writing, personally delivered, sent by facsimile transmission and
confirmed or mailed by overnight service, to the Issuer addressed to: ANRC
Auto Owner Trust ____________________, in care of _______________________,
as Owner Trustee, __________________________, Attention: ________________,
or at any other address furnished in writing to the Indenture Trustee by
the Issuer; or
(iii) the Insurer by the Issuer or the Indenture Trustee shall
be sufficient for any purpose hereunder if in writing, personally
delivered, sent by facsimile transmission and confirmed or mailed by
overnight service, to the Insurer addressed to: _________________________.
(b) Notices required to be given to the Rating Agencies by the
Issuer, the Indenture Trustee or the Owner Trustee shall be in writing,
personally delivered, sent by facsimile transmission and confirmed or mailed by
overnight service, to (i) in the case of Moody's, at the following address:
Moody's Investors Service, Inc., ABS Monitoring Department, 99 Church Street,
New York, New York 10007 and (ii) in the case of Standard & Poor's, at the
following address: Standard & Poor's Ratings Services, 55 Water Street, New
York, New York 10041, Attention: Asset Backed Surveillance Department; or as to
each of the foregoing, at such other address as shall be designated by written
notice to the other parties.
SECTION 11.05. Notices to Noteholders; Waiver. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at 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
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Noteholders is given by mail, neither the failure to mail such notice nor any
defect in any notice so mailed to any particular Noteholder shall affect the
sufficiency of such notice with respect to other Noteholders, and any notice
that is mailed in the manner herein provided shall conclusively be presumed to
have been duly given.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed
to be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute a Default or
Event of Default
SECTION 11.06. Alternate Payment and Notice Provisions.
Notwithstanding any provision of this Indenture or any of the Notes to the
contrary, the Issuer may enter into any agreement with any Holder of a Note
providing for a method of payment, or notice by the Indenture Trustee or any
Paying Agent to such Holder, that is different from the methods provided for in
this Indenture for such payments or notices. The Issuer will furnish to the
Indenture Trustee a copy of each such agreement and the Indenture Trustee will
cause payments to be made and notices to be given in accordance with such
agreements.
SECTION 11.07. Conflict With Trust Indenture Act. If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this indenture by any of the provisions of the Trust
Indenture Act, such required provision shall control.
The provisions of TIA Sections 310 through 317 that impose duties on
any Person (including the provisions automatically deemed included herein unless
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expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
SECTION 11.08. Effect of Headings and Table of Contents. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
SECTION 11.09. Successors and Assigns. All covenants and agreements
in this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Indenture Trustee in
this Indenture shall bind its successors, co-trustees and agents.
SECTION 11.10. Separability. In case any provision in this Indenture
or in the Notes shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 11.11. Benefits of Indenture. The Insurer and its successors
and assigns shall be a third-party beneficiary to the provisions of this
Indenture, and shall be entitled to rely upon and directly to enforce such
provisions of this In denture so long as no Insurer Default shall have occurred
and be continuing. Nothing in this Indenture or in the Notes, express or
implied, shall give to any Person, other than the parties hereto and the Insurer
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
Collateral, any benefit or any legal or equitable right, remedy or claim under
this Indenture. The Insurer may disclaim any of its rights and powers under this
Indenture, but not its duties and obligations under the Insurance Policy, upon
delivery of a written notice to the Indenture Trustee.
SECTION 11.12. Legal Holidays. In any case where the date on which
any payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the date on which nominally due, and no interest shall
accrue on the amount of such payment for the period from and after any such
nominal date.
SECTION 11.13. Governing Law. This Indenture shall be governed by,
and construed in accordance with, the laws of the State of New York.
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SECTION 11.14. Counterparts. This Indenture may be executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
SECTION 11.15. Recording of Indenture. If this Indenture is subject
to recording in any appropriate public recording offices, such recording is to
be effected by the Issuer and at its expense accompanied by an Opinion of
Counsel (which may be counsel to the Indenture Trustee or any other counsel
reasonably acceptable to the Indenture Trustee and the Insurer) to the effect
that such recording is necessary either for the protection of the Noteholders or
any other Person secured hereunder or for the enforcement of any right or remedy
granted to the Indenture Trustee under this Indenture.
SECTION 11.16. Trust Obligation. No recourse may be taken, directly
or indirectly, with respect to the obligations of the Issuer, the Owner Trustee
or the Indenture Trustee on the Notes or under this Indenture or any certificate
or other writing delivered in connection herewith or therewith, against (i) the
Indenture Trustee or the Owner Trustee in its individual capacity, (ii) any
owner of a beneficial interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director, employee or agent of the Indenture
Trustee or the Owner Trustee in its individual capacity, any holder of a
beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee or
of any successor or assign of the Indenture Trustee or the Owner Trustee in its
individual capacity, except as any such Person may have expressly agreed (it
being understood that the Indenture Trustee and the Owner Trustee have no such
obligations in their individual capacity) and except that any such partner,
owner or beneficiary shall be fully liable, to the extent provided by applicable
law, for any unpaid consideration for stock, unpaid capital contribution or
failure to pay any installment or call owing to such entity. For all purposes of
this Indenture, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Articles VI, VII and VIII of the Owner Trust
Agreement.
SECTION 11.17. No Petition. The parties hereto, by entering into
this Indenture, and each Noteholder, by accepting a Note or a beneficial
interest in a Note, hereby covenant and agree that they will not at any time
institute against the Seller or the Issuer, or join in any institution against
the Seller 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
88
<PAGE>
in connection with any obligations relating to the Notes, this Indenture or any
of the other Basic Documents.
SECTION 11.18. Inspection. The Issuer agrees that, on reasonable
prior notice, it will permit any representative of the Indenture Trustee or of
the In surer, during the Issuer's normal business hours, to examine all the
books of account, records, reports and other papers of the Issuer, to make
copies and extracts therefrom, to cause such books to be audited by independent
certified public accountants, and to discuss the Issuer's affairs, finances and
accounts with the Issuer's officers, employees and independent certified public
accountants, all at such reasonable times and as often as may be reasonably
requested. The Indenture Trustee and the Insurer shall and shall cause their
respective representatives to hold in confidence all such information except to
the extent disclosure may be required by law (and all reasonable applications
for confidential treatment are unavailing) and except to the extent that the
Indenture Trustee and the Insurer may reasonably determine that such disclosure
is consistent with its obligations hereunder.
SECTION 11.19. Limitation of Liability of Owner Trustee. Notwithstanding
anything contained herein to the contrary, this instrument has been
countersigned by ____________________ not in its individual capacity but solely
in its capacity as Owner Trustee of the Issuer and in no event shall
____________________ in its individual capacity or any beneficial owner of the
Issuer have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder, as to all of which
recourse shall be had solely to the assets of the Issuer. For all purposes of
this Agreement, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Articles VI, VII and VIII of the Owner Trust
Agreement. Notwithstanding anything herein to the contrary, Section 2.07 of the
Owner Trust Agreement shall remain in full force and effect.
SECTION 11.20. Certain Matters Regarding the Insurer. So long as an
Insurer Default shall not have occurred and be continuing, the Insurer shall
have the right to exercise all rights, including voting rights, which the
Noteholders are entitled to exercise pursuant to this Indenture, without any
consent of such Noteholders; provided that without the consent of each
Noteholder affected thereby, the Insurer shall not exercise such rights to amend
this Indenture in any manner that would (i) reduce the amount of, or delay the
timing of, collections of payments on the Contracts or distributions which are
required to be made on any Note, (ii) ad-
89
<PAGE>
versely affect in any material respect the interests of any of the Noteholders,
or (iii) alter the rights of any such Noteholder to consent to such amendment.
Notwithstanding any provision in this Indenture to the contrary, in
the event an Insurer Default shall have occurred and be continuing, the Insurer
shall not have the right to take any action under this Agreement or to control
or direct the actions of the Trust, the Seller, the Indenture Trustee or the
Owner Trustee pursuant to the terms of this Indenture, nor shall the consent of
the Insurer be required with respect to any action (or waiver of a right to take
action) to be taken by the Trust, the Seller, the Indenture Trustee, the Owner
Trustee or the Noteholders; provided that the consent of the Insurer shall be
required at all times with respect to any amendment of this Indenture.
90
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed and delivered as of the day and year first above written.
ANRC AUTO OWNER TRUST __________,
as Issuer
By:
---------------------------------------,
not in its individual capacity but
solely as Owner Trustee
By:
---------------------------------------,
Name:
Title:
---------------------------------------,
not in its individual capacity but
solely as Indenture Trustee
By:
---------------------------------------
Name:
Title:
91
<PAGE>
SCHEDULE A
SCHEDULE OF CONTRACTS
Schedules of Contracts are on file at the offices of the
Seller, the Servicer, the Indenture Trustee and the Insurer.
92
<PAGE>
EXHIBIT A
FORM OF NOTE DEPOSITORY AGREEMENT
[Begins on Next Page]
A-1
<PAGE>
EXHIBIT B
FORM OF CLASS A-1 NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT
INSURED BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE 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.
ANRC AUTO OWNER TRUST ______
____% AUTO LOAN BACKED NOTE, CLASS A-1
REGISTERED $__________________
No. 1 CUSIP NO. __________________
ANRC Auto Owner Trust ______, a business trust organized and
existing under the laws of the State of Delaware (the "Issuer"), for value
received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of _____________ ($_____________), payable to the extent described
in the Indenture and the Sale and Servicing Agreement referred to on the
reverse hereof on each
B-1
<PAGE>
Distribution Date; provided that the entire unpaid principal amount of this Note
shall be payable on the earlier of the Distribution Date occurring in
_________________ (the "Class A-1 Final Scheduled Distribution Date") and the
Redemption Date, if any, selected pursuant to the Indenture.
The Issuer will pay interest on this Note at the Class A-1 Note Rate
shown above on each Distribution Date until the principal of this Note is paid
or made available for payment, on the principal amount of this Note outstanding
on the preceding Distribution Date (after giving effect to all payments of
principal made on the preceding Distribution Date), or on the Closing Date in
the case of the first Distribution Date, subject to certain limitations
contained in the Indenture. Interest on this Note will accrue for each
Distribution Date during the period (the "Interest Accrual Period" with respect
to such Distribution Date) from and including the Distribution Date immediately
preceding such Distribution Date (or, in the case of the first Distribution
Date, from and including the Closing Date) to but excluding such Distribution
Date. The Issuer shall pay interest on overdue installments of interest at the
Class A-1 Note Rate to the extent lawful. Interest will be computed on the basis
of a 360-day year and the actual number of days in the related Interest Accrual
Period. 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.
The Notes are entitled to the benefits of a financial guaranty
insurance policy (the "Insurance Policy") issued by ________________ (the
"Insurer"), pursuant to which the Insurer has unconditionally guaranteed payment
of the Note Interest Distributable Amount on each Distribution Date and the
Guaranty Note Principal Amount of the Notes, all as more fully set forth in the
Insurance Policy.
Reference is made to the further provisions of this Note set forth
on the reverse hereof, which shall have the same effect as though fully set
forth on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
B-2
<PAGE>
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
B-3
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by an Authorized Officer, as set forth below.
Date: ____________, ____ ANRC AUTO OWNER TRUST __________
By:
---------------------------------,
not in its individual capacity,
but solely as Owner Trustee
By:
---------------------------------
Name:
Title:
B-4
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
-------------------------------------,
not in its individual capacity but
solely as Indenture Trustee
By:
---------------------------------
Authorized Signatory
B-5
<PAGE>
[REVERSE OF CLASS A-1 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its "____% Auto Loan Backed Notes, Class A-1" (the "Class A-1
Notes"), all issued under the Indenture, dated as of _________, ____ (as
amended, supplemented or otherwise modified and in effect from time to time, the
"Indenture"), between the Issuer and ____________, as indenture trustee (the
"Indenture Trustee"), 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 Insurer, the Indenture 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, and if not defined therein, in the
Sale and Servicing Agreement (as defined in the Indenture).
The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and
the Class A-4 Notes (collectively, the "Notes") are and will be equally and
ratably secured by the collateral pledged as security therefor as provided in
the Indenture.
Principal payable on the Class A-1 Notes will be paid on each
Distribution Date in the amount specified in the Indenture and the Sale and
Servicing Agreement. As described above, the entire unpaid principal amount of
this Note will be payable on the earlier of the Class A-1 Final Scheduled
Distribution Date and the Redemption Date, if any, selected pursuant to the
Indenture. Notwithstanding the foregoing, under certain circumstances, the
entire unpaid principal amount of the Class A-1 Notes shall be due and payable
following the occurrence and continuance of an Event of Default, as described in
the Indenture. All principal payments on the Class A-1 Notes shall be made pro
rata to the Class A-1 Noteholders entitled thereto.
Payments of principal and interest on this Note due and payable on
each Distribution Date or Redemption Date shall be made by check mailed to the
Person whose name appears as the registered Holder of this Note (or one or more
Predecessor Notes) on the Note Register as of the close of business on the
related 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
B-6
<PAGE>
of payment. Any reduction in the principal amount of this Note (or any one or
more Predecessor Notes) affected by any payments made on any Distribution Date
or Redemption 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 remaining
unpaid principal amount of this Note on a Distribution Date or Redemption Date,
then the Indenture Trustee, in the name of and on behalf of the Issuer, will
notify the Person who was the registered Holder hereof as of the Record Date
preceding such Distribution Date or Redemption Date by notice mailed within five
days of such Distribution Date or Redemption Date and the amount then due and
payable shall be payable only upon presentation and surrender of this Note at
the Corporate Trust Office of the Indenture Trustee or at the office of the
Indenture Trustee's agent appointed for such purposes located in The City of New
York.
As provided in the Indenture, the Notes are subject to redemption in
whole, but not in part, on any Distribution Date as of which the Pool Balance is
less than or equal to 10% of the Original Pool Balance.
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. No service charge will be
charged for any registration of transfer or exchange of this Note, but the
transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such
registration of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, covenants and agrees that
no recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Indenture Trustee or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the Issuer
or (iii) any partner, owner, beneficiary, agent, officer, director or employee
of the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary
B-7
<PAGE>
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 and such Note that such Noteholder or
Note Owner will not at any time institute against the Seller or the Issuer, or
join in any institution against the Seller or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States Federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture or the other Basic Documents.
The Issuer has entered into the Indenture, and this Note is issued
with the intention that, for federal, state and local income, single business
and franchise tax purposes, the Notes will qualify as indebtedness secured by
the Trust Estate. Each Noteholder, by acceptance of a Note (and each Note Owner
by acceptance of a beneficial interest in a Note), agrees to treat the Notes for
federal, state and local income, single business and franchise tax purposes as
indebtedness.
Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Indenture Trustee and the Insurer and any agent of the
Issuer, the Indenture Trustee or the Insurer 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 Indenture
Trustee, the Insurer 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 Insurer and of the Holders of Notes
representing a majority of the Outstanding Principal Amount of the Notes. The
Indenture also contains provisions permitting the Insurer and the Holders of
Notes representing specified percentages of the Outstanding Principal 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 Insurer
or Holder of this Note (or any one of more Predecessor Notes) shall be
conclusive and binding upon such Insurer or Holder and
B-8
<PAGE>
upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note. The Indenture
also permits the Indenture Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder and with the consent of the Insurer.
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, 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.
B-9
<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:
________________________*/
*/NOTICE: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
B-10
<PAGE>
EXHIBIT C
FORM OF CLASS A-2 NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED BY
THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE 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.
ANRC AUTO OWNER TRUST _____
____% AUTO LOAN BACKED NOTE, CLASS A-2
REGISTERED $_____________
No. 1 CUSIP NO. ________________
ANRC Auto Owner Trust ________, a business trust organized and
existing under the laws of the State of Delaware (the "Issuer"), for value
received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of __________________ ($____________), payable to the extent
described in the Indenture and the Sale and Servicing Agreement referred to on
the reverse hereof on each Distribution Date; provided that the entire unpaid
principal amount of this Note shall
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<PAGE>
be payable on the earlier of the Distribution Date occurring in ________________
(the "Class A-2 Final Scheduled Distribution Date") and the Redemption Date, if
any, selected pursuant to the Indenture. No payments of principal of the Class
A-2 Notes shall be made until the principal amount of the Class A-1 Notes has
been reduced to zero.
The Issuer will pay interest on this Note at the Class A-2 Note Rate
shown above on each Distribution Date until the principal of this Note is paid
or made available for payment, on the principal amount of this Note outstanding
on the preceding Distribution Date (after giving effect to all payments of
principal made on the preceding Distribution Date), or on the Closing Date in
the case of the first Distribution Date, subject to certain limitations
contained in the Indenture. Interest on this Note will accrue for each
Distribution Date during the period (the "Interest Accrual Period" with respect
to such Distribution Date) from and including the Distribution Date immediately
preceding such Distribution Date (or, in the case of the first Distribution
Date, from and including the Closing Date) to but excluding such Distribution
Date. The Issuer shall pay interest on overdue installments of interest at the
Class A-2 Note Rate to the extent lawful. 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.
The Notes are entitled to the benefits of a financial guaranty
insurance policy (the "Insurance Policy") issued by ____________________ (the
"Insurer"), pursuant to which the Insurer has unconditionally guaranteed
payment of the Note Interest Distributable Amount on each Distribution Date and
the Guaranty Principal Amount of the Notes as more fully set forth in the
Insurance Policy.
Reference is made to the further provisions of this Note set forth
on the reverse hereof, which shall have the same effect as though fully set
forth on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
C-2
<PAGE>
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
C-3
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by an Authorized Officer, as set forth below.
Date: __________, ____ ANRC AUTO OWNER TRUST ______
By:
---------------------------------,
not in its individual capacity,
but solely as Owner Trustee
By:
---------------------------------
Name:
Title:
C-4
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
-------------------------------------,
not in its individual capacity but
solely as Indenture Trustee
By:
---------------------------------
Authorized Signatory
C-5
<PAGE>
[REVERSE OF CLASS A-2 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its "____% Auto Loan Backed Notes, Class A-2" (the "Class A-2
Notes"), all issued under the Indenture, dated as of _________, ____ (as
amended, supplemented or otherwise modified and in effect from time to time, the
"Indenture"), between the Issuer and The Chase Manhattan Bank, as indenture
trustee (the "Indenture Trustee"), 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 Insurer, the Indenture
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, and if not defined therein, in
the Sale and Servicing Agreement (as defined in the Indenture).
The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and
the Class A-4 Notes (collectively, the "Notes") are and will be equally and
ratably secured by the collateral pledged as security therefor as provided in
the Indenture.
Principal payable on the Class A-2 Notes will be paid on each
Distribution Date in the amount specified in the Indenture and the Sale and
Servicing Agreement. As described above, the entire unpaid principal amount of
this Note will be payable on the earlier of the Class A-2 Final Scheduled
Distribution Date and the Redemption Date, if any, selected pursuant to the
Indenture. Notwithstanding the foregoing, under certain circumstances, the
entire unpaid principal amount of the Class A-2 Notes shall be due and payable
following the occurrence and continuance of an Event of Default, as described in
the Indenture. All principal payments on the Class A-2 Notes shall be made pro
rata to the Class A-2 Noteholders entitled thereto.
Payments of principal and interest on this Note due and payable on
each Distribution Date or Redemption Date shall be made by check mailed to the
Person whose name appears as the registered Holder of this Note (or one or more
Predecessor Notes) on the Note Register as of the close of business on the
related 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
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<PAGE>
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) affected by any payments made on any Distribution
Date or Redemption 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 remaining
unpaid principal amount of this Note on a Distribution Date or Redemption Date,
then the Indenture Trustee, in the name of and on behalf of the Issuer, will
notify the Person who was the registered Holder hereof as of the Record Date
preceding such Distribution Date or Redemption Date by notice mailed within five
days of such Distribution Date or Redemption Date and the amount then due and
payable shall be payable only upon presentation and surrender of this Note, at
the Corporate Trust Office of the Indenture Trustee or at the office of the
Indenture Trustee's agent appointed for such purposes located in The City of New
York.
As provided in the Indenture, the Notes are subject to redemption in
whole, but not in part, on any Distribution Date as of which the Pool Balance is
less than or equal to 10% of the Original Pool Balance.
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. No service charge will be
charged for any registration of transfer or exchange of this Note, but the
transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such
registration of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, covenants and agrees that
no recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Indenture Trustee or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the Issuer
or (iii) any partner, owner, beneficiary, agent, officer, director or employee
of the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in its individual capacity, except as any such Person
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<PAGE>
may have expressly agreed and except that any such partner, owner or beneficiary
shall be fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, covenants and agrees that
by accepting the benefits of the Indenture and such Note that such Noteholder or
Note Owner will not at any time institute against the Seller or the Issuer, or
join in any institution against the Seller or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States Federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture or the other Basic Documents.
The Issuer has entered into the Indenture, and this Note is issued
with the intention that, for federal, state and local income, single business
and franchise tax purposes, the Notes will qualify as indebtedness secured by
the Trust Estate. Each Noteholder, by acceptance of a Note (and each Note Owner
by acceptance of a beneficial interest in a Note), agrees to treat the Notes for
federal, state and local income, single business and franchise tax purposes as
indebtedness.
Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Indenture Trustee and the Insurer and any agent of the
Issuer, the In denture Trustee or the Insurer 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 Indenture
Trustee, the Insurer 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 Insurer and of the Holders of Notes
representing a majority of the Outstanding Principal Amount of the Notes. The
Indenture also contains provisions permitting the Insurer and the Holders of
Notes representing specified percentages of the Outstanding Principal 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 Insurer
or Holder of this Note (or any one of more
C-8
<PAGE>
Predecessor Notes) shall be conclusive and binding upon such Insurer or Holder
and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note. The Indenture
also permits the Indenture Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder and with the consent of the Insurer.
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, 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.
C-9
<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:
________________________*/
*/NOTICE: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
C-10
<PAGE>
EXHIBIT D
FORM OF CLASS A-3 NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT
INSURED BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE 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.
ANRC AUTO OWNER TRUST _____
____% AUTO LOAN BACKED NOTE, CLASS A-3
REGISTERED $________________
No. 1 CUSIP NO. ______________
ANRC Auto Owner Trust ______, a business trust organized and
existing under the laws of the State of Delaware (the "Issuer"), for value
received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of ______________ ($_________), payable to the extent described in
the Indenture and the Sale and Servicing Agreement referred to on the reverse
hereof on each Distribution Date; provided that the entire unpaid principal
amount of this Note shall be pay-
D-1
<PAGE>
able on the earlier of the Distribution Date occurring in ____________ (the
"Class A-3 Final Scheduled Distribution Date") and the Redemption Date, if any,
selected pursuant to the Indenture. No payments of principal of the class A-3
Notes shall be made until the principal amount of the Class A-1 and Class A-2
Notes have been reduced to zero.
The Issuer will pay interest on this Note at the Class A-3 Note Rate
shown above on each Distribution Date until the principal of this Note is paid
or made available for payment, on the principal amount of this Note outstanding
on the preceding Distribution Date (after giving effect to all payments of
principal made on the preceding Distribution Date), or on the Closing Date in
the case of the first Distribution Date, subject to certain limitations
contained in the Indenture. Interest on this Note will accrue for each
Distribution Date during the period (the "Interest Accrual Period" with respect
to such Distribution Date) from and including the Distribution Date immediately
preceding such Distribution Date (or, in the case of the first Distribution
Date, from and including the Closing Date) to but excluding such Distribution
Date. The Issuer shall pay interest on overdue installments of interest at the
Class A-3 Note Rate to the extent lawful. 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.
The Notes are entitled to the benefits of a financial guaranty
insurance policy (the "Insurance Policy") issued by ________________ (the
"Insurer"), pursuant to which the Insurer has unconditionally guaranteed
payment of the Note Interest Distributable Amount on each Distribution Date and
the Guaranty Note Principal Amount of the Notes all as more fully set forth in
the Insurance Policy.
Reference is made to the further provisions of this Note set forth
on the reverse hereof, which shall have the same effect as though fully set
forth on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
D-2
<PAGE>
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
D-3
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by an Authorized Officer, as set forth below.
Date: __________, ____ ANRC AUTO OWNER TRUST _____
By:
---------------------------------,
not in its individual capacity,
but solely as Owner Trustee
By:
---------------------------------
Name:
Title:
D-4
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
-------------------------------------,
not in its individual capacity but
solely as Indenture Trustee
By:
---------------------------------
Authorized Signatory
D-5
<PAGE>
[REVERSE OF CLASS A-3 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its "____% Auto Loan Backed Notes, Class A-3" (the "Class A-3
Notes"), all issued under the Indenture, dated as of ______________, ____ (as
amended, supplemented or otherwise modified and in effect from time to time, the
"Indenture"), between the Issuer and ________________, as indenture trustee (the
"Indenture Trustee"), 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 Insurer, the Indenture 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, and if not defined therein, in the
Sale and Servicing Agreement (as defined in the Indenture).
The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and
the Class A-4 Notes (collectively, the "Notes") are and will be equally and
ratably secured by the collateral pledged as security therefor as provided in
the Indenture.
Principal payable on the Class A-3 Notes will be paid on each
Distribution Date in the amount specified in the Indenture and the Sale and
Servicing Agreement. As described above, the entire unpaid principal amount of
this Note will be payable on the earlier of the Class A-3 Final Scheduled
Distribution Date and the Redemption Date, if any, selected pursuant to the
Indenture. Notwithstanding the foregoing, under certain circumstances, the
entire unpaid principal amount of the Class A-3 Notes shall be due and payable
following the occurrence and continuance of an Event of Default, as described in
the Indenture. All principal payments on the Class A-3 Notes shall be made pro
rata to the Class A-3 Noteholders entitled thereto.
Payments of principal and interest on this Note due and payable on
each Distribution Date or Redemption Date shall be made by check mailed to the
Person whose name appears as the registered Holder of this Note (or one or more
Predecessor Notes) on the Note Register as of the close of business on the
related 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
D-6
<PAGE>
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) affected by any payments made on any Distribution
Date or Redemption 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 remaining
unpaid principal amount of this Note on a Distribution Date or Redemption Date,
then the Indenture Trustee, in the name of and on behalf of the Issuer, will
notify the Person who was the registered Holder hereof as of the Record Date
preceding such Distribution Date or Redemption Date by notice mailed within five
days of such Distribution Date or Redemption Date and the amount then due and
payable shall be payable only upon presentation and surrender of this Note at
the Corporate Trust Office of the Indenture Trustee or at the office of the
Indenture Trustee's agent appointed for such purposes located in The City of New
York.
As provided in the Indenture, the Notes are subject to redemption in
whole, but not in part, on any Distribution Date as of which the Pool Balance is
less than or equal to 10% of the Original Pool Balance.
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. No service charge will be
charged for any registration of transfer or exchange of this Note, but the
transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such
registration of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, covenants and agrees that
no recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Indenture Trustee or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the Issuer
or (iii) any partner, owner, beneficiary, agent, officer, director or employee
of the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in its individual capacity, except as any such Person
D-7
<PAGE>
may have expressly agreed and except that any such partner, owner or beneficiary
shall be fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, covenants and agrees that
by accepting the benefits of the Indenture and such Note that such Noteholder or
Note Owner will not at any time institute against the Seller or the Issuer, or
join in any institution against the Seller or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States Federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture or the other Basic Documents.
The Issuer has entered into the Indenture, and this Note is issued
with the intention that, for federal, state and local income, single business
and franchise tax purposes, the Notes will qualify as indebtedness secured by
the Trust Estate. Each Noteholder, by acceptance of a Note (and each Note Owner
by acceptance of a beneficial interest in a Note), agrees to treat the Notes for
federal, state and local income, single business and franchise tax purposes as
indebtedness.
Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Indenture Trustee and the Insurer and any agent of the
Issuer, the Indenture Trustee or the Insurer 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 Indenture
Trustee, the Insurer 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 Insurer and of the Holders of Notes
representing a majority of the Outstanding Principal Amount of the Notes. The
Indenture also contains provisions permitting the Insurer and the Holders of
Notes representing specified percentages of the Outstanding Principal 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 Insurer
or Holder of this Note (or any one of more
D-8
<PAGE>
Predecessor Notes) shall be conclusive and binding upon such Insurer or Holder
and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note. The Indenture
also permits the Indenture Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder and with the consent of the Insurer.
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, 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.
D-9
<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:
________________________*/
*/NOTICE: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
D-10
<PAGE>
EXHIBIT E
FORM OF CLASS A-4 NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT
INSURED BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE 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.
ANRC AUTO OWNER TRUST _____
____% AUTO LOAN BACKED NOTE, CLASS A-4
REGISTERED $______________
No. 1 CUSIP NO. ____________
ANRC Auto Owner Trust ______, a business trust organized and
existing under the laws of the State of Delaware (the "Issuer"), for value
received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of ________________ ($__________), payable to the extent described
in the Indenture and the Sale and Servicing Agreement referred to on the reverse
hereof on each Distribution Date; provided that the entire unpaid principal
amount of this Note shall be
E-1
<PAGE>
payable on the earlier of the Distribution Date occurring in ________________
(the "Class A-4 Final Scheduled Distribution Date") and the Redemption Date, if
any, selected pursuant to the Indenture. No payments of principal of the Class
A-4 Notes shall be made until the principal amount of the Class A-1 Notes, the
Class A-2 Notes and the Class A-3 Notes has been reduced to zero.
The Issuer will pay interest on this Note at the Class A-4 Note Rate
shown above on each Distribution Date until the principal of this Note is paid
or made available for payment, on the principal amount of this Note outstanding
on the preceding Distribution Date (after giving effect to all payments of
principal made on the preceding Distribution Date), or on the Closing Date in
the case of the first Distribution Date, subject to certain limitations
contained in the Indenture. Interest on this Note will accrue for each
Distribution Date during the period (the "Interest Accrual Period" with respect
to such Distribution Date) from and including the Distribution Date immediately
preceding such Distribution Date (or, in the case of the first Distribution
Date, from and including the Closing Date) to but excluding such Distribution
Date. The Issuer shall pay interest on overdue installments of interest at the
Class A-4 Note Rate to the extent lawful. 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.
The Notes are entitled to the benefits of a financial guaranty
insurance policy (the "Insurance Policy") issued by ____________ (the
"Insurer"), pursuant to which the Insurer has unconditionally guaranteed
payment of the Note Interest Distributable Amount on each Distribution Date and
the Guaranty Note Principal Amount of the Notes all as more fully set forth in
the Insurance Policy.
Reference is made to the further provisions of this Note set forth
on the reverse hereof, which shall have the same effect as though fully set
forth on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
E-2
<PAGE>
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
E-3
<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:
________________________*/
*/NOTICE: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
E-4
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by an Authorized Officer, as set forth below.
Date: ________, ____ ANRC AUTO OWNER TRUST _____
By:
---------------------------------,
not in its individual capacity,
but solely as Owner Trustee
By:
---------------------------------
Name:
Title:
E-5
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
-------------------------------------,
not in its individual capacity but
solely as Indenture Trustee
By:
---------------------------------
Authorized Signatory
E-6
<PAGE>
[REVERSE OF CLASS A-4 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its "____% Auto Loan Backed Notes, Class A-4" (the "Class A-4
Notes"), all issued under the Indenture, dated as of ______________, ____ (as
amended, supplemented or otherwise modified and in effect from time to time, the
"Indenture"), between the Issuer and ______________, as indenture trustee (the
"Indenture Trustee"), 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 Insurer, the Indenture 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, and if not defined therein, in the
Sale and Servicing Agreement (as defined in the Indenture).
The Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and the Class
A-4 Notes (collectively, the "Notes") are and will be equally and ratably
secured by the collateral pledged as security therefor as provided in the
Indenture.
Principal payable on the Class A-4 Notes will be paid on each
Distribution Date in the amount specified in the Indenture and the Sale and
Servicing Agreement. As described above, the entire unpaid principal amount of
this Note will be payable on the earlier of the Class A-4 Final Scheduled
Distribution Date and the Redemption Date, if any, selected pursuant to the
Indenture. Notwithstanding the foregoing, under certain circumstances, the
entire unpaid principal amount of the Class A-4 Notes shall be due and payable
following the occurrence and continuance of an Event of Default, as described in
the Indenture. All principal payments on the Class A-4 Notes shall be made pro
rata to the Class A-4 Noteholders entitled thereto.
Payments of principal and interest on this Note due and payable on
each Distribution Date or Redemption Date shall be made by check mailed to the
Person whose name appears as the registered Holder of this Note (or one or more
Predecessor Notes) on the Note Register as of the close of business on the
related 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
E-7
<PAGE>
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) affected by any payments made on any Distribution
Date or Redemption 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 remaining
unpaid principal amount of this Note on a Distribution Date or Redemption Date,
then the Indenture Trustee, in the name of and on behalf of the Issuer, will
notify the Person who was the registered Holder hereof as of the Record Date
preceding such Distribution Date or Redemption Date by notice mailed within five
days of such Distribution Date or Redemption Date and the amount then due and
payable shall be payable only upon presentation and surrender of this Note at
the Corporate Trust Office of the Indenture Trustee or at the office of the
Indenture Trustee's agent appointed for such purposes located in The City of New
York.
As provided in the Indenture, the Notes are subject to redemption in
whole, but not in part, on any Distribution Date as of which the Pool Balance is
less than or equal to 10% of the Original Pool Balance.
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. No service charge will be
charged for any registration of transfer or exchange of this Note, but the
transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such
registration of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, covenants and agrees that
no recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Indenture Trustee or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the Issuer
or (iii) any partner, owner, beneficiary, agent, officer, director or employee
of the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in its individual capacity, except as any such Person
E-8
<PAGE>
may have expressly agreed and except that any such partner, owner or beneficiary
shall be fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, covenants and agrees that
by accepting the benefits of the Indenture and such Note that such Noteholder or
Note Owner will not at any time institute against the Seller or the Issuer, or
join in any institution against the Seller or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States Federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture or the other Basic Documents.
The Issuer has entered into the Indenture, and this Note is issued
with the intention that, for federal, state and local income, single business
and franchise tax purposes, the Notes will qualify as indebtedness secured by
the Trust Estate. Each Noteholder, by acceptance of a Note (and each Note Owner
by acceptance of a beneficial interest in a Note), agrees to treat the Notes for
federal, state and local income, single business and franchise tax purposes as
indebtedness.
Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Indenture Trustee and the Insurer and any agent of the
Issuer, the Indenture Trustee or the Insurer 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 Indenture
Trustee, the Insurer 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 Insurer and of the Holders of Notes
representing a majority of the Outstanding Principal Amount of the Notes. The
Indenture also contains provisions permitting the Insurer and the Holders of
Notes representing specified percentages of the Outstanding Principal 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 Insurer
or Holder of this Note (or any one of more
E-9
<PAGE>
Predecessor Notes) shall be conclusive and binding upon such Insurer or Holder
and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note. The Indenture
also permits the Indenture Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder and with the consent of the Insurer.
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, and the obligations, rights and remedies of
the parties hereunder and thereunder shall be determined in accordance with such
laws.
No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
E-10
<PAGE>
[Letterhead of Weil, Gotshal & Manges LLP]
August 19, 1999
AutoNation Receivables Corporation
200 South Andrews Avenue
Ft. Lauderdale, Florida 33301
AutoNation Financial Services Corp.
110 South 6th Street
Ft. Lauderdale, Florida 33301
Ladies and Gentlemen:
We have acted as special counsel to AutoNation Receivables
Corporation, a Delaware corporation, as Seller (the "Company"), and AutoNation
Financial Services Corp., a Delaware corporation, as Servicer ("AutoNation
Financial Services"), in connection with the preparation and filing of the
Registration Statement of the Company on Form S-3 (File No. 333-81615) under
the Securities Act of 1933, as amended (the "Registration Statement") and the
registration of the Asset-Backed Notes (the "Notes") to be sold from time to
time in one or more series in amounts to be determined at the time of sale and
to be set forth in one or more supplements (each, a "Supplement") to the
Prospectus (the "Prospectus") included in the Registration Statement.
Capitalized terms defined in the Registration Statement and used but not
otherwise defined herein are used herein as so defined.
As described in the Registration Statement, the Notes of
each series will be issued pursuant to an Indenture (the "Indenture") by and
between a trust (the "Trust"), as issuer, and a trustee (the "Indenture
Trustee"), with the Trust to be formed by the Company pursuant to an Owner Trust
Agreement (the "Owner Trust Agreement") by and between the Company, as
depositor, and an owner trustee (the "Owner Trustee"). The Notes issued by the
Trust will include one or more classes of notes.
In so acting, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of such corporate
records, agreements, documents and other instruments, and such certificates or
comparable documents of public officials, and have made such inquiries of
officers and representatives of the Company and AutoNation
<PAGE>
Financial Services as we have deemed relevant and necessary as a basis for the
opinions hereinafter set forth.
In such examination, we have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents
of all documents submitted to us as certified, conformed or photostatic copies
and the authenticity of the originals of such latter documents. We have also
assumed (i) the due incorporation and valid existence of the Company and
AutoNation Financial Services, (ii) the due formation and valid existence of
the applicable Trust and (iii) that the Company and AutoNation Financial
Services have the requisite corporate power and authority to file the
Registration Statement and the Company, the applicable Trust and AutoNation
Financial Services have the requisite power and authority (corporate or other)
to enter into and perform the Owner Trust Agreement, the Indenture and the
Sale and Servicing Agreement.
Based on the foregoing, and subject to the qualifications
stated herein, we are of the opinion that the Notes, when as and if (i) the
Registration Statement becomes effective pursuant to the provisions of the
Securities Act of 1933, as amended, (ii) the amount, price, interest rate and
other principal terms of such Notes have been duly approved by the Board of
Directors of the Company, (iii) the Owner Trust Agreement, the Indenture and
the Sale and Servicing Agreement relating thereto have been duly completed,
executed and delivered by the parties thereto substantially in the form we
have examined, duly reflecting the terms established as described above, and
(iv) the Notes have been duly authorized and validly issued by the Owner
Trustee on behalf of the applicable Trust and authenticated by the Indenture
Trustee all in accordance with the terms and conditions of the Indenture and
sold by the Company in the manner described in the Registration Statement,
such Notes will have been legally issued, fully paid and non-assessable and
will be enforceable in accordance with their terms subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject,
as to enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity) and except that
rights to indemnification and contribution thereunder may be limited by
federal or state securities laws or public policy relating thereto.
The opinions expressed herein are limited to the laws of the
State of New York and the federal laws of the United States, and we express no
opinion as to the effect on the matters covered by this letter of the laws of
any other jurisdiction.
We hereby consent to be named in the Prospectus as the
attorneys who have passed upon the legality of the securities being offered
thereby and to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ Weil, Gotshal & Manges LLP
2
<PAGE>
[Letterhead of Weil, Gotshal & Manges LLP]
August 19, 1999
AutoNation Receivables Corporation
200 South Andrews Avenue
Ft. Lauderdale, Florida 33301
AutoNation Financial Services Corp.
110 South 6th Street
Ft. Lauderdale, Florida 33301
Ladies and Gentlemen:
We have acted as special counsel to AutoNation Receivables
Corporation, a Delaware corporation, as Seller (the "Company"), and AutoNation
Financial Services Corp., a Delaware corporation, as Servicer ("AutoNation
Financial Services"), in connection with the preparation and filing of the
Registration Statement of the Company on Form S-3 (File No. 333-81615) (as
amended to the date hereof) under the Securities Act of 1933, as amended (the
"Registration Statement") in connection with the registration of the
Asset-Backed Notes (the "Notes") and Asset-Backed Certificates (the
"Certificates" and, together with the Notes, the "Securities") to be issued and
sold by the ANRC Auto Owner Trusts (each a "Trust") from time to time in one or
more series in amounts to be determined at the time of sale and to be set forth
in one or more supplements (each, a "Supplement") to the Prospectus (the
"Prospectus") included in the Registration Statement. Capitalized terms defined
in the Registration Statement and used but not otherwise defined herein are used
herein as so defined.
As described in the Registration Statement, (i) the Notes of
each series will be issued pursuant to a separate Indenture (each an
"Indenture") by and between a Trust, as issuer, and a trustee (the "Indenture
Trustee"), with a separate Trust to be formed by the Company pursuant to an
Owner Trust Agreement (each an "Owner Trust Agreement") by and between the
Company, as depositor, and an owner trustee and (ii) the Certificates of each
series will be issued pursuant to an Owner Trust Agreement.
<PAGE>
In so acting, we have examined originals or copies, certified
or otherwise identified to our satisfaction, of (i) the Registration Statement,
(ii) the Prospectus, (iii) a form of Supplement, (iv) a draft Indenture, (v) a
draft Owner Trust Agreement, (vi) forms of the Securities and such corporate
records, agreements, documents and other instruments (collectively, the
"Documents"), and such certificates or comparable documents of public officials,
and have made such inquiries of officers and representatives of the Company and
AutoNation Financial Services as we have deemed relevant and necessary as a
basis for the opinions hereinafter set forth.
In such examination, we have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified, conformed or photostatic copies and
the authenticity of the originals of such latter documents. We have further
assumed that all of the documents which we have reviewed which were in draft
form will be executed in substantially the same form as the ones we reviewed and
that there are no agreements or understandings between or among the parties to
the Documents with respect to the transactions contemplated therein other than
those contained in the Documents.
Based on the foregoing, subject to the next paragraph and
assuming full compliance with all the terms of the Documents, it is our opinion
that the statements contained in the Prospectus and the Supplement under the
caption "Material Federal Income Tax Consequences," insofar as such statements
constitute matters of law or legal conclusions and except to the extent
qualified therein, are correct in all material respects.
The foregoing opinion, to the extent it relates to federal
law, is based on current provisions of the Internal Revenue Code of 1986, as
amended, the Treasury Regulations promulgated thereunder, published
pronouncements of the Internal Revenue Service, and case law. Any rules set
forth in any of the foregoing authorities may be changed at any time with
retroactive effect. Further you should be aware that opinions of counsel are not
binding on the Internal Revenue Service or the courts. We express no opinion
either as to any matters not specifically covered by the foregoing opinion or as
to the effect on the matters covered by this opinion of the laws of any other
jurisdictions. Additionally, we undertake no obligation to update this opinion
in the event there is either a change in the legal authorities, in the facts,
including the taking of any action by any party to any of the transactions
described in the Documents pursuant to an opinion of counsel as required by any
of the Documents relating to such transactions, or in the Documents on which
this opinion is based, or an inaccuracy in any of the representations or
warranties upon which we have relied in rendering this opinion.
2
<PAGE>
This opinion is being delivered solely to the addressees
hereof and, except for the references to our firm and this opinion in the
Prospectus and the Supplement under the caption "Material Federal Income Tax
Consequences" and in the Supplement under the caption "Tax Status," may not
otherwise be relied upon by, or disclosed, quoted or referred to, any other
person.
Very truly yours,
/s/ Weil, Gotshal & Manges LLP
3
<PAGE>
EXHIBIT 10.1
================================================================================
SALE AND SERVICING AGREEMENT
by and among
ANRC AUTO OWNER TRUST _____,
as Issuer,
AUTONATION RECEIVABLES CORPORATION,
as Seller,
AUTONATION FINANCIAL SERVICES CORP.,
as Servicer and Custodian
and
____________________________________,
as Indenture Trustee
Dated as of ____________, ______
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions...................................................1
SECTION 1.02. Usage of Terms...............................................20
SECTION 1.03. Section References...........................................21
SECTION 1.04. Calculations.................................................21
SECTION 1.05. Accounting Terms.............................................21
ARTICLE II
CONVEYANCE OF CONTRACTS;
REPRESENTATIONS AND WARRANTIES OF THE SELLER
SECTION 2.01. Conveyance of Contracts......................................22
SECTION 2.02. Representations and Warranties of the Seller.................25
SECTION 2.03. Repurchase of Certain Contracts..............................32
SECTION 2.04. Custody of Contract Files....................................33
SECTION 2.05. Duties of Servicer Relating to the Contracts.................36
SECTION 2.06. Instructions; Authority to Act...............................38
SECTION 2.07. Indemnification..............................................38
SECTION 2.08. Effective Period and Termination.............................38
SECTION 2.09. Nonpetition Covenant.........................................39
SECTION 2.10. Collecting Title Documents Not Delivered at the Closing
Date........................................................39
ARTICLE III
ADMINISTRATION AND SERVICING OF CONTRACTS
SECTION 3.01. Duties of Servicer...........................................41
SECTION 3.02. Collection of Contract Payments..............................44
SECTION 3.03. Realization upon Defaulted Contracts.........................44
SECTION 3.04. Maintenance of Security Interests in Financed Vehicles.......45
SECTION 3.05. Covenants, Representations and Warranties of Servicer........46
SECTION 3.06. Purchase of Contracts upon Breach by Servicer................49
SECTION 3.07. Servicing Compensation.......................................49
i
<PAGE>
SECTION 3.08. Reporting by the Servicer....................................50
SECTION 3.09. Annual Statement as to Compliance............................52
SECTION 3.10. Annual Independent Certified Public Accountant's Report......52
SECTION 3.11. Access to Certain Documentation and Information
Regarding Contracts.........................................53
SECTION 3.12. Indemnification; Third Party Claims..........................53
SECTION 3.13. Reports to Noteholders and the Rating Agencies...............54
ARTICLE IV
DISTRIBUTIONS; SPREAD ACCOUNT;
STATEMENTS TO NOTEHOLDERS
SECTION 4.01. Establishment of Trust Accounts..............................55
SECTION 4.02. Collections; Realization upon Insurance Policy; Net
Deposits; Transfers to Payment Account......................57
SECTION 4.03. Distributions................................................59
SECTION 4.04. Spread Account...............................................62
SECTION 4.05. Statements to Noteholders....................................65
ARTICLE V
THE SELLER
SECTION 5.01. Liability of Seller; Indemnities.............................68
SECTION 5.02. Merger or Consolidation of, or Assumption of the
Obligations of Seller; Certain Limitations..................69
SECTION 5.03. Limitation on Liability of Seller and Others.................69
SECTION 5.04. Seller Not to Resign.........................................70
SECTION 5.05. Seller May Own Notes.........................................70
ARTICLE VI
THE SERVICER
SECTION 6.01. Liability of Servicer; Indemnities...........................71
SECTION 6.02. Corporate Existence; Status as Servicer; Merger..............72
SECTION 6.03. Performance of Obligations...................................73
SECTION 6.04. Servicer Not to Resign; Assignment...........................73
SECTION 6.05. Limitation on Liability of Servicer and Others...............74
ii
<PAGE>
ARTICLE VII
SERVICER DEFAULT
SECTION 7.01. Servicer Defaults............................................75
SECTION 7.02. Trustee to Act; Appointment of Successor.....................77
SECTION 7.03. Notification to Noteholders..................................78
SECTION 7.04. Waiver of Past Defaults......................................79
SECTION 7.05. Insurer Direction of Insolvency Proceedings..................79
ARTICLE VIII
TERMINATION
SECTION 8.01. Optional Purchase of All Contracts; Satisfaction and
Discharge of The Indenture..................................81
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendment....................................................82
SECTION 9.02. Protection of Title to Trust.................................83
SECTION 9.03. Governing Law................................................85
SECTION 9.04. Notices......................................................85
SECTION 9.05. Severability of Provisions...................................86
SECTION 9.06. Assignment...................................................87
SECTION 9.07. Third Party Beneficiaries....................................87
SECTION 9.08. Certain Matters Relating to the Insurer......................87
SECTION 9.09. Headings.....................................................88
SECTION 9.10. Assignment by Issuer.........................................88
SECTION 9.11. Limitation of Liability of Owner Trustee.....................88
EXHIBITS
Exhibit A -- List of Contracts
Exhibit B -- Location and Account Numbers of Trust Accounts
iii
<PAGE>
This SALE AND SERVICING AGREEMENT, dated as of _________, ____ (as
amended, supplemented or otherwise modified and in effect from time to time,
this "Agreement"), is between ANRC AUTO OWNER TRUST __________, a Delaware
business trust (the "Issuer" or the "Trust"), AUTONATION RECEIVABLES
CORPORATION, a Delaware corporation (together with its permitted successors and
assigns, the "Seller"), AUTONATION FINANCIAL SERVICES CORP., a Delaware
corporation (together with its permitted successors and assigns, "AutoNation
Financial Services" or, in its capacity as servicer, the "Servicer") and
________________________________, a _________________________, as the Indenture
Trustee on behalf of the Noteholders (together with its permitted successors and
assigns in such capacity, the "Indenture Trustee").
In consideration of the premises and the mutual covenants herein
contained, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
"Additional Servicing Fee" shall mean the excess, if any, of (i) the
servicing fee of any Successor Servicer (other than the Indenture Trustee, in
its capacity as Successor Servicer), which has been approved in writing by the
Insurer over (ii) the Servicing Fee.
"Affiliate" of any specified Person shall mean 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 shall mean 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" or
"controlled" have meanings correlative to the foregoing.
"Amount Financed" shall mean, with respect to a Contract, the
aggregate amount advanced by the Originator under such Contract toward the
purchase price of the related Financed Vehicle and related costs, including
amounts
<PAGE>
advanced in respect of accessories, extended service or warranty contracts and
other items customarily financed as part of retail automobile installment sales
contracts, excluding any collision and/or comprehensive insurance premiums.
"APR" of a Contract shall mean the annual percentage rate used to
determine the total interest expected to be charged over the term of a Contract
as of its inception, as shown on such Contract.
"AutoNation Dealer" shall mean a franchised automotive dealership or
used vehicle megastore owned by AutoNation Inc. and the used vehicle megastore
licensees.
"Available Funds" shall mean, with respect to any Distribution Date
and the related Collection Period, the sum of (i) all payments of Monthly
Scheduled Payments, all partial prepayments, all Full Prepayments, Net
Liquidation Proceeds and Net Insurance Proceeds in each case, collected with
respect to the Contracts during such Collection Period and (ii) the aggregate
Purchase Amount for Purchased Contracts deposited in or credited to the
Collection Account pursuant to Section 4.02(a) on the Business Day preceding the
Servicer Report Date next preceding such Distribution Date.
"Basic Documents" shall have the meaning specified in the Indenture.
"Business Day" shall mean any day other than (i) a Saturday or a
Sunday or (ii) a day on which commercial banking institutions or savings
associations located in New York, New York or in the city in which the Owner
Trustee Corporate Trust Office or the Corporate Trust Office is located are
authorized or obligated by law, regulation, executive order or governmental
decree to be closed.
"Class" shall mean all Notes whose form is identical except for
variation in denomination, principal amount or owner.
"Class A-1 Final Scheduled Distribution Date" shall mean the
Distribution Date occurring in _____________.
"Class A-1 Note" shall mean any Class A-1 Note in the form attached
to the Indenture as Exhibit B.
"Class A-1 Rate" shall mean ____% per annum.
2
<PAGE>
"Class A-2 Final Scheduled Distribution Date" shall mean the
Distribution Date occurring in _____________.
"Class A-2 Note" shall mean any Class A-2 Note in the form attached
to the Indenture as Exhibit C.
"Class A-2 Rate" shall mean ____% per annum.
"Class A-3 Final Scheduled Distribution Date" shall mean the
Distribution Date occurring in _____________.
"Class A-3 Note" shall mean any Class A-3 Note in the form attached
to the Indenture as Exhibit D.
"Class A-3 Rate" shall mean ____% per annum.
"Class A-4 Final Scheduled Distribution Date" shall mean the
Distribution Date occurring in _____________.
"Class A-4 Note" shall mean any Class A-4 Note in the form attached
to the Indenture as Exhibit E.
"Class A-4 Rate" shall mean ____% per annum.
"Clearing Agency" shall mean an organization registered as a
"clearing agency" pursuant to Section 17A of the Exchange Act.
"Closing Date" shall mean ____________, ____
"Collection Account" shall mean the account established and
maintained as such pursuant to Section 4.01.
"Collection Period" shall mean, with respect to any Distribution
Date, the calendar month immediately preceding the calendar month in which such
Distribution Date occurs.
"Contract" shall mean each motor vehicle retail installment sales
contract and all proceeds thereof and payments thereunder conveyed by the Seller
to the Servicer pursuant to this Agreement, which contract or agreement has been
executed by an Obligor and pursuant to which such Obligor purchased or financed
the Financed Vehicle described therein, agreed to pay the deferred purchase
price
3
<PAGE>
(i.e., the purchase price net of any down payment) or amount borrowed, together
with interest, as therein provided in connection with such purchase or loan,
granted a security interest in such Financed Vehicle, and undertook to perform
certain other obligations as specified in such contract or agreement. Each
Contract shall have been originated by the Originator from application referrals
received from a Dealer and subsequently conveyed by the Originator to the Seller
pursuant to the Receivables Purchase Agreement and (ii) in any case subsequently
conveyed by the Seller to the Issuer pursuant to this Agreement.
"Contract Documents" shall mean, with respect to each Contract, (a)
the Contract and the original credit application fully executed by the Obligor
thereunder; (b) either (i) the original Title Document for the related Financed
Vehicle or a duplicate copy thereof issued or certified by the Registrar of
Titles which issued the original thereof, together with evidence of perfection
of the security interest in the related Financed Vehicle granted by such
Contract, as reasonably determined by the Servicer to be permitted or required
to perfect such security interest under the laws of the applicable jurisdiction,
or (ii) written evidence that the Title Document for such Financed Vehicle
showing AutoNation Financial Services or a subsidiary of AutoNation Financial
Services as first lienholder has been applied for; (c) any agreement(s)
modifying the Contract (including, without limitation, any extension
agreement(s)); (d) a signed agreement by an Obligor to provide insurance with
AutoNation Financial Services or a subsidiary of AutoNation Financial Services
listed as loss payee; (e) a copy of the contract for any supplemental warranty
purchased with respect to the Financed Vehicle; (f) acceptable vehicle valuation
documentation and (g) any documents specifically relating to the Obligor or the
Financed Vehicle. The documents referred to above, other than the Contracts and
the Title Documents may be maintained in microfiche or electronic form.
"Contract Files" shall mean all papers and computerized records
customarily kept by the Servicer or its agents in servicing contracts and loans
comparable to the Contracts.
"Contract Number" shall mean, with respect to any Contract included
in the Trust, the number assigned to such Contract by the Servicer, which number
is set forth in the related Schedule of Contracts.
"Controlling Party" shall have the meaning set forth in the
Indenture.
"Corporate Trust Office" shall mean the principal office of the
Indenture Trustee at which at any particular time its corporate trust business
shall be administered, which office at the date of the execution of this
Agreement is located at
4
<PAGE>
________________________________, Attention: ______________________; or at
such other address as the Indenture Trustee may designate from time to time by
notice to the Noteholders, the Insurer, the Servicer and the Seller.
"Custodian" shall mean AutoNation Financial Services until such
time, if any, as a Successor Custodian is appointed and thereafter shall mean
such Successor Custodian.
"Cut-Off Date" shall mean _______________, _____
"Default" shall mean any occurrence which with the giving of notice
or the lapse of time or both would become a Servicer Default.
"Dealer" shall mean the seller of a Financed Vehicle, which seller
referred the application in respect of the related Contract to AutoNation
Financial Services.
"Defaulted Contract" shall mean, with respect to any Collection
Period, a Contract, the earlier of (i) which, at the end of such Collection
Period, is deemed uncollectible by the Servicer in accordance with its customary
procedures; (ii) in respect of which all amounts more than one hundred and
twenty (120) days past due represent in the aggregate $40 or more or (iii) in
respect of which the related Financed Vehicle has been repossessed and
liquidated.
"Deficiency Amount" shall mean, with regard to any Distribution
Date, the sum of (i) the excess, if any, of (a) the Note Interest Distributable
Amount for such Distribution Date over (b) the sum of (x) the Available Funds
for such Distribution Date (after giving effect to distribution in clauses (i),
(ii) and (iii) of Section 4.03(a) for such Distribution Date) and (y) the amount
to be on deposit in the Spread Account for such Distribution Date (prior to
giving effect to any withdrawals with respect to such Distribution Date) and
(ii) the Guaranteed Note Principal Amount for such Distribution Date.
"Deficiency Notice" shall mean, with respect to any Distribution
Date, the notice delivered pursuant to Section 4.02(c) by the Servicer to the
Indenture Trustee, with a copy to the Insurer.
"Definitive Notes" shall mean Notes issued in fully registered,
certificated form to Noteholders.
5
<PAGE>
"Delivery" when used with respect to Trust Account Property shall
mean:
(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that constitute
"instruments" within the meaning of Section 9-105(1)(i) of the UCC and are
susceptible of physical delivery, transfer thereof to the Indenture Trustee by
physical delivery to the Indenture Trustee endorsed to, or registered in the
name of, the indenture Trustee or endorsed in blank, and, with respect to a
certificated security (as defined in Section 8-102 of the UCC) transfer thereof
(i) by delivery of such certificated security endorsed to, or registered in the
name of the Indenture Trustee or (ii) by delivery thereof to a "clearing
corporation" (as defined in Section 8-102 of the UCC) and the making by such
clearing corporation of appropriate entries on its books reducing the
appropriate securities account of the transferor and increasing the appropriate
securities account of the Indenture Trustee by the amount of such certificated
security and the identification by the clearing corporation of the certificated
securities for the sole and exclusive account of the Indenture Trustee (all of
the foregoing, "Physical Property"), and, in any event, any such Physical
Property in registered form shall be in the name of the Indenture Trustee; and
such additional or alternative procedures as may hereafter become appropriate to
effect the complete transfer of ownership of any such Trust Account Property to
the Indenture Trustee or its nominee or custodian, consistent with changes in
applicable law or regulations or the interpretation thereof;
(b) with respect to any security issued by the U.S. Treasury, the
Federal Home Loan Mortgage Corporation or by the Federal national Mortgage
Association that is a book-entry security held through the Federal Reserve
System pursuant to federal book-entry regulations, the following procedures, all
in accordance with applicable law, including applicable federal regulations and
Articles 8 and 9 of the UCC: book-entry registration of such Trust Account
Property to an appropriate book-entry account maintained with a Federal Reserve
Bank by a securities intermediary that is also a "depository" pursuant to
applicable federal regulations; the making by such securities intermediary of
entries in its books and records crediting such Trust Account Property to the
Indenture Trustee's security account at the securities intermediary and
identifying such book-entry security held through the Federal Reserve System
pursuant to federal book-entry regulations as belonging to the Indenture
Trustee; and such additional or alternative procedures as may hereafter become
appropriate to effect complete transfer of ownership of any such Trust Account
Property to the Indenture Trustee, consistent with changes in applicable law or
regulations or the interpretation thereof; and
6
<PAGE>
(c) with respect to any item of Trust Account Property that is an
uncertificated security under Article 8 of the UCC and that is not governed by
clause (b) above, registration on the books and records of the issuer thereof in
the name of the Indenture Trustee or its nominee or custodian who either (i)
becomes the registered owner on behalf of the Indenture Trustee or (ii) having
previously become the registered owner, acknowledges that it holds for the
Indenture Trustee.
"Depositor" shall mean the Seller in its capacity as Depositor under
the Owner Trust Agreement, and its successors.
"Distribution Account" means the Note Distribution Account.
"Distribution Date" shall mean the __th day of each month or if such
date shall not be a Business Day, the following Business Day, commencing on
__________, _____.
"Distribution Date Statement" shall have the meaning specified in
Section 3.09(a).
"Due Date" shall mean, as to any Contract, the date upon which a
Monthly Scheduled Payment is due.
"Eligible Account" shall mean (i) a trust account that is either (a)
maintained by the Indenture Trustee, (b) maintained with a depository
institution or trust company the commercial paper or other short-term debt
obligations of which have credit ratings from Standard & Poor's at least equal
to "A-1" and from Moody's equal to "P-1," which account is fully insured up to
applicable limits by the Federal Deposit Insurance Corporation or (c) maintained
with a depository institution acceptable to the Insurer, as evidenced by a
letter from the Insurer to that effect or (ii) a general ledger account or
deposit account at a depository institution acceptable to the Insurer, as
evidenced by a letter from the Insurer to that effect.
"Eligible Investments" shall mean any one or more of the following
obligations or securities, all of which shall be denominated in United States
dollars:
(a) direct obligations of, and obligations fully guaranteed as to
timely payment of principal and interest by, the United States of America or any
agency or instrumentality of the United States of America the obligations of
which are backed by the full faith and credit of the United States of America
and, to the extent, at the time of investment, acceptable to the Insurer and
each Rating Agency for securities having a rating equivalent to the rating of
the Notes at the Closing
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Date, the direct obligations of, or obligations fully guaranteed by, the Federal
Home Loan Mortgage Corporation and the Federal National Mortgage Association;
(b) demand and time deposits in, certificates of deposit of,
banker's acceptances issued by, or federal funds sold by any depository
institution or trust company (including the Indenture Trustee or the Owner
Trustee) incorporated under the laws of the United States of America or any
State and subject to supervision and examination by Federal and/or State banking
authorities, so long as at the time of such investment or contractual commitment
providing for such investment either (i) the long-term, unsecured debt
obligations of such depository institution or trust company have credit ratings
from Standard & Poor's at least equal to "AA-" and from Moody's at least equal
to "Aa2" or (ii) such depository institution is acceptable to the Insurer as
evidenced by a letter from the Insurer to the Indenture Trustee (which
acceptability may be revoked at any time by the Insurer) and provided that each
such investment has an original maturity of no more than 365 days; provided that
any such demand and time deposits shall be fully insured by the FDIC and any
such certificates of deposit must be secured at all times by collateral
described in clause (a) above, such collateral must be held by a third party and
the Indenture Trustee must have a perfected first priority security interest in
such collateral, and (iii) any other demand or time deposit or deposit which is
fully insured by the Federal Deposit Insurance Corporation;
(c) repurchase obligations with respect to (i) any security
described in clause (a) above or (ii) any other security issued or guaranteed as
to timely payment of principal and interest by an agency or instrumentality of
the United States of America, in either case entered into with any depository
institution or trust company (including the Indenture Trustee and the Owner
Trustee), acting as principal, described in clause (b) above; provided,
however, that collateral transferred pursuant to such repurchase obligation must
be of the type described in clause (a) above and must (i) be valued weekly,
marked-to-market at current market price plus accrued interest, (ii) pursuant to
such valuation, be equal at all times to 105% of the cash transferred by the
Indenture Trustee in exchange for such collateral and (iii) be delivered to the
Indenture Trustee or, if the Indenture Trustee is supplying the collateral, an
agent for the Indenture Trustee, in such a manner as to accomplish perfection of
a security interest in the collateral by possession of certified securities;
(d) commercial paper having the highest rating by Standard & Poor's
and Moody's at the time of such investment;
(e) investments in money market funds or money market mutual funds
registered under the Investment Company Act of 1940, as amended, whose
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shares are registered under the Securities Act of 1933, having a rating from
Standard & Poor's and Moody's in the highest investment category granted
thereby, including funds for which the Indenture Trustee, the Owner Trustee or
any of their respective Affiliates is investment manager or advisor; and
(f) such other obligations or securities acceptable to the Insurer,
as evidenced by a letter from the Insurer to the Indenture Trustee (which
acceptability may be revoked at any time by the Insurer).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Final Scheduled Distribution Date" shall mean with respect to the
Notes, the Class A-1 Final Scheduled Distribution Date, the Class A-2 Final
Scheduled Distribution Date, the Class A-3 Final Scheduled Distribution Date or
the Class A-4 Final Scheduled Distribution Date, as the case may be.
"Financed Vehicle" shall mean, as to any Contract, a new or used
automobile and/or light-duty truck, together with all accessions thereto,
securing the related Obligor's indebtedness under such Contract.
"Fiscal Agent" shall have the meaning set forth in the Insurance
Policy.
"Full Prepayment" shall mean, with respect to any Contract, any of
the following: (a) payment by or on behalf of the Obligor of the total amount
required by the terms of such Contract to be paid thereunder, which amount shall
be at least equal to the sum of (i) 100% of the Principal Balance of such
Contract, (ii) interest accrued thereon to the date of such payment at the APR
and (iii) any overdue amounts; or (b) payment by the Seller to the Indenture
Trustee of the Purchase Amount of such Contract in connection with the purchase
of such Contract pursuant to Section 2.03, or payment by the Servicer of the
Purchase Amount of such Contract in connection with the purchase of such
Contract pursuant to Section 3.07 or the purchase of all Contracts pursuant to
Section 8.01.
"Guaranteed Note Principal Amount" shall mean with regard to any
Distribution Date, the lesser of (a) the excess, if any, of (i) the Note
Principal Distributable Amount for such Distribution Date over (ii) the sum of
(x) the Available Funds for such Distribution Date (after giving effect to
distributions in clauses (i), (ii), (iii) and (iv) of Section 4.03(a) for such
Distribution Date) and (y) the amount to be on deposit in the Spread Account for
such Distribution Date (after
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giving effect to any withdrawals to pay amounts pursuant to Section 4.03(a)(iv)
for such Distribution Date) and (b) the excess, if any, of (i) the outstanding
principal amount of the Notes for such Distribution Date (after giving effect to
all distributions of principal on such Distribution Date) over (ii) the sum of
(x) the Pool Balance as of the last day of the preceding Collection Period and
(y) the amount to be on deposit in the Spread Account (after giving effect to
any withdrawals to pay amounts pursuant to clauses [(iv) and (v)] of Section
4.03(a) for such Distribution Date); provided, however, on the Final Scheduled
Distribution Date for such Class of Notes, the Guaranteed Note Principal Amount
shall include, without duplication, the outstanding principal amount of such
Class of Notes on such Final Scheduled Distribution Date (after giving effect to
all distributions of principal on such Final Scheduled Distribution Date).
"Indenture" shall mean the Indenture, dated as of _____________,
_____, between the Issuer and the Indenture Trustee, as the same may from time
to time be amended, supplemented or otherwise modified and in effect.
"Indenture Trustee" shall mean _________________________, a
____________________, not in its individual capacity but solely as the Indenture
Trustee under the Indenture, its successors in interest and any successor
Indenture Trustee under the Indenture.
"Insolvency Proceeding" shall have the meaning specified in Section
7.05.
"Insurance Agreement" shall mean the Insurance Agreement, dated as
of ____________, ________________, by and among the Insurer, the Seller,
AutoNation Financial Services, the Indenture Trustee, the Owner Trustee and the
Issuer, as the same may from time to time be amended, supplemented or otherwise
modified and in effect.
"Insurance Policy" shall mean the note guaranty insurance policy for
the Notes, number _______________, dated ______________, __________ and issued
by the Insurer in favor of the Indenture Trustee, guaranteeing payment of any
Insured Payment, as the same may be amended, supplemented or otherwise modified
and in effect.
"Insurance Policy Amount" shall mean, with respect to any
Distribution Date, the sum of (a) in the case of the first Distribution Date,
the initial aggregate principal amount of the Notes, or in the case of any
Distribution Date thereafter, the aggregate principal amount of the Notes
outstanding on the immediately preceding Distribution Date (after giving effect
to the payments and distributions of
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principal on the Notes on such preceding Distribution Date), (b) the amount of
interest payable in respect of the Notes on such Distribution Date and (c) the
Servicing Fee payable on such Distribution Date.
"Insurance Premium" shall have the meaning specified in the
Insurance Agreement.
"Insured Payment" shall mean the sum of (i) with respect to each
Distribution Date, the Deficiency Amount and (ii) the Preference Amount.
"Insurer" shall mean ___________________________, a
__________________________, and its permitted successors and assigns.
"Insurer Default" shall mean the occurrence and continuance of any
of the following:
(i) the Insurer shall have failed to make a payment required to be
made under the Insurance Policy in accordance with its terms;
(ii) the Insurer shall have (a) filed a petition or commenced any
case or proceeding in respect of the Insurer under any provision or
chapter of the United States Bankruptcy Code or any other similar federal
or state law relating to insolvency, bankruptcy, rehabilitation,
liquidation or reorganization, (b) made a general assignment for the
benefit of its creditors or (c) had an order for relief entered against it
under the United States Bankruptcy Code or any other similar federal or
state law relating to insolvency, bankruptcy, rehabilitation, liquidation
or reorganization which is final and nonappealable; or
(iii) a court of competent jurisdiction, the New York Department of
Insurance or other competent regulatory authority shall have entered a
final and nonappealable order, judgment or decree (a) appointing a
custodian, trustee, agent or receiver for the Insurer or for all or any
material portion of its property or (b) authorizing the taking of
possession by a custodian, trustee, agent or receiver of the Insurer (or
the taking of possession of all or any material portion of the property of
the Insurer).
"Interest Accrual Period" shall mean, with respect to any
Distribution Date, the period from and including the Distribution Date
immediately preceding such Distribution Date (or, in the case of the first
Distribution Date, from and including the Closing Date) to but excluding such
Distribution Date.
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"Issuer" shall mean ANRC Auto Owner Trust ______________, a Delaware
business trust, and its permitted successors and assigns.
"Lien" shall mean a security interest, lien, charge, pledge, equity
or encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that attach to the respective Contract by operation of law.
"Liquidation Expenses" shall mean reasonable out-of-pocket expenses,
other than any overhead expenses, incurred by the Servicer in connection with
the realization of the full amounts due under any Defaulted Contract (including
the attempted liquidation of a Contract which is brought current and is no
longer in default during such attempted liquidation) and the sale of any
property acquired in respect thereof which are not recoverable as proceeds paid
by any insurer under any type of motor vehicle insurance policy related to the
Contract. Liquidation Expenses shall not include any late fees or other
administrative fees and expenses or similar charges collected with respect to a
Contract.
"Maturity Date" shall mean, with respect to any Contract, the date
on which the last scheduled payment of such Contract shall be due and payable as
such date may be extended pursuant to Section 3.02.
"Monthly Scheduled Payment" shall mean, with respect to any
Contract, in any given month, the amount of the scheduled payment of principal
and interest payable by the Obligor of such Contract for such month in
accordance with the terms thereof, exclusive of any charges which represent late
payment charges or extension fees.
"Moody's" shall mean Moody's Investors Service, Inc., and its
permitted successors and assigns.
"Net Insurance Proceeds" shall mean proceeds paid by any insurer
under a comprehensive and collision insurance policy related to a Contract
(other than funds used for the repair of the related Financed Vehicle or
otherwise released to the related Obligor in accordance with normal servicing
procedures), after reimbursement to the Servicer of expenses recoverable under
such policy.
"Net Liquidation Proceeds" shall mean, at any time, with respect to
any Contract that becomes a Defaulted Contract, the amount received by the
Servicer during or after the Collection Period in which such Contract becomes a
Defaulted Contract (net of Liquidation Expenses).
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"Note" shall mean a Class A-1 Note, a Class A-2 Note, a Class A-3
Note or a Class A-4 Note.
"Note Distributable Amount" shall mean, with respect to any
Distribution Date, the sum of the Note Principal Distributable Amount and the
Note Interest Distributable Amount for such Distribution Date.
"Note Distribution Account" shall mean the account established and
maintained as such pursuant to Section 4.01.
"Noteholder" shall mean, with respect to any Note, the person in
whose name such Note is registered in the Note Register.
"Note Interest Carryover Shortfall" shall mean, with respect to any
Distribution Date and a Class of Notes, the sum of (i) the excess, if any, of
the Note Interest Distributable Amount for such Class for the immediately
preceding Distribution Date over the amount in respect of interest that is
actually deposited in the Note Distribution Account with respect to such Class
on such preceding Distribution Date, plus, (ii) to the extent permitted by
applicable law, interest on the amount of interest due but not paid to
Noteholders of such Class on the preceding Distribution Date at the related Note
Rate for the related Interest Accrual Period; provided that the Note Interest
Carryover Shortfall for the first Distribution Date shall be zero.
"Note Interest Distributable Amount" shall mean, with respect to any
Distribution Date and a Class of Notes, the sum of (i) an amount equal to the
interest accrued during the related Interest Accrual Period at the related Note
Rate for such Class of Notes on the outstanding principal amount of such Class
of Notes on the immediately preceding Distribution Date, after giving effect to
all payments of principal to Noteholders of such Class on or prior to such
Distribution Date (or, in the case of the first Distribution Date, on the
original outstanding principal amount of such Class of Notes) and (ii) the Note
Interest Carryover Shortfall for such Class of Notes for such Distribution Date.
"Note Principal Carryover Shortfall" shall mean, as of the close of
business on any Distribution Date, the excess of the Note Principal
Distributable Amount for such Distribution Date over the amount in respect of
principal that is actually deposited in the Note Distribution Account on such
Distribution Date.
"Note Principal Distributable Amount" shall mean, with respect to
any Distribution Date, the sum of (i) the Principal Distributable Amount for
such Distribution Date and (ii) any outstanding Note Principal Carryover
Shortfall for the
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immediately preceding Distribution Date; provided that the Note Principal
Distributable Amount shall not exceed the aggregate outstanding principal
amount of the Notes. Notwithstanding the foregoing, the Note Principal
Distributable Amount on the Final Scheduled Distribution Date for each Class
shall not be less than the amount that is necessary to reduce the outstanding
principal amount of the related Class of Notes to zero.
"Note Rate" shall mean the Class A-1 Rate, the Class A-2 Rate, the
Class A-3 Rate or the Class A-4 Rate, as the case may be.
"Note Register" shall have the meaning specified in the Indenture.
"Obligee" shall mean, with respect to any Contract, the Person to
whom an Obligor is indebted under such Contract.
"Obligor" shall mean, with respect to any Contract, the purchaser or
co-purchasers of the Financed Vehicle and any other Person who owes payments
under such Contract.
"Officers' Certificate" shall mean a certificate signed by the
[Chairman, the President, a Vice President, the Treasurer, an Assistant
Treasurer, the Controller, an Assistant Controller, the Secretary or an
Assistant Secretary] of any Person delivering such certificate and delivered to
the Person to whom such certificate is required to be delivered. In the case of
an Officers' Certificate of the Servicer, at least one of the signing officers
must be a Servicing Officer. Unless otherwise specified, any reference herein to
an Officers' Certificate shall be to an Officers' Certificate of the Servicer.
"Opinion of Counsel" shall mean a written opinion of counsel (who
may be an employee of or counsel to the Seller or the Servicer) acceptable to
the Indenture Trustee or the Owner Trustee, as the case may be, and the Insurer.
"Optional Purchase" shall have the meaning specified in Section 8.01
"Original Pool Balance" shall mean $___________, which is the
aggregate principal balance.
"Originator" shall mean AutoNation Financial Services Corp., and its
permitted successors and assigns.
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"Outstanding" shall mean with respect to a Contract and as of the
time of reference thereto, a Contract that has not reached its Maturity Date,
has not been fully prepaid, has not become a Defaulted Contract and has not
otherwise been repurchased pursuant to Section 2.03, 3.07 or 8.01.
"Outstanding Principal Balance" shall mean, as of the Cut-Off Date,
the amount set forth as the Outstanding Principal Balance of such Contract on
the Schedule of Contracts, such amount being the total of all principal payments
due on or after the Cut-Off Date.
"Overcollateralization Amount" shall mean __% of the initial Pool
Balance.
"Owner Trust Agreement" shall mean the Amended and Restated Owner
Trust Agreement, dated as of __________________, ___________, between the
Depositor and the Owner Trustee, as the same may be further amended,
supplemented or otherwise modified and in effect.
"Owner Trustee" shall mean _________________, a _______________, not
in its individual capacity but solely as the Owner Trustee under the Owner Trust
Agreement acting on behalf of the Depositor, its successors in interest and any
successor Owner Trustee under the Owner Trust Agreement.
"Owner Trustee Corporate Trust Office" shall mean the principal
office of the Owner Trustee at which at any particular time its corporate trust
business shall be administered, which office at the date of the execution of
this Agreement is located at ______________________________, Attention:
________________, with a copy to _________________________________, Attention:
__________________; or at such other address as the Owner Trustee may designate
from time to time by notice to the Noteholders, the Insurer, the Servicer and
the Seller.
"Paying Agent" shall mean with respect to the Notes, the Person
acting as the "Paying Agent" under the Indenture or any other Person that meets
the eligibility standards for the Indenture Trustee specified in the Indenture
and is authorized by the Issuer to make the distributions from the Note
Distribution Account, including payment of principal of or interest on the Notes
on behalf of the Issuer.
"Payment Account" shall mean the account established and maintained
as such pursuant to Section 4.01.
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"Person" shall mean a legal person, including any individual,
corporation, estate, partnership, limited liability company or limited
liability partnership, joint venture, association, joint stock company, business
trust, trust (including any beneficiary thereof), unincorporated organization or
government or any agency or political subdivision thereof.
"Pool Balance" as of the time of determination shall mean the
aggregate of the Principal Balances of the Contracts, exclusive of the Principal
Balances of all Contracts that are not Outstanding at the end of the Collection
Period ending immediately prior to such time of determination.
"Pool Factor" shall mean, a six-digit decimal computed each month
indicating the Pool Balance at the end of the month, divided by the Original
Pool Balance. The Pool Factor will be 1.000000 as of the Closing Date;
thereafter, the Pool Factor will decline to reflect reductions in the Pool
Balance.
"Potential Preference Parties" shall have the meaning specified in
Section 4.04(d).
"Preference Amount" shall mean any amount previously distributed to
a Noteholder that is recoverable and sought to be recovered as a voidable
preference by a trustee in bankruptcy with respect to AutoNation Financial
Services, the Seller or the Trust pursuant to the United States Bankruptcy Code
(11 U.S.C.), as amended from time to time, in accordance with a final
nonappealable order of a court having competent jurisdiction.
"Preference Claim" shall have the meaning specified in Section 7.05.
"Principal Balance" shall mean, with respect to a Contract, as of
any date of determination, the Amount Financed under the terms of such Contract
minus (i) that portion of all Monthly Scheduled Payments in respect of such
Contract received on or prior to the end of the most recently ended Collection
Period and allocable to principal as determined by the Servicer. For purposes of
this definition, allocations between interest and principal of the Monthly
Scheduled Payment on each Contract by the Servicer shall be made in accordance
with the terms of such Simple Interest Contract.
"Principal Distributable Amount" shall mean, with respect to any
Distribution Date, the amount equal to the sum of the following amounts with
respect to the Collection Period: (i) collections received on Contracts (other
than Defaulted Contracts and Purchased Contracts) allocable to principal as
determined by the
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Servicer, including full and partial principal prepayments; (ii) the Principal
Balance of all Contracts (other than Purchased Contracts) that become Defaulted
Contracts during the related Collection Period; and (iii) the Principal Balance
as of the date of purchase of all Contracts that became Purchased Contracts as
of the immediately preceding Record Date.
"Purchase Amount" shall mean, with respect to a Purchased Contract,
the Principal Balance of such Contract as of the date of purchase or repurchase
of such Contract plus accrued interest thereon at the applicable APR to the
extent not previously collected.
"Purchased Contract" shall mean a Contract that (i) has been
purchased by the Servicer or the Seller because of certain material defects in
documents related to such Contract or certain breaches of representations and
warranties regarding such Contract made by the Seller in this Agreement or by
the Originator in the Receivables Purchase Agreement that materially and
adversely affect the interests of the Noteholders or the Insurer, (ii) has been
purchased by the Servicer because of certain breaches by the Servicer of
servicing covenants or (iii) has been purchased by the Servicer in the event of
an optional purchase of all of the Contracts pursuant to Section 8.01.
"Rating Agencies" shall mean Moody's and Standard & Poor's, and if
either Moody's or Standard & Poor's no longer maintain a rating on the Notes,
such other nationally recognized statistical rating organization designated by
the Depositor and acceptable to the Insurer.
"Receivables Purchase Agreement" shall mean the Receivables Purchase
Agreement, dated as of ____________________, ____, between AutoNation Financial
Services Corp., as seller, and the Seller, as purchaser, as such agreement may
from time to time be amended, supplemented or otherwise modified and in effect.
"Record Date" shall mean, with respect to a Class of Notes, on each
Distribution Date and the Final Scheduled Distribution Date, the Business Day
immediately prior to such Distribution Date or, if Definitive Securities are
issued, the last day of the immediately preceding calendar month.
"Registrar of Titles" shall mean the agency, department or office
having the responsibility for maintaining records of titles to motor vehicles
and issuing documents evidencing such titles in the jurisdiction in which a
particular Financed Vehicle is registered.
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"Reimbursement Amount" shall mean the sum of (i) any unreimbursed
payments made by the Insurer under the Insurance Policy or pursuant to Section
5.02(e) of the Indenture, (ii) any expense paid by the Insurer pursuant to
Section 3.05(b), (iii) any unpaid Insurance Premium and (iv) all other amounts
due to the Insurer under the Insurance Agreement, in each case, together with
interest on such amounts at the Late Payment Rate (as defined in the Insurance
Agreement).
"Re-Liening Expenses" shall mean reasonable out-of-pocket expenses,
acceptable to the Insurer and incurred in connection with the retitling of the
Title Documents to name the Indenture Trustee as secured party with respect to
the Financed Vehicles.
"Residual Interest Certificate" shall have the meaning specified in
the Owner Trust Agreement.
"Responsible Officer" shall mean any officer of the Indenture
Trustee or the Owner Trustee within the Corporate Trust Office, including any
vice president, assistant vice president, assistant treasurer, assistant
secretary or any other officer of the Indenture Trustee or Owner Trustee
customarily performing functions similar to those performed by any of the above
designated officers with direct responsibility for the administration of this
Agreement.
"Schedule of Contracts" shall mean the list or lists of Contracts
attached as Exhibit A hereto. In addition, the information contained in Exhibit
A shall also be contained on a computer disk or tape (the "Disk") that shall be
delivered by the Servicer to the Indenture Trustee and the Insurer on or prior
to the Closing Date.
"Securities Control Account Agreement" shall have the meaning set
forth in the Indenture.
"Seller" shall mean AutoNation Receivables Corporation, a Delaware
corporation, in its capacity as the Seller of the Contracts under this
Agreement, and each successor thereto (in the same capacity) pursuant to Section
5.02.
"Servicer" shall mean AutoNation Financial Services Corp., a
Delaware corporation, in its capacity as the servicer of the Contracts under
Section 3.01, and, in each case upon succession in accordance herewith, each
successor servicer in the same capacity pursuant to Section 3.01 and each
successor servicer pursuant to Section 7.02.
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"Servicer Default" shall mean an event specified in Section 7.01.
"Servicer Report Date" shall mean, with respect to any Distribution
Date, the third Business Day prior to such Distribution Date.
"Servicing Fee" shall mean, as to any Distribution Date, the fee
payable to the Servicer for services rendered during the Collection Period
ending immediately prior to such Distribution Date, which shall be an amount
equal to the product of the Servicing Fee Percentage multiplied by the Pool
Balance as of the end of the Collection Period preceding the related Collection
Period or in the case of the first Distribution Date, the Pool Balance as of the
Cut-Off Date.
"Servicing Fee Percentage" shall mean a percentage equal to the
product of one-twelfth of __% per annum.
"Servicing Officer" shall mean any officer of the Servicer involved
in, or responsible for, the administration and servicing of the Contracts whose
name appears on a list of servicing officers furnished to the Indenture Trustee
and the Insurer by the Servicer pursuant to Section 3.01, as such list may be
amended or supplemented from time to time.
"Servicing Standards" shall mean, at any time, the quality of the
Servicer's performance with respect to (i) compliance with the terms of this
Agreement and (ii) adequacy, measured in accordance with industry standards and
current and historical standards of the Servicer, in respect of the servicing of
all Contracts serviced by the Servicer, regardless of whether any such Contract
is owned by the Servicer or otherwise.
"Simple Interest Contract" shall mean a Contract as to which the
portion of payments allocable to earned interest and principal thereunder is
deter mined according to the Simple Interest Method.
"Simple Interest Method" shall mean the method for calculating
interest on a Contract whereby interest due is calculated each day based on the
actual principal balance of the Contract on that day.
"Spread Account" shall mean the account established and maintained
as such pursuant to Section 4.01.
"Spread Account Required Amount" shall have the meaning set forth in
the Insurance Agreement.
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"Standard & Poor's" shall mean Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc., and its permitted successors and
assigns.
"Successor Custodian" shall have the meaning set forth in Section
2.04(b).
"Successor Servicer" shall have the meaning set forth in the
Indenture.
"Title Document" shall mean, with respect to any Financed Vehicle,
the certificate of title for, or other evidence of ownership of, such Financed
Vehicle issued by the Registrar of Titles in the jurisdiction in which such
Financed Vehicle is registered.
"Transition Costs" shall mean reasonable costs and expenses incurred
by or payable to the Successor Servicer in connection with the transfer of
servicing (whether due to termination, resignation or otherwise) from the
Servicer to such Successor Servicer, which shall be approved in writing by the
Insurer.
"Trust" shall mean the Issuer.
"Trust Account Property" shall mean 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) and all proceeds of the foregoing.
"Trust Accounts" shall have the meaning specified in Section
4.01(a).
"Trust Property" shall have the meaning set forth in Section 2.01
hereof.
"UCC" shall mean the Uniform Commercial Code as in effect in the
applicable jurisdiction.
SECTION 1.02. Usage of Terms.
With respect to all terms in this Agreement, the singular includes
the plural and the plural the singular; words importing any gender include the
other genders; references to "writing" include printing, typing, lithography and
other means of reproducing words in a visible form; references to agreements and
other contractual instruments include all amendments, modifications and
supplements thereto or
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any changes therein entered into in accordance with their respective terms and
not prohibited by this Agreement; references to Persons include their permitted
successors and assigns; and the term "including" means "including without
limitation."
SECTION 1.03. Section References.
All section references, unless otherwise indicated, shall be to
Sections in this Agreement.
SECTION 1.04. Calculations.
Interest on the Class A-1 Notes will be calculated on the basis of
the actual number of days in the related Interest Accrual Period and a 360-day
year. Interest on the Class A-2 Notes, the Class A-3 Notes and the Class A-4
Notes will be calculated on the basis of a 360-day year consisting of twelve
30-day months. Collections of interest on Simple Interest Contracts will be
calculated in accordance with the terms thereof.
SECTION 1.05. Accounting Terms.
All accounting terms used but not specifically defined herein shall
be construed in accordance with generally accepted accounting principles in the
United States of America.
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ARTICLE II
CONVEYANCE OF CONTRACTS;
REPRESENTATIONS AND WARRANTIES OF THE SELLER
SECTION 2.01. Conveyance of Contracts.
(a) In consideration of the Issuer's delivery of the authenticated
Notes to or upon the order of the Seller, effective upon the Closing Date, the
Seller hereby sells, grants, transfers, conveys and assigns to the Issuer,
without recourse (except as expressly provided in Section 2.03 hereof), all of
the right, title and interest of the Seller in, to and under:
(i) the Contracts listed in the Schedule of Contracts;
(ii) all monies received with respect to all Contracts on or after
the Cut-Off Date, including any Purchase Amounts;
(iii) all Net Liquidation Proceeds and Net Insurance Proceeds with
respect to any Financed Vehicle to which a Contract relates received on or
after the Cut-Off Date;
(iv) certain documents relating to the Contracts, the Contract
Documents and Contract Files relating to the Contracts, including all
servicing records in hard and electronic form;
(v) all rights of the Seller, (but not its obligations) under the
Receivables Purchase Agreement;
(vi) any and all security interests in the Financed Vehicles and the
rights to receive proceeds from claims on certain insurance policies
covering the Financed Vehicles or the individual Obligors under each
related Contract; and
(vii) all proceeds in any way delivered with respect to the
foregoing, all rights to payments with respect to the foregoing and all
rights to enforce the foregoing.
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The foregoing items of property listed in this Section 2.01,
together with the rights of the Indenture Trustee for the benefit of the
Noteholders under the Insurance Policy, are collectively referred to herein as
the "Trust Property".
It is the intention of the Seller and the Issuer that the assignment
and transfer contemplated herein constitute (and shall be construed and treated
for all purposes as) a true and complete sale of the Trust Property, conveying
good title thereto free and clear of any liens and encumbrances, from the Seller
to the Issuer. However, in the event that such conveyance is deemed to be a
pledge to secure a loan (in spite of the express intent of the parties hereto
that this conveyance constitutes, and shall be construed and treated for all
purposes, as a true and complete sale), the Seller hereby grants to the Issuer,
for the benefit of the Noteholders and the Insurer, a first priority perfected
security interest in all of the Seller's right, title and interest in, to and
under the Trust Property whether now existing or hereafter created and all
proceeds of the foregoing to secure the loan deemed to be made in connection
with such pledge and, in such event, this Agreement shall constitute a security
agreement under applicable law.
(b) As of the Closing Date, the Issuer acknowledges the conveyance
to it of the Trust Property from the Seller, including all right, title and
interest of the Seller in, to and under the Trust Property, receipt of which is
hereby acknowledged by the Issuer. Concurrently with such delivery and in
exchange therefor, the Issuer has pledged to the Indenture Trustee, for the
benefit of the Noteholders and the Insurer, the Trust Property and the Indenture
Trustee, pursuant to the written instructions of the Issuer, has executed and
caused to be authenticated and delivered the Notes to the Seller or its
designee, upon the order of the Issuer. In addition, concurrently with such
delivery and its exchange therefor, the Owner Trustee, pursuant to the
instructions of the Seller, has executed (not in its individual capacity, but
solely as Owner Trustee on behalf of the Issuer) and caused to be authenticated
and delivered, the Residual Interest Certificate to the Seller, upon the order
of the Seller.
(c) In connection with the sale of the Contracts pursuant to the
Receivables Purchase Agreement, AutoNation Financial Services has filed with the
office of the Secretary of State of the State of _____________ a UCC-1 financing
statement naming AutoNation Financial Services as debtor, naming the Seller as
secured party and the Indenture Trustee as assignee and including the Contracts
in the description of the collateral. In connection with the sale of the
Contracts pursuant to this Agreement, the Seller has filed or caused to be filed
with the Secretary of State of the State of ____________ a UCC-1 financing
statement naming the Seller as debtor, naming the Issuer as secured party,
naming the Indenture Trustee, on behalf of the Noteholders, as assignee, and
including the Contracts in the description of the
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collateral. In connection with the pledge of the Contracts pursuant to the
Indenture, the Trust has filed with the offices of the Secretary of State of the
State of Delaware UCC-1 financing statements naming the Trust as debtor and the
Indenture Trustee, on behalf of the Noteholders and the Insurer, as secured
party. The grant of a security interest to the Indenture Trustee and the rights
of the Indenture Trustee in the Contracts shall be governed by the Indenture.
The Seller shall have caused UCC-2 termination statements to have
been filed with the office of Secretary of State of the State of _____________
terminating any effective UCC-1 financing statements with respect to any
outstanding security interests in the Contracts.
(d) From time to time, the Servicer shall cause to be taken such
actions as are necessary to continue the perfection of the respective interests
of the Trust and the Indenture Trustee in the Contracts and to continue the
first priority security interest of the Indenture Trustee in the Financed
Vehicles and their proceeds (other than, as to such priority, any statutory lien
arising by operation of law after the Closing Date which is prior to such
interest), including, without limitation, the filing of financing statements,
amendments thereto or continuation statements and the making of notations on
records or documents of title.
(e) The Owner Trustee, on behalf of the Issuer and the Indenture
Trustee, hereby authorizes the Servicer, and the Servicer hereby agrees, to take
such steps as are necessary to re-perfect such security interest in the event of
the relocation of a Financed Vehicle or for any other reason, in either case,
when the Servicer has knowledge of the need for such re-perfection. In the event
that the assignment of a Receivable to the Issuer and by the Issuer to the
Indenture Trustee pursuant to the Indenture is insufficient without a notation
on the related Financed Vehicle's certificate of title, or without fulfilling
any additional administrative requirements under the laws of the State in which
the Financed Vehicle is located, to grant to the Indenture Trustee a perfected
security interest in the related Financed Vehicle, the Seller and the Servicer
hereby agree that the Seller's listing as the secured party on the certificate
of title is deemed to be in its capacity as agent of the Indenture Trustee and
the Servicer further agrees to hold such certificate of title as the Indenture
Trustee's agent and custodian; provided, however, that the Servicer shall not,
nor shall the Owner Trustee, the Indenture Trustee or the Noteholders have the
right to require that the Servicer make any such notation on the related
Financed Vehicle's certificate of title or fulfill any such additional
administrative requirements of the laws of the State in which a Financed Vehicle
is located.
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(f) During the term of this Agreement, the Seller and AutoNation
Financial Services shall each maintain its chief executive office in one of the
States of the United States.
SECTION 2.02. Representations and Warranties of the Seller.
The Seller hereby makes the following representations and warranties
on which (i) the Issuer is deemed to have relied in acquiring the Contracts and
(ii) the Insurer is deemed to have relied in issuing the Insurance Policy. Such
representations and warranties speak as of the execution and delivery of this
Agreement and as of the Closing Date, but shall survive the sale, transfer and
assignment of the Contracts to the Issuer and the pledge thereof to the
Indenture Trustee pursuant to the Indenture.
(a) As to the Seller:
(i) The Seller is duly organized and validly existing as a
corporation organized and existing and in good standing under the laws of
the State of Delaware, with power and authority to own its properties and
to conduct its business as currently owned and conducted and had at all
relevant times, and has, power, authority, and legal right to originate or
acquire, own and sell the Contracts.
(ii) The Seller is duly qualified to do business as a foreign
corporation in good standing, and shall have obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or
lease of property or the conduct of its business requires such
qualifications.
(iii) The Seller has the power and authority to execute and deliver
this Agreement and the other Basic Documents to which it is a party and to
carry out their respective terms; the Seller has full power and authority
to sell and assign the property to be sold and assigned to and deposited
with the Issuer and has duly authorized such sale and assignment to the
Issuer by all necessary corporate action; and the execution, delivery,
and performance of this Agreement and the other Basic Documents to which
it is a party have been duly authorized by the Seller by all necessary
corporate action.
(iv) This Agreement (A) constitutes a valid sale, transfer, and
assignment of the Contracts, enforceable against creditors of and
purchasers from the Seller and (B) and the other Basic Documents to which
it is a party constitute a legal, valid, and binding obligations of the
Seller enforceable in accordance with their respective terms, except as
such enforceability may be
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limited by bankruptcy, insolvency, reorganization, or other similar laws
affecting the enforcement of creditors' rights in general and by general
principles of equity, regardless of whether such enforceability shall be
considered in a proceeding in equity or at law.
(v) The consummation of the transactions contemplated by this
Agreement and the other Basic Documents and the fulfillment of their
respective terms shall not conflict with, result in any breach of any of
the terms and provisions of, nor constitute (with or without notice or
lapse of time) a default under, the certificate of incorporation or bylaws
of the Seller, or any indenture, agreement, or other instrument to which
the Seller is a party or by which it shall be bound; nor result in the
creation or imposition of any Lien upon any of the properties of the
Seller pursuant to the terms of any such indenture, agreement, or other
instrument (other than pursuant to the Basic Documents to which the Seller
is a party); nor violate any law or any order, rule, or regulation
applicable to the Seller of any court or of any federal or state
regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Seller or its properties.
(vi) To the Seller's best knowledge after due inquiry, there are no
proceedings or investigations pending, or threatened, before any court,
regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Seller or its properties: (A)
asserting the invalidity of this Agreement, the other Basic Documents or
the Notes, (B) seeking to prevent the issuance of the Notes or the
consummation of any of the transactions contemplated by this Agreement
and the other Basic Documents, (C) seeking any determination or ruling
that might materially and adversely affect the performance by the Seller
of its obligations under, or the validity or enforceability of, this
Agreement, the other Basic Documents or the Notes, or (D) naming the
Seller which might adversely affect the federal income tax attributes of
the Notes.
(vii) On the Closing Date, the chief executive office of the Seller
is located at ________________________.
(b) As to each Contract:
(i) The information pertaining to such Contract set forth in the
related Schedule of Contracts was true and correct in all material
respects at the Closing Date and the calculations of the Principal
Balances appearing in such
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Schedule of Contracts for each such Contract at the Cut-Off Date have been
performed in accordance with this Agreement and are accurate.
(ii) As of the Closing Date, such Contract was secured by a valid
and enforceable first priority perfected security interest in favor of
AutoNation Financial Services or a subsidiary of AutoNation Financial
Services in the related Financed Vehicle; such security interest had been
assigned by AutoNation Financial Services to the Seller pursuant to the
Receivables Purchase Agreement, and, as of the Closing Date, has been
assigned by the Seller to the Issuer pursuant to Section 2.01(a) hereof.
(iii) (A) If the related Financed Vehicle was originated in a state
in which notation of a security interest on the Title Document is required
or permitted to perfect such security interest, the Title Document or the
electronic title records for such Financed Vehicle shows, or, if a new or
replacement Title Document is being applied for with respect to such
Financed Vehicle, the Title Document will be received within 180 days of
the Closing Date and will show, AutoNation Financial Services or a
subsidiary of AutoNation Financial Services named as the original and only
secured party under the related Contract as the holder of a first priority
security interest in such Financed Vehicle, and (B) if the related
Financed Vehicle was originated in a state in which the filing of a
financing statement under the UCC is required to perfect a security
interest in motor vehicles, such filings or recordings have been duly
made and show AutoNation Financial Services or a subsidiary of AutoNation
Financial Services named as the original secured party under the related
Contract, and in either case, the Indenture Trustee on behalf of the
Noteholders and the Insurer has the same rights as such secured party has
or would have (if such secured party were still the owner of such
Contract) (x) against all parties claiming an interest in such Financed
Vehicle and (y) to repossess or recover by legal process the Financed
Vehicle in its name. With respect to each Contract for which the Title
Document has not yet been returned from the Registrar of Titles,
AutoNation Financial Services has written evidence that such Title
Documents showing AutoNation Financial Services or a subsidiary of
AutoNation Financial Services as first lienholder have been applied for.
(iv) As of the Closing Date, the Seller had good and marketable
title to and was the sole owner of each Contract to be transferred to the
Issuer pursuant to Section 2.01 free of liens, claims, encumbrances and
rights of others and, upon transfer of such Contract to the Issuer
pursuant to Section 2.01, the Issuer will have good and marketable title
to, will have a first priority
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perfected security interest in and will be the sole owner of such Contract
free of liens, encumbrances and rights of others.
(v) As of the Cut-Off Date, no payment on each such Contract was
more than __ days past due.
(vi) As of the Closing Date, there is no lien against the related
Financed Vehicle for delinquent taxes.
(vii) As of the Closing Date, there is no right of rescission,
offset, defense, claim or counterclaim to the obligation of the related
Obligor(s) to pay the unpaid principal or interest due under such
Contract; the operation of the terms of such Contract or the exercise of
any right thereunder will not render such Contract unenforceable in whole
or in part nor subject such Contract to any right of rescission, offset,
defense, claim or counterclaim, and the Seller has no knowledge that such
right of rescission, offset, defense or counterclaim has been asserted or
threatened.
(viii) Such Contract is a retail installment sales contract, and
such Contract and the sale of the Financed Vehicle sold thereunder, at the
time it was made complied in all material respects with all requirements
of applicable federal, state and local laws and regulations thereunder,
including without limitation the Federal Truth-in-Lending Act, the Equal
Credit Opportunity Act, the Fair Credit Reporting Act, the Federal Trade
Commission Act, the Fair Debt Collection Practices Act, the Fair Credit
Billing Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board's
Regulations B and Z, the Soldiers' and Sailors' Civil Relief Act of 1940,
state adaptations of the National Consumer Act and of the Uniform
Consumer Credit Code, and any other consumer credit, equal opportunity and
disclosure laws applicable to that contract and sale; and the consummation
of the transactions herein contemplated, including, without limitation,
the transfer of ownership of the Contracts to the Issuer, pledge to the
Indenture Trustee and the receipt of interest by the Noteholders, will not
violate any applicable federal, state or local law.
(ix) Such Contract is the legal, valid and binding obligation of the
related Obligor(s) thereunder and is enforceable in accordance with its
terms, except only as such enforcement may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally; [each party to such Contract had full legal capacity to execute
and deliver such Contract and all other documents related thereto and to
grant the security interest purported to be granted thereby;] the terms of
such Contract have not
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been waived, amended or modified in any respect, except by instruments
that are part of the related Contract Documents, and no such waiver,
amendment or modification has caused such Contract to fail to meet all of
the representations, warranties and conditions, set forth herein with
respect thereto.
(x) Such Contract contains customary and enforceable provisions such
as to render the rights and remedies of the holder or assignee thereof
adequate for the practical realization against the collateral of the
benefits of the security, subject, as to enforceability, to bankruptcy,
insolvency, reorganization or similar laws affecting the enforcement of
creditors' rights generally.
(xi) As of the Closing Date, there was no default, breach, violation
or event permitting acceleration existing under such Contract (except
payment delinquencies permitted by subparagraph (v) above) and no event
which, with notice and the expiration of any grace or cure period, would
constitute such a default, breach, violation or event permitting
acceleration under such Contract, and the Seller has not waived any such
default, breach, violation or event permitting acceleration except payment
delinquencies permitted by subparagraph (v) above.
(xii) At the Closing Date, (a) such Contract will require that the
related Obligor(s) obtain and maintain in effect for the related Financed
Vehicle a comprehensive and collision insurance policy (i) in an amount at
least equal to the lesser of (x) its fair market value or (y) the
principal amount due from the related Obligor(s) under such Contract, (ii)
naming AutoNation Financial Services as a loss payee and (iii) insuring
against loss and damage due to fire, theft, transportation, collision and
other risks generally covered by comprehensive and collision coverage.
(xiii) Such Contract was originated by AutoNation Financial Services
and no adverse selection procedures have been utilized in selecting such
Contract from all other similar contracts originated by AutoNation
Financial Services.
(xiv) Payments under such Contract have been applied in accordance
with the Simple Interest Method, as provided in the applicable fixed rate
Contract, and are due monthly in substantially equal amounts through its
Maturity Date sufficient to fully amortize the principal balance of such
Contract by its Maturity Date.
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(xv) There is only one original of such Contract and such original,
together with all other related Contract Documents, is being held by the
Custodian or an agent acceptable to the Insurer on its behalf; provided
that upon the execution by the Indenture Trustee and the Trust with the
prior written consent of the Insurer of a letter agreement revocably
appointing the Servicer as Successor Custodian in accordance with Section
2.04, such original Contracts together with all other Contract Documents
may be held by the Servicer.
(xvi) As of the Closing Date, the Servicer has clearly marked its
electronic records to indicate that such Contract is owned by the Issuer.
(xvii) At the date of origination of the Contract, the original
principal balance of such Contract was not greater than the purchase price
to the related Obligor(s) (including taxes, warranties, licenses and
related charges) of the related Financed Vehicle.
(xviii) As of the Cut-Off Date, the Seller has not received notice
that any Obligor under such Contract has filed for bankruptcy, and to the
best of the Seller's knowledge without any independent investigation, no
Obligor under such Contract is in bankruptcy or similar proceedings.
(xix) As of the Cut-Off Date, such Contract had an original maturity
of not more than __ months and such Contract has a remaining maturity of
__ months or less.
(xx) Such contract constitutes "chattel paper" under the UCC as in
effect in the applicable jurisdiction.
(xxi) As of the Cut-Off Date, such Contract has a remaining
principal balance of not more than $_____ and not less than $______.
(xxii) As of the Cut-Off Date, such Contract is secured by a
Financed Vehicle that has not been repossessed without reinstatement.
(xxiii) Each related Obligor listed on such Contract had a mailing
address within the United States on the date of origination of such
Contract.
(xxiv) The rights with respect to such Contract are assignable by
the lender thereunder and its assignees without the consent of or notice
to any Person.
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(xxv) All payments on such Contract are required to be made in
United States dollars.
(xxvi) None of the Obligors is the United States of America or any
state, or agency, department or instrumentality or political subdivision
of the United States of America or any state.
(xxvii) At the time of origination of such Contract, the proceeds of
such Contract were fully disbursed. There is no requirement for future
advances thereunder and all fees and expenses in connection with the
origination of such Contract have been paid.
(xxviii) The scheduled payments on such Contracts are applicable
only to payment of principal and interest on such Contracts and not to the
payment of any insurance premiums (although the proceeds of the extension
of credit on such Contract may have been used to pay insurance premiums).
(xxix) Such Contract does not provide for the substitution, exchange
or addition of any Financed Vehicle subject to such Contract.
(xxx) Such Contract has a Maturity Date due no later than _________.
(c) As to all of the Contracts:
(i) The aggregate Outstanding Principal Balance payable by Obligors
of the Contracts as of the Cut-Off Date equals the Original Pool Balance.
(ii) As of the Cut-Off Date, Contracts representing approximately
__% of the Outstanding Principal Balance are secured by new Financed
Vehicles, and Contracts representing approximately __% of the Outstanding
Principal Balance of all Contracts is attributable to loans involving used
Financed Vehicles.
(d) None of the foregoing representations and warranties shall be
construed as, and the Seller is specifically not making, any representations and
warranties regarding the collectibility of the Contracts or the future
performance of the Contracts.
(e) The Seller has not prepared any financial statement which
accounts for the transfer of the Trust Property hereunder to the Issuer in any
manner
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other than as a sale of the Trust Property by it to the Issuer, and the Seller
has not in any other non-income tax respect (including, but not limited to, for
accounting purposes) accounted for or treated the transfer of the Trust Property
hereunder in any manner other than as a sale and absolute assignment to the
Issuer of the Seller's full right, title and ownership interest in the Trust
Property to the Issuer.
SECTION 2.03. Repurchase of Certain Contracts.
The representations and warranties of the Seller set forth in
Section 2.02(b) shall survive the Closing Date and shall continue until the
termination of this Agreement. Upon discovery by the Seller, the Servicer, the
Insurer or a Responsible Officer of the Owner Trustee or the Indenture Trustee
that any of such representations and warranties was incorrect or that any of
such conditions was unsatisfied as of the time made or that any of the Contract
Documents relating to any such Contract has not been properly executed by the
Obligor or contains a material defect or has not been received by the Custodian
or its agent, such Person making such discovery shall give prompt notice to the
other such Persons. If any such defect, incorrectness or omission materially and
adversely affects the interest in the Contract of the Noteholders, the Indenture
Trustee, the Issuer or the Insurer, the Seller shall cure the defect or
eliminate or otherwise cure the circumstances or condition in respect of which
such representation or warranty was incorrect as of the time made; provided that
if the Seller does not do so by the last day of the Collection Period following
the Collection Period (or, if the Seller elects, the last day of such Collection
Period) during which the Seller becomes aware of or receives written notice from
the Servicer, the Insurer or the Indenture Trustee of such defect, incorrectness
or omission, it shall repurchase such Contract on the last day of the
applicable Collection Period from the Issuer at the Purchase Amount. Upon any
such repurchase, the Issuer shall execute and deliver such instruments of
transfer or assignment, in each case without recourse, as shall be necessary to
vest in the Seller any Contract purchased hereunder. The sole remedy of the
Issuer, the Indenture Trustee or the Noteholders with respect to a breach of the
Seller's representations and warranties pursuant to Section 2.02 shall be to
require the Seller to repurchase Contracts pursuant to this Section; provided
that the Seller shall indemnify the Owner Trustee, the Indenture Trustee, the
Insurer, the Issuer and the Noteholders against all costs, expenses, losses,
damages, claims and liabilities, including reasonable fees and expenses of
counsel, which may be asserted against or incurred by any of them as a result of
third-party claims arising out of the events or facts giving rise to such
breach.
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SECTION 2.04. Custody of Contract Files.
(a) Duties of Custodian. The Custodian shall:
(i) maintain or cause to be maintained continuous custody of the
Contract Documents in secure and fire resistant facilities in accordance
with customary standards for such custody. Such Contract Documents shall
be electronically segregated to show the Issuer as owner thereof and the
Indenture Trustee as the pledgee thereof, unless the Insurer has waived
the requirement for such segregation by notice in writing to the
Indenture Trustee, the Custodian and the Servicer.
(ii) with respect to the Contract Documents, (A) act as the
Custodian exclusively for the benefit of the Indenture Trustee and (B)
hold or cause to be held all Contract Documents for the exclusive use
(notwithstanding Sections 2.04(a)(iii) and 2.04(a)(iv) below) and for the
benefit of the Indenture Trustee.
(iii) to the extent the Servicer directs the Custodian in writing,
deliver or cause to be delivered certain specified Contract Documents to
the Servicer to enable the Servicer to service the Contracts pursuant to
this Agreement. At such time as the Servicer returns such Contract
Documents to the Custodian or its agent, the Servicer shall provide
written notice of such return to the Custodian. The Custodian or its
agent shall acknowledge receipt of the returned materials by signing the
Servicer's notice and shall promptly send copies of such acknowledgment or
receipt to the Servicer.
(iv) upon reasonable prior written notice, permit the Servicer, the
Indenture Trustee and the Insurer to examine the Contract Documents in the
possession, or under the control, of the Custodian or its agent.
(v) at its own expense, maintain or cause to be maintained at all
times while acting as Custodian, and keep in full force and effect (A)
fidelity insurance, (B) theft of documents insurance, (C) fire insurance,
and (d) forgery insurance. All such insurance shall be in amounts, with
standard coverage and subject to deductibles, as are customary for similar
insurance typically maintained by banks that act as custodian in similar
transactions.
(vi) perform its duties as custodian in accordance with the terms of
the Agreement and applicable law, and to the extent consistent with such
terms, in the same manner in which, and with the same care, skill,
prudence and diligence with which, it administers files for other
portfolios, if any,
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giving due consideration to customary and usual standards of practice of
prudent custodians. The Custodian shall promptly report to the Indenture
Trustee, the Owner Trustee and the Insurer any failure by it to hold the
complete set of Contract Documents for each Contract as herein provided
and shall promptly take appropriate action to remedy such failure.
(vii) hold the Contract Documents for the exclusive use and benefit
of the Indenture Trustee on behalf of the Noteholders and the Insurer, in
order to maintain accurate records pertaining to each Contract to enable
it to comply with terms hereof and to maintain a current inventory
thereof.
(viii) not have and will not assert any beneficial ownership
interest in the Contracts or the Contract Documents.
(ix) agree that the Contract Documents shall be maintained at World
Omni Financial Corp.'s offices located at _____________________, and shall
not be moved to another location without the Insurer's prior written
consent.
(b) Appointment of Custodian. As of the Closing Date, AutoNation
Financial Services, as initial Servicer, shall be the Custodian of the Contract
Documents; provided that upon the execution by the Indenture Trustee, the
Issuer (or, if the Notes have been paid in full and the Indenture has been
satisfied and discharged, the Issuer alone) of a letter agreement with the prior
written consent of the Insurer (such consent not to be unreasonably withheld)
revocably appointing another entity acceptable to the Insurer as agent of and
bailee for the Indenture Trustee (or, if applicable, the Trust) to act as
Custodian (such Person, the "Successor Custodian") of the Contract Documents,
such Successor Custodian shall be so appointed and shall from the effective date
of such agreement retain custody of the Contract Documents and any and all other
documents relating to a Contract or the related Obligor or Financed Vehicle. As
of the effective date of any such appointment, the Contract Documents and any
and all other documents relating to a Contract or the related Obligor or
Financed Vehicle will be delivered by the predecessor Custodian to the Successor
Custodian in its capacity as agent of and bailee for the Indenture Trustee (or,
if applicable, the Trust). The Custodian may delegate or subcontract out its
duties as Custodian hereunder to an entity acceptable to the Insurer; provided
that no such delegation or subcontract arrangement shall relieve the Custodian
of its duties and obligations hereunder. The Indenture Trustee, the Seller and
the Insurer hereby consent to the delegation by the initial Custodian of World
Omni Financial Corp. as agent of the Custodian.
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(c) Certification.
(i) Within 90 days of the Closing Date, the Custodian shall
ascertain that all Contract Documents for each Contract are in its
possession or in the possession of its designated agent, and shall deliver
to the Issuer, the Indenture Trustee and the Insurer a certification to
the effect that, as to each Contract Document listed in Schedule A (other
than any Contract paid in full or any Contract specifically identified in
such certification as not covered by such certification): (i) all
documents required to be in the Contract Documents are in its possession
or the possession of its designated agent and (ii) such documents have
been reviewed by it and appear regular on their face and relate to such
Contract. In making this certification, the Custodian shall separately
list those Contracts for which an original certificate of title was not
found in the relevant Contract Documents and shall, within 180 days after
the Closing Date, deliver to the Issuer, the Indenture Trustee and the
Insurer a certification (the "Second Certification"), to the effect that,
as to each such set of Contract Documents that did not include an original
certificate of title in the initial certification (other than any Contract
paid in full or any Contract specifically identified in such certification
as not covered by such certification): (i) all documents required to be
in the Contract Documents are in its possession and (ii) such documents
have been reviewed by it and appear regular on their face and relate to
such Contract.
(ii) If the Custodian or its agent, during the process of reviewing
the Contract Documents, pursuant to this Section 2.04, finds any document
constituting a part of a Contract Document which is not executed, has not
been received, is unrelated to the Contract identified in Schedule A, or
does not conform to the requirements of clause (i) above or the loan
number set forth in Schedule A, then the Custodian shall, or shall cause
World Omni Financial Corp. to promptly so notify the Issuer, the Servicer,
the Insurer and the Indenture Trustee in writing of such discovery.
(iii) The Servicer will use reasonable efforts to remedy a material
defect in a document or omission of a Contract Document of which it is so
notified by the Custodian or its agent as set forth above. If, however,
within 15 days after the initial Custodian's certification to it
respecting such defect or omission (other than a defect or omission in
respect of a certificate of title) or within 15 days after the Second
Certification in respect of a defect or omission as to a certificate of
title the Servicer has not remedied or caused the Seller to remedy the
defect or omission, the Servicer shall give notice to the Indenture
Trustee of the date and price of repurchase and, on the next succeeding
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Servicer Report Date, cause the Seller to repurchase such Contract, which
Purchase Amount shall be deposited into the Collection Account.
SECTION 2.05. Duties of Servicer Relating to the Contracts.
(a) Safekeeping. The Servicer, in its capacity as servicer, shall
hold or cause to be held the Contract Files and any Contract Documents held by
it or any Custodian in accordance with this Agreement on behalf of the Issuer,
the Indenture Trustee and the Insurer for the use and benefit of all present and
future Noteholders, and maintain such accurate and complete accounts, records
and computer systems pertaining to each Contract File as shall enable the
Servicer and Issuer to comply with this Agreement. In performing its duties as
servicer, the Servicer shall act with reasonable care, using that degree of
skill and attention that the Servicer exercises with respect to the files
relating to all comparable automobile contracts that the Servicer owns or
services for itself or others. The Servicer shall (i) conduct, or cause to be
conducted, periodic physical inspections of the Contract Files (and the Contract
Documents, if the Servicer is acting as Custodian) held by it or its agents
under this Agreement and of the related accounts, records and computer systems;
(ii) maintain or cause to be maintained the Contract Files (and the Contract
Documents, if the Servicer is acting as Custodian) in such a manner as shall
enable the Issuer, the Indenture Trustee and the Insurer to verify the accuracy
of the Servicer's record keeping; (iii) promptly report to the Issuer, the
Indenture Trustee and the Insurer any failure on its part or the part of its
agents to hold the Contract Files (and the Contract Documents, if the Servicer
is acting as Custodian) and maintain its accounts, records and computer systems
as herein provided and (iv) promptly take appropriate action to remedy any such
failure.
(b) Maintenance of and Access to Records. The Servicer shall
maintain or cause to be maintained each Contract File (other than the Contract
Documents, unless the Servicer is acting as Custodian) at the address of the
Servicer or its agents set forth in Section 9.04, or at such other location as
shall be specified to the Issuer, the Indenture Trustee and the Insurer by 30
days' prior written notice. The Servicer shall permit the Issuer, the Indenture
Trustee and the Insurer or their respective duly authorized representatives,
attorneys or auditors to inspect the Contract Files and the related accounts,
records and computer systems maintained by the Servicer at such times as such
Persons may request.
(c) Release of Documents. If the Servicer is acting as Custodian
pursuant to Section 2.04, upon instruction from the Indenture Trustee (a copy of
which shall be furnished to the Issuer and the Insurer), the Servicer shall
release or cause to be released any document in the Contract Files to the
Indenture Trustee, the
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Indenture Trustee's agent, or the Indenture Trustee's designee, as the case may
be, at such place or places as the Indenture Trustee may designate, as soon as
practicable.
(d) Monthly Reports. On each Servicer Report Date, commencing with
the month next succeeding the month of the Closing Date, the Servicer shall
deliver to the Issuer, the Indenture Trustee and the Insurer a certificate of a
Servicing Officer stating (i) the number of Contracts and aggregate outstanding
principal balance of such Contracts that have become Defaulted Contracts since
the Business Day immediately preceding the date of the last statement delivered
pursuant to this subsection (or since the Closing Date in the case of the first
such statement); (ii) that, if such Contract has been the subject of a Full
Prepayment pursuant to clause (a) of the definition of the term "Full
Prepayment", all proceeds received in respect thereof have been deposited in or
credited to the Collection Account in accordance with Section 4.02; (iii) that,
if such Contract has been the subject of a Full Prepayment pursuant to clause
(b) of the definition of the term "Full Prepayment", the correct Purchase Amount
has been deposited in or credited to the Collection Account in accordance with
Section 2.03, 3.07 or 4.02; and (iv) that the Indenture Trustee is authorized to
release such Contract and the related Contract Documents as provided herein.
On each Servicer Report Date, the Servicer shall also deliver to the
Indenture Trustee, Owner Trustee and the Insurer a statement setting forth (i)
the amounts on deposit in the Collection Account; (ii) the sources of such
amounts; (iii) the amounts to be paid to Noteholders;
(e) Schedule of Title Documents. The Servicer shall deliver to the
Indenture Trustee, the Issuer and the Insurer (i) within 60 days of the Closing
Date, a schedule of Title Documents for Financed Vehicles which, as of the
Closing Date, did not show AutoNation Financial Services or a subsidiary of
AutoNation Financial Services as first lienholder and (ii) within 180 days of
the Closing Date, as to the Contracts, a schedule of Title Documents for
Financed Vehicles which, as of the date prior to such delivery, do not show
AutoNation Financial Services or a subsidiary of AutoNation Financial Services
as first lienholder and as to which the Seller is obligated to repurchase
pursuant to the provisions hereof.
(f) Electronic Marking of Contracts; Possession. The Servicer shall
cause the electronic record of the Contracts maintained by it to be clearly
marked to indicate that the Contracts have been sold to the Issuer and pledged
to the Indenture Trustee and shall not in any way assert or claim an ownership
interest in the Contracts. It is intended that pursuant to the applicable
provisions of Sections 2.04 and 2.05 hereof, the Custodian on behalf of the
Indenture Trustee and the Insurer shall be
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deemed to have possession of the Contract Documents for purposes of Section
9-305 of the UCC of the state in which the Contract Documents are located.
SECTION 2.06. Instructions; Authority to Act.
The Servicer shall be deemed to have received proper instructions (a
copy of which shall be furnished to the Issuer and the Insurer) with respect to
the Contract Files upon its receipt of written instructions signed by a
Responsible Officer of the Indenture Trustee.
SECTION 2.07. Indemnification.
Subject to Section 7.02, the Servicer shall indemnify the Issuer,
the Owner Trustee, the Indenture Trustee, the Insurer, the Custodian and the
Noteholders for any and all liabilities, obligations, losses, compensatory
damages, payments, costs or expenses of any kind whatsoever (including the
reasonable fees and expenses of counsel) that may be imposed on, incurred by or
asserted against the Issuer, the Owner Trustee, the Indenture Trustee, the
Insurer, the Custodian or the Noteholders as the result of any improper act or
omission in any way relating to the maintenance and custody by the Servicer of
the Contract Files or the Contract Documents, or the failure of the Servicer to
perform its duties and service the Contracts in compliance with the terms of
this Agreement; provided that the Servicer shall not be liable to the Owner
Trustee, the Indenture Trustee, the Custodian or the Insurer for any portion of
any such amount resulting from the willful misfeasance, bad faith or negligence
of the Owner Trustee, the Indenture Trustee, the Custodian or the Insurer,
respectively.
SECTION 2.08. Effective Period and Termination.
The appointment of the initial Servicer as Custodian shall become
effective as of the Closing Date and shall continue in full force and effect
until the earlier of (i) the replacement of the initial Servicer as Custodian or
(ii) the Final Scheduled Distribution Date of the Notes. If AutoNation Financial
Services shall subsequently resign as Servicer in accordance with the terms of
this Agreement or if all of the rights and obligations of the Servicer shall
have been terminated pursuant to Section 7.01, any appointment of the Servicer
as Custodian may be terminated by the Insurer, or if an Insurer Default has
occurred and is continuing, (i) if the Notes have not been paid in full, by the
holders of Notes evidencing not less than 25% of the outstanding principal
amount of the Notes, acting together as a single class, or by the Indenture
Trustee. As soon as practicable after any termination of such appointment, the
Servicer shall, at the Servicer's expense, deliver or cause the delivery of all
Contract Documents and all Contract Files (including those held in microfiche or
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electronic form) to the Indenture Trustee or its agent (or, if the Indenture has
been satisfied and discharged, as directed by the Trust, with the consent of the
Issuer) at such place or places as the applicable party may reasonably designate
and shall cooperate in good faith to effect such delivery. The foregoing
notwithstanding, if the Servicer is acting as Custodian, the Servicer shall, at
the request of the Insurer, deliver the Contract Documents to the Indenture
Trustee in the event that such delivery is required by any Rating Agency to
consider the Securities investment grade without consideration of the Insurance
Policy.
SECTION 2.09. Nonpetition Covenant.
(a) Neither the Seller nor the Servicer shall petition or otherwise
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.
(b) The Servicer shall not, nor cause the Seller to, petition or
other wise invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Seller 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 Seller or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Seller.
SECTION 2.10. Collecting Title Documents Not Delivered at the
Closing Date.
In the case of any Contract in respect of which, in place of a Title
Document, the Custodian received on or before the Closing Date written evidence
from the Dealer selling the related Financed Vehicle, or from AutoNation
Financial Services, that the Title Document for such Financed Vehicle showing
AutoNation Financial Services or a subsidiary of AutoNation Financial Services
as first lienholder has been applied for from the Registrar of Titles, the
Servicer shall use its best efforts to collect such Title Document from the
Registrar of Titles as promptly as possible. If such Title Document showing
AutoNation Financial Services or a subsidiary of AutoNation Financial Services
as first lienholder is not received by the Servicer within 180 days after the
Closing Date with respect to the Contracts, then the representation and
warranty in Section 2.02(b)(iii) as to such Contracts in respect of such
Contract shall be deemed to have been incorrect in a manner that materially and
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adversely affects the Noteholders, and the Seller shall be obligated to
repurchase such Contract in accordance with Section 2.03.
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ARTICLE III
ADMINISTRATION AND SERVICING OF CONTRACTS
SECTION 3.01. Duties of Servicer.
The Servicer, for the benefit of the Indenture Trustee and the
Insurer, shall manage, service, administer, and make collections on the
Contracts and perform such other actions required of the Servicer under this
Agreement. The Servicer agrees that its servicing of the Contracts shall be
carried out in accordance with reasonable care consistent with customary and
usual procedures employed by institutions that service motor vehicle retail
installment contracts and, to the extent more exacting, the procedures used by
the Servicer in respect of such contracts serviced by it for its own account;
provided that, subject to Section 3.02 as to extensions, the Servicer shall not
release or waive the right to collect the unpaid balance of any Contract unless
the Insurer has provided its prior written consent. The Servicer's duties shall
include collection and posting of all payments, responding to inquiries of
Obligors on the Contracts, investigating delinquencies, sending payment coupons
to Obligors, reporting tax information to Obligors, monitoring the Trust
Property accounting for collections, furnishing monthly and annual statements to
the Indenture Trustee, the Issuer and the Insurer with respect to distributions
and any tax forms required by any federal, state or local tax authority, if any.
The Servicer shall have, subject to the terms hereof, full power and authority,
acting alone, and subject only to the specific requirements and prohibitions of
this Agreement, to do any and all things in connection with such managing,
servicing, administration, and collection of the Contracts that it may deem
necessary or desirable. Without limiting the generality of the foregoing, but
subject to the provisions of this Agreement, the Servicer is authorized and
empowered by the Indenture Trustee and the Issuer to execute and deliver, on
behalf of itself, the Issuer, the Insurer, the Noteholders, the Indenture
Trustee or any of them, any and all instruments of satisfaction or cancellation,
or partial or full release or discharge, and all other comparable instruments,
with respect to the Contracts or to the Financed Vehicles; provided, however,
that notwithstanding the foregoing, the Servicer shall not, except pursuant to
an order from a court of competent jurisdiction or with the prior written
consent of the Insurer, release an Obligor from payment of any unpaid amount due
under any Contract or reduce the related APR. The Issuer shall furnish to the
Servicer any documents necessary or appropriate to enable the Servicer to carry
out its servicing and administrative duties hereunder. The Servicer may engage
agents and subservicers to fulfill its duties hereunder with the prior written
consent of the Insurer and pursuant to an subservicing agreement acceptable to
the Insurer. __________________________ is an acceptable subservicer to
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the Insurer. The Servicer may not terminate any subservicer, with respect to the
Contracts, without the Insurer's prior written consent. All amounts payable to
any subservicer shall be paid by the Servicer and shall not be obligations of
the Issuer or paid from the Trust Property. In addition, the Servicer shall pay
all costs and expenses (including, without limitations, reasonable fees and
expenses of counsel) associated with the transfer of subservicing from the
existing subservicer to a successor. The Servicer may also at any time perform
through agents or subcontractors the specified duties of (i) repossession and
subsequent sale of Financed Vehicles and (ii) pursuing collection of deficiency
balances on certain Defaulted Contracts, in each case without the prior written
consent of the Insurer. No such delegation or engagement of agents,
subservicers or subcontractors by the Servicer shall relieve the Servicer of its
responsibilities with respect to any of its duties hereunder.
On or prior to the Closing Date, the Servicer shall deliver to the
Owner Trustee, the Indenture Trustee and the Insurer a list of Servicing
Officers of the Servicer involved in, or responsible for, the administration and
servicing of the Contracts, which list shall from time to time be updated by the
Servicer on request of the Owner Trustee, the Indenture Trustee or the Insurer.
On the Closing Date, the Servicer shall deposit in the Collection
Account: (i) all installments of each Monthly Scheduled Payment due on or after
the Cut-Off Date and received by the Servicer at least two Business Days prior
to the Closing Date; (ii) the proceeds of each Full Prepayment of any Contract
and all partial prepayments on Contracts received by the Servicer on or after
the Cut-Off Date and at least two Business Days prior to the Closing Date; and
(iii) all Net Liquidation Proceeds and Net Insurance Proceeds received with
respect to a Financed Vehicle to which a Contract relates received on or after
the Cut-Off Date and at least two Business Days prior to the Closing Date.
The Servicer shall deposit in or credit to the Collection Account
within two Business Days of receipt (i) all collections of Monthly Scheduled
Payments due on or after the Cut-Off Date and received by it together with the
proceeds of all Full Prepayments on all Contracts and all partial prepayments on
Simple Interest Contracts, and any accompanying interest; (ii) all Net
Liquidation Proceeds and Net Insurance Proceeds; (iii) any amounts required to
purchase Contracts as to which the Servicer has breached certain servicing
covenants and (iv) any amounts received as a result of the Servicer exercising
its rights under certain circumstances to purchase all or a portion of the
Contracts. The foregoing requirements for deposit in the Collection Account are
exclusive, it being understood that collections in the nature of late payment
charges, extension fees and similar charges or fees may, but need not be
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deposited in the Collection Account and shall be retained by the Servicer as
additional servicing compensation.
In order to facilitate the servicing of the Contracts by the
Servicer, the Servicer shall retain, subject to and only to the extent permitted
by the provisions of this Agreement, all collections on the Contracts prior to
the time they are remitted or credited, in accordance with such provisions, to
the Collection Account. The Servicer acknowledges that the unremitted
collections on the Contracts are part of the Trust Property and the Servicer
agrees to act as custodian and bailee of the Indenture Trustee, the Issuer and
the Insurer in holding such monies and collections. The Servicer agrees, for the
benefit of the Indenture Trustee, the Issuer, the Noteholders and the Insurer,
to act as such custodian and bailee, and to hold and deal with such monies and
such collections, as custodian and bailee for the Indenture Trustee, the Issuer
and the Insurer, in accordance with the provisions of this Agreement.
The Servicer shall retain all data (including, without limitation,
computerized title records) relating directly to or maintained in connection
with the servicing of the Contracts at the address of the Custodian or its Agent
set forth in Section 9.04 or, upon 15 days' prior written notice to the Issuer,
the Indenture Trustee and the Insurer, at such other place where the servicing
offices of the Servicer are located, and shall give the Issuer, the Indenture
Trustee and the Insurer access to all data (including, without limitation,
computerized title records, documentation and personnel having knowledge of such
documentation or software in such cases where the Indenture Trustee acts as
Successor Servicer) at all reasonable times and, while a Servicer Default shall
be continuing, the Servicer shall, on demand of the Issuer, the Indenture
Trustee or the Insurer deliver or cause to be delivered to the Issuer, the
Indenture Trustee or the Insurer, as the case may be, all data (including,
without limitation, computerized title records and, to the extent transferable,
related operating software) necessary for the servicing of the Contracts and all
monies collected by it and required to be deposited in or credited to the
Collection Account.
All deposits made by the Servicer in any Trust Account shall be made
in immediately available funds.
The Administrator shall be responsible for the payment of the fees
and expenses of the Indenture Trustee and the Owner Trustee; provided that any
such fees not paid as of a Distribution Date shall be paid as provided in
Section 4.03(a)(ii).
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SECTION 3.02. Collection of Contract Payments.
Consistent with the standards, policies and procedures required by
this Agreement, the Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Contracts as and when
the same shall become due and shall use its reasonable efforts to cause each
Obligor to make all payments in respect of his or her Contract to the Servicer.
Consistent with the foregoing, the Servicer may, on a case-by-case basis, in its
discretion (i) waive any late payment charges in connection with delinquent
payments on a Contract, (ii waive any prepayment charges or (iii) grant an
extension in order to work out a default or an impending default; provided that
following the extension there will have been no more than two extensions of the
related Contract in the last 12 months and the sum of the terms of all
extensions of the Contract does not exceed six months. The Servicer shall not
extend the Maturity Date of a Contract except as provided in clause (ii) of the
preceding sentence. Except as explicitly permitted by this paragraph, the
Servicer shall not change any material term of a Contract, including but not
limited to the interest rate, the payment amounts or due dates, or the property
securing such Contract unless the Insurer has provided prior written consent.
SECTION 3.03. Realization upon Defaulted Contracts.
The Servicer shall use its best efforts, consistent with the
servicing standard specified in Section 3.01, to repossess or otherwise convert
the ownership of the Financed Vehicle securing any Contract as to which no
satisfactory arrangements can be made for collection of delinquent payments.
Such servicing procedures may include reasonable efforts to realize upon any
recourse to Dealers and selling the Financed Vehicle at public or private sale.
In connection with such repossession or other conversion, the Servicer shall
follow such practices and procedures as it shall deem necessary or advisable and
as shall be normal and usual for prudent holders of retail installment sales
contracts and as shall be in compliance with all applicable laws, and, in
connection with the repossession of any Financed Vehicle or any contract in
default, may commence and prosecute any proceedings in respect of such Contract
in its own name or, if the Servicer deems it necessary, in the name of the
Issuer or the Indenture Trustee or on behalf of the Issuer or the Indenture
Trustee. The Servicer's obligations under this Section 3.03 are subject to the
provision that, in the case of damage to a Financed Vehicle from an uninsured
cause, the Servicer shall not expend its own funds in repairing such motor
vehicle unless it shall determine (i) that such restoration will increase the
proceeds of liquidation of the related Contract, after reimbursement to itself
for such expenses and (ii) that such expenses will be recoverable by it either
as Liquidation Expenses or as expenses recoverable under an
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applicable insurance policy or under an insurance reserve established by the
Servicer. The Servicer shall be responsible for all other costs and expenses
incurred by it in connection with any action taken in respect of a Defaulted
Contract; provided that it shall be entitled to reimbursement of such costs and
expenses to the extent they constitute Liquidation Expenses or expenses
recoverable under an applicable insurance policy. All Net Liquidation Proceeds
and Net Insurance Proceeds shall be deposited directly in or credited to the
Collection Account (without deposit in any intervening account) to the extent
required by Section 4.02.
SECTION 3.04. Maintenance of Security Interests in Financed
Vehicles.
(a) The Servicer shall take such steps as are necessary to maintain
continuous perfection and priority of the security interest created by each
Contract in the related Financed Vehicle, including but not limited to,
obtaining the execution by the related Obligor and the recording, registering,
filing, re-recording, re-registering, and refiling of all security agreements,
financing statements, continuation statements or other instruments as are
necessary to maintain the security interest granted by such Obligor under each
respective Contract. The Issuer and the Indenture Trustee each hereby authorize
the Servicer to take such steps as are necessary to re-perfect such security
interest on behalf of the Issuer in the event of the relocation of a Financed
Vehicle or for any other reason. In the event that the assignment of a Contract
to the Issuer and the subsequent pledge thereof by the Issuer to the Indenture
Trustee is insufficient, without a notation on the related Financed Vehicle's
certificate of title, or without fulfilling any additional administrative
requirements under the laws of the state in which the Financed Vehicle is
located, to grant to the Issuer a perfected security interest in the related
Financed Vehicle and to pledge such perfected security interest to the Indenture
Trustee, the initial Servicer hereby agrees that the identification of
AutoNation Financial Services or a subsidiary of AutoNation Financial Services
as the secured party on the Title Document is deemed to be in its capacity as
agent of the Indenture Trustee and further agrees to hold such certificate of
title as the Indenture Trustee's agent and custodian; provided that, except as
provided in subsection (b) of this Section 3.04 and the Insurance Agreement,
neither the Servicer nor AutoNation Financial Services shall make, nor shall the
Issuer or Noteholders have the right to require that the Servicer or AutoNation
Financial Services make, any such notation on the related Financed Vehicles'
Title Document or fulfill any such additional administrative requirement of the
laws of the state in which a Financed Vehicle is located.
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(b) The Seller, the Indenture Trustee, the Owner Trustee, the
Servicer and the Issuer hereby agree that upon the occurrence of a Servicer
Default, the Insurer may direct the Servicer and the Indenture Trustee to take
or to cause to be taken such action as may, in the Insurer's discretion, be
necessary to perfect or re-perfect the security interest in the Financed
Vehicles in the name of the Indenture Trustee, including the amending of the
Title Documents of the Financed Vehicles and the Indenture Trustee agrees to
execute any and all documents or instruments prepared by and at the expense of
the Servicer in this regard. The Servicer hereby agrees to pay all expenses
related to such perfection or reperfection, and the Servicer and the Indenture
Trustee hereby agree to take all action necessary therefor. If such expenses are
not paid within __ days after delivery of any invoice for such expenses to the
Servicer, such expenses shall be paid pursuant to Section 4.03(a)(viii). The
Insurer, in its sole discretion, may pay such costs and any such amounts shall
be included in amounts owed to the Insurer as Reimbursement Amounts; provided,
however, that if the Insurer requests the Title Documents to be amended prior to
the occurrence of a Re-Liening Trigger, the out-of-pocket expenses of the
Servicer or any other entity incurred in connection with such action shall be
reimbursed by the Insurer.
SECTION 3.05. Covenants, Representations and Warranties of Servicer.
The Servicer hereby makes the following covenants, representations
and warranties on which (i) the Issuer is deemed to have relied in acquiring the
Contracts and (ii) the Insurer is deemed to have relied in issuing the Insurance
Policy. Such covenants, representations and warranties speak as of the execution
and delivery of this Agreement and as of the Closing Date, but shall survive the
sale, transfer and assignment of the Contracts to the Issuer and the pledge
thereof to the Indenture Trustee pursuant to the Indenture.
(a) The Servicer covenants as to the Contracts:
(i) The Financed Vehicle securing each Contract shall not be
released from the lien granted by the Contract in whole or in part, except
as contemplated herein.
(ii) The Servicer shall not impair the rights of the Noteholders or
the Insurer in the Contracts or the other Trust Property.
(iii) The Servicer shall not increase the number of payments under a
Contract, nor increase the amount financed under a Contract, nor extend,
forgive payments on a Contract or otherwise amend the terms of any
Contract,
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except as provided in Section 3.02 and the Servicer shall not amend in any
materially adverse respect, the Collection Policy without the Insurer's
prior written consent.
(iv) The Servicer shall not consent to the sale or transfer by an
Obligor of any Financed Vehicle unless the original Obligor under the
related Contract remains liable under such Contract and the transferee
assumes all of the Obligor's obligations thereunder and upon doing so the
credit profile with respect to such Obligor will not be changed from
adequate to speculative by virtue of the addition of the transferee's
obligation thereunder.
(v) The Servicer shall not (A) create, incur or suffer to exist, or
agree to create, incur or suffer to exist, or consent to or permit in the
future (upon the occurrence of a contingency or otherwise) the creation,
incurrence or existence of any Lien on or restriction on transferability
of any Contract except for the Lien of the Indenture and the restrictions
on transferability imposed by this Agreement or (B) sign or file any UCC
financing statements with respect to the Trust Property, in any
jurisdiction that names AutoNation Financial Services, the Servicer or the
Depositor as debtor other than those financing statements executed and
filed in connection with the Basic Documents to create or maintain the
first priority perfected security interest of the Indenture Trustee in the
Trust Property, or sign any security agreement authorizing any secured
party thereunder to file any financing statements with respect to the
Trust Property.
(b) The Servicer represents and warrants as of the Closing Date:
(i) The Servicer (1) is duly organized, is validly existing and in
good standing as a corporation organized and existing under the laws of
the State of Delaware, (2) is qualified to do business as a foreign
corporation, is in good standing and has obtained all necessary licenses
and approvals in each jurisdiction where the character of its properties
or the nature of its activities makes such qualification necessary, and
(3) has full power, authority and legal right to own its property, to
carry on its business as presently conducted, and to enter into and
perform its obligations under this Agreement and the other Basic
Documents.
(ii) The execution, delivery and performance by the Servicer of this
Agreement and the other Basic Documents are within the corporate power of
the Servicer and have been duly authorized by all necessary corporate
action on the part of the Servicer. Neither the execution, delivery and
performance of
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this Agreement, nor the consummation of the transactions herein
contemplated, nor compliance with the provisions hereof, will conflict
with or result in a breach of, or constitute a default under, any of the
provisions of any law, governmental rule, regulation, judgment, decree or
order binding on the Servicer or its properties or the Certificate of
Incorporation or Bylaws of the Servicer, or any of the provisions of any
indenture, mortgage, contract or other instrument to which the Servicer is
a party or by which it is bound or result in the creation or imposition of
any lien, charge or encumbrance upon any of its property pursuant to the
terms of any such indenture, mortgage, contract or other instrument.
(iii) Other than consents that have been obtained prior to the
Closing Date, the Servicer is not required to obtain the consent of any
other party or any consent, license, approval or authorization, or
registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity
or enforceability of this Agreement.
(iv) This Agreement and the other Basic Documents have been duly
executed and delivered by the Servicer and, assuming the due
authorization, execution and delivery hereof by the Issuer and the
Indenture Trustee, constitutes legal, valid and binding obligations of
the Servicer enforceable against the Servicer in accordance with their
respective terms (subject to applicable bankruptcy and insolvency laws and
other similar laws affecting the enforcement of creditors' rights
generally).
(v) There are no actions, suits or proceedings pending or, to the
knowledge of the Servicer, threatened against or affecting the Servicer,
before or by any court, administrative agency, arbitrator or governmental
body with respect to any of the transactions contemplated by this
Agreement and the other Basic Documents, or which may, if determined
adversely to the Servicer, materially and adversely affect it or its
business, assets, operations or condition, financial or otherwise, or
materially and adversely affect the Servicer's ability to perform its
obligations under this Agreement and the other Basic Documents. The
Servicer is not in default with respect to any order of any court,
administrative agency, arbitrator or governmental body so as to materially
and adversely affect the transactions contemplated by the above-mentioned
documents.
(vi) The Servicer has obtained or made all necessary consents,
approvals, waivers and notifications of creditors, lessors and other
nongovernmental persons, in each case, in connection with the execution
and
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delivery of this Agreement and the other Basic Documents to which it is a
party, and the consummation of all the transactions herein contemplated.
SECTION 3.06. Purchase of Contracts upon Breach by Servicer.
The Servicer or the Issuer shall inform the other party and the
Indenture Trustee and the Insurer promptly, in writing, upon the discovery of
any breach of the covenants, representations and warranties set forth in Section
3.05(b) or of the covenants set forth in Sections 3.02, 3.05 or 3.06(a)
provided, however, failure to give notice shall not affect any obligation of the
Servicer under this Section 3.06. Unless the breach shall have been cured within
30 days following such discovery or receipt of notice of such breach, the
Servicer shall purchase any Contract materially and adversely affected by such
breach from the Issuer. As consideration for the Contract, the Servicer shall
remit the Purchase Amount on the Business Day preceding the Servicer Report Date
next succeeding the end of such 30-day cure period in the manner specified in
Section 4.02(a). The sole remedy of the Issuer, the Indenture Trustee, or the
Noteholders with respect to a breach of Section 3.02, 3.05 or 3.06 shall be to
require the Servicer to purchase Contracts pursuant to this Section 3.07;
provided that the Servicer shall indemnify the Owner Trustee, the Indenture
Trustee, the Insurer, the Issuer, the Custodian and the Noteholders against all
costs, expenses, losses damages, claims and liabilities, including reasonable
fees and expenses of counsel, which may be asserted against or incurred by any
of them as a result of third-party claims arising out of the events or facts
giving rise to such breach.
Any successor Servicer appointed pursuant to Section 7.02 shall not
be obligated to purchase Contracts pursuant to this Section 3.07.
SECTION 3.07. Servicing Compensation.
As compensation for the performance of its obligations under this
Agreement and subject to the terms of this Section 3.08, the Servicer shall be
entitled to receive on each Distribution Date the Servicing Fee in respect of
each Contract that was Outstanding at the beginning of the Collection Period
ending immediately prior to such Distribution Date; provided that with respect
to the first Distribution Date the Servicer will be entitled to receive the
Servicing Fee in respect of each Outstanding Contract as of the Cut-Off Date. As
servicing compensation in addition to the Servicing Fee, the Servicer shall be
entitled to retain all late payment charges, extension fees and similar items
paid in respect of Contracts and (ii) to receive all investment earnings on
funds credited to the Collection Account. The Servicer shall pay all expenses
incurred by it in connection with its servicing activities hereunder
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and shall not be entitled to reimbursement of such expenses except to the extent
provided in Section 3.03.
SECTION 3.08. Reporting by the Servicer.
(a) No later than 12:00 P.M (New York time) on each Servicer Report
Date, the Servicer shall deliver (by telex, facsimile, electronic transmission,
first class mail, overnight courier, personal delivery or such other format
mutually agreed to by the Issuer, the Indenture Trustee and the Insurer) to the
Issuer, the Indenture Trustee and the Insurer a statement (the "Distribution
Date Statement") setting forth with respect to the next succeeding Distribution
Date:
(i) the Note Principal Distributable Amount for such Distribution
Date;
(ii) the Note Interest Distributable Amount for such Distribution
Date;
(iii) the aggregate distribution amount for such Distribution Date;
(iv) the Insurance Premium payable to the Insurer;
(v) the amount to be deposited into the Spread Account on such
Distribution Date, before and after giving effect to deposits thereto and
withdrawals therefrom to be made in respect of such Distribution Date;
(vi) the amount of the withdrawal, if any, required to be made from
the Spread Account by the Indenture Trustee pursuant to Section 4.04(b);
(vii) the aggregate Servicing Fee paid to the Servicer with respect
to the related Contracts for the related Collection Period;
(viii) the amount of fees paid to the Owner Trustee and the
Indenture Trustee with respect to the related Collection Period to the
extent paid from Available Funds pursuant to Section 4.03;
(ix) the amount of any Note Interest Carryover Shortfall or Note
Principal Carryover Shortfall on such Distribution Date, the Insured
Payment required to pay any shortfall; and the change in such shortfall
amounts from those with respect to the immediately preceding Distribution
Date;
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(x) the number of, and aggregate amount of, monthly principal and
interest payments due on the related Contracts which are delinquent as of
the end of the related Collection Period presented in 30-day increments;
(xi) the Available Funds and the Insured Payment, if any, for such
Distribution Date;
(xii) the aggregate amount of Liquidation Proceeds received for
Defaulted Contracts;
(xiii) the number and net outstanding balance of Contracts for which
the Financed Vehicle has been repossessed; and
(xiv) the Pool Balance.
Each such Distribution Date Statement shall be accompanied by an
Officers' Certificate of the Servicer, which Officers' Certificate shall state
that the computations reflected in such statement were made in conformity with
the requirements of this Agreement.
(b) On each Servicer Report Date, no later than 12:00 P.M. New York
Time, the Servicer shall deliver to the Issuer, the Indenture Trustee and the
Insurer a report, in respect of the immediately preceding Collection Period,
setting forth the following:
(i) the aggregate amount, if any, paid by or due from it or the
Seller for the purchases of Contracts which the Seller or the Servicer has
become obligated to repurchase or purchase pursuant to Sections 2.03 or
3.07;
(ii) the net amount of funds which have been deposited in or
credited to the Collection Account in respect of such Collection Period
after giving effect to all permitted deductions therefrom pursuant to
Section 4.02;
(iii) with respect to all Contracts which were the subject of a Full
Prepayment during such Collection Period, the following information:
(A) the related Contract Number; and
(B) the dates of such Full Prepayment;
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(iv) the Contract Numbers, Monthly Scheduled Payment, Principal
Balances and Maturity Dates of all Contracts which became Defaulted
Contracts during such Collection Period;
(v) any other information relating to the Contracts reasonably
requested by the Owner Trustee, the Indenture Trustee or the Insurer; and
(vi) the amount of Net Liquidation Proceeds and Net Insurance
Proceeds which have been deposited in or credited to the Collection
Account in respect of the Collection Period ending immediately prior to
such Servicer Report Date and the cumulative amount of Net Liquidation
Proceeds and Net Insurance Proceeds deposited in or credited to the
Collection Account during the preceding Collection Periods.
SECTION 3.09. Annual Statement as to Compliance.
(a) The Servicer shall deliver to the Issuer, the Owner Trustee, the
Indenture Trustee and the Insurer, on or before March 15, ____ and on or before
March 15 of each year thereafter, an Officers' Certificate of the Servicer
stating that (i) a review of the activities of the Servicer during the preceding
fiscal year (since the Closing Date in the case of the first of such Officers'
Certificates required to be delivered) and of its performance of its obligations
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 the preceding
twelve months and that no default under this Agreement has occurred and is
continuing, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officer and the nature
and status thereof.
(b) The Servicer shall deliver to the Issuer, the Owner Trustee, the
Indenture Trustee, the Insurer and each Rating Agency promptly after having
obtained knowledge thereof, but in no event later than five Business Days
thereafter, an Officer's Certificate specifying any event which with the giving
of notice or lapse of time, or both, would become a Servicer Default under
Section 7.01.
SECTION 3.10. Annual Independent Certified Public Accountant's
Report.
On or before April 30, ____ and on or before April 30 of each fiscal
year thereafter, the Servicer at its expense shall cause a firm of nationally
recognized independent certified public accountants (who may also render other
services to the
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Servicer) to furnish a report to the Issuer, the Owner Trustee, the Indenture
Trustee and the Insurer to the effect that (i) they have audited the balance
sheet of the Servicer as of the last day of said fiscal year and the related
statements of operations, retained earnings and cash flows for such fiscal year
and have issued an opinion thereon, specifying the date thereof, (ii) they have
also reviewed the reports delivered by the Servicer pursuant to Section 3.09(b)
and certain other documents and the records relating to the servicing of the
Contracts and the distributions on the Notes under this Agreement, (iii) their
audit and review as described under clauses (i) and (ii) above was made in
accordance with generally accepted auditing standards and accordingly included
such tests of the accounting records and such other auditing procedures as they
considered necessary in the circumstances, and (iv) their audits and reviews
described under clauses (i) and (ii) above disclosed no exceptions which, in
their opinion, were material, relating to the servicing of such Contracts in
accordance with this Agreement and the making of distributions on the Notes in
accordance with this Agreement, or, if any such exceptions were disclosed
thereby, setting forth those exceptions which, in their opinion, were material.
SECTION 3.11. Access to Certain Documentation and Information
Regarding Contracts.
If the Servicer is acting as Custodian, the Servicer shall provide
to the Noteholders, the Issuer, the Indenture Trustee and the Insurer reasonable
access to the Contract Files and Contract Documents. Access shall be afforded
without charge, but only upon reasonable request and during normal business
hours at designated offices of the Servicer. Nothing in this Section 3.12 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 3.12. Indemnification; Third Party Claims.
Subject to Section 7.02, the Servicer agrees to indemnify and hold
the Issuer, the Owner Trustee, the Indenture Trustee, the Insurer, the Custodian
and the Noteholders harmless against any and all claims, losses, penalties,
fines, forfeitures, reasonable legal fees and related costs, judgments, and any
reasonable other costs, fees and expenses that the Issuer, the Owner Trustee,
the Indenture Trustee, the Insurer, the Custodian or Noteholders may sustain
because of the failure of the Servicer to perform its duties and service the
Contracts in compliance with the terms of this Agreement. The Servicer shall (i)
immediately notify the Issuer, the Insurer and the Indenture Trustee if a claim
is made by a third party with respect to the Contracts, (ii) assume, with the
consent of the Issuer, the Indenture Trustee and the
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Insurer, the defense of any such claim, (iii) pay all expenses in connection
therewith, including counsel fees, and (iv) promptly pay, discharge and satisfy
any judgment or decree which may be entered with respect to such claim against
the Servicer, the Issuer, the Owner Trustee, the Indenture Trustee, the Insurer,
the Custodian or the Noteholders.
SECTION 3.13. Reports to Noteholders and the Rating Agencies.
(a) The Owner Trustee or the Indenture Trustee at its own expense
shall provide to each Noteholder a copy of each Distribution Date Statement
described in Section 3.09(a) concurrently with the delivery of the statement
described in Section 4.05 below.
(b) The Indenture Trustee shall provide to any Noteholder who so
requests in writing (addressed to the Corporate Trust Office of the Indenture
Trustee) a copy of the annual audit statement described in Section 3.09, or the
annual audit report described in Section 3.10.
(c) The Indenture Trustee shall forward to the Rating Agencies and
the Insurer the statement to Noteholders described in Section 4.05 and any other
reports it may receive pursuant to this Agreement to (i) Standard & Poor's
Ratings Services, Asset-Backed Surveillance Group, 55 Water Street, New York,
New York 10041, (ii) Moody's Investors Service, Inc., ABS Monitoring Dept., 99
Church Street, 4th Floor, New York, New York 10007, and (iii) the Insurer at the
address set forth in the Insurance Agreement.
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ARTICLE IV
DISTRIBUTIONS; SPREAD ACCOUNT;
STATEMENTS TO NOTEHOLDERS
SECTION 4.01. Establishment of Trust Accounts.
(a) Prior to the Closing Date, the Indenture Trustee shall open, at
a depository institution (which shall be the same depository institution which
is acting in the capacity as Indenture Trustee), the following accounts:
(i) an account denominated "Collection Account, ANRC Auto Owner
Trust ____, ______________, Indenture Trustee" (the "Collection Account");
and
(ii) an account denominated "Note Distribution Account, ANRC Auto
Owner Trust ____, ______________, Indenture Trustee" (the "Note
Distribution Account").
In addition, the Indenture Trustee shall establish (i) an account
denominated "Spread Account, ANRC Auto Owner Trust ____, ______________,
Indenture Trustee" (the "Spread Account") and (ii) a trust account to be
maintained in the Corporate Trust Office of the Indenture Trustee denominated
"Payment Account, ANRC Auto Owner Trust ____, ______________, Indenture Trustee"
(the "Payment Account" and, together with the accounts described in clauses (i)
and (ii) above, the "Trust Accounts"). The Trust Accounts shall be Eligible
Accounts (subject to the requirement that the Payment Account must be maintained
as provided in the immediately preceding sentence) and relate solely to the
Notes and to the Contracts and, if applicable, the related Eligible Investments,
and the Indenture Trustee shall have sole dominion over the Trust Accounts. The
location and account numbers of the Trust Accounts as of the Closing Date are
set forth on Exhibit B. If at any time a Trust Account ceases to be an Eligible
Account, the Indenture Trustee (or the Servicer on its behalf) shall within 5
Business Days establish a new Trust Account, which is an Eligible Account, and
shall transfer any cash or any investments from the prior account to the new
Trust Account. The Indenture Trustee shall give the Issuer, the Owner Trustee,
the Servicer and the Insurer at least five Business Days' written notice of any
change in the location of any Trust Account and shall not change any related
account identification information without the Insurer's prior written consent.
All amounts, financial assets and investment property held in, deposited in or
credited to, from time to time, the Trust Accounts shall be part of the Trust
Property and all amounts, financial assets and investment property held in,
deposited in or credited to,
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from time to time, the Collection Account and the Spread Account shall be
invested by the Indenture Trustee in Eligible Investments pursuant to Section
4.01(b).
(b) All funds in the Collection Account and the Spread Account shall
be invested by the Indenture Trustee (so long as the Indenture Trustee maintains
the applicable account) in Eligible Investments. Subject to the limitations set
forth herein, the Servicer may direct the Indenture Trustee to invest funds in
the Collection Account and the Spread Account in Eligible Investments (which
instructions may be in the form of standing instructions); provided that (i) in
the absence of such directions from the Servicer, the Insurer may so direct, and
(ii) at any time during the continuance of a Servicer Default, only the Insurer,
or for so long as an Insurer Default shall have occurred and be continuing, only
the Issuer, may give such investment directions. All such investments shall be
in the name of the Indenture Trustee for the benefit of the Noteholders. All
income or other gain from investment of monies (net of losses) deposited in or
credited to the Collection Account shall be paid by the depository institution
maintaining the Collection Account to the Servicer monthly and any investment
losses shall be payable by the Servicer. All income or other gain from
investment of monies deposited in or credited to the Spread Account shall be
deposited in or credited to the Spread Account immediately upon receipt, and any
loss resulting from such investment shall be charged to the Spread Account.
Eligible Investments made with respect to the Collection Account and the Spread
Account will mature no later than the next following Distribution Date. No
investment in Eligible Investments may be sold prior to its maturity and, except
as permitted in writing by the Rating Agencies and the Insurer, funds on deposit
in the Collection Account and Spread Account shall be invested in Eligible
Investments that will mature no later than the Business Day immediately
preceding the next Distribution Date. The funds on deposit in the Payment
Account and the Note Distribution Account shall remain uninvested.
(c) In the absence of written direction as provided above, all funds
held in the Spread Account and the Collection Account shall be invested in
Eligible Accounts as described in clause (e) of the definition thereof. In
addition, if the applicable depository institution receives what it perceives to
be conflicting directions regarding the investment of funds in the Collection
Account or the Spread Account, the directions of the Insurer shall control
unless an Insurer Default shall have occurred and be continuing, in which case
the directions of the Servicer shall control unless a Servicer Default shall
have occurred and be continuing, in which case the directions of the Issuer
shall control. In addition, the Indenture Trustee shall not in any way be held
liable by reason of any insufficiency in any of the foregoing Trust Accounts
held by or on behalf of the Indenture Trustee resulting from any investment loss
on any Eligible Investments, except in its capacity as obligor thereunder.
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(d) With respect to the Trust Account Property, the Indenture
Trustee agrees, by its acceptance hereof, that, subject at all times to the
terms of the Securities Control Agreement:
(i) any Trust Account Property that is held in deposit accounts
shall be held solely in Eligible Accounts, subject to the last sentence of
Section 5.2(c)(i); and each such Eligible Account shall be subject to the
exclusive custody and control of the Indenture Trustee, and the Indenture
Trustee shall have sole signature authority with respect thereto;
(ii) any Trust Account Property that constitutes Physical Property
shall be delivered to the Indenture Trustee in accordance with paragraph
(a) of the definition of "Delivery" and shall be held, pending maturity or
disposition, solely by the Indenture Trustee or a securities intermediary
(as such term is defined in Section 8-102(a)(14) of the UCC) acting solely
for the Indenture Trustee;
(iii) any Trust Account Property that is a book-entry security held
through the Federal Reserve System pursuant to federal book-entry
regulations shall be delivered in accordance with paragraph (b) of the
definition of "Delivery" and shall be maintained by the Indenture Trustee,
pending maturity or disposition, through continued book-entry registration
of such Trust Account Property as described in such paragraph; and
(iv) any Trust Account Property that is an "uncertificated security"
under Article VIII of the UCC and that is not governed by clause (iii)
above shall be delivered to the Indenture Trustee in accordance with
paragraph (c) of the definition of "Delivery" and shall be maintained by
the Indenture Trustee, pending maturity or disposition, though continued
registration of the Indenture Trustee's (or its nominee's) ownership of
such security.
SECTION 4.02. Collections; Realization upon Insurance Policy; Net
Deposits; Transfers to Payment Account.
(a) Subject to the last sentence of this Section 4.02(a), the
Servicer shall remit or credit all Full Prepayments and partial prepayments on a
daily basis, within two Business Days of receipt, by or on behalf of Obligors on
the Contracts, and all Net Liquidation Proceeds and Net Insurance Proceeds and
other monies as required to the Collection Account. The Servicer or the Seller,
as the case may be, each shall remit or credit to the Collection Account each
Purchase Amount to be
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remitted by it with respect to Purchased Contracts on the Business Day preceding
the Servicer Report Date next succeeding (i) the end of the Collection Period in
which the applicable Contract is repurchased by the Seller pursuant to Section
2.03, in the case of the Seller or (ii) the last day of the related cure period
specified in Section 3.07, in the case of the Servicer. On the date of receipt,
the Servicer shall remit to the Collection Account any Purchase Amounts received
from AutoNation Financial Services pursuant to the Receivables Purchase
Agreement.
(b) On the Servicer Report Date, the Servicer shall determine the
Insured Payment, if any, which exists with respect to the related Distribution
Date.
(c) The Indenture Trustee, based solely on the Distribution Date
Statement, shall, no later than 12:00 noon, New York City time, on the second
Business Day prior to each Distribution Date, make a claim under the Insurance
Policy for the Insured Payment, if any, for such Distribution Date by delivering
to the Fiscal Agent, with a copy to the Insurer and the Servicer, by hand
delivery, telex or facsimile transmission, a written notice (a "Deficiency
Notice") specifying the Insured Payment, if any, for such Distribution Date. In
addition, the Indenture Trustee shall make claims under the Insurance Policy for
Preference Amounts as provided in the Insurance Policy. Each Deficiency Notice
shall be in the form set forth as Exhibit A to the Insurance Policy. In making
any such claim, the Indenture Trustee shall comply with all the terms and
conditions of the Insurance Policy. Upon receipt of the Insured Payment, the
Indenture Trustee shall apply the portion thereof, if any, representing the
Deficiency Amount with respect to a Distribution Date as provided in Section
4.03(a). Any amounts received by the Indenture Trustee under the Insurance
Policy that represent Preference Amounts shall be paid, in accordance with the
Insurance Policy, to the applicable Noteholder(s).
(d) In connection with any Preference Amount payable under the
Insurance Policy, the Indenture Trustee shall furnish to the Insurer its records
evidencing the distributions of principal of and interest on the Notes that have
been made and subsequently recovered from Noteholders and the dates on which
such payments were made.
(e) The Indenture Trustee shall keep a complete and accurate record
of the amount of interest and principal paid in respect of any Notes from monies
received under the Policy. The Insurer shall have the right to inspect such
records at reasonable times during normal business hours upon three (3) Business
Day's prior notice to the Indenture Trustee, at the expense of the Insurer.
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All notices, statements, reports, notes or opinions required by this
agreement to be sent to any other party hereto or to the Noteholders at any time
shall also be sent to the Insurer unless the Insurance Policy is no longer in
effect (and the Insurer has been paid in full).
(f) So long as AutoNation Financial Services is the Servicer, the
Servicer may make deposits in or credits to the Collection Account net of
amounts to be paid to the Servicer under this Agreement. Notwithstanding the
foregoing, the Servicer shall maintain the records and accounts for such
deposits and credits on a gross basis.
(g) On the Business Day immediately preceding each Distribution
Date, the Indenture Trustee shall cause funds equal to the amount of Available
Funds available with respect to such Distribution Date to be withdrawn from the
Collection Account and deposited into the Payment Account to be distributed
pursuant to Section 4.03(a).
SECTION 4.03. Distributions.
(a) On the Business Day immediately preceding each Distribution
Date, the Indenture Trustee will cause funds equal to the amount of Available
Funds available with respect to such Distribution Date to be withdrawn from the
Collection Account and deposited into the Payment Account. On each Distribution
Date, the Indenture Trustee, based solely on the Distribution Date Statement,
will apply the Available Funds on deposit in the Payment Account, together with
amounts, if any, withdrawn from the Spread Account or representing payment of
the Insured Payment, to make the following deposits and distributions in the
following amounts and order of priority; provided, however, payments under the
Insurance Policy shall be used solely to make distributions pursuant to clauses
(iv), (v) and (vi) of this Section 4.03(a):
(i) to the Servicer, from Available Funds and amounts, if any,
withdrawn from the Spread Account, the Servicing Fee, including any unpaid
Servicing Fees with respect to one or more prior Collection Periods;
(ii) to the Indenture Trustee and the Owner Trustee, from Available
Funds (after giving effect to the reduction in Available Funds described
in clause (i) above) and amounts, if any, withdrawn from the Spread
Account, any accrued and unpaid fees and expenses of the Indenture Trustee
and the Owner Trustee, in each case to the extent those fees and expenses
have not been previously paid by the Servicer; provided that such payments
pursuant to
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this clause (ii) will not on any Distribution Date exceed $________ and
will not during any calendar year exceed $______;
(iii) to the Insurer, from Available Funds (after giving effect to
the reduction in Available Funds described in clauses (i) and (ii) above)
and amounts, if any, withdrawn from the Spread Account, the Insurance
Premium for such Distribution Date;
(iv) to the Note Distribution Account, from Available Funds (after
giving effect to the reduction in Available Funds described in clauses
(i), (ii) and (iii) above) and amounts, if any, withdrawn from the Spread
Account and any amounts representing payment of the Insured Payment, the
Note Interest Distributable Amount to be distributed to the holders of the
Notes at their respective Note Rates;
(v) to the Note Distribution Account, if such Distribution Date is a
Final Scheduled Distribution Date for any Class of Notes, the Note
Principal Distributable Amount to the extent of the remaining outstanding
principal amount of such Class of Notes, from Available Funds (after
giving effect to the reduction in Available Funds described in clauses (i)
through (iv) above), and amounts, if any, withdrawn from the Spread
Account or representing payment of the Insured Payment to be paid to the
holders of such Class of Notes;
(vi) to the Note Distribution Account, from Available Funds (after
giving effect to the reduction in Available Funds described in clauses (i)
through (v) above) and amounts, if any, withdrawn from the Spread Account
and any amounts representing payment of the Insured Payment to be paid to
the Noteholders as follows, the remaining Note Principal Distributable
Amount (after giving effect to the payment, if any, described in clause
(v) above), to be distributed first to the holders of the Class A- 1 Notes
until the outstanding principal amount of the Class A-1 Notes has been
reduced to zero, second, to the holders of the Class A-2 Notes until the
outstanding principal amount of the Class A-2 Notes has been reduced to
zero, third, to the holders of the Class A-3 Notes until the outstanding
principal amount of the Class A-3 Notes has been reduced to zero, and
fourth, to the holders of the Class A-4 Notes until the outstanding
principal amount of the Class A-4 Notes has been reduced to zero;
(vii) to the Insurer, from Available Funds (after giving effect to
the reduction in Available Funds described in clauses (i) through (vi)
above) and
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amounts, if any, withdrawn from the Spread Account, any Reimbursement
Amounts owing to the Insurer;
(viii) to the Indenture Trustee or the Successor Servicer, if
applicable, from Available Funds (after giving effect to the reduction in
Available Funds described in clauses (i) through (vii) above), the amount
of any fees and reasonable expenses not paid under clause (ii) above as a
result of the dollar limitation on fees and reasonable expenses set forth
in clause (ii);
(ix) to the Indenture Trustee or the Successor Servicer from
Available Funds (after giving effect to the reduction in Available Funds
described in clauses (i) through (viii) above), any Re-Liening Expenses,
to the extent not paid by the Servicer as required pursuant to Section
3.04;
(x) to the Successor Servicer, if applicable, from Available Funds
(after giving effect to the reduction in Available Funds described in
clauses (i) through (ix) above), reasonable expenses not paid by the
Servicer incurred in connection with the transfer of servicing from the
Servicer to the Successor Servicer and the amount of any additional
servicing fee owing to the Successor Servicer in excess of the Servicing
Fee;
(xi) to the Spread Account, from Available Funds (after giving
effect to the reduction in Available Funds described in clauses (i)
through (x) above), the amount, if any, required to increase the amount
therein to the Spread Account Required Amount;
(xii) to the Note Distribution Account, after the occurrence of a
Servicer Default, all remaining Available Funds (after giving effect to
the reduction in Available Funds described in clauses (i) through (xi)
above) and, upon the direction of the Insurer, all amounts on deposit in
the Spread Account for distribution to the Noteholders until the
outstanding principal amount for all Notes is reduced to zero;
(xiii) any remaining Available Funds will be distributed to the
Seller, as holder of the Residual Interest Certificate.
Any amounts deposited in the Payment Account pursuant to 4.04(b) with respect to
a Distribution Date and any Insured Payment that represent the Deficiency Amount
with respect to such Distribution Date shall be applied by the Indenture Trustee
solely to make the deposits and distributions referred to in clauses (iii)
through (vii) above, in that order of priority, but only to the extent that the
Available Funds with respect to
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such Distribution Date, after application as provided above, were insufficient
to make such deposit or distribution.
SECTION 4.04. Spread Account.
(a) The Spread Account will be held for the benefit of the
Noteholders and the Insurer. On or prior to the Closing Date, the Issuer shall
deposit or cause to have deposited an amount equal to the Spread Account Initial
Deposit into the Spread Account from the net proceeds of the sale of the Notes.
(b) On each Distribution Date, the Indenture Trustee, based solely
on the Distribution Date Statement, shall withdraw funds from the Spread
Account, to the extent funds are on deposit therein, equal to the amount by
which the sum of the amounts set forth in Section 4.03(a), clauses (i) though
(vii), with respect to such Distribution Date exceeds the amount of Available
Funds for such Distribution Date. The Indenture Trustee shall deposit any such
funds withdrawn from the Spread Account into the Payment Account to be
distributed pursuant to Section 4.03(a). Funds shall also be withdrawn from the
Spread Account by the Indenture Trustee, as directed by the Insurer to reimburse
the Insurer for any draws under the Insurance Policy with respect to any
Preference Amount. If the amount on deposit in the Spread Account on any
Distribution Date (after giving effect to all deposits thereto or withdrawals
therefrom on such Distribution Date other than withdrawals relating to
distributions to be made pursuant to this sentence) exceeds the Spread Account
Required Amount set forth in the Insurance Agreement, the Indenture Trustee
shall, based solely on the Distribution Date Statement, distribute any excess
first, to the Insurer, to the extent of any amounts owing to the Insurer
pursuant to the Insurance Agreement, and then to the Seller. Upon any such
distributions to the Insurer the Noteholders will have no further rights in, or
claims to, such distributed amounts. None of the Noteholders, the Indenture
Trustee, the Owner Trustee, the Seller or the Insurer will be required to refund
any amounts properly distributed to them, whether or not there are sufficient
funds on any subsequent Distribution Date to make full distributions to the
Noteholders. The obligations of the Insurer under the Insurance Policy will not
be diminished or otherwise affected by any amounts distributed to the Insurer.
(c) Amounts held in the Spread Account shall be invested in the
manner specified in Section 4.01(b) and (c), and such investments shall be made
in accordance with written instructions from the Servicer; provided that, if the
Indenture Trustee does not receive any such written instructions prior to any
date on which an investment decision must be made, the funds held in the Spread
Account shall be invested in Eligible Investments as described in clause (e) of
the definition thereof.
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All such investments shall be made in the name of the Indenture Trustee or its
nominee and such investments shall not be sold or disposed of prior to their
maturity. In no event shall the Indenture Trustee be liable for investment
losses pursuant to this Section 4.04(c).
(d) With respect to the Trust Account Property relating to the
Spread Account, the Indenture Trustee agrees that, subject at all times to the
terms of the Securities Account Control Agreement:
(i) any Trust Account Property that is held in deposit
accounts shall be held solely in the name of the Indenture Trustee,
as collateral agent, with the Indenture Trustee. The Spread Account
shall be subject to the exclusive custody and control of the
Indenture Trustee, and the Indenture Trustee shall have sole
signatory authority with respect thereto.
(ii) Any Trust Account Property that constitutes Physical
Property shall be delivered to the Indenture Trustee, as collateral
agent, in accordance with clause (a) of the definition of "Delivery"
and shall be held, pending maturity or disposition, solely by the
Indenture Trustee, as collateral agent, or a securities
intermediary, as such term is defined in Section 8-102(a)(14) of the
UCC, acting solely for the Indenture Trustee, as collateral agent.
(iii) Any Trust Account Property that is a book-entry security
held through the Federal Reserve System pursuant to federal
book-entry regulations shall be delivered in accordance with clause
(b) of the definition of "Delivery" and shall be maintained by the
Indenture Trustee, as collateral agent, pending maturity or
disposition, through continued book-entry registration of such Trust
Account Property as described in such paragraph.
(iv) Any Trust Account Property that is an "uncertificated
security" under Article 8 of the UCC and that is not governed by
clause (iii) above shall be delivered to the Indenture Trustee, as
collateral agent, in accordance with clause (c) of the definition of
"Delivery" and shall be maintained by the Indenture Trustee, as
collateral agent, pending maturity or disposition through continued
registration of the Indenture Trustee's or its securities
intermediary's (or its custodian's or its nominee's) ownership of
such security, in its capacity as collateral agent.
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Effective upon delivery of any Trust Account Property in the form of
physical property, book-entry securities or uncertficiated securities, the
Indenture Trustee shall be deemed to have purchased such Trust Account Property
for value, in good faith and without notice of any adverse claim thereto.
The Indenture Trustee shall not enter into any subordination or
intercreditor agreement with respect to the Trust Account Property.
(e) Ninety-one (91) days following the termination of the Trust
pursuant to Section 9.01 of the Owner Trust Agreement, any amounts on deposit in
the Spread Account, after payments of amounts due to the Noteholders and all
amounts due to the Insurer pursuant to the Insurance Agreement, shall be paid to
the Seller; provided, however, that if an insolvency preceding with respect to
any of the Seller, the Servicer, the Indenture Trustee or the Noteholders
(collectively, the "Potential Preference Parties") shall have occurred during
the period ending ninety-one (91) days after payment in full to the Noteholders
of all amounts payable with respect to the Notes and the payment in full of the
Repayment Amount then the funds on deposit in the Spread Account shall be
retained until the date all applicable statute of limitation periods with
respect to all applicable preference actions and periods have expired and during
which time no preference action or similar proceeding at law or in equity is
commenced, at which time, the Indenture Trustee shall release all amounts in the
Spread Account to the Seller. In the event that any preference action referred
to above is commenced during any applicable statute of limitations period, funds
deposited in the Spread Account shall be retained until the date on which there
is a final determination by a court of competent jurisdiction as to whether any
payment or payments made pursuant to this Agreement, the Indenture or the
Insurance Agreement is recoverable from the Insurer or the Noteholders. If it is
so determined that a payment is so recoverable, funds deposited in the Spread
Account shall be applied by the Indenture Trustee at the written direction of
the Insurer, first to pay any and all such claims with respect to such
preference actions as the Noteholders and the Insurer may be required to pay and
then to the Seller. If it is determined that any such payment is not
recoverable, the Indenture Trustee shall release all amounts on deposit in the
Spread Account to the Seller, upon receipt from the Insurer of both a final
order determining that such payments are not recoverable and an opinion of
nationally recognized bankruptcy counsel to the effect that such appeal is final
and not subject to appeal. For purposes of compliance with this Section 4.04,
the Indenture Trustee shall be entitled to rely on written instructions from the
Insurer.
(f) In the event the Seller seeks to have the amounts remaining on
deposit in the Spread Account released to it prior to the expiration of the
ninety-one
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(91) day period specified in Section 4.04(d) above, then, if (i) amounts payable
with respect to the Notes have been fully paid to the Noteholders, (ii) the
Repayment Amount and all other amounts owing to the Insurer pursuant to the
Insurance Agreement have been paid in full, (iii) no insolvency proceeding
described in Section 7.01 (d) or (e) has occurred with respect to the Potential
Preference Parties, and (iv) either (A) the long term unsecured debt of the
Seller and the Servicer is rated BBB- or better by Standard & Poor's and Baa3 or
better by Moody's, (B) the Insurer shall have received a favorable opinion or
opinions, satisfactory in form and substance to the Insurer, from counsel to
AutoNation Financial Services, the Seller and the Servicer, to the effect that
in the event an insolvency proceeding described in Sections 7.01 (d) or (e) were
to occur with respect to the Potential Preference Parties, no payment pursuant
to this Agreement or the Insurance Agreement would be recoverable from either
the Insurer or the Noteholders, and such other matters as the Insurer may
reasonably request, or (C) the Insurer, in its sole discretion, elects to have
the remaining amounts on deposit in the Spread Account paid to the Seller, then,
in any such event, all remaining amounts on deposit in the Spread Account shall
be paid to the Seller.
SECTION 4.05. Statements to Noteholders.
(a) On each Distribution Date, the Indenture Trustee and the Owner
Trustee shall include with each distribution to a Noteholder of record as of the
related Record Date, a statement, prepared by the Servicer, based solely on the
information in the Distribution Date Statement furnished pursuant to Section
3.09, setting forth for such Distribution Date at least the following
information as of the Distribution Date, as the case may be:
(i) the amount of such distribution on or with respect to each Class
of Notes allocable to principal;
(ii) the amount of such distribution on or with respect to each
Class of Notes allocable to interest;
(iii) the aggregate Distribution Amount for such Distribution Date;
(iv) the Insurance Premium payable to the Insurer;
(v) the balance, if any, of any fund or account with respect to any
credit or liquidity enhancement on such date, after giving effect to
changes thereto on such date;
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(vi) the Spread Account Required Amount and the amount on deposit in
the Spread Account on such Distribution Date, before and after giving
effect to deposits thereto and withdrawals therefrom to be made in respect
of such Distribution Date;
(vii) the amount of the withdrawal, if any, required to be made from
the Spread Account by the Indenture Trustee pursuant to Section 4.04(b);
(viii) the aggregate Servicing Fee paid to the Servicer with respect
to the Contracts for the related Collection Period;
(ix) the amount of fees paid to the Owner Trustee and the Indenture
Trustee, with respect to the related Collection Period to the extent not
paid by the Servicer;
(x) the amount available in the Collection Account for payment of
the aggregate amount payable or distributable on such Securities, the
amount of the Servicing Fee, the amount of any principal or interest
shortfall with respect to each Class of Notes and the amount required from
the Insurer pursuant to the related Insurance Policy to pay any shortfall;
(xi) the number of, and aggregate amount of, monthly principal and
interest payments due on the Contracts which are delinquent as of the end
of the related Collection Period presented in 30-day increments;
(xii) the Available Funds, the Deficiency Amount and the Insured
Payment, if any, for such Distribution Date;
(xiii) the aggregate amount of Liquidation Proceeds received by the
Servicer, net of recoverable out-of-pocket expenses, in respect of a
Contract which is a Defaulted Contract;
(xiv) the number and net outstanding balance of Contracts for which
the Financed Vehicle has been repossessed;
(xv) The Overcollateralization Amount; and
(xvi) the Pool Balance.
Each amount set forth pursuant to subclauses (i) or (ii) above shall be
expressed as a dollar amount per $1,000.00 of Original Principal Amount of a
Note.
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(b) No later than the latest date permitted by law, the Servicer
shall prepare and furnish to the Issuer, the Indenture Trustee and each Paying
Agent, and the Paying Agent for the Notes and the Paying Agent for the Notes
shall furnish to each Person who on any Record Date during such calendar year
shall have been a Noteholder, a statement or statements containing the sum of
the amounts set forth in clauses (i) and (ii) above for such calendar year and
such other information as is reasonably necessary for the preparation of such
Person's federal income tax return in respect of the Notes or, in the event such
Person shall have been a Noteholder during a portion of such calendar year, for
the applicable portion of such year, for the purposes of such Noteholder's
preparation of federal income tax returns.
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ARTICLE V
THE SELLER
SECTION 5.01. Liability of Seller; Indemnities.
The Seller shall be liable in accordance herewith only to the extent
of the obligations specifically undertaken by the Seller under this Agreement.
The Seller shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee, the Indenture Trustee, the Insurer, the Servicer and the
Custodian and their respective officers, directors, agents and employees from
and against any taxes that may at any time be asserted against any such Person
with respect to the transactions contemplated herein and in the other Basic
Documents, including any sales, gross receipts, general corporation, tangible or
intangible personal property, privilege or license taxes (but, not including (i)
in the case of the Issuer, any taxes asserted with respect to, and as of the
date of, the sale of the Contracts to the Issuer or the issuance and original
sale of the Securities, or (ii) any taxes asserted with respect to ownership of
the Contracts, or (iii) any federal or other income taxes arising out of
distributions on the Securities) and costs and expenses in defending against the
same.
The Seller shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee, the Indenture Trustee, the Custodian their respective officers,
directors, agents and employees and the Noteholders from and against any loss,
liability or expense incurred by reason of the Seller's willful misfeasance, bad
faith or negligence (other than errors in judgment) in the performance of its
duties under this Agreement, or by reason of reckless disregard of its
obligations and duties under this Agreement.
The Seller shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee, the Indenture Trustee, the Custodian and their respective
officers, directors, agents and employees from and against all costs, expenses,
losses, claims, damages and liabilities arising out of or incurred in connection
with the acceptance or performance of the trusts and duties herein and, in the
case of the Owner Trustee, in the Owner Trust Agreement and, in the case of the
Indenture Trustee, in the Indenture as well as the other Basic Documents, except
to the extent that such cost, expense, loss, claim, damage or liability, in the
case of (i) the Owner Trustee, shall be due to the willful misfeasance, bad
faith or negligence of the Owner Trustee or shall arise from the breach by the
Owner Trustee of any of its representations or warranties set forth in the Owner
Trust Agreement, (ii) the Indenture Trustee, shall be due to the willful
misfeasance, bad faith or negligence of the Indenture Trustee or (iii) the
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Custodian, shall be due to the willful misfeasance, bad faith or negligence of
the Custodian, respectively.
Indemnification under this Section 5.01 shall include, without
limitation, reasonable fees and expenses of counsel and expenses of litigation.
Indemnification under this Section 5.01 shall be payable solely from amounts
payable to the Seller pursuant to clause (xiii) of Section 4.03(a) and shall not
otherwise be payable from the Trust Property. If the Seller 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 Seller, without
interest.
SECTION 5.02. Merger or Consolidation of, or Assumption of the
Obligations of Seller; Certain Limitations.
(a) The Seller shall keep in full effect its existence, rights and
franchises as a corporation incorporated under the laws of the State of
Delaware, and will obtain and preserve its qualification to do business as a
foreign corporation in each jurisdiction in which such qualification is or shall
be necessary to protect the validity and enforceability of the Contract
Documents and this Agreement.
(b) The Seller shall not consolidate with or merge into any other
corporation or convey, transfer or lease substantially all of its assets as an
entirety to any Person unless the corporation formed by such consolidation or
into which the Seller has merged or the Person which acquires by conveyance,
transfer or lease substantially all the assets of the Seller as an entirety, can
lawfully perform the obligations of the Seller hereunder and executes and
delivers to the Issuer, the Indenture Trustee and the Insurer an agreement in
form and substance reasonably satisfactory to the Issuer, the Indenture Trustee
and the Insurer, which contains an assumption by such successor entity of the
due and punctual performance and observance of each covenant and condition to be
performed or observed by the Seller under this Agreement.
SECTION 5.03. Limitation on Liability of Seller and Others.
The Seller and any director or officer or employee or agent of the
Seller may rely in good faith on any document of any kind, prima facie properly
executed and submitted by any Person respecting any matters arising hereunder.
The Seller shall not be under any obligation to appear in, prosecute or defend
any legal
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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 5.04. Seller Not to Resign.
Subject to the provisions of Section 5.02, the Seller shall not
resign from the obligations and duties hereby imposed on it as Seller under this
Agreement.
SECTION 5.05. Seller May Own Notes.
The Seller and any Affiliate thereof may in its individual or any
other capacity become the owner or pledgee of Notes with the same rights as it
would have if it were not the Seller or an Affiliate thereof, except as
expressly provided herein or in any Basic Document. Notes so owned by or pledged
to the Seller or such Affiliate shall have an equal and proportionate benefit
under the provisions of this Agreement, without preference, priority or
distinction as among all of the Notes.
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ARTICLE VI
THE SERVICER
SECTION 6.01. Liability of Servicer; Indemnities.
Subject to Section 7.02, the Servicer shall be liable in accordance
herewith only to the extent of the obligations specifically undertaken by the
Servicer under this Agreement. Such obligations shall include the following:
(a) The Servicer shall defend, indemnify and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Insurer, the Seller, the
Custodian, their respective officers, directors, agents and employees, and the
Noteholders from and against any and all costs, expenses, losses, damages,
claims and liabilities, arising out of or resulting from the use, ownership or
operation by the Servicer or any Affiliate thereof of a Financed Vehicle.
(b) The Servicer shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Insurer, the Seller, the
Custodian and their respective officers, directors, agents and employees from
and against any taxes that may at any time be asserted against the Issuer, the
Owner Trustee, the Indenture Trustee, the Insurer, the Seller or the Custodian
with respect to the transactions contemplated herein, including, without
limitation, any sales, gross receipts, general corporation, tangible or
intangible personal property, privilege or license taxes (but, not including (i)
in the case of the Issuer, any taxes asserted with respect to, and as of the
date of, the sale of the Contracts to the Issuer or the issuance and original
sale of the Securities, or (ii) any taxes asserted with respect to ownership of
the Contracts, or (iii) any federal or other income taxes arising out of
distributions on the Securities) and costs and expenses in defending against the
same.
(c) The Servicer shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Insurer, the Seller, the
Custodian, their respective officers, directors, agents and employees and the
Noteholders from and against any and all costs, expenses, losses, claims,
damages and liabilities to the extent that such cost, expense, loss, claim,
damage or liability arose out of, or was imposed upon any such Person through,
the negligence, willful misfeasance or bad faith of the Servicer in the
performance of its duties under this Agreement.
Indemnification under this Section 6.01 shall include, without
limitation, reasonable fees and expenses of counsel and expenses of litigation.
If the Servicer shall have made any indemnity payments pursuant to this Section
and the
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recipient thereafter collects any of such amounts from others, the recipient
Person shall promptly repay such amounts to the Servicer, without interest.
This Section 6.01 shall survive the resignation or removal of the
Owner Trustee, the Custodian and the Indenture Trustee and the termination of
this Agreement.
SECTION 6.02. Corporate Existence; Status as Servicer; Merger.
(a) The Servicer shall keep in full effect its existence, rights and
franchises as a corporation incorporated under the laws of the State of
Delaware, and will obtain and preserve its qualification to do business as a
foreign corporation in each jurisdiction in which such qualification is or shall
be necessary to protect the validity and enforceability of the Contract
Documents and this Agreement.
(b) The Servicer shall not consolidate with or merge into any other
corporation or convey, transfer or lease all or substantially all of its assets
as an entirety to any Person or engage in any corporate transaction pursuant to
which the surviving or successor entity is not AutoNation Financial Services,
unless (i) such entity is at least rated investment grade by the Rating Agencies
and (ii) such entity executes and delivers to the Issuer, the Indenture Trustee
and the Insurer an agreement in form and substance reasonably satisfactory to
the Issuer, the Indenture Trustee and the Insurer, which contains an assumption
by such successor entity of the due and punctual performance and observance of
each covenant and condition to be performed or observed by the Servicer under
this Agreement.
(c) The Servicer shall provide notice of any merger, consolidation
or succession pursuant to this Section 6.02 to the Owner Trustee, the Indenture
Trustee, the Insurer and each Rating Agency. Notwithstanding the foregoing, the
Servicer shall not merge or consolidate with any other Person or permit any
other Person to become a successor to the Servicer's business unless (i)
immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 3.05 shall have been breached (for purposes
hereof, such representations and warranties shall speak as of the date of the
consummation of such transaction) and no event that, after notice or lapse of
time or both, would become a Servicer Default shall have occurred, (ii) the
Servicer shall have delivered to the Owner Trustee, the Indenture Trustee and
the Insurer an Officer's Certificate and an Opinion of Counsel, each stating
that such consolidation, merger or succession and such agreement of assumption
comply with this Section 6.02 and that all conditions precedent provided for in
this Agreement relating to such transaction have been complied with and (iii)
the Servicer shall have delivered to the Owner Trustee, the Indenture Trustee
and the
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Insurer an Opinion of Counsel stating that either (A) all financing statements
and continuation statements and amendments thereto have been duly executed and
filed that are necessary to preserve and protect the interest of the Trust and
the Indenture Trustee, respectively, in the assets of the Trust and reciting the
details of such filings or (B) no such action shall be necessary to preserve and
protect such interest.
SECTION 6.03. Performance of Obligations.
(a) The Servicer shall punctually perform and observe all of its
obligations and agreements contained in this Agreement.
(b) The Servicer shall not take any action, or permit any action to
be taken by others, which would excuse any person from any of its covenants or
obligations under any of the Contract Documents or under any other instrument
included in the Trust Property, or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any of the Contract Documents or any such
instrument, except as expressly provided herein and therein.
SECTION 6.04. Servicer Not to Resign; Assignment.
(a) The Servicer shall not resign from the duties and obligations
hereby imposed on it except upon determination by its Board of Directors that by
reason of change in applicable legal requirements the continued performance by
the Servicer of its duties hereunder would cause it to be in violation of such
legal requirements in a manner which would result in a material adverse effect
on the Servicer or its financial condition, said determination to be evidenced
by a resolution of its Board of Directors to such effect accompanied by an
Opinion of Counsel, satisfactory to the Issuer, the Insurer and the Indenture
Trustee, to such effect. No such resignation shall become effective unless and
until (i) the Indenture Trustee assumes all of the Servicer's obligations under
this Agreement or (ii) a new servicer acceptable to the Insurer assumes the
servicing of the Contracts and enters into a servicing agreement with the
Issuer, the Indenture Trustee and the Insurer in form and substance
substantially similar to this Agreement and satisfactory to the Issuer, the
Indenture Trustee and the Insurer, and each Rating Agency confirms that the
selection of such new servicer will not result in the qualification, reduction
or withdrawal of its then-current rating of each Class of Notes assigned by such
Rating Agency, without regard to the Insurance Policy. No such resignation by
the Servicer shall affect the obligation of the Servicer to repurchase Contracts
pursuant to Section 3.07.
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(b) Except as specifically permitted in this Agreement, the Servicer
may not assign this Agreement or any of its rights, powers, duties or
obligations hereunder; provided that (i) the Servicer may assign this Agreement
in connection with a consolidation, merger, conveyance, transfer or lease made
in compliance with Section 6.02(b).
(c) Except as provided in Sections 6.04(a) and (b), the duties and
obligations of the Servicer under this Agreement shall continue until this
Agreement shall have been terminated as provided in Section 8.01 or the Trust
shall have been terminated as provided by the terms of the Trust Agreement, and
shall survive the exercise by the Issuer, the Indenture Trustee or the Insurer
of any right or remedy under this Agreement, or the enforcement by the Issuer,
the Indenture Trustee, any Noteholder, or the Insurer of any provision of the
Notes, the Insurance Agreement or this Agreement.
(d) The resignation of the Servicer in accordance with this Section
shall not affect the rights of the Seller hereunder. If the Servicer resigns
pursuant to this Section, its appointment as custodian may be terminated
pursuant to Section 2.08.
SECTION 6.05. Limitation on Liability of Servicer and Others.
Neither the Servicer nor any of the directors, officers, employees
or agents of the Servicer shall be under any liability to the Issuer or the
Noteholders, except as provided under this Agreement, for any action taken or
for refraining from the taking of any action pursuant to this Agreement or for
errors in judgment; provided that this provision shall not protect the Servicer
or any such person against any liability that would otherwise be imposed by
reason of willful misfeasance, bad faith or negligence (except errors in
judgment) in the performance of duties or by reason of reckless disregard of
obligations and duties under this Agreement. The Servicer and any director,
officer, employee or agent of the Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any person
respecting any matters arising under this Agreement.
Except as provided in this Agreement, the Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action that
shall not be incidental to its duties to service the Contracts in accordance
with this Agreement, and that in its opinion may involve it in any expense or
liability; provided that the Servicer may undertake any reasonable action that
it may deem necessary or desirable in respect of this Agreement and the other
Basic Documents and the rights and duties of the parties to this Agreement and
the other Basic Documents and the interests of the Noteholders under this
Agreement and the other Basic Documents.
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ARTICLE VII
SERVICER DEFAULTS
SECTION 7.01. Servicer Defaults.
If any one of the following events (each, a "Servicer Default")
shall occur and be continuing:
(a) any failure by the Servicer to deposit or credit to the
Collection Account any amount required under this Agreement to be so deposited
or credited, which failure continues unremedied for a period of three Business
Days after discovery by the Servicer or receipt by the Servicer of written
notice of such failure from the Issuer, the Indenture Trustee or the Insurer or
after discovery of such failure by an officer of the Servicer;
(b) the Insurer, the Indenture Trustee or the Issuer shall not have
received a report in accordance with Section 3.09 by the Servicer Report Date
with respect to which such report is due and which shall continue unremedied for
a period of one day after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given;
(c) failure on the part of the Seller, the Issuer or the Servicer
duly to observe or to perform in any material respect any other covenants or
agreements of the Seller or the Servicer set forth in this Agreement or any
other Basic Document, which failure shall (i) materially and adversely affect
the rights of the Noteholders, the Insurer, the Issuer, the Owner Trustee or the
Indenture Trustee and (ii) continue unremedied for a period of 30 days after the
date on which the Seller, the Issuer, the Custodian or the Servicer shall have
knowledge of such failure or written notice of such failure, requiring the same
to be remedied, shall have been given (A) to the Seller or the Servicer, as the
case may be, by the Insurer, the Issuer, the Owner Trustee or the Indenture
Trustee or (B) to the Seller or the Servicer, as the case may be, and to the
Issuer and the Indenture Trustee by Noteholders, acting together as a single
class, evidencing in the aggregate not less than 25% of the outstanding
principal amount of the Notes or, so long as no Insurer Default has occurred and
is continuing, by the Insurer;
(d) the entry of a decree or order for relief by a court or
regulatory authority having jurisdiction in respect of the Servicer or the
Seller in an involuntary case under the federal bankruptcy laws, as now or
hereafter in effect, or another
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present or future, federal or state, bankruptcy, insolvency or similar law, or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Servicer or the Seller or of any substantial part
of its property, or ordering the winding up or liquidation of the affairs of the
Servicer or the Seller and the continuance of any such decree or order unstayed
and in effect for a period of 60 consecutive days or the commencement of an
involuntary case under the federal bankruptcy laws, as now or hereinafter in
effect, or another present or future federal or state bankruptcy, insolvency or
similar law and such case is not dismissed within 60 days;
(e) the commencement by the Servicer or the Seller of a voluntary
case under the federal bankruptcy laws, as now or hereafter in effect, or any
other present or future, federal or state, bankruptcy, insolvency or similar
law, or the consent by the Servicer or the Seller to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Servicer or the Seller or of any
substantial part of its property or the making by the Servicer or the Seller of
an assignment for the benefit of creditors or the failure by the Servicer or the
Seller generally to pay its debts as such debts become due or the taking of
corporate action by the Servicer or the Seller in furtherance of any of the
foregoing;
(f) any change of control of the Servicer in violation of the
covenant set forth in Section 6.02 hereof;
(g) the Servicer shall have failed in the reasonable opinion of the
Insurer to service the Contracts in accordance with the Servicing Standards and
such failure shall have continued unremedied for 30 days after written notice of
such failure shall have been delivered to the Servicer by the Insurer;
(h) any representation, warranty or statement of the Servicer or the
Seller made in this Agreement or any certificate, report or other writing
delivered pursuant hereto shall prove to be incorrect in any material respect as
of the time when the same shall have been made (excluding, however, any
representation or warranty as to which Section 2.03 or 3.07 shall be applicable
so long as the Servicer or the Seller shall be in compliance with Section 2.03
or 3.07, as the case may be), and the incorrectness of such representation,
warranty or statement has a material adverse effect on the Noteholders or the
Insurer and, within 30 days after written notice thereof shall have been given
to the Servicer or the Seller by the Indenture Trustee or the Issuer or by
Noteholders, acting together as a single class, evidencing in the aggregate not
less than 25% of the outstanding principal amount of the Notes, or so long as no
Insurer Default has occurred, by the Insurer, the circumstance or condition
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in respect of which such representation, warranty or statement was incorrect
shall not have been eliminated or otherwise cured;
then and in each and every case, so long as such Servicer Default shall not have
been remedied, (i) if no Insurer Default has occurred and is continuing, the
Insurer or (ii) if an Insurer Default has occurred and is continuing, the
Indenture Trustee acting at the direction of (a) if the Notes have not been paid
in full, the Noteholders evidencing not less than 25% of the outstanding amount
of the Notes, acting together as a single Class, by notice then given in writing
to the Servicer (and to the Insurer, the Indenture Trustee and the Issuer if
given by the Noteholders) may terminate all the rights and obligations of the
Servicer under this Agreement. Upon such termination, termination of the
Servicer as custodian, if the Servicer is acting as such, can be made pursuant
to Section 2.08.
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 Contracts or otherwise, shall, without further action, pass to
and be vested in the Indenture Trustee or such Successor Servicer as may be
appointed under Section 7.02 and, without limitation, the Indenture Trustee and
the Issuer are hereby authorized and empowered to execute and deliver on behalf
of the 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 Contracts and related documents, or
otherwise. The Servicer shall cooperate with the Indenture Trustee, the Insurer
and the Issuer in effecting the transfer of the responsibilities and rights of
the Servicer under this Agreement (whether due to termination, resignation or
otherwise), including the transfer to the Indenture Trustee or such Successor
Servicer, as applicable, for administration by it of all cash amounts that (i)
shall at the time be held by the Servicer for deposit in, or shall have been
deposited by the Servicer in, the Collection Account or (ii) shall thereafter be
received by it with respect to any Contract. The predecessor Servicer shall pay
all costs of the Successor Servicer associated with its transition to the role
of Successor Servicer (whether due to termination, resignation or otherwise).
SECTION 7.02. Trustee to Act; Appointment of Successor.
Upon the termination of the Servicer by the Insurer pursuant to
Section 7.01 or resignation of the Servicer pursuant to Section 6.04 or
otherwise, the Insurer may appoint a successor servicer ("Successor Servicer")
other than the Indenture Trustee. Until the Insurer has appointed a successor
servicer, the Indenture Trustee shall be the Successor Servicer for all purposes
of this Agreement. In the event that
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the Indenture Trustee is unwilling or unable to so act, it may, with the consent
of the insurer, which consent will not be unreasonably withheld, 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 automobile and light-duty truck retail installment sales contracts.
Upon the termination of the Servicer by the Indenture Trustee, the Noteholders
shall appoint a Successor Servicer, pursuant to Section 7.01, or upon the
resignation of the Servicer pursuant to Section 6.04 in the event that the
Insurer is not entitled to appoint a successor servicer by operation of Section
9.08, (i) if the Notes have not been paid in full, the Indenture Trustee shall
be the Successor Servicer and (ii) if the Notes have been paid in full, the
Depositor shall appoint the Successor Servicer. The Successor Servicer shall
succeed to all the responsibilities, duties and liabilities of the Servicer
under this Agreement, except that such Successor Servicer shall not be obligated
to purchase Contracts pursuant to Section 3.07. The Successor Servicer has the
right to terminate the services of any subservicer in respect of the contracts
any agreement between the predecessor servicer and any subservicer which is in
effect at the time such Successor Servicer assumes its responsibilities as
Successor Servicer and any termination fees assessed in connection therewith
shall be paid by the predecessor servicer. If the Indenture Trustee acts as
Successor Servicer, the Indenture Trustee shall be entitled to such compensation
(whether payable out of the Collection Account or otherwise) as the Servicer
would have been entitled to under this Agreement, and as well as reasonable
transition costs and expenses if no such notice of termination shall have been
given. Notwithstanding the foregoing, if the Notes have not been paid in full,
the Indenture Trustee may, if it shall be unwilling to act, or shall, if it
shall be legally unable to so act, appoint, or petition a court of competent
jurisdiction to appoint, any established financial institution acceptable to the
Insurer, having a net worth of not less than $50,000,000 and whose regular
business shall include the servicing of automobile and light duty truck
receivables, as the successor to the Servicer under this Agreement. Pending
appointment of any such Successor Servicer, the Indenture Trustee shall act in
such capacity as provided above. In connection with any appointment of a
Successor Servicer, the Indenture Trustee may make arrangements for the
compensation of such successor out of payments on Contracts as the Indenture
Trustee, the Insurer and such Successor Servicer shall agree; provided (i) that
such amount shall equal the product of a fixed percentage rate and the Principal
Balance, as of the commencement of each Collection Period, of each Contract and
(ii) that no such compensation shall be in excess of that previously permitted
the Servicer under this Agreement. The Indenture Trustee and such successor
shall take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession.
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SECTION 7.03. Notification to Noteholders.
Upon any termination of, or appointment of a successor to, the
Servicer pursuant to this Article, the Owner Trustee and the Indenture Trustee
shall give prompt written notice thereof to each Noteholder of record at their
respective addresses appearing in the Note Register.
SECTION 7.04. Waiver of Past Defaults.
Upon the occurrence of a Servicer Default, unless an Insurer Default
shall have occurred and be continuing, the Insurer, and only the Insurer, may
waive any default by the Servicer in the performance of its obligations under
this Agreement or any Servicer Default. Upon the occurrence of a Servicer
Default, if an Insurer Default has occurred and is continuing, (i) the
Noteholders evidencing not less than 51% of the outstanding principal amount of
the Notes, acting together as a single Class on behalf of all Noteholders, shall
have the right to waive any default by the Servicer in the performance of its
obligations under this Agreement or any Servicer Default except a Servicer
Default in making any required deposits to or payment from the Trust Accounts in
accordance with this Agreement. No such waiver shall impair the Insurer's or the
Noteholders' rights with respect to subsequent defaults.
SECTION 7.05. Insurer Direction of Insolvency Proceedings.
(a) The Indenture Trustee, upon the actual knowledge of a
Responsible Officer of the Indenture Trustee, shall promptly notify the Insurer
of (i) the commencement of any of the events or proceedings by or against any
Obligor, the Servicer, the Seller, the Issuer or AutoNation Financial Services
under the United States Bankruptcy Code or any other applicable federal or state
bankruptcy, insolvency, receivership, rehabilitation or similar law
(individually, an "Insolvency Proceeding") described in the Section 7.01(d) or
7.01(e) hereof and (ii) the making of any claim in connection with any
Insolvency Proceeding seeking the avoidance as a preferential transfer (a
"Preference Claim") of any payment of principal of, or interest on, any Notes.
Any Preference Amounts paid by the Insurer shall be reimbursed to the Insurer as
provided in Section 4.03(a) and 4.04(b). Each Noteholder, by its purchase of
Notes, the Owner Trustee and the Indenture Trustee hereby agree that, so long as
no Insurer Default has occurred and is continuing, the Insurer may at any time
during the continuation of an Insolvency Proceeding direct all matters relating
to such Insolvency Proceeding, including, without limitation, (i) all matters
relating to any Preference Claim, (ii) the direction of any appeal of any order
relating to any Preference Claim and (iii) the posting of any surety or
performance bond pending any such appeal. The Insurer shall be subrogated to,
and each Noteholder and the Indenture Trustee hereby delegate and assign, to the
fullest extent permitted by law, the rights of the Indenture Trustee, the Owner
Trustee and each Noteholder in the conduct of any
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Insolvency Proceeding, including, without limitation, all rights of any party to
an adversary proceeding action with respect to any court order issued in
connection with any such Insolvency Proceeding.
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ARTICLE VIII
TERMINATION
SECTION 8.01. Optional Purchase of All Contracts; Satisfaction and
Discharge of The Indenture.
(a) On any Distribution Date as of which the Pool Balance is 10% or
less of the Original Pool Balance, the Servicer shall have the option to
purchase the remaining Contracts from the Trust (such purchase an "Optional
Purchase"). Notice of the exercise of such option shall be given by the Servicer
to the Issuer, the Indenture Trustee and the Insurer not later than the 10th day
prior to the specified Distribution Date and not earlier than the 15th day of
the month prior to the month of the specified Distribution Date. To exercise
such option, the Servicer shall pay to the Indenture Trustee for the benefit of
the Noteholders and the Insurer, by deposit in the Collection Account on the
Business Day immediately preceding the related Distribution Date, the greater of
(i) the sum of (x) the Pool Balance on the date of repurchase, plus (y) any
accrued and unpaid interest on the Contracts and (ii) the sum of (x) the
aggregate unpaid principal amount of the Securities, plus (y) any accrued and
unpaid interest thereon to such Distribution Date plus (z) all amounts due to
the Indenture Trustee under the Indenture and the other Basic Documents and the
Insurer hereunder and under the Insurance Agreement and the Servicer, the
Indenture Trustee and the Owner Trustee under the Basic Documents. Such purchase
shall be deemed to have occurred on the last day of the related Collection
Period.
Any Outstanding Notes will be redeemed concurrently with any
Optional Purchase described above.
(b) Notice of any termination of the Trust shall be given by the
Servicer to the Owner Trustee, the Insurer and the Indenture Trustee as soon as
practicable after the Servicer has received notice thereof. Such notice shall
conform to the notice described in Section 9.01(c) of the Owner Trust Agreement.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendment.
(a) This Agreement may be amended by the Issuer, the Seller, the
Servicer and the Indenture Trustee, collectively without the consent of any
Noteholders but with the consent of the Insurer (so long as the Insurer is the
Controlling Party), to cure any ambiguity, to correct or supplement any
provisions in this Agreement which are inconsistent with the provisions herein,
or to make any other provisions with respect to matters or questions arising
under this Agreement which are not inconsistent with the provisions of this
Agreement; provided that any such action shall not materially and adversely
affect the interests of any Noteholder or the Insurer; and provided, further,
that any such amendment shall be deemed not to materially and adversely affect
the interests of any Noteholder if the Person requesting the amendment obtains
(i) a letter from each Rating Agency to the effect that such amendment would not
result in a downgrading or withdrawal of the ratings then assigned to the
applicable Securities by such Rating Agency, without regard to the Insurance
Policy and (ii) an Opinion of Counsel to such effect.
(b) This Agreement may also be amended by the Issuer, the Seller,
the Servicer and the Indenture Trustee, with the consent of the Insurer and (i)
for so long as the Notes are outstanding, the Noteholders evidencing in the
aggregate not less than 51% of the principal amount of the Notes then
outstanding, acting 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 Noteholders;
provided 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
Contracts or distributions that shall be required to be made for the benefit of
the Noteholders, (ii) reduce the aforesaid percentage of the Noteholders which
are required to consent to any such amendment, without the consent of the
Holders of all the outstanding Notes or (iii) result in a taxable event to any
of the Noteholders for federal income tax purposes or result in the Owner Trust
being taxable as a corporation for federal income tax purposes.
(c) Promptly after the execution of any such amendment or consent,
the Owner Trustee and the Indenture Trustee shall furnish the written
notification of the substance of such amendment or consent to each Noteholder.
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(d) It shall not be necessary for the consent of Noteholders
pursuant to Section 9.01(b) to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization by Noteholders of the execution thereof shall be subject to
such reasonable requirements as the Owner Trustee and the Indenture Trustee may
prescribe. Any consent by a Noteholder to an amendment of the Agreement shall be
conclusive and binding on such Noteholder and upon all future Noteholders, of
such Note and of any Note issued upon the transfer thereof or in exchange
thereof or in lieu thereof whether or not notation of such consent is made upon
such Security.
(e) The Indenture Trustee may, but shall not be obligated to, enter
into any such amendment which affects the Indenture Trustee's own rights, duties
or immunities under this Agreement or otherwise and any such amendment shall be
unenforceable in its entirety absent the execution of such amendment by the
Indenture Trustee. Before consenting to any amendment, the Indenture Trustee
shall, if it requests, be entitled to receive an opinion of counsel (not at its
own expense) stating that such amendment is authorized and permitted under the
terms of this Agreement and the Indenture.
SECTION 9.02. Protection of Title to Trust.
(a) The Servicer 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, the Noteholders, the Indenture Trustee
and the Insurer in the Contracts and in the proceeds thereof. The Servicer shall
deliver (or cause to be delivered) to the Indenture Trustee file-stamped copies
of, or filing receipts for, any document filed as provided above, as soon as
available following such filing.
(b) Neither the 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
Section 9.02(a) seriously misleading within the meaning of Section 9-402(7) of
the UCC, unless it shall have given the Insurer, and the Indenture Trustee at
least 30 days' prior written notice thereof.
(c) The Seller and the Servicer shall give the Insurer, the Owner
Trustee and the Indenture Trustee at least 30 days' prior written notice of any
relocation of the principal executive office of the Seller and the Servicer if,
as a result of such relocation, the applicable provisions of the UCC would
require the filing of any
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amendment of any previously filed financing or continuation statement or of any
new financing statement and shall promptly file appropriate amendments or new
financing statements. The Servicer shall at all times maintain each office from
which it shall service Contracts, and its principal executive office, within the
United States.
(d) The Servicer shall maintain or cause to be maintained accounts
and records as to each Contract accurately and in sufficient detail to permit
(i) the reader thereof to know at any time the status of such Contract,
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 Contract and the amounts from time to time deposited in or credited to
the Collection Account in respect of such Contract.
(e) The Servicer shall maintain or cause to be maintained its or its
agent's computer systems so that, from and after the time of sale under this
Agreement of the Contracts to the Issuer, the Servicer's master computer records
(including any backup archives) that shall refer to a Contract indicate clearly
the interest of the Issuer and the Indenture Trustee in such Contract and that
such Contract is owned by the Issuer and has been pledged to the Indenture
Trustee.
(f) If at any time the Seller or the Servicer shall propose to sell,
grant a security interest in, or otherwise transfer any interest in automotive
retail installment sales contracts 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 print-outs
(including any restored from back-up archives) that, if they shall refer in any
manner whatsoever to any Contract, shall indicate clearly that such Contract has
been sold and is owned by the Issuer and has been pledged to the Indenture
Trustee.
(g) The Servicer shall permit the Owner Trustee, the Indenture
Trustee and the Insurer and their respective agents, at any time during normal
business hours, to inspect, audit and make copies of and abstracts from the
Servicer's records regarding any Contract.
(h) Upon request, the Servicer shall furnish to the Owner Trustee,
the Indenture Trustee and the Insurer, within five Business Days, a list of all
Contracts then held as part of the Trust Property.
(i) The Servicer shall deliver to the Indenture Trustee and the
Insurer:
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(i) promptly after the execution and delivery of this Agreement and
of each amendment hereto, an Opinion of Counsel 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 Issuer and the Indenture Trustee
in the Contracts, 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
(ii) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months
after the Cut-Off Date an Opinion of Counsel, dated as of a date during
such 90-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 Issuer and the Indenture Trustee in the Contracts, 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.
(j) The Seller shall, to the extent required by applicable law,
cause the Notes to be registered with the Securities and Exchange Commission
pursuant to Section 12(b) or Section 12(g) of the Securities Exchange Act of
1934, as amended, within the time periods specified in such sections.
(k) For the purpose of facilitating the execution of this Agreement
and for other purposes, this Agreement may be executed simultaneously in any
number of counterparts, each of which counterpart shall be deemed to be an
original, and all of which counterparts shall constitute but one and the same
instrument.
SECTION 9.03. Governing Law.
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York.
SECTION 9.04. Notices.
All demands, notices and communications under this Agreement shall
be in writing, personally delivered or mailed by certified mail, return receipt
requested, and shall be deemed to have been duly given upon receipt in the case
of
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(i) the Seller, at _________________________, Attention:
_________________________, facsimile _________________________;
(ii) the Servicer, at _________________________, Attention:
________________________, facsimile _________________________, with a copy
to __________________________ as Custodian;
(iii) the Insurer, at _________________________, Attention:
_________________________, facsimile _________________________;
(iv) the Issuer or the Owner Trustee, at the Owner Trustee Corporate
Trust Office (with, in the case of the Issuer, a copy to the Seller);
(v) the Indenture Trustee, at the Corporate Trust Office;
(vi) Moody's, to Moody's Investors Service, Inc., ABS Monitoring
Department, 99 Church Street, New York, New York 10007;
(vii) Standard & Poor's, to Standard & Poor's Ratings Services, 55
Water Street, New York, New York 10041, Attention: Asset Backed
Surveillance Department; and
(viii) the Custodian, to _________________________, Attention:
_________________________, facsimile _________________________;
or, as to each of the foregoing, at such other address as shall be designated by
written notice to the other parties. Any notice required or permitted to be
mailed to a Noteholder shall be given by first class mail, postage prepaid, at
the address of such Noteholder as shown in the Note Register. Any notice so
mailed within the time prescribed herein shall be conclusively presumed to have
been duly given, whether or not such Noteholder shall receive such notice.
SECTION 9.05. Severability of Provisions.
If the covenants, agreements, provisions or terms of this Agreement
shall be for any reason whatsoever held invalid, then such covenants,
agreements, provisions or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of this Agreement and shall in no way
affect the validity or enforceability of the other provisions of this Agreement
or of the Notes or the rights of the Noteholders thereof.
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SECTION 9.06. Assignment.
Notwithstanding anything to the contrary contained herein, except as
provided in Sections 5.02 and 6.02, neither the Seller nor the Servicer may
transfer or assign all, or a portion of, its rights, obligations and duties
under this Agreement unless such transfer or assignment (i) (A) will not result
in a reduction or withdrawal by any Rating Agency of the rating then assigned by
it to the Notes, without regard to the Insurance Policy and (B) the Issuer, the
Indenture Trustee, acting at the direction of 51% of the Noteholders, and the
Insurer have consented to such transfer or assignment, or (ii) the Insurer, the
Issuer, the Indenture Trustee and the Noteholders of each Class evidencing not
less than 51% of the outstanding amount of Notes of such Class consent thereto.
Any transfer or assignment with respect to the Servicer of all of its rights,
obligations and duties will not become effective until a Successor Servicer has
assumed the Servicer's rights, duties and obligations under this Agreement. In
the event of a transfer or assignment pursuant to clause (ii) above, each Rating
Agency shall be provided with notice of such transfer or assignment.
SECTION 9.07. Third Party Beneficiaries.
Except as otherwise specifically provided herein, the parties to
this Agreement hereby manifest their intent that no third party other than the
Insurer shall be deemed a third party beneficiary of this Agreement, and
specifically that the Obligors are not third party beneficiaries of this
Agreement. The parties hereto intend for the Insurer to be, and the Insurer
hereby is an express third party beneficiary entitled to enforce the provisions
hereof as if it were a party hereto.
SECTION 9.08. Certain Matters Relating to the Insurer.
So long as an Insurer Default shall not have occurred and be
continuing, the Insurer shall have the right to exercise all rights, including
voting rights, which the Noteholders are entitled to exercise pursuant to this
Agreement, without any consent of such Noteholders; provided that without the
consent of each Noteholder affected thereby, the Insurer shall not exercise such
rights to amend this Agreement in any manner that would (i) reduce the amount
of, or delay the timing of, collections of payments on the Contracts or
distributions which are required to be made on any Note, (ii) adversely affect
in any material respect the interests of any Noteholders or (iii) alter the
rights of any such Noteholder to consent to such amendment.
Notwithstanding any provision in this Agreement to the contrary, for
so long as an Insurer Default shall have occurred and be continuing, the Insurer
shall
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not have the right to take any action under this Agreement or to control or
direct the actions of the Trust, the Seller, the Indenture Trustee pursuant to
the terms of this Agreement, nor shall the consent of the Insurer be required
with respect to any action (or waiver of a right to take action) to be taken by
the Trust, the Seller, the Indenture Trustee or the Noteholders; provided that
the consent of the Insurer shall be required at all times during which there is
no Insurer Default and the Notes are still Outstanding with respect to any
amendment of this Agreement.
SECTION 9.09. 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 9.10. Assignment by Issuer.
The Seller hereby acknowledges and consents to any mortgage, pledge,
assignment and grant of a security interest by the Issuer to the Indenture
Trustee pursuant to the Indenture for the benefit of the Noteholders and the
Insurer of all right, title and interest of the Issuer in, to and under the
Contracts and/or the assignment of any or all of the Issuer's rights and
obligations hereunder to the Indenture Trustee.
SECTION 9.11. Limitation of Liability of Owner Trustee.
Notwithstanding anything contained herein to the contrary, this
instrument has been executed by _____________ not in its individual capacity but
in its capacity as Owner Trustee of the Issuer and by _____________ not in its
individual capacity but in its capacity as Indenture Trustee, and in no event
shall _____________ in its individual capacity, _____________ in its individual
capacity or any beneficial owner of the Issuer have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Issuer hereunder, as to all of which recourse shall be had solely to the assets
of the Issuer.
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IN WITNESS WHEREOF, the parties hereto have caused this Sale and
Servicing Agreement to be duly executed by their respective officers as of the
day and year first above written.
ANRC AUTO OWNER TRUST ______________,
as Issuer
By: ____________________________, not in its
individual capacity but solely as Owner Trustee
By: _______________________________________________
Name:
Title:
AUTONATION RECEIVABLES
CORPORATION, as Seller
By: _______________________________________________
Name:
Title:
AUTONATION FINANCIAL SERVICES CORP.,
as Servicer and as Custodian
By: _______________________________________________
Name:
Title:
_____________________, not in its individual capacity
but solely as Indenture Trustee
By: _______________________________________________
Name:
Title:
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EXHIBIT A
List of Contracts
(Delivered to the Indenture Trustee at Closing)
A-1
<PAGE>
EXHIBIT B
Location and Account Numbers of Trust Accounts
B-1
<PAGE>
- --------------------------------------------------------------------------------
ADMINISTRATION AGREEMENT
by and among
ANRC AUTO OWNER TRUST _______,
as Issuer,
AUTONATION FINANCIAL SERVICES CORP.,
as Administrator,
AUTONATION RECEIVABLES CORPORATION,
as Seller,
and
_______________________________,
as Indenture Trustee
Dated as of __________, ____
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. Duties of the Administrator.......................................2
SECTION 2. Records...........................................................8
SECTION 3. Compensation......................................................8
SECTION 4. Additional Information to be Furnished to the Issuer..............9
SECTION 5. Independence of the Administrator.................................9
SECTION 6. No Joint Venture..................................................9
SECTION 7. Other Activities of Administrator.................................9
SECTION 8. Term of Agreement; Resignation and Removal of Administrator.......9
SECTION 9. Action upon Termination, Resignation or Removal..................11
SECTION 10. Notices..........................................................11
SECTION 11. Amendments.......................................................12
SECTION 12. Successors and Assigns...........................................13
SECTION 13. Governing Law....................................................13
SECTION 14. Headings.........................................................13
SECTION 15. Counterparts.....................................................13
SECTION 16. Severability.....................................................13
SECTION 17. Not Applicable to AutoNation Financial Services in Other
Capacities.......................................................13
SECTION 18. Limitation of Liability of Owner Trustee and Indenture Trustee...13
SECTION 19. Third-Party Beneficiary..........................................14
SECTION 20. Nonpetition Covenants............................................14
SECTION 21. Certain Matters Regarding the Insurer............................15
i
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This ADMINISTRATION AGREEMENT, dated as of ________, ____ (as
amended, supplemented or otherwise modified and in effect from time to time,
this "Agreement"), is by and among ANRC AUTO OWNER TRUST _________, a Delaware
business trust (the "Issuer"), AUTONATION FINANCIAL SERVICES CORP. ("AutoNation
Financial Services" or in its capacity as administrator, the "Administrator"),
AUTONATION RECEIVABLES CORPORATION (the "Seller") and ___________, not in its
individual capacity but solely as Indenture Trustee (the "Indenture Trustee").
W I T N E S S E T H :
WHEREAS, the Issuer is a business trust under the Delaware
Business Trust Act created by an owner trust agreement dated as of ----------,
____ (as amended, supplemented or otherwise modified and in effect from time to
time, the "Owner Trust Agreement") between the Seller, as Depositor, and ______,
as Owner Trustee (together with its successors and assigns in such capacity, the
"Owner Trustee").
WHEREAS, the Issuer is issuing ___ % Auto Loan Backed Notes, Class
A- 1, ___% Auto Loan Backed Notes, Class A-2, ___% Auto Loan Backed Notes, Class
A-3 and ___% Auto Loan Backed Notes, Class A-4 (collectively, the "Notes")
pursuant to an Indenture, dated as of the date hereof (as amended, supplemented
or otherwise modified and in effect from time to time, the "Indenture"), between
the Issuer and the Indenture Trustee (capitalized terms used herein that are not
otherwise defined shall have the meanings ascribed thereto in, or incorporated
by reference into, the Indenture);
WHEREAS, the Issuer has entered into certain agreements in
connection with the issuance of the Notes including (i) the sale and servicing
agreement, dated as of the date hereof (as amended, supplemented or otherwise
modified and in effect from time to time, the "Sale and Servicing Agreement"),
between the Issuer, the Seller, AutoNation Financial Services Corp., as servicer
(in such capacity, the "Servicer") and the Indenture Trustee, (ii) a Letter of
Representations, dated ________, ____, among the Issuer, the Indenture Trustee,
the Owner Trustee and The Depository Trust Company ("DTC") relating to the Notes
(as amended, supplemented or otherwise modified and in effect from time to time,
the "Depository Agreement"), (iii) the Owner Trust Agreement and (iv) the
Indenture (the Sale and Servicing Agreement, the Depository Agreement, the Trust
Agreement and the Indenture being referred to hereinafter collectively as the
"Related Agreements");
<PAGE>
WHEREAS, pursuant to the Related Agreements, the Issuer and the
Owner Trustee are required to perform certain duties in connection with (i) the
Notes and the collateral therefor pledged pursuant to the Indenture (the
"Collateral") and (ii) the beneficial ownership interest in the Issuer (the
holder of such interest being referred to herein as the "Depositor");
WHEREAS, the Issuer and the Owner Trustee desire to have the
Administrator perform certain of the duties of the Issuer and the Owner Trustee
referred to in the preceding clause and to provide such additional services
consistent with the terms of this Agreement and the Related Agreements as the
Issuer and the Depositor may from time to time request; and
WHEREAS, the Administrator has the capacity to provide the
services required hereby and is willing to perform such services for the Issuer
and the Owner Trustee on the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. Duties of the Administrator.
(a) Duties with Respect to the Related Agreements and the
Indenture.
(i) The Administrator agrees to perform all its duties as
Administrator and the duties of the Issuer and the Owner Trustee
under the Depository Agreement. In addition, the Administrator
shall consult with the Owner Trustee regarding the duties of the
Issuer or the Owner Trustee under the Related Agreements. The
Administrator shall monitor the performance of the Issuer and
shall advise the Owner Trustee when action is necessary to comply
with the respective duties of the Issuer and the Owner Trustee
under the Related Agreements. The Administrator shall prepare for
execution by the Issuer, or shall cause the preparation by other
appropriate persons of, all such documents, reports, filings,
instruments, certificates and opinions that it shall be the duty
of the Issuer or the Owner Trustee to prepare, file or deliver
pursuant to the Related Agreements. In furtherance of the
foregoing, the Administrator shall take all appropriate action
that the Issuer or the Owner Trustee is required to take pursuant
to the Indenture including, without limitation, such of the
foregoing as are required with respect to the following matters
under the Indenture (references are to Sections of the Indenture):
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<PAGE>
(A) the fixing or causing to be fixed of any special record
date and the notification of the Indenture Trustee with respect to
special payment dates, if any (Section 2.07);
(B) the preparation, obtaining or filing of the instruments,
opinions and certificates and other documents required for the
release of Collateral (Section 2.12);
(C) the duty to cause newly appointed Paying Agents, if any,
to deliver to the Indenture Trustee the instrument specified in
the Indenture regarding funds held in trust (Section 3.03);
(D) the direction to the Indenture Trustee to deposit monies
with the Paying Agent, if any, other than the Indenture Trustee
(Section 3.03);
(E) the obtaining and preservation of the Issuer's
qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of the Indenture, the Notes and the Collateral
(Section 3.04);
(F) the preparation of all supplements and amendments to the
Indenture and all financing statements, continuation statements,
instruments of further assurance and other instruments and the
taking of such other action as is necessary or advisable to
protect the Collateral (Section 3.05);
(G) the delivery of the Opinion of Counsel on the Closing Date
as to the Collateral, and the annual delivery of the Officer's
Certificate and certain other statements as to compliance with the
Indenture (Sections 3.06 and 3.09);
(H) the identification to the Indenture Trustee and the
Insurer in an Officer's Certificate of a Person with whom the
Issuer has contracted to perform its duties under the Indenture
(Section 3.07(b));
(I) the notification of the Indenture Trustee, the Insurer and
each Rating Agency of a Servicer Default under the Sale and
Servicing Agreement and, if such Servicer Default arises from the
failure of the Servicer to perform any of its duties or
obligations under the Sale and Servicing Agreement with respect to
the Contracts, the taking of all reasonable steps available to
remedy such failure (Section 3.07(d));
3
<PAGE>
(J) the duty to cause the Servicer to comply with the
Servicer's obligations under the Sale and Servicing Agreement
(Section 3.13);
(K) the preparation and obtaining of documents and
instruments required for the release of the Issuer from its
obligations under the Indenture (Section 3.10(b));
(L) the delivery of written notice to the Indenture Trustee,
Owner Trustee, the Insurer and each Rating Agency of each Event of
Default under the Indenture and each default by the Servicer or
the Seller under the Sale and Servicing Agreement (Section 3.15);
(M) the monitoring of the Issuer's obligations as to the
satisfaction and discharge of the Indenture and the preparation of
an Officer's Certificate and the obtaining of the Opinion of
Counsel and the Independent Certificate relating thereto (Section
4.01);
(N) the compliance with any written directive of the Indenture
Trustee or the Insurer, as the case may be, with respect to the
sale of the Collateral in a commercially reasonable manner if an
Event of Default shall have occurred and be continuing (Section
5.04);
(O) the preparation of any written instruments required to
give effect to the authority of any co-trustee or separate trustee
and any written instruments necessary in connection with the
resignation or removal of the Indenture Trustee or any co-trustee
or separate trustee (Sections 6.08 and 6.10);
(P) the preparation and, after execution by the Issuer, the
filing with the Commission, any applicable state agencies and the
Indenture Trustee of documents required to be filed on a periodic
basis with, and summaries thereof as may be required by rules and
regulations prescribed by, the Commission and any applicable state
agencies and the transmission of such summaries, as necessary, to
the Noteholders (Section 7.03);
(Q) the opening of one or more accounts in the Issuer's name,
the preparation and delivery of Issuer Orders, Officer's
Certificates and Opinions of Counsel and all other actions
necessary with respect to investment and reinvestment of funds in
the Trust Accounts (Section 8.02);
4
<PAGE>
(R) the preparation of an Issuer Request and Officer's
Certificate and the obtaining of an Opinion of Counsel and
Independent Certificates, if necessary, for the release of the
Trust Estate (Section 8.04);
(S) the preparation of Issuer Orders and the obtaining of
Opinions of Counsel with respect to the execution of supplemental
indentures (Sections 9.01, 9.02 and 9.03);
(T) arranging for the execution and delivery of new Notes
conforming to any supplemental indenture (Section
9.06);
(U) the duty to notify Noteholders, the Insurer and the Rating
Agencies of redemption of the Notes or to cause the Indenture
Trustee to provide such notification (Section 10.02);
(V) the preparation and delivery of all Officer's
Certificates, Opinions of Counsel and Independent Certificates
with respect to any requests by the Issuer to the Indenture
Trustee to take any action under the Indenture (Section 11.01(a));
(W) the preparation and delivery of Officer's Certificates and
the obtaining of Independent Certificates, if necessary, for the
release of property from the lien of the Indenture
(Section 11.01(b));
(X) the notification of the Rating Agencies, upon the failure
of the Issuer or the Indenture Trustee to give such notification,
of the information required pursuant to Section 11.04 of the
Indenture (Section 11.04); and
(Y) the preparation and delivery to the Indenture Trustee of
any agreements with respect to alternate payment and notice
provisions (Section 11.06).
(ii) The Administrator will:
(A) pay the Indenture Trustee from time to time reasonable
compensation for all services rendered by the Indenture Trustee
under the Indenture (which compensation shall not be limited by
any provision of law in regard to the compensation of a trustee of
an express trust);
5
<PAGE>
(B) except as otherwise expressly provided in the Indenture,
reimburse the Indenture Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made
by the Indenture Trustee in accordance with any provision of the
Indenture (including the reasonable compensation, expenses and
disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence,
bad faith or wilful misconduct;
(C) indemnify the Indenture Trustee and its agents for, and
hold them harmless against, any loss, liability or expense
incurred without negligence or bad faith on their part, arising
out of or in connection with the acceptance or administration of
the transactions contemplated by the Indenture, including the
reasonable costs and expenses of defending themselves against any
claim or liability in connection with the exercise or performance
of any of their powers or duties under the Indenture; and
(D) indemnify the Owner Trustee and its agents for, and hold
them harmless against, any loss, liability or expense incurred
with out negligence or bad faith on their part, arising out of or
in connection with the acceptance or administration of the
transactions contemplated by the Owner Trust Agreement, including
the reasonable costs and expenses of defending themselves against
any claim or liability in connection with the exercise or
performance of any of their powers or duties under the Owner Trust
Agreement.
(b) Additional Duties.
(i) In addition to the duties set forth in Section I (a)(i),
the Administrator shall perform such calculations and shall
prepare or shall cause the preparation by other appropriate
persons of, and shall execute on behalf of the Issuer or the Owner
Trustee, all such documents, reports, filings, instruments,
certificates and opinions that it shall be the duty of the Issuer
or the Owner Trustee to prepare, file or deliver pursuant to the
Related Agreements, and at the request of the Owner Trustee shall
take all appropriate action that the Issuer or the Owner Trustee
is required to take pursuant to the Related Agreements. In
furtherance thereof, the Owner Trustee shall on behalf of itself
and of the Issuer, execute and deliver to the Administrator and to
each successor Administrator appointed pursuant to the terms
hereof, one or more powers of attorney substantially in the forms
of Exhibits A and B hereto, appointing the Administrator the
attorney-in-fact of the Owner Trustee and the Issuer for the
purpose of exe-
6
<PAGE>
cuting on behalf of the Owner Trustee and the Issuer all such
documents, reports, filings, instruments, certificates and
opinions. Subject to Section 5 of this Agreement, and in
accordance with the directions of the Owner Trustee, the
Administrator shall administer, perform or supervise the
performance of such other activities in connection with the
Collateral (including the Related Agreements) as are not covered
by any of the foregoing provisions and as are expressly requested
by the Owner Trustee and are reasonably within the capability of
the Administrator.
(ii) Notwithstanding anything in this Agreement or the Related
Agreements to the contrary, the Administrator shall be responsible
for promptly notifying the Owner Trustee in the event that any
withholding tax is imposed on the Trust's payments (or allocations
of income) to the Depositor as contemplated in Section 5.02(c) of
the Owner Trust Agreement. Any such notice shall specify the
amount of any withholding tax required to be withheld by the Owner
Trustee pursuant to such provision.
(iii) Notwithstanding anything in this Agreement or the
Related Agreements to the contrary, the Administrator shall be
responsible for performance of the duties of the Owner Trustee set
forth in Section 5.04(a), (b), (c) and (d), the penultimate
sentence of Section 5.04 and Section 5.05(a) of the Owner Trust
Agreement with respect to, among other things, accounting and
reports to the Depositor.
(iv) The Administrator shall provide written notice to the
Indenture Trustee upon notification to the Administrator that the
Clearing Agency is no longer willing or able to properly discharge
its responsibilities as described in the Depository Agreement.
Upon the receipt of such notification from the Clearing Agency,
the Administrator shall use reasonable efforts to locate and
appoint a qualified successor Clearing Agency.
(v) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Administrator may enter into
transactions or otherwise deal with any of its Affiliates;
provided that the terms of any such transactions or dealings shall
be in accordance with any directions received from the Issuer or
the Insurer and shall be, in the Administrator's opinion, no less
favorable to the Issuer than would be available from unaffiliated
parties.
(c) Non-Ministerial Matters.
7
<PAGE>
(i) With respect to matters that in the reasonable judgment of
the Administrator are non-ministerial, the Administrator shall not
take any action unless within a reasonable time before the taking
of such action, the Administrator shall have notified the Owner
Trustee and the Insurer of the proposed action and the Owner
Trustee and the Insurer shall not have unreasonably withheld
consent or provided an alternative direction. For the purpose of
the preceding sentence, "non-ministerial matters" shall include,
without limitation:
(A) the amendment of or any supplement to the
Indenture;
(B) the initiation of any claim or lawsuit by the Issuer and
the compromise of any action, claim or lawsuit brought by or
against the Issuer (other than in connection with the collection
of the Contracts);
(C) the amendment, change or modification of the Related
Agreements;
(D) the appointment of successor Note Registrars, successor
Paying Agents and successor Indenture Trustees pursuant to the
Indenture or the appointment of a successor Administrator or a
successor Servicer, or the consent to the assignment by the Note
Registrar, Paying Agent or Indenture Trustee of its obligations
under the Indenture; and
(E) the removal of the Indenture Trustee.
(ii) Notwithstanding anything to the contrary in this
Agreement, the Administrator shall not be obligated to, and shall
not, (A) make any payments to the Noteholders under the Related
Agreements, (B) sell the Collateral pursuant to clause (iv) of
Section 5.04(a) of the Indenture, (C) take any other action that
the Issuer directs the Administrator not to take on its behalf or
(D) take any other action which may be construed as having the
effect of varying the investment of the Holders.
SECTION 2. Records. The Administrator shall maintain appropriate
books of account and records relating to services performed hereunder, which
books of account and records shall be accessible for inspection by the Issuer at
any time during normal business hours.
SECTION 3. Compensation. As compensation for the performance of
the Administrator's obligations under this Agreement and as reimbursement for
its
8
<PAGE>
expenses related thereto, the Administrator shall be entitled to an annual
payment of compensation of $ _______________________ which shall be solely an
obligation of the Servicer.
SECTION 4. Additional Information to be Furnished to the Issuer.
The Administrator shall furnish to the Issuer from time to time such additional
information regarding the Collateral as the Issuer shall reasonably
request.
SECTION 5. Independence of the Administrator. For all purposes of
this Agreement, the Administrator shall be an independent contractor and shall
not be subject to the supervision of the Issuer or the Owner Trustee with
respect to the manner in which it accomplishes the performance of its
obligations hereunder. Unless expressly authorized by the Issuer, the
Administrator shall have no authority to act for or represent the Issuer, the
Owner Trustee or the Indenture Trustee in any way and shall not otherwise be
deemed an agent of the Issuer, the Owner Trustee or the Indenture Trustee.
SECTION 6. No Joint Venture. Nothing contained in this Agreement
(i) shall constitute the Administrator and either of the Issuer, the Owner
Trustee or the Indenture 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 7. Other Activities of Administrator. Nothing herein shall
prevent the Administrator or its Affiliates from engaging in other businesses
or, in its sole discretion, from acting in a similar capacity as an
administrator for any other Person or entity even though such person or entity
may engage in business activities similar to those of the Issuer, the Owner
Trustee or the Indenture Trustee.
SECTION 8. Term of Agreement; Resignation and Removal of
Administrator. This Agreement shall continue in force until the dissolution of
the Issuer, upon which event this Agreement shall automatically terminate.
(a) Subject to Sections 8(d) and 8(e), the Administrator may
resign its duties hereunder by providing the Issuer with at least 60 days'
prior written notice.
(b) Subject to Sections 8(d) and 8(e), the Issuer may remove the
Administrator without cause by providing the Administrator with at least 60
days' prior written notice.
(c) Subject to Sections 8(d) and 8(e), at the sole option of the
Issuer, the Administrator may be removed immediately upon written notice of
9
<PAGE>
termination from the Issuer to the Administrator if any of the
following events shall
occur:
(i) the Administrator shall default in the performance of any
of its duties under this Agreement and, after notice of such
default, shall not cure such default within 30 days (or, if such
default cannot be cured in such time, shall not give within ten
days such assurance of cure as shall be reasonably satisfactory to
the Issuer);
(ii) a court having jurisdiction in the premises shall enter a
decree or order for relief, and such decree or order shall not
have been vacated within 60 days, in respect of the Administrator
in any involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect or
appoint a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official for the Administrator or any
substantial part of its property or order the winding-up or
liquidation of its affairs; or
(iii) the Administrator shall commence a voluntary case under
any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, shall consent to the entry of an order for
relief in an involuntary case under any such law, or shall consent
to the appointment of a receiver, liquidator, assignee, trustee,
custodian, sequestrator or similar official for the Administrator
or any substantial part of its property, shall consent to the
taking of possession by any such official of any substantial part
of its property, shall make any general assignment for the benefit
of creditors or shall fail generally to pay its debts as they
become due.
The Administrator agrees that if any of the events specified in
clauses (ii) or (iii) above shall occur, it shall give written notice thereof to
the Issuer and the Indenture Trustee within seven days after the occurrence of
such event.
(d) No resignation or removal of the Administrator pursuant to
this Section shall be effective until (i) a successor Administrator shall have
been appointed by the Issuer with the consent of the Insurer and (ii) such
successor Administrator shall have agreed in writing to be bound by the terms of
this Agreement in the same manner as the Administrator is bound hereunder.
(e) The appointment of any successor Administrator shall be
effective only after satisfaction of the Rating Agency Condition with respect to
the proposed appointment.
10
<PAGE>
(f) Subject to Section 8(d) and 8(e), the Administrator
acknowledges that upon the appointment of a successor Servicer pursuant to the
Sale and Servicing Agreement, the Administrator shall immediately resign and
such successor Servicer shall automatically become the Administrator under this
Agreement; provided, however, that this Section 8(f) shall not apply at such
times as the Indenture Trustee shall be the successor Servicer.
SECTION 9. Action upon Termination, Resignation or Removal.
Promptly upon the effective date of termination of this Agreement pursuant to
the first sentence of Section 8 or the resignation or removal of the
Administrator pursuant to Section 8(a), (b) or (c), respectively, the
Administrator shall be entitled to be paid all fees and reimbursable expenses
accruing to it to the date of such termination, resignation or removal. The
Administrator shall forthwith upon such termination pursuant to the first
sentence of Section 8 deliver to the Issuer all property and documents of or
relating to the Collateral then in the custody of the Administrator. In the
event of the resignation or removal of the Administrator pursuant to Section
8(a), (b) or (c), respectively, the Administrator shall cooperate with the
Issuer and take all reasonable steps requested to assist the Issuer in making an
orderly transfer of the duties of the Administrator. The Administrator's payment
and indemnification obligations pursuant to this Agreement shall survive the
termination of this Agreement and the resignation and removal of the
Administrator.
SECTION 10. Notices. Any notice, report or other communication
given hereunder shall be in writing and addressed as follows:
(a) if to the Issuer or the Owner Trustee, to:
ANRC AUTO OWNER TRUST _____________
c/o _______________________________
___________________________________
Attention:
Telephone:
Telecopy:
(b) if to the Administrator, to:
AUTONATION FINANCIAL SERVICES CORP.
___________________________________
___________________________________
Attention:
Telephone:
Telecopy:
11
<PAGE>
(c) if to the Indenture Trustee, to:
___________________________________
___________________________________
___________________________________
Attention:
Telephone:
Telecopy:
(d) if to the Insurer, to:
___________________________________
___________________________________
___________________________________
Attention:
Telephone:
Telecopy:
or to such other address as any party shall have provided to the other parties
in writing. Any notice required to be in writing hereunder shall be deemed given
if such notice is mailed by certified mail, postage prepaid, or hand-delivered
to the address of such party as provided above.
SECTION 11. Amendments. This Agreement may be amended from time to
time by a written amendment duly executed and delivered by the parties hereto,
with the written consent of the Insurer and the Owner Trustee, but without the
consent of the Noteholders, 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; provided that such
amendment will not, as so evidenced by an Opinion of Counsel satisfactory to the
Indenture Trustee, materially and adversely affect the interest of any
Noteholder. This Agreement may also be amended by the parties hereto with the
written consent of the Owner Trustee, the Insurer (so long as the Insurer is the
Controlling Party) and the holders of Notes evidencing at least a majority of
the Outstanding Principal Amount of the Notes for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of Noteholders;
provided, further, 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 Contracts or distributions that are required to be made for the
benefit of the Noteholders or (ii) reduce the aforesaid percentage of the
holders of Notes which are required to consent to any such amendment, without
the consent of the holders of all outstanding Notes. Notwithstanding the
foregoing, the Administrator may not amend this Agreement without the
permission of the Seller, which permission shall not be unreasonably withheld.
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<PAGE>
SECTION 12. Successors and Assigns. This Agreement may not be
assigned by the Administrator unless such assignment is previously consented to
in writing by the Issuer, the Owner Trustee, the Insurer and the Indenture
Trustee and subject to the satisfaction of the Rating Agency Condition in
respect thereof. An assignment with such consent and satisfaction, if accepted
by the assignee, shall bind the assignee hereunder in the same manner as the
Administrator is bound hereunder. Notwithstanding the foregoing, this Agreement
may be assigned by the Administrator without the consent of the Issuer, the
Insurer, the Indenture Trustee or the Owner Trustee to a corporation or other
organization that is a successor (by merger, consolidation or purchase of
assets) to the Administrator; provided that such successor organization executes
and delivers to the Issuer, the Insurer, the Owner Trustee and the Indenture
Trustee an agreement, in form and substance reasonably satisfactory to the
Issuer, the Owner Trustee, the Indenture Trustee and the Insurer, in which such
corporation or other organization agrees to be bound hereunder by the terms of
said assignment in the same manner as the Administrator is bound hereunder.
Subject to the foregoing, this Agreement shall bind any successors or assigns of
the parties hereto.
SECTION 13. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York.
SECTION 14. Headings. The section and subsection headings hereof
have been inserted for convenience of reference only and shall not be construed
to affect the meaning, construction or effect of this Agreement.
SECTION 15. Counterparts. This Agreement may be executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same agreement.
SECTION 16. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 17. Not Applicable to AutoNation Financial Services in
Other Capacities. Nothing in this Agreement shall affect any obligation
AutoNation Financial Services Corp. may have in any other capacity.
SECTION 18. Limitation of Liability of Owner Trustee and Indenture
Trustee.
(a) Notwithstanding anything contained herein to the contrary,
this instrument has been countersigned by _______________, not in its individual
13
<PAGE>
capacity but solely in its capacity as Owner Trustee of the Issuer, and in no
event shall in its individual capacity or any beneficial owner of the Issuer
have any liability for the representations, warranties, covenants, agreements or
other obligations of the Issuer hereunder, as to all of which recourse shall be
had solely to the assets of the Issuer. For all purposes of this Agreement, in
the performance of any duties or obligations of the Issuer hereunder, the Owner
Trustee shall be subject to, and entitled to the benefits of, the terms and
provisions of Articles VI, VII and VIII, of the Owner Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary,
this Agreement has been countersigned by ______________________________ not in
its individual capacity but solely as Indenture Trustee and in no event shall
have any liability for the representations, 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 19. Third-Party Beneficiary. The Owner Trustee and the
Insurer are third-party beneficiaries to this Agreement and are entitled to the
rights and benefits hereunder and may enforce the provisions hereof as if they
were parties hereto.
SECTION 20. Nonpetition Covenants.
(a) Notwithstanding any prior termination of this Agreement, the
Seller, the Administrator, the Owner Trustee and the Indenture Trustee 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.
(b) Notwithstanding any prior termination of this Agreement, the
Issuer, the Administrator, the Owner Trustee and the Indenture Trustee shall
not, prior to the date which is one year and one day after the termination of
this Agreement with respect to the Seller, acquiesce, petition or otherwise
invoke or cause the Seller to invoke the process of any court or government
authority for the purpose of commencing or sustaining a case against the Seller
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 Seller or any substan-
14
<PAGE>
tial part of its property, or ordering the winding up or liquidation of the
affairs of the Seller.
SECTION 21. Certain Matters Regarding the Insurer. Notwithstanding
any provision in this Agreement to the contrary, in the event an Insurer Default
(as defined in the Sale and Servicing Agreement) shall have occurred and be
continuing, the Insurer shall not have the right to take any action under this
Agreement or to control or direct the actions of the Issuer, the Administrator,
the Indenture Trustee, the Seller or the Owner Trustee pursuant to the terms of
this Agreement, nor shall the consent of the Insurer be required with respect to
any action (or waiver of right to take action) to be taken by the Issuer, the
Administrator, the Indenture Trustee, the Seller, the Owner Trustee or the
holders of the Notes; provided that the consent of the Insurer shall be required
at all times with respect to any amendment of this Agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Administration Agreement to be duly executed and delivered as of the day and
year first above written.
ANRC AUTO OWNER TRUST
By:
------------------------------
not in its individual capacity
but solely as Owner Trustee
By:
------------------------------
Name:
Title:
AUTONATION RECEIVABLES
CORPORATION, as Seller
By:
------------------------------
Name:
Title:
------------------------------
not in its individual capacity
but solely as Indenture Trustee
By:
------------------------------
Name:
Title:
AUTONATION FINANCIAL
SERVICES CORP., as Administrator
By:
------------------------------
Name:
Title:
16
<PAGE>
EXHIBIT A
FORM OF
POWER OF ATTORNEY
STATE OF____________ )
)
COUNTY OF _________ )
KNOW ALL MEN BY THESE PRESENTS, that __________________, a
________________________, not in its individual capacity but solely as owner
trustee ("Owner Trustee") for the ANRC Auto Owner Trust _____(the "Trust"), does
hereby make, constitute, and appoint AUTONATION FINANCIAL SERVICES CORP. as
Administrator under the Administration Agreement (as defined below), and its
agents and attorneys, as Attorneys-in-Fact to execute on behalf of the Owner
Trustee or the Trust all such documents, reports, filings, instruments,
certificates and opinions as it shall be the duty of the Owner Trustee or the
Trust to prepare, file or deliver pursuant to the Related Agreements (as defined
in the Administration Agreement), including, without limitation, to appear for
and represent the Owner Trustee and the Trust in connection with the
preparation, filing and audit of federal, state and local tax returns pertaining
to the Trust, and with full power to perform any and all acts associated with
such returns and audits that the Owner Trustee could perform, including without
limitation, the right to distribute and receive confidential information, defend
and assert positions in response to audits, initiate and defend litigation, and
to execute waivers of restriction on assessments of deficiencies, consents to
the extension of any statutory or regulatory time limit, and settlements. For
the purpose of this Power of Attorney, the term "Administration Agreement" means
the Administration Agreement, dated as of _____________, ____, by and among the
Trust, AutoNation Financial Services Corp., as Administrator, AutoNation
Receivables Corporation, as Seller, and __________________, as Indenture
Trustee, as such may be amended, supplemented or otherwise modified and in
effect from time to time.
All powers of attorney for this purpose heretofore filed or executed
by the Owner Trustee are hereby revoked.
A-1
<PAGE>
EXECUTED this ___ day of ____________, ____
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not in its individual capacity but
solely as Owner Trustee
By:
------------------------------
Name:
Title:
A-2
