Pursuant to Rule: 424(b)5
Registration No.: 333-84579
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MARCH 29, 2000)
$700,000,000
WORLD OMNI MASTER OWNER TRUST
$646,000,000 SERIES 2000-1 FLOATING RATE AUTOMOBILE DEALER FLOORPLAN ASSET
BACKED NOTES, CLASS A
$54,000,000 SERIES 2000-1 FLOATING RATE AUTOMOBILE DEALER FLOORPLAN ASSET BACKED
NOTES, CLASS B
WODFI LLC, TRANSFEROR
WORLD OMNI FINANCIAL CORP., SERVICER
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<S> <C> <C> <C>
- -----------------
BEFORE YOU THE TRUST WILL ISSUE THE FOLLOWING CLASSES OF SERIES 2000-1
PURCHASE ANY OF NOTES:
THE NOTES, YOU
SHOULD CAREFULLY
CONSIDER THE RISK
FACTORS BEGINNING
ON PAGE S-8 IN CLASS A NOTES CLASS B NOTES
THIS PROSPECTUS Principal Amount........................ $646,000,000 $54,000,000
SUPPLEMENT AND ON Interest Rate........................... LIBOR + 0.135% LIBOR + 0.45%
PAGE 8 IN THE Payment Dates........................... Monthly Monthly
PROSPECTUS. Expected Principal Payment Date......... March 17, 2003 March 17, 2003
Stated Maturity Date.................... March 15, 2005 March 15, 2005
The sole source Price to Public (1)..................... 100% 100%
of payments on Underwriting Discount................... 0.225% 0.3%
the notes is a Proceeds to Transferor (2).............. 99.775% 99.7%
portion of the
assets of the
trust. The notes ----------------------------------
are not interests
in or obligations (1) As of March 22, 2000 in the case of the Class A Notes.
of World Omni
Financial Corp., (2) Before deducting expenses which are estimated to be
WODFI LLC or any approximately $850,000. Total price to the public is
other entity or $700,000,000, total underwriting discount is $1,615,500, and
person. total proceeds to the Transferor are $698,384,500.
This prospectus TRUST ASSETS:
may be used to
offer and sell o The primary assets of the trust consist of a revolving pool of
the notes only if receivables arising under selected revolving floorplan
accompanied by financing agreements entered into with World Omni Financial
the prospectus. Corp. by retail automobile dealers to finance their inventory
- ----------------- of new and used automobiles and light duty trucks.
CREDIT ENHANCEMENT:
o The certificates issued by the trust are subordinate to the
Series 2000-1 Notes to the extent of the available
subordinated amount, which is initially $60,869,565 plus the
incremental subordinated amount as of the closing date.
o A reserve account, with an initial balance of $3,500,000.
o The Class B Notes are subordinated to the Class A Notes.
Subordination of the Class B Notes provides additional credit
enhancement to the Class A Notes.
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This prospectus supplement and the accompanying prospectus relate only to the
offering of the notes. The certificates issued by the trust are not being
offered under this prospectus supplement and the prospectus.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE NOTES OR DETERMINED IF THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Delivery of the notes will be made only in book-entry form through the
facilities of The Depository Trust Company, the Clearstream system and the
Euroclear system on or about April 6, 2000.
Underwriters of the Class A Notes
MERRILL LYNCH & CO.
BANC OF AMERICA SECURITIES LLC
CHASE SECURITIES INC.
FIRST UNION CAPITAL MARKETS
Underwriter of the Class B Notes
MERRILL LYNCH & CO.
March 29, 2000
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[Intentionally Left Blank]
S-2
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
- ------- ----
WHERE TO FIND INFORMATION IN THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS................... S-4
Limitations on Offers or Solicitations.......... S-4
Transactions That May Affect the Price of the
Series 2000-1 Notes.......................... S-4
SUMMARY OF TERMS.................................. S-5
The Parties..................................... S-5
The Notes....................................... S-5
Credit Enhancement.............................. S-6
Servicing Fee Rate.............................. S-7
Optional Repurchase............................. S-7
Tax Status...................................... S-7
ERISA Considerations............................ S-7
Ratings......................................... S-7
RISK FACTORS...................................... S-8
USE OF PROCEEDS................................... S-11
THE WHOLESALE PORTFOLIO........................... S-11
Loss Experience................................. S-11
Aging Experience................................ S-12
Geographic Distribution......................... S-13
Dealer Concentration............................ S-14
MATURITY AND PRINCIPAL PAYMENT CONSIDERATIONS..... S-14
SERIES PROVISIONS................................. S-15
General......................................... S-15
Interest........................................ S-15
SECTION PAGE
- ------- ----
Principal....................................... S-16
Allocation Percentages.......................... S-18
Allocation of Collections; Limited Subordination
of Certificates.............................. S-19
Distributions from the Collection Account;
Reserve Fund................................. S-19
Available Subordinated Amount................... S-21
Principal Collections........................... S-22
Excess Principal Collections.................... S-22
Distributions................................... S-22
Noteholder Charge-Offs.......................... S-24
Early Amortization Events....................... S-24
Stated Maturity Date............................ S-25
Payment Event of Default........................ S-26
Optional Repurchase............................. S-26
Principal Funding Account....................... S-27
Excess Funding Account.......................... S-27
Reports......................................... S-27
Definitions..................................... S-28
CERTAIN FEDERAL INCOME TAX CONSEQUENCES........... S-33
FLORIDA INCOME TAXATION........................... S-34
ERISA CONSIDERATION............................... S-34
UNDERWRITING...................................... S-35
LEGAL MATTERS..................................... S-36
INDEX OF TERMS.................................... S-37
ANNEX I........................................... A-1
S-3
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WHERE TO FIND INFORMATION IN THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS
We provide information to you about your series of the notes in two
separate documents that provide varying levels of detail:
(a) the prospectus, which provides general information, some of which may
not apply to a particular series of notes, including your series.
(b) this prospectus supplement, which provides information regarding the
pool of receivables held by the trust and specifies the terms of your
series
IF THE TERMS OF YOUR SERIES OF NOTES VARY BETWEEN THE PROSPECTUS AND THIS
PROSPECTUS SUPPLEMENT, YOU SHOULD RELY ON THE INFORMATION IN THIS PROSPECTUS
SUPPLEMENT.
You should rely only on the information provided in the prospectus and this
prospectus supplement. We have not authorized anyone to provide you with other
or different information. You should not assume that the information in the
prospectus and this prospectus supplement is accurate on any date other than the
dates stated on their respective covers.
Capitalized terms used in this prospectus supplement are defined either in
this prospectus supplement or in the prospectus. You can find a list of the
pages where capitalized terms used in this prospectus supplement are defined
under the caption 'Index of Terms' which appears at the end of the prospectus
and this prospectus supplement.
LIMITATIONS ON OFFERS OR SOLICITATIONS
We do not intend this document to be an offer or solicitation:
(a) if used in a jurisdiction in which such offer or solicitation is not
authorized;
(b) if the person making the offer or solicitation is not qualified to do
so; or
(c) if the offer or solicitation is made to anyone to whom it is unlawful
to make the offer or solicitation.
TRANSACTIONS THAT MAY AFFECT THE PRICE OF THE SERIES 2000-1 NOTES
The underwriters may engage in transactions that stabilize, maintain, or
otherwise affect the price of the Series 2000-1 Notes. Such transactions may
include stabilizing and the purchase of the notes to cover syndicate short
positions. For a description of these activities, see 'Underwriting.'
S-4
<PAGE>
SUMMARY OF TERMS
This summary highlights selected information from this prospectus
supplement and provides an overview to aid in your understanding of the Series
2000-1 Notes. It does not contain all the information that you need to
consider in making an investment decision. To understand all of the terms of
the notes, you should carefully read this prospectus supplement and the
accompanying prospectus.
THE PARTIES
Trust / Issuer
World Omni Master Owner Trust, a Delaware business trust formed by
WODFI LLC as Transferor and Chase Manhattan Bank Delaware as Owner Trustee
Transferor
WODFI LLC, a wholly-owned subsidiary of World Omni Financial Corp.
Servicer
World Omni Financial Corp., a wholly-owned subsidiary of JM Family
Enterprises, Inc.
Indenture Trustee
Harris Trust and Savings Bank
Owner Trustee
Chase Manhattan Bank Delaware
Administrator
World Omni Financial Corp.
THE NOTES
The trust will issue the following classes of Series 2000-1 Notes:
<TABLE>
<CAPTION>
AGGREGATE
INTEREST PRINCIPAL
CLASS RATE AMOUNT
- --------------------- --------------- ------------
<S> <C> <C>
Class A Notes........ LIBOR + 0.135% $646,000,000
Class B Notes........ LIBOR + 0.45% $ 54,000,000
</TABLE>
The sole source of payments on the Series 2000-1 Notes is a portion of
the assets of the trust. The Series 2000-1 Notes are not interests in or
obligations of World Omni, the Transferor or any other entity or person. The
trust has previously issued other series of notes. A summary of each
outstanding series of notes is contained in 'Annex I-- Outstanding Series of
Notes' at the end of this prospectus supplement. The trust has also issued
certificates. The certificates are not being offered for sale by this
prospectus supplement and are currently held by the Transferor. The trust may
issue additional series of notes and additional certificates.
Series Issuance Date
April 6, 2000.
Series Cut-Off Date
April 1, 2000.
Payment Dates
Payments on the Series 2000-1 Notes will generally be made on the 15th
day of each month or, if such day is not a business day, on the next
succeeding business day.
Interest Payments
The interest rate for each class of the Series 2000-1 Notes is as
follows:
Class A Notes: LIBOR plus 0.135% or, if lower, the Assets Receivables
Rate described in this prospectus supplement.
Class B Notes: LIBOR plus 0.45% or, if lower, the Assets Receivables
Rate.
The trust will pay interest on the Series 2000-1 Notes on each Payment
Date beginning on May 15, 2000 for the period from the prior Payment Date or,
in the case of the first Payment Date, from the Series Issuance Date to the
day prior to the Payment Date. Interest will be calculated on the basis of the
actual number of days divided by 360.
The payment of interest on the Class B Notes is subordinate to the
payment of interest on the Class A Notes. No interest will be paid on the
Class B Notes on any Payment Date unless all interest due and payable on the
Class A Notes has been paid.
S-5
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Principal Payments
The entire principal balance of the Class A Notes and the Class B
Notes is expected to be paid on March 17, 2003.
However, special circumstances could cause principal to be paid
earlier or later or in reduced amounts. See 'Maturity and Principal Payment
Considerations.'
If not previously paid, the outstanding principal amount of the Class
A Notes and the Class B Notes will be payable in full on their stated final
maturity dates as follows:
Class A Notes: March 15, 2005
Class B Notes: March 15, 2005
The payment of principal on the Class B Notes is subordinate to the
payment of principal on the Class A Notes. No principal will be paid on the
Class B Notes until all principal on the Class A Notes has been paid in full.
Revolving Period
The Series 2000-1 Notes will have a Revolving Period that will begin
at the close of business on the Series Cut-Off Date and end when the
Accumulation Period for the Series 2000-1 Notes begins. The Revolving Period
will also end if an Early Amortization Period that is not terminated begins.
Accumulation Period
The Series 2000-1 Notes will have an Accumulation Period, unless an
Early Amortization Period that is not terminated begins before the start of
the Accumulation Period. The Accumulation Period will be a period of one to
three months long. No principal payments will be made on the Series 2000-1
Notes during the Accumulation Period. The entire principal balance of the
Class A Notes and the Class B Notes is expected to be paid on the March 2003
Payment Date, the first Payment Date following the end of the Accumulation
Period.
Early Amortization Period
The Series 2000-1 Notes may have an Early Amortization Period if an
Early Amortization Event occurs and is not cured. See 'The Transfer and
Servicing Agreements--Investment Events and Early Amortization Events' in the
prospectus and 'Series Provision--Early Amortization Events' in this
prospectus supplement for a description of the events that might cause an
Early Amortization Period to start and, in some cases, terminate. During an
Early Amortization Period, principal payments will be made on the Series
2000-1 Notes to the extent of funds available for that purpose.
CREDIT ENHANCEMENT
Subordination of the Certificates
The certificates are subordinated to the rights of the holders of
Series 2000-1 Notes to the extent described in this prospectus supplement.
Collections on the Receivables otherwise allocable to the certificates may be
used to pay interest and principal on the Series 2000-1 Notes but only to the
extent of the Available Subordinated Amount.
The Available Subordinated Amount will initially be $60,869,565 plus
the incremental subordinated amount as of the closing date, but is subject to
reduction from time to time. See 'Series Provisions-- Allocation of
Collections; Limited Subordination of Certificates' for more information about
the Available Subordinated Amount.
The portion of the assets of the trust securing the Series 2000-1
Notes and the portion of collections from those assets allocated to the Series
2000-1 Notes will be based on the sum of the Available Subordinated Amount and
the Invested Amount. The Invested Amount will initially be $700,000,000 but is
subject to reduction from time to time as described in this prospectus
supplement under the caption 'Series Provisions--Allocation Percentages.'
Reserve Account
A Reserve Fund will be established and maintained in the name of the
Indenture Trustee for the benefit of the holders of the Series 2000-1 Notes.
On the Series Issuance Date, $3,500,000 will be deposited into the Reserve
Fund. The Reserve Fund Required
S-6
<PAGE>
Amount for any Payment Date will equal 0.50% of the outstanding principal
balance of the Series 2000-1 Notes for such Payment Date, after giving effect
to any change in the principal balance on such Payment Date. The Reserve Fund
Required Amount will increase to 0.60% of the outstanding principal balance of
the Series 2000-1 Notes on and after the September 2002 Payment Date and will
also increase to the extent described herein during an Early Amortization
Period for the Series 2000-1 Notes.
Amounts on deposit in the Reserve Fund will be available to pay
Monthly Interest, the Monthly Servicing Fee and Noteholder Defaulted Amounts.
In addition, on the stated maturity date for a class of notes or on the date
on which the principal amount of the notes has been reduced to zero, amounts
on deposit in the Reserve Fund will be available to pay Carry-over Amounts for
that class of notes.
Excess Principal Collections
Principal Collections allocable to a series of Notes, including the
Series 2000-1 Notes, to the extent not needed to make payments on that series
of Notes, will be applied to make principal payments on the Series 2000-1
Notes and on other series of notes entitled to principal payments.
Subordination of Class B Notes
The Class B Notes will be subordinated to the Class A Notes to the
extent described in this prospectus supplement.
SERVICING FEE RATE
The trust will pay the Servicer a monthly 1.0% per annum servicing fee as
compensation for servicing the receivables.
OPTIONAL REPURCHASE
The Series 2000-1 Notes are subject to optional repurchase by the
Servicer on any Payment Date after the outstanding principal amount of the
Series 2000-1 Notes is reduced to $70,000,000 or less.
TAX STATUS
Kirkland & Ellis, special tax counsel, is of the opinion that, for
federal income tax purposes, the Series 2000-1 Notes will be characterized as
indebtedness and the trust will not be characterized as an association (or
publicly traded partnership) taxable as a corporation.
By accepting a Series 2000-1 Note, you agree to treat the notes as
indebtedness for federal, state and local income and franchise tax purposes.
See 'Certain Federal Income Tax Consequences' concerning the application
of federal, state and local tax laws.
ERISA CONSIDERATIONS
Subject to the considerations discussed under 'ERISA Considerations,' an
employee benefit plan regulated by the Employee Retirement Income Security Act
of 1974 may purchase the Series 2000-1 Notes, including the Class B Notes. See
'ERISA Considerations' for a description of the limitations on purchases of
Series 2000-1 Notes by employee benefit plans. An employee benefit plan should
consult with its counsel before purchasing any Series 2000-1 Notes.
RATINGS
The Series 2000-1 Notes will not be issued unless:
o the Class A Notes are rated in the highest rating category for
long-term debt obligations by at least one nationally recognized
rating agency, and
o the Class B Notes are rated in at least the 'A' category or its
equivalent for long-term debt obligations by at least one nationally
recognized rating agency.
The rating agencies do not evaluate and their ratings do not address the
likelihood that any Class A Carry-over Amount or Class B Carry-over Amount
will be paid.
S-7
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RISK FACTORS
In addition to the risk factors on page 8 of the prospectus, you should
consider the following risk factors in deciding whether to purchase any Series
2000-1 Notes.
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CLASS B NOTES ARE SUBJECT TO GREATER
CREDIT RISK BECAUSE THE CLASS B NOTES
ARE SUBORDINATED TO THE CLASS A NOTES The Class B Notes bear greater credit risk than the Class A Notes because
payments of interest on the Class B Notes are subordinated in priority to the
payment of interest due on the Class A Notes and payments of principal on the
Class B Notes will not be made until the principal of the Class A Notes has
been paid in full.
This subordination could result in delays or reductions in the payment of
principal and interest on the Class B Notes.
DEPENDENCE ON OTHER SERIES' ALLOCATED
PRINCIPAL COLLECTIONS MAY RESULT IN
DELAYED PAYMENT OF SERIES 2000-1 NOTE
PRINCIPAL The shorter the Accumulation Period for the Series 2000-1 Notes, the greater
the chance that payment in full of the Series 2000-1 Notes on the Expected
Principal Payment Date will depend on principal collections initially
allocated to another series of notes being available to make principal
payments on the Series 2000-1 Notes. A series of notes from which principal
collections were expected to be available to make payments on the Series
2000-1 Notes may enter an early amortization period or investment period after
the beginning of the accumulation period for the Series 2000-1 Notes. If that
were to occur, excess principal collections from that series that otherwise
would have been available to the Series 2000-1 Notes would not be available.
As a result, the final payment of principal of the Series 2000-1 Notes may be
later than the Expected Principal Payment Date. On written request, the
Transferor will give Series 2000-1 Noteholders disclosure documents relating
to any other outstanding series of notes. Those documents describe the events
which could result in the start of an early amortization period or investment
period for those series.
See 'The Dealer Floorplan Financing Business' in the prospectus and 'Maturity
and Principal Payment Considerations' and 'Series Provisions--Early
Amortization Events' in this prospectus supplement for more information about
the timing of payments on the Series 2000-1 Notes.
EARLY AMORTIZATION OF SERIES 2000-1
NOTES MAY RESULT IN EARLY, DELAYED
AND/OR REDUCED PAYMENT OF SERIES 2000-1
NOTES A significant decline in the amount of Receivables generated could cause an
Early Amortization Event. If the Pool Balance is not
</TABLE>
S-8
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<TABLE>
<S> <C>
maintained at a specified level, World Omni must designate additional
Accounts, the Receivables of which will be sold to the Transferor. The
Transferor will be required to transfer those Receivables to the trust. If
additional Accounts are not designated by World Omni when required, an Early
Amortization Period will begin and could result in payment of the Series
2000-1 Notes prior to the Expected Principal Payment Date and/or reduced
payment of the Series 2000-1 Notes. In certain cases, however, the resulting
Early Amortization Period may end and the Revolving Period will start again.
In addition, if certain events occur, an Early Amortization Period will begin
and could also result in payment of the Series 2000-1 Notes before or after
the Expected Principal Payment Date and/or reduced payment of the Series
2000-1 Notes.
THE CLASS A NOTE RATE AND CLASS B NOTE
RATE ARE LIMITED BY THE ASSETS
RECEIVABLES RATE The 'Assets Receivables Rate' is based on the interest rates on the
Receivables and investment earnings on amounts on deposit in certain accounts
of the trust. If the interest rate on the Class A Notes or the Class B Notes,
which is based on LIBOR, exceeds the Assets Receivables Rate, then the
interest rate on the Class A Notes or the Class B Notes, as applicable, will
be adjusted to equal the Assets Receivables Rate.
THE TRUST MAY NOT BE ABLE TO MAKE UP A
DEFICIENCY IN INTEREST PAYMENTS IF THE
CLASS A NOTE OR CLASS B NOTE INTEREST
RATE IS HIGHER THAN THE ASSETS
RECEIVABLES RATE The interest rates on the Class A Notes and the Class B Notes are based on
LIBOR and may exceed the Assets Receivables Rate as a result of LIBOR
exceeding the interest rate on the Receivables (which may be reduced by the
Servicer) and/or LIBOR exceeding the investment earnings on amounts, if any,
on accounts of the trust in which principal collections are held. Any
deficiency in interest payments resulting from the Assets Receivables Rate
being lower than the interest rate based on LIBOR and interest on such
deficiency will be paid to the extent of:
o any funds remaining after all required distributions and deposits for the
Series 2000-1 Notes have been made; and
o on the last payment date for Series 2000-1, certain amounts in the Reserve
Account and Additional Noteholder Collections.
The Transferor cannot assure that those amounts, if any, will be sufficient to
pay such deficiency. If any such deficiency is outstanding for six Payment
Dates in a row, an Early Amortization Event will occur.
</TABLE>
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<TABLE>
<S> <C>
CREDIT ENHANCEMENT IS LIMITED AND MAY
BE REDUCED Credit enhancement of the Series 2000-1 Notes will be provided by the
subordination of the certificates to the extent of the Available Subordinated
Amount as described in this prospectus supplement and by amounts in the
Reserve Account. In addition, the Class B Notes are subordinated to the Class
A Notes to the extent described in this prospectus supplement. The amount of
such credit enhancement is limited and may be reduced from time to time. See
'Series Provisions--Allocation of Collections; Limited Subordination of
Certificates' for more information about credit enhancement for the Series
2000-1 Notes.
LIMITED ABILITY TO RESELL NOTES The underwriters may assist in the resale of the Series 2000-1 Notes, but they
are not required to do so. A trading market for the Series 2000-1 Notes may
not develop. If a trading market does develop, it might not continue or it
might not be sufficiently liquid to allow you to resell any of your Series
2000-1 Notes.
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S-10
<PAGE>
USE OF PROCEEDS
The Transferor will use $3.5 million of the net proceeds to fund the
Reserve Fund and expects to use approximately $550 million to repay a portion of
the Series 1999-VFN Note currently outstanding. The Trust issued the $600
million Series 1999-VFN Note on November 22, 1999, in connection with the
formation of the Trust. The Series 1999-VFN has a floating rate of interest
based on commercial paper issued by the holder of the Series 1999-VFN Note. The
net proceeds of the issuance of the Series 1999-VFN Note were distributed by the
Trust to the Transferor in connection with the Transferor's transfer of
receivables to the Trust, and were used to acquire receivables and to repay
$507.3 million of floating rate indebtedness financing those receivables. Any
remaining net proceeds will be deposited into the Excess Funding Account to the
extent required so that the Pool Balance is not less than the Required Pool
Balance or paid to World Omni in connection with the acquisition of additional
receivables, which will then be transferred to the Trust.
THE WHOLESALE PORTFOLIO
As of February 29, 2000, there were approximately 231 Dealers with active
credit lines in the Wholesale Portfolio, and with respect to the Accounts in the
Wholesale Portfolio:
o there were 76 active Southeast Toyota Distributors Dealer Accounts and
155 active non-Southeast Toyota Distributors Dealer Accounts;
o the average credit line per Account was $4.7 million; the average
principal balance of Receivables per Account was $3.9 million;
o the aggregate total principal balance of Receivables as a percentage of
the aggregate total credit line was approximately 82.3%;
o the weighted average spread over the prime rate charged to Dealers was
(0.42%); and
o the weighted average spread over LIBOR charged to Dealers was 2.00%.
There can be no assurance that the experience of the Accounts set forth in the
tables below under '--Loss Experience,' '--Aging Experience,' '--Geographic
Distribution' and '--Dealer Concentration' in the future will be similar to the
historical experience set forth below.
Because the Accounts from which Receivables are transferred to the Trust
(the 'POOL OF ACCOUNTS') are only a portion of the Wholesale Portfolio, actual
experience with respect to such Accounts may be different from that of the
Wholesale Portfolio. Because such Accounts are selected from the Wholesale
Portfolio in a manner not adverse to Noteholders and represent a sizeable
portion of the Wholesale Portfolio, the Transferor believes that the performance
of the Wholesale Portfolio reflected in the following tables is indicative of
the historical performance of the Accounts being transferred to the Trust.
Historical loss experience, aging experience and geographic distribution with
respect to the Accounts transferred to the Trust may be different from that of
the Wholesale Portfolio in the future.
LOSS EXPERIENCE
The following tables set forth World Omni's average principal receivables
balance and loss experience for each of the periods shown with respect to the
Wholesale Portfolio. Losses occur on Receivables when a Dealer has been
terminated under circumstances in which the Dealer has sold one or more Vehicles
to a retail customer and has failed to remit the appropriate proceeds of such
sale to World Omni. Losses also occur when used Vehicles financed at wholesale
and repossessed by World Omni from a terminated Dealer cannot be sold for the
balance due on the related Receivables. By contrast, losses generally have not
occurred when new Vehicles financed by World Omni are repossessed from
terminated Dealers, because such new Vehicles will generally be returned to the
manufacturers or distributors for a purchase price which generally covers the
balance due on the related Receivables. World Omni recognizes losses on
Receivables at the time it deems such Receivables to be uncollectible
S-11
<PAGE>
(which is generally at the time it has exhausted all non-legal remedies).
Because the Eligible Accounts may be only a portion of the entire portfolio,
actual loss experience with respect to the Eligible Accounts may be different.
As shown in the table below, World Omni experienced no losses on the
Wholesale Portfolio during the period from 1994 through 1997 and minimal losses
during 1998 and 1999. Management attributes the strong performance during the
periods shown below to World Omni's conservative underwriting policies, its
effective monitoring and loss mitigation efforts and the significant collateral
value that supports its floorplan receivables. In addition, the strong economy
and the improving environment for new vehicle dealerships contributed to the low
level of losses during this period. The losses incurred in 1998 and 1999 were
primarily related to floorplan loans to dealerships that only sold used
vehicles. As of September 30, 1999, loans to used-vehicle-only Dealer groups
represented approximately 6% of the Receivables.
The data presented in the following table is for illustration purposes
only. Loss experience may be influenced by a variety of economic, social,
geographic and other factors. Accordingly, we cannot assure you that the loss
experience for the Receivables in the future will be similar to the historical
experience set forth below with respect to the Wholesale Portfolio.
LOSS EXPERIENCE FOR THE WHOLESALE PORTFOLIO
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
----------------- -----------------------------------------------
1999 1998 1998 1997 1996 1995 1994
------- ------- ------- ------- ------- ------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
Average Principal Balance of Receivables
(1)..................................... $751.2 $711.6 $694.3 $623.9 $495.4 $391.9 $339.4
Net Losses (Recoveries) (2)............... 1.25 3.0 4.8 0.0 0.0 0.0 0.0
Net Losses/Average Principal Balance of
Receivables............................. 0.17% 0.42% 0.69% 0.00% 0.00% 0.00% 0.00%
</TABLE>
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(1) Average principal balance of receivables is the average of the monthly
average principal balances (based on beginning and ending month balances)
for the twelve months ending on the last day of the period, except for the
periods ended September 30, 1999 and September 30, 1998, each of which is
based on a nine month average.
(2) Net losses in any period are gross losses less recoveries for such period.
Recoveries include recoveries from Collateral Security in addition to the
Vehicle. Losses do not include losses with respect to certain Accounts
guaranteed by Southeast Toyota Distributors.
AGING EXPERIENCE
The following table provides the age distribution of Vehicle inventory for
all Dealers in the Wholesale Portfolio, as a percentage of total principal
outstanding at the date indicated. Because the Eligible Accounts may only be a
portion of the entire Wholesale Portfolio, actual age distribution with respect
to the Eligible Accounts may be different.
AGE DISTRIBUTION FOR THE WHOLESALE PORTFOLIO
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
DAYS 1999 1998
- ------------------------------------------------------------------------------------------ ------------- ------------
<S> <C> <C>
1-120..................................................................................... 88.23% 88.81%
121-180................................................................................... 5.70 6.20
Over 180.................................................................................. 6.07 4.99
</TABLE>
The average payoff rate in the Wholesale Portfolio is described under
'Maturity and Principal Payment Considerations.'
S-12
<PAGE>
GEOGRAPHIC DISTRIBUTION
The following table provides the geographic distribution of the vehicle
inventory for all Dealers in the Wholesale Portfolio. As of September 30, 1999,
approximately 20.7% of Receivables in the Wholesale Portfolio arose in the State
of Florida.
GEOGRAPHIC DISTRIBUTION OF ACCOUNTS IN THE WHOLESALE PORTFOLIO
AS OF SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
PERCENTAGE OF
RECEIVABLES RECEIVABLES NUMBER OF PERCENTAGE OF
OUTSTANDING OUTSTANDING VEHICLES TOTAL VEHICLES
------------ ------------- --------- --------------
<S> <C> <C> <C> <C>
Alabama..................................................... $ 20,758,764 2.96% 1,033 2.96%
Arkansas.................................................... 15,867,650 2.26 712 2.04
California.................................................. 10,398,907 1.48 795 2.28
Colorado.................................................... 1,673,883 0.24 116 0.33
Connecticut................................................. 13,162,121 1.88 610 1.75
Florida..................................................... 145,268,019 20.74 7,900 22.65
Georgia..................................................... 88,542,082 12.63 4,340 12.44
Illinois.................................................... 6,384,523 0.91 348 1.00
Indiana..................................................... 4,107,222 0.59 285 0.82
Massachusetts............................................... 36,120,406 5.16 1,792 5.14
Maryland.................................................... 3,838,805 0.55 127 0.36
Mississippi................................................. 4,319,795 0.62 216 0.62
North Carolina.............................................. 68,296,348 9.75 3,532 10.13
New Hampshire............................................... 24,393,466 3.48 1,204 3.45
New Jersey.................................................. 6,793,121 0.97 171 0.49
New York.................................................... 67,247,226 9.60 2,969 8.51
Ohio........................................................ 54,009,903 7.71 2,668 7.65
Oregon...................................................... 1,367,544 0.20 91 0.26
Pennsylvania................................................ 11,333,496 1.62 466 1.34
Rhode Island................................................ 4,733,981 0.68 219 0.63
South Carolina.............................................. 15,340,548 2.19 835 2.39
Tennessee................................................... 2,305,650 0.33 173 0.50
Texas....................................................... 27,270,418 3.89 860 2.47
Virginia.................................................... 64,183,564 9.16 3,242 9.30
Vermont..................................................... 1,211,669 0.17 65 0.19
Washington.................................................. 1,631,177 0.23 106 0.30
------------ ------------- --------- --------------
Total..................................................... $700,560,288 100.00% 34,875 100.00%
</TABLE>
S-13
<PAGE>
DEALER CONCENTRATION
The following table provides information with respect to the concentration
of Receivables relating to certain Dealers as of September 30, 1999. The
Accounts described below (identified by Dealer group code, which includes each
Dealer and its affiliates under common ownership and control) constitute all
Accounts with at least 2% or more of the outstanding Wholesale Portfolio as of
September 30, 1999. The amount set forth under the column entitled 'Receivables
Outstanding' has not been reduced by the amount of Floorplan Equity Program
deposits on hand as of September 30, 1999.
DEALER CONCENTRATION FOR THE WHOLESALE PORTFOLIO
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1999
----------------------------------
RECEIVABLES PERCENTAGE OF TOTAL
DEALER GROUP CODE OUTSTANDING RECEIVABLES
- ------------------------------------------------------------------------------------ ----------- -------------------
<S> <C> <C>
82.................................................................................. $54,249,343 7.74%
58.................................................................................. 52,828,487 7.54
15.................................................................................. 37,952,111 5.42
12.................................................................................. 31,749,907 4.53
71.................................................................................. 30,191,910 4.31
111................................................................................. 27,270,418 3.89
22.................................................................................. 24,433,917 3.49
01.................................................................................. 21,675,624 3.09
13.................................................................................. 19,201,415 2.74
11.................................................................................. 17,357,221 2.48
30.................................................................................. 17,090,523 2.44
109................................................................................. 15,867,650 2.26
45.................................................................................. 15,753,663 2.25
104................................................................................. 15,148,615 2.16
</TABLE>
MATURITY AND PRINCIPAL PAYMENT CONSIDERATIONS
Full payment of the Series 2000-1 Notes by the March 2003 Payment Date (the
'EXPECTED PRINCIPAL PAYMENT DATE') depends in large part on repayment by Dealers
of the Receivables. Timely payment on the Notes may not occur if Dealer payments
are insufficient. Because the Receivables generally are paid upon retail sale of
the underlying Vehicle, the timing of Receivable payments is uncertain. In
addition, there is no assurance that World Omni will generate additional
Receivables under the Accounts or that any particular pattern of Dealer payments
will occur. In addition, the shorter the Accumulation Period Length, the greater
the likelihood that payment of the Class A Notes or the Class B Notes in full by
the Expected Principal Payment Date may be dependent on the reallocation of
Principal Collections from other outstanding series of notes. If one or more
other series from which Principal Collections are expected to be reallocated to
pay the Series 2000-1 Notes enters into an early amortization period or
investment period after the start of the Accumulation Period for the Series
2000-1 Notes, Principal Collections allocated to such series generally will not
be reallocated to pay principal of the Series 2000-1 Notes. In such a case, the
final payment of principal of 2000-1 Notes may be later than the Expected
Principal Payment Date.
Principal for the Series 2000-1 Notes will be payable if an Early
Amortization Period that is not terminated has commenced. Because an Early
Amortization Event for the Series 2000-1 Notes may occur and initiate an Early
Amortization Period, the final distribution of principal on the Class A Notes
and the Class B Notes may be made prior to or after the scheduled termination of
the Revolving Period or prior to or after the Expected Principal Payment Date.
The amount of new Receivables generated in any month and monthly payment
rates on the Receivables may vary because of seasonal variations in Vehicle
sales and inventory levels, retail incentive programs provided by Vehicle
manufacturers and various economic factors affecting Vehicle
S-14
<PAGE>
sales generally. The following table sets forth the highest and lowest monthly
payment rates for the Wholesale Portfolio during any month in the periods shown
and the average of the monthly payment rates for all months during the periods
shown. In each case the data is calculated as the percentage equivalent of a
fraction, the numerator being the aggregate of all collections of principal
during the period and the denominator being the average aggregate principal
balance for such period. Monthly payment rates reflected in the table include
principal credit adjustments. There can be no assurance that the rate of
Principal Collections will be similar to the historical experience set forth
below. As the Eligible Accounts will be only a portion of the entire Wholesale
Portfolio, historical monthly payment rates for the Eligible Accounts may be
different than those shown below.
MONTHLY PAYMENT RATES FOR THE WHOLESALE PORTFOLIO
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
-------------- -----------------------------------------
1999 1998 1998 1997 1996 1995 1994
----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Highest Month........................................... 76.05% 77.29% 77.29% 71.21% 78.79% 61.60% 70.81%
Lowest Month............................................ 57.74 53.10 53.10 51.05 50.69 45.85 46.28
Average of the Months in the Period..................... 66.82 64.65 63.77 61.52 61.18 54.82 58.76
</TABLE>
SERIES PROVISIONS
GENERAL
The Series 2000-1 Notes will be issued pursuant to the Indenture and a
Series Supplement to the Indenture for the Series 2000-1 Notes (the 'SERIES
SUPPLEMENT'). The Transferor will provide a copy of the Indenture and the Series
Supplement (each without exhibits) upon request of a Noteholder. The following
summary does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all of the provisions of the Series 2000-1 Notes,
the Indenture and the Series Supplement. Where particular provisions or terms
used in the Indenture or the Series Supplement are referred to, the actual
provisions, including definitions of terms, are incorporated by reference as
part of this summary. You should see the prospectus for additional information
about the Series 2000-1 Notes and the Indenture.
The Series 2000-1 Notes will consist of two classes, the Class A Notes and
the Class B Notes. The Series 2000-1 Notes will be offered in minimum
denominations of $1,000 and integral multiples of $1,000.
INTEREST
Interest on the principal balance of the Class A Notes and the Class B
Notes will accrue at the Class A Note Rate and the Class B Note Rate,
respectively, and will be payable to the holders of the Class A Noteholders (the
'CLASS A NOTEHOLDERS') and to the holders of the Class B Notes (the 'CLASS B
NOTEHOLDERS' and, together with the Class A Noteholders, the 'SERIES 2000-1
NOTEHOLDERS') on each Payment Date, commencing May 15, 2000. Interest payable on
any Payment Date will accrue from and including the preceding Payment Date to
but excluding such Payment Date (or, in the case of the first Payment Date, from
and including the Series Issuance Date to but excluding the first Payment Date)
(each, an 'INTEREST PERIOD'). Interest will be calculated on a basis of the
actual number of days in each Interest Period divided by 360. Interest due for
any Payment Date but not paid on such Payment Date will be due on the next
Payment Date, together with interest on such amount at the applicable Note Rate
calculated on the basis of LIBOR, to the extent permitted by applicable law.
Interest payments on the Series 2000-1 Notes will generally be derived from
Noteholder Non-Principal Collections for a Collection Period, any withdrawals
from the Reserve Fund, Investment Proceeds and, under certain circumstances,
Additional Noteholder Collections to the extent of the Available Subordinated
Amount.
S-15
<PAGE>
The Class A Note Rate and the Class B Note Rate for each Interest Period
will be determined on the LIBOR Determination Date preceding such Interest
Period. The 'CLASS A NOTE RATE' will be equal to the lesser of (a) LIBOR plus
0.135% and (b) the Assets Receivables Rate for the related Payment Date. The
'CLASS B NOTE RATE' will be equal to the lesser of (a) LIBOR plus 0.45% and (b)
the Assets Receivables Rate for the related Payment Date. The Class A Note Rate
and the Class B Note Rate are each referred to as a 'NOTE RATE.'
If the Class A Note Rate or the Class B Note Rate for a Payment Date
calculated on the basis of LIBOR as described above is greater than the Assets
Receivable Rate, then the Note Rate for such Payment Date and such class will be
the Assets Receivables Rate.
If the Class A Note Rate or the Class B Note Rate for any Payment Date is
based on the Assets Receivables Rate, the excess of (a) the amount of interest
on the Class A Notes or the Class B Notes, as the case may be, that would have
accrued in respect of the related Interest Period had interest on that Class
been calculated based on LIBOR over (b) the amount of interest on the Class A
Notes or the Class B Notes, as the case may be, actually accrued in respect of
such Interest Period based on the Assets Receivables Rate (such excess, together
with the unpaid portion of any such excess from prior Payment Dates (and
interest accrued thereon calculated on the basis of LIBOR), is referred to as
the 'CLASS A CARRY-OVER AMOUNT' or the 'CLASS B CARRY-OVER AMOUNT,' as
applicable, and together as the 'CARRY-OVER AMOUNT'), will be paid on such
Payment Date to the extent funds are allocated and available therefor after
making all required distributions and deposits with respect to the Series 2000-1
Notes, including payments with respect to principal (including deposits to the
Excess Funding Account), Monthly Interest, the Noteholder Monthly Servicing Fee,
the Reserve Fund Deposit Amount, the Noteholder Defaulted Amount, the Monthly
Dilution Amount, the Noteholder Charge-Off Reversal Amount and Noteholder
Defaulted Amounts and Monthly Dilution Amounts from prior periods that had not
previously been paid as described below under '--Distributions from the
Collection Account; Reserve Fund.' In addition, any Class A Carry-over Amount
outstanding on the Class A Stated Maturity Date and any Class B Carry-over
Amount outstanding on the Class B Stated Maturity Date, or in each case on the
date on which the Invested Amount of the Series 2000-1 Notes has been reduced to
zero, after making the distributions described in the preceding sentence, will
be paid on such date, as applicable, from certain amounts on deposit in the
Reserve Fund (to the extent such amounts would otherwise be available to the
Certificateholders) and Additional Noteholder Collections on deposit in the
Collection Account (to the extent such amounts would otherwise be available to
the Certificateholder) as described under '--Distributions from the Collection
Account; Reserve Fund.' The ratings of the Series 2000-1 Notes do not address
the likelihood of payment of any Carry-over Amount.
PRINCIPAL
In general, no principal payments will be made to the Series 2000-1
Noteholders until the earlier of the Expected Principal Payment Date and the
first Special Payment Date after the commencement of an Early Amortization
Period. On each Deposit Date with respect to the Revolving Period, collections
of Principal Receivables will be (a) allocated to one or more other series of
notes which are in amortization, early amortization, investment or accumulation
periods to cover principal payments due to the Noteholders of any such series;
(b) deposited into the Excess Funding Account or (c) paid to the
Certificateholders. See '--Allocation Percentages,' '--Distributions from the
Collection Account; Reserve Fund' and '--Principal Collections.'
The 'REVOLVING PERIOD' shall mean the period beginning at the close of
business on the Series Cut-Off Date and terminating on the earlier of (a) the
close of business on the day immediately preceding the Accumulation Period
Commencement Date and (b) the close of business on the day immediately preceding
the day on which an Early Amortization Event occurs; provided, however, that the
Revolving Period may recommence in certain circumstances upon the termination of
an Early Amortization Period. See '--Early Amortization Events.'
S-16
<PAGE>
Unless an Early Amortization Period that is not terminated as described
herein shall have commenced, the Series 2000-1 Notes will have an Accumulation
Period (the 'ACCUMULATION PERIOD') of one to three months long as described in
the following paragraph.
On the November 2002 Payment Date and each Payment Date thereafter that
occurs prior to the Accumulation Period Commencement Date, the Servicer shall
calculate the Accumulation Period Length. The 'ACCUMULATION PERIOD LENGTH' will
be calculated on each such date as the lesser of (1) the number of full
Collection Periods between such Payment Date and the Expected Principal Payment
Date and (2) the product, rounded upwards to the nearest integer not greater
than three, of (a) one divided by the lowest Monthly Payment Rate on the
Receivables during the last 12 months and (b) a fraction, the numerator of which
is the sum of (1) the Invested Amount as of such Payment Date (after giving
effect to all changes therein on such date) and (2) the invested amounts of all
other series (excluding certain series) currently in their amortization or
accumulation periods or expected to be in their amortization or accumulation
periods by the Expected Principal Payment Date and the denominator of which is
the sum of the Invested Amount and the invested amounts as of such Payment Date
(after giving effect to all changes therein on such date) of all other
outstanding series (excluding certain series) which are scheduled to be
outstanding on the Expected Principal Payment Date.
The 'ACCUMULATION PERIOD COMMENCEMENT DATE' (which will be the first day of
a Collection Period) will occur when the number of full Collection Periods
remaining until the Expected Principal Payment Date first equals the
Accumulation Period Length as calculated above and shall not thereafter be
changed except as described in the following sentence. If at any time after the
November 2002 Payment Date, any other outstanding series (excluding certain
series) shall have entered into an investment period or an early amortization
period, the Accumulation Period Commencement Date shall be the earlier of (1)
the date that such outstanding series shall have entered into its investment
period or early amortization period and (2) the Accumulation Period Commencement
Date as previously determined.
The calculation described above will result in a (1) shorter Accumulation
Period in the event of increases in the Monthly Payment Rate and (2) longer
Accumulation Period in the event other series shall have entered into an
investment period or early amortization period.
'MONTHLY PAYMENT RATE' shall be a fraction, the numerator of which is the
amount of Principal Collections for the immediately preceding Collection Period
and the denominator of which is the daily average Pool Balance for such
Collection Period.
Unless and until an Early Amortization Period that is not terminated as
described herein shall have occurred and until the outstanding principal balance
of the Notes is paid in full, on each Deposit Date with respect to the
Accumulation Period, collections of Principal Receivables allocable to Series
2000-1 Noteholders will no longer be allocated to another series or paid to the
Certificateholders as described above but instead an amount thereof up to the
sum of the Class A Controlled Deposit Amount and the Class B Controlled Deposit
Amount for that Deposit Date will be deposited into the Principal Funding
Account; provided, however, in some circumstances amounts in excess of the Class
A Controlled Deposit Amount and the Class B Controlled Deposit Amount may be
deposited into the Principal Funding Account. On the business day immediately
following the last day of the Revolving Period, the Series 2000-1 Excess Funding
Amount as of the last day of the Revolving Period will be deposited in the
Principal Funding Account. The funds deposited in the Principal Funding Account
will be used to pay the outstanding principal balance of the Notes on the
Expected Principal Payment Date or each Special Payment Date. If on the Expected
Principal Payment Date the Principal Funding Account Balance is less than the
outstanding principal balance of the Notes, an Early Amortization Period will
commence. On the Expected Principal Payment Date and each Special Payment Date
the Class A Noteholders will receive distributions with respect to principal of
amounts allocable to the Series 2000-1 Notes, but not in excess of the Class A
Invested Amount, until the outstanding principal balance of the Class A Notes
has been paid in full or the Class A Stated Maturity Date has occurred. Even if
the Principal Funding Account Balance on the Expected Principal Payment Date is
insufficient to pay the
S-17
<PAGE>
outstanding principal balance of the Class A Notes in full, such amount will be
distributed to the Class A Noteholders at such time.
On the Expected Principal Payment Date and each Special Payment Date after
the Class A Invested Amount has been reduced to zero, the Class B Noteholders
will receive distributions with respect to principal of amounts allocable to the
Series 2000-1 Notes, but not in excess of the Class B Invested Amount, until the
outstanding principal balance of the Class B Notes has been paid in full or the
Class B Stated Maturity Date has occurred. Even if the Principal Funding Account
Balance remaining after payment of the Class A Notes on the Expected Principal
Payment Date is insufficient to pay the outstanding principal balance of the
Class B Notes in full, such balance will be distributed to the Class B
Noteholders at such time.
It is expected that the outstanding principal balance of the Class A Notes
and the Class B Notes will be paid on the Expected Principal Payment Date.
However, principal of the Class A Notes or the Class B Notes may be paid earlier
or, depending on the actual payment rate on the Receivables, later, as described
under 'Risk Factors--Dependence on Other Series' Allocated Principal Collections
May Result in Delayed Payment of Series 2000-1 Note Principal' herein and 'Risk
Factors--The Failure of Dealers to Make Payments on the Receivables Could Delay
or Reduce Payments on the Notes' in the prospectus.
ALLOCATION PERCENTAGES
The Servicer will allocate amounts initially allocated to Series 2000-1 as
described under 'The Notes -- Allocation Percentages--Allocations among Series'
in the prospectus between the Series 2000-1 Noteholders and the
Certificateholders for each Deposit Date or Collection Period, as applicable, as
follows:
(1) Series Allocable Non-Principal Collections will be allocated to Series
2000-1 Noteholders based on the Floating Allocation Percentage;
(2) during the Revolving Period, Series Allocable Principal Collections
will be treated as Excess Principal Collections based on the Floating
Allocation Percentage;
(3) during the Accumulation Period and any Early Amortization Period,
Series Allocable Principal Collections will be allocated to Series
2000-1 Noteholders based on the Principal Allocation Percentage;
(4) Series Allocable Miscellaneous Payments will be treated as Noteholder
Principal Collections; provided, however, that Series Allocable
Miscellaneous Payments consisting of the amount of Adjustment Payments
that (1) were paid after their due date and (2) have been included in
the Monthly Dilution Amount for any prior Collection Period will be
treated as Noteholder Non-Principal Collections; and
(5) Series Allocable Defaulted Amount will be allocated to Series 2000-1
Noteholders based on the Weighted Average Floating Allocation
Percentage.
Amounts not allocated to the Series 2000-1 Noteholders as described above
will be allocated to the Certificateholders, but portions thereof may be
available to pay the principal of, interest on or other amounts with respect to
the Series 2000-1 Notes to the extent described in this prospectus supplement.
'SERIES ADJUSTED INVESTED AMOUNT' with respect to the Series 2000-1 means,
for any date, an amount equal to the sum of (a) the Invested Amount as of the
most recent Reset Date (or, during an Early Amortization Period, the Invested
Amount as of the close of business on the date immediately preceding the date on
which such Early Amortization Period began) and (b) the Available Subordinated
Amount as of the most recent Reset Date.
S-18
<PAGE>
ALLOCATION OF COLLECTIONS; LIMITED SUBORDINATION OF CERTIFICATES
On each Deposit Date, the Servicer will allocate and distribute to the
Certificateholders an amount equal to (a) the Excess Certificateholder
Percentage of Series Allocable Principal Collections for such date; provided
that if the Pool Balance (determined after giving effect to any Principal
Receivables transferred to the Trust on such Deposit Date) is less than the
Required Pool Balance (after giving effect to the allocations, distributions,
withdrawals and deposits to be made on that Deposit Date), such funds shall be
deposited into the Excess Funding Account to the extent necessary so that the
Pool Balance at least equals the Required Pool Balance and (b) the Excess
Certificateholder Percentage of Series Allocable Non-Principal Collections for
such date. In addition, on each Deposit Date, the Additional Noteholder
Non-Principal Collections for such Deposit Date shall be retained in the
Collection Account; provided that during the Revolving Period or the
Accumulation Period the amount so retained shall not exceed the amount by which
the Reserve Fund Required Amount exceeds the amount in the Reserve Fund. During
an Early Amortization Period, Additional Noteholder Principal Collections shall
be retained in the Collection Account and, to the extent not otherwise required
to be allocated, on the related Payment Date shall be treated as Noteholder
Principal Collections.
Any remaining Additional Noteholder Collections for a Deposit Date not
required to be retained in the Collection Account pursuant to the preceding
paragraph or distributed in the amount of the Required Draw Amount will be
distributed to the Certificateholders if the Pool Balance (determined after
giving effect to the Principal Receivables transferred to the Trust on such
date) exceeds the Required Pool Balance (after giving effect to the allocations,
distributions, withdrawals and deposits to be made on the Deposit Date).
DISTRIBUTIONS FROM THE COLLECTION ACCOUNT; RESERVE FUND
Non-Principal Collections. On each Payment Date, commencing with the
initial Payment Date, the Servicer shall instruct the Indenture Trustee to apply
Noteholder Non-Principal Collections and Investment Proceeds, if any, in respect
of the related Collection Period to make the following distributions in the
following priority to the extent funds are available therefor:
(1) first, an amount equal to Class A Monthly Interest for such Payment
Date, plus the amount of any Class A Monthly Interest previously due
but not distributed on a prior Payment Date (plus, but only to the
extent permitted under applicable law, interest at the Class A Note
Rate on Class A Monthly Interest previously due but not distributed),
shall be distributed to the Class A Noteholders;
(2) second, an amount equal to Class B Monthly Interest for such Payment
Date, plus the amount of any Class B Monthly Interest previously due
but not distributed on a prior Payment Date (plus, but only to the
extent permitted under applicable law, interest at the Class B Note
Rate on Class B Monthly Interest previously due but not distributed),
shall be distributed to the Class B Noteholders;
(3) third, an amount equal to the Noteholder Monthly Servicing Fee for
such Payment Date shall be distributed to the Servicer (unless such
amount has been netted against deposits to the Collection Account as
described in the prospectus under 'The Notes--Allocation of
Collections; Deposits in Collection Account' or waived by the
Servicer);
(4) fourth, an amount equal to the Reserve Fund Deposit Amount, if any,
for such Payment Date shall be deposited in the Reserve Fund;
(5) fifth, an amount equal to the Noteholder Defaulted Amount and the
Monthly Dilution Amount, if any, for such Payment Date shall be
treated as a portion of Noteholder Principal Collections for such day;
S-19
<PAGE>
(6) sixth, an amount equal to the aggregate amount of Noteholder
Charge-Offs which have not been previously reversed shall be treated
as a portion of Noteholder Principal Collections for such day and
shall increase the Class A Invested Amount or Class B Invested Amount
as described under '--Noteholder Charge-Offs' (the 'NOTEHOLDER
CHARGE-OFF REVERSAL AMOUNT');
(7) seventh, an amount equal to the amount of reductions of the Available
Subordinated Amount on account of Noteholder Defaulted Amounts and
Monthly Dilution Amounts that have not previously been reinstated
shall be treated as a portion of Additional Noteholder Principal
Collections for such day and shall increase the Available Subordinated
Amount;
(8) eighth, an amount equal to any outstanding Class A Carry-over Amount
shall be distributed to the Class A Noteholders;
(9) ninth, an amount equal to any outstanding Class B Carry-over Amount
shall be distributed to the Class B Noteholders;
(10) tenth, an amount equal to the aggregate outstanding amounts of
Noteholder Monthly Servicing Fee which have been previously waived
shall be distributed to the Servicer; and
(11) eleventh, the balance shall be distributed to the Certificateholders.
If such Noteholder Non-Principal Collections and Investment Proceeds are
not sufficient to make the entire distributions required by clauses (1), (2),
(3) and (5) and, in the case of the Class A Stated Maturity Date or the date on
which the Invested Amount of the Series 2000-1 Notes has been reduced to zero
only, clause (8) and, in the case of the Class B Stated Maturity Date or the
date on which the Invested Amount of the Series 2000-1 Notes has been reduced to
zero only, clause (9), the Indenture Trustee shall withdraw funds from the
Reserve Fund (in the case of clauses (8) and (9) only to the extent such amounts
would otherwise be distributed to the Certificateholders) and apply such funds
to complete the distributions pursuant to such clauses; provided, however, that
during any Early Amortization Period funds shall not be withdrawn from the
Reserve Fund to make distributions required by clause (5) to the extent that,
after giving effect to such withdrawal, the amount on deposit in the Reserve
Fund shall be less than $1,000,000.
If such Noteholder Non-Principal Collections, Investment Proceeds and funds
withdrawn from the Reserve Fund are not sufficient to make the entire
distributions required by clauses (1), (2), (3) and (5) (such shortfall being
the 'DEFICIENCY AMOUNT'), the Indenture Trustee shall apply the amount of
Additional Noteholder Collections for the related Collection Period on deposit
in the Collection Account on such Payment Date, but only up to the Available
Subordinated Amount, to make the distributions required by clauses (1), (2), (3)
and (5) above that have not been made (the amount of Additional Noteholder
Collections so applied being referred to as the 'REQUIRED DRAW AMOUNT'), and, if
such Payment Date is either the date on which the Invested Amount of the Series
2000-1 Notes has been reduced to zero or the Class A Stated Maturity Date or the
Class B Stated Maturity Date, the distributions required by clause (8) on the
Class A Notes or clause (9) on the Class B Notes, as applicable, that have not
been made. The Available Subordinated Amount will be reduced by the amount of
Additional Noteholder Collections so applied. If the amount necessary to
complete the distributions referred to in this paragraph exceeds such Additional
Noteholder Collections, the Available Subordinated Amount will be reduced by the
amount of such excess, but not by more than the sum of the Noteholder Defaulted
Amount and the Monthly Dilution Amount.
Reserve Fund. The 'RESERVE FUND' will be an Eligible Deposit Account
established and maintained in the name of the Indenture Trustee for the benefit
of the Series 2000-1 Noteholders. On the Series Issuance Date, $3,500,000 (0.50%
of the principal balance of the Series 2000-1 Notes) will be deposited into the
Reserve Fund. The 'RESERVE FUND REQUIRED AMOUNT' for any Payment Date with
respect to an Early Amortization Period is an amount equal to the Excess Reserve
Fund Required
S-20
<PAGE>
Amount, and for any other Payment Date is an amount equal to 0.50%, or on and
after the September 2002 Payment Date, 0.60%, of the outstanding principal
balance of the Series 2000-1 Notes on such Payment Date (after giving effect to
any change therein on such Payment Date). The 'RESERVE FUND DEPOSIT AMOUNT' is
the amount, if any, by which the Reserve Fund Required Amount exceeds the amount
on deposit in the Reserve Fund. Funds in the Reserve Fund will be invested in
Eligible Investments that will mature on or prior to the next Payment Date. On
each Determination Date, the Servicer will deposit any investment earnings (net
of losses and investment expenses) with respect to the Reserve Fund in the
Collection Account and treat such funds as Investment Proceeds and apply such
amount as set forth under '--Distributions from the Collection Account; Reserve
Fund.' After the earlier of the payment in full of the outstanding principal
balance of the Series 2000-1 Notes and the Class B Stated Maturity Date, any
funds remaining on deposit in the Reserve Fund will be paid to the
Certificateholders.
If, after giving effect to the allocations, distributions and deposits in
the Reserve Fund described above under '--Non-Principal Collections,' the amount
in the Reserve Fund is less than the Reserve Fund Required Amount for such
Payment Date, the Indenture Trustee shall deposit any remaining Additional
Noteholder Collections for the related Collection Period into the Reserve Fund
until the amount in the Reserve Fund is equal to such Reserve Fund Required
Amount.
The 'EXCESS RESERVE FUND REQUIRED AMOUNT' for any such Payment Date means
an amount equal to the greater of
(a) 5.0% of the initial principal balance of the Series 2000-1 Notes
and
(b) the excess of
(1) the Available Subordinated Amount on the most recent Reset Date
(after giving effect to the allocations, distributions,
withdrawals and deposits to be made on such Payment Date)
over
(2) the excess of (A) the Series Allocation Percentage of the Pool
Balance on the most recent Reset Date over (B) the Invested
Amount on such Payment Date (after giving effect to changes
therein on such Payment Date);
provided that the Excess Reserve Fund Required Amount shall not exceed such
Available Subordinated Amount.
AVAILABLE SUBORDINATED AMOUNT
The 'AVAILABLE SUBORDINATED AMOUNT' means, on the Series Issuance Date, the
Required Subordinated Amount and, on any subsequent day of determination, an
amount equal to the lesser of (x) the Required Subordinated Amount for that day
and (y) the Available Subordinated Amount for the most recent Reset Date, minus
(A) the Required Draw Amount with respect to any Payment Date occurring after
that Reset Date, plus (B) the amount of Noteholder Non-Principal Collections and
Investment Proceeds treated as a portion of Additional Noteholder Principal
Collections in respect of Noteholder Defaulted Amounts and Monthly Dilution
Amounts that had previously reduced the Available Subordinated Amount since the
most recent Reset Date, minus (C) the Incremental Subordinated Amount for the
most recent Reset Date, plus (D) the Incremental Subordinated Amount for such
date of determination plus (E) the Subordinated Percentage of the decrease in
the Series 2000-1 Excess Funding Amount since the most recent Reset Date, minus
(F) the Subordinated Percentage of the increase in the Series 2000-1 Excess
Funding Amount since the most recent Reset Date.
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The Certificateholders may, in their sole discretion, at any time increase
the Available Subordinated Amount for so long as the cumulative amount of such
increases does not exceed the lesser of (1) $12,352,970 or (2) 1.765% of the
Invested Amount. The Certificateholders are not under any obligation to increase
the Available Subordinated Amount at any time, except as described herein. If
the Available Subordinated Amount were reduced to less than the Required
Subordinated Amount, an Early Amortization Event would occur. The
Certificateholders could elect to increase the Available Subordinated Amount at
the time such Early Amortization Event would otherwise occur, thus preventing or
delaying the occurrence of the Early Amortization Event.
PRINCIPAL COLLECTIONS
On each Deposit Date with respect to a Revolving Period, all Series
Allocable Principal Collections allocated to the Series 2000-1 Noteholders shall
be treated as Excess Principal Collections and made available to other series,
deposited into the Excess Funding Account or paid to the Certificateholders.
On each Deposit Date, with respect to the Accumulation Period or any Early
Amortization Period, all Available Noteholder Principal Collections will be
allocated as follows:
(1) first, to the Principal Funding Account in an amount up to the Class A
Controlled Deposit Amount for such Deposit Date; provided, however, in
some circumstances amounts in excess of the Class A Controlled Deposit
Amount may be deposited into the Principal Funding Account;
(2) second, to the Principal Funding Account in an amount up to the Class
B Controlled Deposit Amount for such Deposit Date; provided, however,
in some circumstances amounts in excess of the Class B Controlled
Deposit Amount may be deposited into the Principal Funding Account and
(3) third, the balance, if any, will be allocated to Excess Principal
Collections and made available to other series.
In the event that the Class B principal balance is greater than zero on the
Class B Stated Maturity Date, any funds remaining in the Reserve Fund (after the
application of funds in the Reserve Fund as described above under
'--Distributions from the Collection Account; Reserve Fund--Non-Principal
Collections') will be treated as a portion of Available Noteholder Principal
Collections for the Payment Date occurring on the Class B Stated Maturity Date.
EXCESS PRINCIPAL COLLECTIONS
The Servicer will allocate Excess Principal Collections to cover any
deposits of principal for the benefit of noteholders of any series entitled
thereto which are either scheduled or permitted and which have not been covered
out of Principal Collections and certain other amounts allocated to such series
('PRINCIPAL SHORTFALLS'). See 'Maturity and Principal Payment Considerations.'
Excess Principal Collections will not be used to cover reductions in the
invested amount of any series. If Principal Shortfalls exceed Excess Principal
Collections for any Collection Period, Excess Principal Collections will be
allocated pro rata among the applicable series based on the relative amounts of
Principal Shortfalls.
DISTRIBUTIONS
Payments to Series 2000-1 Noteholders will be made from the Collection
Account, the Reserve Fund, and the Principal Funding Account.
(a) The Servicer shall instruct the Indenture Trustee to apply funds on
deposit in the Collection Account and the Reserve Fund and shall
instruct the Indenture Trustee to distribute on each Payment Date the
amounts on deposit in the Collection Account and the Reserve Fund as
are
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payable to the Series 2000-1 Noteholders with respect to accrued
interest to the Series 2000-1 Noteholders; provided, however, that no
Class B Monthly Interest shall be paid to the Class B Noteholders
until all Class A Monthly Interest has been paid the Class A
Noteholders and no Class B Carry-over Amount shall be paid to the
Class B Noteholders until all Class A Carry-over Amounts have been
paid to the Class A Noteholders.
(b) The Servicer shall instruct the Indenture Trustee in writing to apply
the funds on deposit in the Principal Funding Account and the
Collection Account and shall instruct the Indenture Trustee in writing
to make, without duplication, the following distributions at the
following times:
(1) on the Expected Principal Payment Date and each Special Payment
Date, the amounts on deposit in the Principal Funding Account and
the Collection Account as are payable to Class A Noteholders with
respect to principal shall be distributed to the Class A
Noteholders up to a maximum amount on any such date equal to the
outstanding principal amount of the Class A Notes; and
(2) if all of the amounts due and owing to the Class A Noteholders
pursuant to clause (1) above have been paid in full, on the
Expected Principal Payment Date and each Special Payment Date,
the amounts on deposit in the Principal Funding Account and the
Collection Account as are payable to Class B Noteholders with
respect to principal shall be distributed to the Class B
Noteholders up to a maximum amount on any such date equal to the
outstanding principal amount of the Class B Notes.
(c) On each Payment Date on which there is an unpaid Class A Carry-over
Amount, the Servicer shall instruct the Indenture Trustee in writing
to distribute to the Class A Noteholders such Class A Carry-over
Amount to the extent funds are available therefor after making all
required distributions and deposits with respect to the Series 2000-1
Notes as provided above under '--Distributions from the Collection
Account; Reserve Fund--Non-Principal Collections.'
(d) On each Payment Date on which there is an unpaid Class B Carry-over
Amount, the Servicer shall instruct the Indenture Trustee in writing
to distribute to the Class B Noteholders such Class B Carry-over
Amount to the extent funds are available therefor after making all
required distributions and deposits with respect to the Series 2000-1
Notes as provided above under '--Distributions from the Collection
Account; Reserve Fund--Non-Principal Collections.'
(e) If on the Class A Stated Maturity Date or the date on which the
Invested Amount of the Series 2000-1 Notes has been reduced to zero
there is any Class A Carry-over Amount or on the Class B Stated
Maturity Date or the date on which the Invested Amount of the Series
2000-1 Notes has been reduced to zero there is any Class B Carry-over
Amount (in each case after giving effect to any distributions on such
date pursuant to (a) through (d) above), the Indenture Trustee shall
distribute to the Class A Noteholders or the Class B Noteholders, as
applicable, (1) certain amounts on deposit in the Reserve Fund (to the
extent such amounts would otherwise be distributed to the
Certificateholders) and (2) Additional Noteholder Collections on
deposit in the Collection Account (to the extent such amounts would
otherwise be distributed to the Certificateholders) which are
available to satisfy such Class A Carry-over Amount or Class B
Carry-over Amount on the Class A Stated Maturity Date or Class B
Stated Maturity Date, as applicable, as described above under
'--Distributions from the Collection Account; Reserve
Fund--Non-Principal Collections.'
All distributions shall be made to the Series 2000-1 Noteholders of record
at the close of business on the day immediately preceding the related Payment
Date (each such day a 'RECORD DATE'), except that the final distribution with
respect to any Series 2000-1 Note will be made only upon surrender of such
Series 2000-1 Note.
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NOTEHOLDER CHARGE-OFFS
If the Available Subordinated Amount is reduced to zero and on any Payment
Date the Deficiency Amount is greater than zero, the Invested Amount of the
Series 2000-1 Notes will be reduced by the Deficiency Amount, but not by more
than the sum of the Noteholder Defaulted Amount and the Monthly Dilution Amount
for such Payment Date (a 'NOTEHOLDER CHARGE-OFF'). Any such reduction shall be
applied first to reduce the Class B Invested Amount (a 'CLASS B NOTEHOLDER
CHARGE-OFF') but not below zero, and then to reduce the Class A Invested Amount
(a 'CLASS A NOTEHOLDER CHARGE-OFF') but not below zero. Any reduction in the
Invested Amount of the Series 2000-1 Notes of either class will have the effect
of slowing or reducing the return of principal to the holders of Series 2000-1
Notes of that class. If the Invested Amount of either class of the Series 2000-1
Notes has been reduced by any Noteholder Charge-Offs, it will thereafter be
increased on any Payment Date (but not by an amount in excess of the aggregate
unreversed Noteholder Charge-Offs for that class) by the Noteholder Charge-Off
Reversal Amount as described above under '--Distributions from the Collection
Account; Reserve Fund--Non-Principal Collections.' Any such increase shall be
applied first to the Class A Invested Amount until all previously unreversed
Class A Noteholder Charge-Offs have been reversed and then to the Class B
Invested Amount until all previously unreversed Class B Noteholder Charge-Offs
have been reversed.
EARLY AMORTIZATION EVENTS
The Early Amortization Events with respect to the Series 2000-1 Notes will
include each of the events so defined in the prospectus, plus the following:
(1) failure on the part of the Transferor, the Servicer or World Omni, as
applicable, (a) to make any payment or deposit required by the Trust
Sale and Servicing Agreement or the Receivables Purchase Agreement,
including but not limited to any Transfer Deposit Amount or Adjustment
Payment, on or before the date occurring ten business days after the
date such payment or deposit is required to be made therein; or (b) to
deliver a Payment Date Statement on the date required under the Trust
Sale and Servicing Agreement (or within the applicable grace period
which will not exceed five business days); (c) to comply with its
covenant not to create any lien on a Receivable; or (d) to observe or
perform in any material respect any other covenants or agreements set
forth in the Trust Sale and Servicing Agreement or the Receivables
Purchase Agreement, which failure continues unremedied for a period of
45 days after written notice of such failure;
(2) any representation or warranty made by World Omni in the Receivables
Purchase Agreement or by the Transferor in the Trust Sale and
Servicing Agreement or any information required to be given by the
Transferor to the Indenture Trustee to identify the Accounts proves to
have been incorrect in any material respect when made and continues to
be incorrect in any material respect for a period of 60 days after
written notice and as a result the interests of the Noteholders are
materially and adversely affected; provided, however, that an Early
Amortization Event shall not be deemed to occur thereunder if the
Transferor has repurchased the related Receivables or all such
Receivables, if applicable, during such period in accordance with the
provisions of the Trust Sale and Servicing Agreement;
(3) on any Determination Date, the Available Subordinated Amount for the
next Payment Date will be reduced to an amount less than the Required
Subordinated Amount on such Determination Date after giving effect to
the distributions to be made on the next Payment Date;
(4) any Servicing Default with respect to the Series 2000-1 Notes occurs;
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(5) on any Determination Date, the average of the Monthly Payment Rates
for the three preceding Collection Periods, is less than 30%;
(6) the occurrence of an Event of Default with respect to the Series
2000-1 Notes and the declaration that the Series 2000-1 Notes are due
and payable;
(7) on the first day of the Accumulation Period, the amount on deposit in
the Reserve Fund does not equal or exceed the Reserve Fund Required
Amount;
(8) on the Expected Principal Payment Date, the Series 2000-1 Notes are
not paid in full; and
(9) any Carry-over Amount is outstanding on six consecutive Payment Dates.
In the case of any event described in clause 1, 2 or 4 above, an Early
Amortization Event with respect to Series 2000-1 will be deemed to have occurred
only if, after the applicable grace period described in such clauses, if any,
either the Indenture Trustee or Series 2000-1 Noteholders holding Series 2000-1
Notes evidencing more than 50% of the aggregate unpaid principal amount of the
Controlling Class of Series 2000-1 Notes by written notice to the Trust, the
Transferor and the Servicer (and the Indenture Trustee, if given by Noteholders)
declare that an Early Amortization Event has occurred as of the date of such
notice. In the case of any Early Amortization Event described in the prospectus
or any event described in clause 3, 5, 6, 7, 8 and 9 above, an Early
Amortization Event with respect to Series 2000-1 will be deemed to have occurred
without any notice or other action on the part of the Indenture Trustee or the
Series 2000-1 Noteholders immediately upon the occurrence of such event.
Under certain limited circumstances, an Early Amortization Period which
commences prior to the scheduled end of the Revolving Period may terminate and
the Revolving Period recommence. If an Early Amortization Event (other than an
Early Amortization Event described in the prospectus) occurs, the Revolving
Period will recommence following (1) satisfaction of the Rating Agency Condition
and (2) receipt of the consent of Series 2000-1 Noteholders evidencing more than
50% of the aggregate unpaid principal amount of the Controlling Class of the
Series 2000-1 Notes to such recommencement, provided that no other Early
Amortization Event that has not been cured or waived as described herein has
occurred and the scheduled termination of the Revolving Period has not occurred.
STATED MATURITY DATE
The last payment of principal and interest on the Class A Notes will be due
and payable no later than the March 2005 Payment Date (the 'CLASS A STATED
MATURITY DATE'). In the event that the aggregate outstanding principal amount of
the Class A Notes is greater than zero on the Class A Stated Maturity Date
(after giving effect to deposits and distributions otherwise to be made on such
Class A Stated Maturity Date), upon receipt of an opinion of counsel to the
effect that its action will not result in the trust being characterized as an
association (or a publicly traded partnership) taxable as a corporation, the
Indenture Trustee will sell or cause to be sold an interest in the Receivables
or certain Receivables, as specified in the Indenture, in an amount such that
the proceeds of such sale equal the aggregate outstanding principal balance of
and accrued and unpaid interest on the Class A Notes on such Class A Stated
Maturity Date (after giving effect to such deposits and distributions);
provided, however, in no event shall such amount of Receivables to be sold
exceed the lesser of (a) the sum of the Invested Amount and the Available
Subordinated Amount on the preceding Determination Date (after giving effect to
the allocations, distributions, withdrawals and deposits to be made on the
Payment Date following such Determination Date) and (b) the Series Allocation
Percentage of Receivables on such Class A Stated Maturity Date. The amount of
Receivables sold shall first reduce the Class A Invested Amount, but not to
below zero, then any remaining amounts shall reduce the Available Subordinated
Amount, but not to below zero, and then any amounts still remaining shall reduce
the Class B Invested Amount. The net proceeds of such sale and any collections
on the Receivables will be paid pro rata to Class A Noteholders on the Class A
Stated Maturity Date
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as the final payment of the Class A Notes, and the Class A Noteholders shall not
receive any additional payments with respect to the Class A Notes.
The last payment of principal and interest on the Class B Notes will be due
and payable no later than the March 2005 Payment Date (the 'CLASS B STATED
MATURITY DATE'). In the event that the aggregate outstanding principal balance
of the Class B Notes is greater than zero on the Class B Stated Maturity Date
(after giving effect to deposits and distributions otherwise to be made on such
Class B Stated Maturity Date), upon receipt of an opinion of counsel to the
effect that its action will not result in the trust being characterized as an
association (or a publicly traded partnership) taxable as a corporation, the
Indenture Trustee will sell or cause to be sold an interest in the Receivables
or certain Receivables in an amount such that the net proceeds of such sale
equal the aggregate outstanding principal balance of and accrued and unpaid
interest on the Class B Notes on such Class B Stated Maturity Date (after giving
effect to such deposits and distributions); provided, however, in no event shall
such amount of Receivables to be sold (including those sold pursuant to the
preceding paragraph) exceed the lesser of (a) the sum of the Invested Amount and
the Available Subordinated Amount on the preceding Determination Date (after
giving effect to the allocations, distributions, withdrawals and deposits to be
made on the Payment Date following such Determination Date) and (b) the Series
Allocation Percentage of Receivables on such Class B Stated Maturity Date. The
amount of Receivables sold shall first reduce the Class B Invested Amount, but
not to below zero, then any remaining amounts shall reduce the Available
Subordinated Amount. The net proceeds of such sale and any collections on the
Receivables will be paid pro rata to Class B Noteholders on the Class B Stated
Maturity Date as the final payment of the Class B Notes, and the Class B
Noteholders shall not receive any additional payments with respect to the Class
B Notes.
PAYMENT EVENT OF DEFAULT
In the event that an Event of Default relating to the failure to make any
required payment of interest or principal on the Series 2000-1 Notes has
occurred and the Series 2000-1 Notes have been declared due and payable, on the
direction of the holders of a majority of the aggregate outstanding principal
amount of the Controlling Class of the Series 2000-1 Notes, upon receipt of an
opinion of counsel to the effect that its action will not result in the trust
being characterized as an association (or a publicly traded partnership) taxable
as a corporation, the Indenture Trustee will sell or cause to be sold an
interest in the Receivables or certain Receivables in an amount such that the
net proceeds of such sale equal the aggregate outstanding principal balance of
and accrued and unpaid interest on the Series 2000-1 Notes then outstanding on
such date; provided, however, in no event shall such amount exceed the lesser of
(a) the sum of the Invested Amount and the Available Subordinated Amount on the
preceding Determination Date (after giving effect to the allocations,
distributions, withdrawals and deposits to be made prior to such date); and (b)
the Series Allocation Percentage of Receivables on such date. The net proceeds
of such sale will be paid pro rata to the Class A Noteholders in an amount up to
the aggregate outstanding principal balance of and accrued and unpaid interest
on the Class A Notes, and then, to the extent of funds remaining, to the Class B
Noteholders, and the Series 2000-1 Noteholders shall not receive any additional
payments with respect to the Series 2000-1 Notes.
OPTIONAL REPURCHASE
The Series 2000-1 Notes will be subject to optional repurchase by World
Omni on any Payment Date after the aggregate outstanding principal balance of
the Series 2000-1 Notes is reduced to an amount less than or equal to
$70,000,000 (10% of the initial outstanding principal amount of the Series
2000-1 Notes). The purchase price will equal the sum of (1) the aggregate
outstanding principal balance of the Series 2000-1 Notes to be repurchased on
the Determination Date preceding the Payment Date on which the purchase is
scheduled to be made, (2) accrued and unpaid interest on the Series 2000-1 Notes
to be repurchased at the applicable Note Rate (together with interest on overdue
interest) and (3) any outstanding Carry-Over Amount with respect to the Series
2000-1 Notes to be repurchased.
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PRINCIPAL FUNDING ACCOUNT
The Servicer will establish and maintain in the name of the Indenture
Trustee, on behalf of the Trust, an Eligible Deposit Account for the benefit of
the Series 2000-1 Noteholders (the 'PRINCIPAL FUNDING ACCOUNT'). On each Deposit
Date with respect to the Accumulation Period or an Early Amortization Period,
the Class A Controlled Deposit Amount and the Class B Controlled Deposit Amount
will be deposited in the Principal Funding Account, in each case as provided
above under '--Principal Collections'; provided, that, if an Early Amortization
Period that is not terminated as described herein commences during the
Accumulation Period, the Principal Funding Account Balance shall be paid to the
Series 2000-1 Noteholders on the first Special Payment Date and on each
subsequent Special Payment Date.
All amounts on deposit in the Principal Funding Account on any Payment Date
prior to the Expected Principal Payment Date (after giving effect to
distributions to be made on such Payment Date) (the 'PRINCIPAL FUNDING ACCOUNT
BALANCE') will be invested from the date of their deposit by the Indenture
Trustee at the direction of the Servicer in Eligible Investments that will
mature on or prior to the next Payment Date. The Servicer may select an
appropriate agent as representative of the Servicer for the purpose of
designating such investments. On each Payment Date, the interest and other
investment income on the Principal Funding Account Balance will be deposited in
the Collection Account, treated as Investment Proceeds and applied as provided
above under '--Distributions from the Collection Account; Reserve Fund.'
EXCESS FUNDING ACCOUNT
On the business day immediately following the last day of the Revolving
Period, an amount equal to the Series 2000-1 Excess Funding Amount as of the
last day of the Revolving Period will be withdrawn from the Excess Funding
Account and deposited in the Principal Funding Account. The amount of that
deposit shall be deemed to have been first for the benefit of the Class A
Noteholders up to the Class A Invested Amount and then for the benefit of the
Class B Noteholders. The Series 2000-1 Noteholders will not be entitled to any
funds in the Excess Funding Account after such deposit has been made.
'SERIES 2000-1 EXCESS FUNDING AMOUNT' means, for any day, the product of
(a) the amount on deposit in the Excess Funding Account on such day, and (b) a
fraction, the numerator of which is the sum of the Invested Amount (calculated
without giving effect to amounts in the Excess Funding Account) and the
Available Subordinated Amount (calculated without giving effect to the
Incremental Subordinated Amount or to amounts in the Excess Funding Account) and
the denominator of which is the sum of the numerators for each series of Notes
then being allocated a portion of the funds on deposit in the Excess Funding
Account; provided, however, that the Series 2000-1 Excess Funding Amount shall
be zero, and the Series 2000-1 Notes shall not be allocated a portion of the
funds on deposit in the Excess Funding Account, on any date after funds have
been withdrawn from the Excess Funding Account and deposited into the Principal
Funding Account.
REPORTS
On each Payment Date (including each Payment Date that corresponds to the
Expected Principal Payment Date or any Special Payment Date), commencing with
the initial Payment Date, the Indenture Trustee will forward to each Series
2000-1 Noteholder of record a statement (the 'PAYMENT DATE STATEMENT') prepared
by the Servicer setting forth the following information (which, in the case of
(c),
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(d) and (e) below, will be stated on the basis of an original principal amount
of $1,000 per Series 2000-1 Note if the Accumulation Period or an Early
Amortization Period has commenced):
(a) the aggregate amount of Collections, the aggregate amount of
Non-Principal Collections and the aggregate amount of Principal
Collections processed during the immediately preceding Collection
Period and the Pool Balance, the Required Pool Balance and the Excess
Funding Account Balance as of the close of business on the last day of
the preceding Collection Period;
(b) the Series Allocation Percentage, the Floating Allocation Percentage
and the Principal Allocation Percentage for the preceding Collection
Period;
(c) the total amount, if any, distributed on the Class A Notes and the
Class B Notes;
(d) the amount of such distribution allocable to principal on each class
of Series 2000-1 Notes;
(e) the amount of such distribution allocable to interest on each class of
Series 2000-1 Notes;
(f) the Noteholder Defaulted Amount for such Payment Date;
(g) the Required Draw Amount, if any, for such Collection Period;
(h) the amount of the Class A Noteholder Charge-Offs and Class B
Noteholder Charge-Offs and the amounts of the reversals thereof for
such Collection Period;
(i) the amount of the Monthly Servicing Fee and the Noteholder Monthly
Servicing Fee for such Collection Period;
(j) the Class A Controlled Deposit Amount and Class B Controlled Deposit
Amount, if any, as of the first day of the Collection Period related
to such Payment Date;
(k) the Invested Amount as of the last day of such Collection Period;
(l) the outstanding principal balance of each Class of Series 2000-1 Notes
for such Payment Date (after giving effect to all distributions which
will occur on such Payment Date);
(m) the Available Subordinated Amount as of the last day of the preceding
Collection Period
(n) the Reserve Fund balance for such date; and
(o) the Principal Funding Account Balance with respect to such date.
DEFINITIONS
'ADDITIONAL NOTEHOLDER COLLECTIONS' for any date means the sum of (a) the
Additional Noteholder Non-Principal Collections for such date and (b) the
Additional Noteholder Principal Collections for such date.
'ADDITIONAL NOTEHOLDER NON-PRINCIPAL COLLECTIONS' for any Deposit Date
means an amount equal to the product of (a) the excess of (1) the
Certificateholder Percentage for such date over (2) the Excess Certificateholder
Percentage for such date and (b) Series Allocable Non-Principal Collections for
such date; provided, however, that the Additional Noteholder Non-Principal
Collections will be zero for any date on which the Available Subordinated Amount
is zero.
'ADDITIONAL NOTEHOLDER PRINCIPAL COLLECTIONS' for any Deposit Date means an
amount equal to the product of (a) the excess of (1) the Certificateholder
Percentage for such date over (2) the Excess Certificateholder Percentage for
such date and (b) Series Allocable Principal Collections for such date;
provided, however, that the Additional Noteholder Principal Collections will be
zero for any date on which the Available Subordinated Amount is zero.
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'ASSETS RECEIVABLES RATE' means for any Interest Period an amount equal to
the product of:
(a) the quotient obtained by dividing (1) 360 by (2) the actual number of
days elapsed in such period
and
(b) a fraction,
(1) the numerator of which is the sum of (A) Noteholder Non-Principal
Collections for the Collection Period immediately preceding the
last day of such period (which for this purpose only is based on
interest amounts billed to the Dealers which are due during such
Collection Period) less the Noteholder Monthly Servicing Fee with
respect to such immediately preceding Collection Period, to the
extent not waived by the Servicer and (B) the Investment Proceeds
to be applied on the Payment Date related to such period
and
(2) the denominator of which is the sum of (A) the product of the
Floating Allocation Percentage, the Series Allocation Percentage
and the weighted average Pool Balance (after giving effect to any
charge-offs) for such immediately preceding Collection Period,
(B) the weighted average of the Series 2000-1 Excess Funding
Amount for such immediately preceding Collection Period, and (C)
the weighted average of the principal balance on deposit in the
Principal Funding Account for such Collection Period.
'AVAILABLE NOTEHOLDER PRINCIPAL COLLECTIONS' for any Deposit Date falling
in the Accumulation Period or an Early Amortization Period means the sum of (a)
Noteholder Principal Collections for such Deposit Date and (b) Excess Principal
Collections allocated to the Series 2000-1 Notes to cover any Principal
Shortfall for such Deposit Date.
'CALCULATION AGENT' means the Indenture Trustee.
'CERTIFICATEHOLDER PERCENTAGE' means 100% minus (a) the Floating Allocation
Percentage, when used with respect to Non-Principal Collections and Defaulted
Amount at all times and Principal Collections during any Revolving Period, and
(b) the Principal Allocation Percentage, when used with respect to Principal
Collections during the Accumulation Period and any Early Amortization Period.
'CLASS A CONTROLLED ACCUMULATION AMOUNT' means an amount equal to (1) the
aggregate outstanding principal balance of the Class A Notes as of the Payment
Date immediately preceding the first day of the Accumulation Period (after
giving effect to any changes therein on such date) less the portion of the
Series 2000-1 Excess Funding Amount deposited into the Principal Funding Account
in respect of the Class A Notes divided by (2) the Accumulation Period Length.
'CLASS A CONTROLLED DEPOSIT AMOUNT' for a Deposit Date means (1) during the
Accumulation Period, the excess, if any, of (a) the product of the Class A
Controlled Accumulation Amount and the number of Payment Dates from and
including the first Payment Date with respect to the Accumulation Period through
and including the Payment Date related to the Collection Period during which the
Deposit Date occurs (but not in excess of the Accumulation Period Length,
expressed in number of months) over (b) the amount on deposit in the Principal
Funding Account to make payments of principal on the Class A Notes less the
portion of the Series 2000-1 Excess Funding Amount deposited into the Principal
Funding Account in respect of the Class A Notes before giving effect to any
withdrawals from or deposits to such account on such Deposit Date, but not more
than the Class A Invested Amount, provided, however, if Available Noteholder
Principal Collections for that Deposit Date would otherwise be deposited into
the Excess Funding Account so that the Pool Balance would not be less than the
Required Pool Balance, the Class A Controlled Deposit Amount for that Deposit
Date shall be increased by an amount equal to the product of (A) the Available
Noteholder Principal Collections that would have been so deposited into the
Excess Funding Account and (B) a fraction, the numerator of which is the Class A
Invested Amount for such Deposit Date and the denominator of which is the
Invested
S-29
<PAGE>
Amount for such Deposit Date, but not by more than the Class A Invested Amount,
and (2) during an Early Amortization Period, the Class A Invested Amount.
'CLASS A INITIAL INVESTED AMOUNT' means $646,000,000.
'CLASS A INVESTED AMOUNT' means for any date an amount equal to the Class A
Initial Invested Amount minus the amount, without duplication, of principal
payments made to Class A Noteholders or deposited to the Principal Funding
Account in respect of the Class A Notes prior to such date since the Series
Issuance Date, minus the excess, if any, of the aggregate amount of Class A
Noteholder Charge-Offs for all Payment Dates preceding such date, over the
aggregate amount of any reversals of Class A Noteholder Charge-Offs for all
Payment Dates preceding such date, minus the Series 2000-1 Excess Funding Amount
for such day but limited to an amount that would reduce the Class A Invested
Amount to zero.
'CLASS A MONTHLY INTEREST' for any Payment Date means the amount of
interest accrued on the outstanding principal balance of the Class A Notes as
described above for such Payment Date.
'CLASS B CONTROLLED ACCUMULATION AMOUNT' means an amount equal to (1) the
aggregate outstanding principal balance of the Class B Notes as of the Payment
Date immediately preceding the first day of the Accumulation Period (after
giving effect to any changes therein on such date) less the portion of the
Series 2000-1 Excess Funding Amount deposited into the Principal Funding Account
in respect of the Class B Notes divided by (2) the Accumulation Period Length.
'CLASS B CONTROLLED DEPOSIT AMOUNT' for a Deposit Date means (1) during the
Accumulation Period, the excess, if any, of (a) the product of the Class B
Controlled Accumulation Amount and the number of Payment Dates from and
including the first Payment Date with respect to the Accumulation Period through
and including the Payment Date related to the Collection Period during which the
Deposit Date occurs (but not in excess of the Accumulation Period Length,
expressed in number of months) over (b) the amount on deposit in the Principal
Funding Account to make principal payments on the Class B Notes less the portion
of the Series 2000-1 Excess Funding Amount deposited into the Principal Funding
Account in respect of the Class B Notes before giving effect to any withdrawals
from or deposits to such account on such Deposit Date, but not more than the
Class B Invested Amount, provided, however, if Available Noteholder Principal
Collections for that Deposit Date would otherwise be deposited into the Excess
Funding Account so that the Pool Balance would not be less than the Required
Pool Balance, the Class B Controlled Deposit Amount for that Deposit Date shall
be increased by an amount equal to the product of (A) the Available Noteholder
Principal Collections that would have been so deposited into the Excess Funding
Account and (B) a fraction, the numerator of which is the Class B Invested
Amount for such Deposit Date and the denominator of which is the Invested Amount
for such Deposit Date but not by more than the Class B Invested Amount, and (2)
during an Early Amortization Period, the Class B Invested Amount.
'CLASS B INITIAL INVESTED AMOUNT' means $54,000,000.
'CLASS B INVESTED AMOUNT' means for any date an amount equal to the Class B
Initial Invested Amount, minus the amount, without duplication, of principal
payments made to Class B Noteholders or deposited to the Principal Funding
Account in respect of the Class B Notes prior to such date since the Series
Issuance Date minus the excess, if any, of aggregate amount of Class B
Noteholder Charge-Offs for all Payment Dates preceding such date, over the
aggregate amount of any reversals of Class B Noteholder Charge-Offs for all
Payment Dates preceding such date minus the amount, if any, of the Series 2000-1
Excess Funding Amount remaining after allocation to the Class A Invested Amount
but limited to an amount that would reduce the Class B Invested Amount to zero.
'CLASS B MONTHLY INTEREST' for any Payment Date means the amount of
interest accrued on the outstanding principal balance of the Class B Notes as
described above for such Payment Date.
S-30
<PAGE>
'EXCESS CERTIFICATEHOLDER PERCENTAGE' for any day means a percentage (which
percentage shall never be less than 0% nor more than 100%) equal to (a) 100%
minus, when used with respect to Non-Principal Collections and Defaulted Amount
at all times and Principal Collections during any Revolving Period, the sum of
(1) the Floating Allocation Percentage with respect to such day and (2) the
percentage equivalent of a fraction, the numerator of which is the Available
Subordinated Amount as of the most recent Reset Date and the denominator of
which is the product of (A) the Pool Balance as of the most recent Reset Date
and (B) the Series Allocation Percentage for such day in respect of which the
Excess Certificateholder Percentage is being calculated or (b) 100% minus, when
used with respect to Principal Collections during the Accumulation Period and
any Early Amortization Period, the sum of (1) the Principal Allocation
Percentage with respect to such day and (2) the percentage equivalent of a
fraction, the numerator of which is the Available Subordinated Amount as of the
most recent Reset Date and the denominator of which is the product of (A) the
Pool Balance as of the most recent Reset Date and (B) the Series Allocation
Percentage for the day in respect of which the Excess Certificateholder
Percentage is being calculated.
'FLOATING ALLOCATION PERCENTAGE' means, with respect to any day, the
percentage equivalent (which shall never exceed 100%) of a fraction, the
numerator of which is the Invested Amount as of the most recent Reset Date and
the denominator of which is the product of (x) the Pool Balance as of such Reset
Date and (y) the Series Allocation Percentage for the day in respect of which
the Floating Allocation Percentage is being calculated; provided, however, that,
prior to the first Reset Date, the Floating Allocation Percentage means the
percentage equivalent of a fraction, the numerator of which is the Initial
Invested Amount and the denominator of which is the product of the Pool Balance
on the Series Cut-Off Date and the Series Allocation Percentage with respect to
the Series Cut-Off Date.
'INCREMENTAL SUBORDINATED AMOUNT' means, for any day, the product of (a) a
fraction, the numerator of which is the sum of the Invested Amount (calculated
without giving effect to amounts in the Excess Funding Account) and the
Available Subordinated Amount (calculated without giving effect to the
Incremental Subordinated Amount or to amounts in the Excess Funding Account) and
the denominator of which is the greater of (i) the Pool Balance and (ii) the sum
of the amounts calculated as the numerator above for all series and (b) the
Trust Incremental Subordinated Amount, in each case, on the most recent Reset
Date.
'INITIAL INVESTED AMOUNT' means the sum of the Class A Initial Invested
Amount and the Class B Initial Invested Amount.
'INVESTED AMOUNT' means for any date an amount equal to the sum of the
Class A Invested Amount and the Class B Invested Amount.
'INVESTMENT PROCEEDS' for any Payment Date means an amount equal to the sum
of investment earnings deposited into the Collection Account on the related
Determination Date with respect to:
(a) funds held in the Reserve Fund;
(b) the Series Allocation Percentage of funds held in the Collection
Account;
(c) funds held in the Principal Funding Account; and
(d) funds held in the Excess Funding Account with respect to the Series
2000-1 Excess Funding Amount, if any.
'LIBOR' with respect to any Interest Period will be established by the
Calculation Agent and will equal the offered rate for United States dollar
deposits for one month that appears on Telerate Page 3750 as of 11:00 A.M.,
London time, on the second LIBOR Business Day prior to such Interest Period (a
'LIBOR DETERMINATION DATE'). 'TELERATE PAGE 3750' means the display page so
designated on the Dow Jones Telerate Service (or such other page as may replace
that page on that service, or such other service as may be nominated as the
information vendor, for the purpose of displaying London interbank offered rates
of major banks). If such rate appears on Telerate Page 3750, LIBOR will be such
rate.
S-31
<PAGE>
'LIBOR BUSINESS DAY' means a day on which banking institutions in New York, New
York and London, England are not required or authorized by law to be closed. If
on any LIBOR Determination Date the offered rate does not appear on Telerate
Page 3750, the Calculation Agent will request each of the reference banks (which
shall be major banks that are engaged in transactions in the London interbank
market selected by the Calculation Agent) to provide the Calculation Agent with
its offered quotation for United States dollar deposits for one month to prime
banks in the London interbank market as of 11:00 A.M., London time, on such
date. If at least two reference banks provide the Calculation Agent with such
offered quotations, LIBOR on such date will be the arithmetic mean, rounded
upwards, if necessary, to the nearest 1/100,000 of 1% (.0000001), with five
one-millionths of a percentage point rounded upward, of all such quotations. If
on such date fewer than two of the reference banks provide the Calculation Agent
with such offered quotations, LIBOR on such date will be the arithmetic mean,
rounded upwards, if necessary, to the nearest 1/100,000 of 1% (.0000001), with
five one-millionths of a percentage point rounded upward, of the offered per
annum rates that one or more leading banks in New York City selected by the
Calculation Agent are quoting as of 11:00 A.M., New York City time, on such date
to leading European banks for United States dollar deposits for one month;
provided, however, that if such banks are not quoting as described above, LIBOR
for such date will be LIBOR applicable to the Interest Period immediately
preceding such Interest Period.
'MONTHLY DILUTION AMOUNT' means an amount equal to the weighted average
Series Allocation Percentage for the related Collection Period of any Adjustment
Payment required to be deposited into the Collection Account pursuant to the
Trust Sale and Servicing Agreement with respect to the related Collection Period
that has not been so deposited as of the related Determination Date.
'MONTHLY INTEREST' means Class A Monthly Interest plus Class B Monthly
Interest.
'NOTEHOLDER DEFAULTED AMOUNT' means, with respect to any Payment Date, an
amount equal to the excess, if any, of (a) the product of the Series Allocable
Defaulted Amount for the related Collection Period and the Weighted Average
Floating Allocation Percentage for the related Collection Period over (b) the
Incremental Subordinated Amount for that Payment Date.
'NOTEHOLDER MONTHLY SERVICING FEE' means an amount equal to one-twelfth of
the product of (a) the Servicing Fee Rate and (b) the Invested Amount as of the
last day of the Collection Period second preceding such Payment Date.
'NOTEHOLDER NON-PRINCIPAL COLLECTIONS' for any Deposit Date means the
portion of Series Allocable Non-Principal Collections for such Deposit Date
allocated to the Series 2000-1 Noteholders as described under '--Allocation
Percentages' plus any Series Allocable Miscellaneous Payments that are treated
as Noteholder Non-Principal Collections.
'NOTEHOLDER PRINCIPAL COLLECTIONS' means, with respect to any Deposit Date
falling in the Accumulation Period or an Early Amortization Period, the sum of
(a) the Principal Allocation Percentage then in effect of Series Allocable
Principal Collections plus any Series Allocable Miscellaneous Payments that are
treated as Noteholder Principal Collections and (b) for any Deposit Date that is
also a Payment Date, the amounts, if any, of Noteholder Non-Principal
Collections, Investment Proceeds, funds in the Reserve Fund and Additional
Noteholder Collections allocated to cover the Noteholder Defaulted Amount or
Monthly Dilution Amount or to reverse Noteholder Charge-offs.
'PRINCIPAL ALLOCATION PERCENTAGE' means, with respect to any day, the
percentage equivalent (which shall never exceed 100%) of a fraction, the
numerator of which is the Invested Amount as of the last day of the Revolving
Period and the denominator of which is the product of (x) the Pool Balance as of
such last day and (y) the Series Allocation Percentage for the day in respect of
which the Principal Allocation Percentage is being calculated.
'REQUIRED PARTICIPATION PERCENTAGE' shall mean, with respect to Series
2000-1 Notes, 100%.
S-32
<PAGE>
'REQUIRED SUBORDINATED AMOUNT' means, as of any date of determination, the
sum of (1) the product of the Subordinated Percentage and the Invested Amount as
of the opening of business on such date and (2) the Incremental Subordinated
Amount. The Required Subordinated Amount will initially be $60,869,565 plus the
Incremental Subordinated Amount as of the Closing Date.
'SUBORDINATION FACTOR' shall mean 8%.
'SUBORDINATED PERCENTAGE' means the percentage equivalent of a fraction,
the numerator of which is the Subordination Factor and the denominator of which
will be the excess of 100% over the Subordination Factor.
'WEIGHTED AVERAGE FLOATING ALLOCATION PERCENTAGE' means, for any Collection
Period, a percentage equal to the result of (a) the sum of the Floating
Allocation Percentages for each day during that Collection Period, divided by
(b) the number of days in that Collection Period.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Kirkland & Ellis, special tax counsel to the Transferor,
for U.S. federal income tax purposes, the Series 2000-1 Notes will constitute
indebtedness. Each Noteholder, by the acceptance of a Series 2000-1 Note, will
agree to treat the Series 2000-1 Notes as indebtedness for federal, state and
local income and franchise tax purposes.
All the certificates issued as of the Series Issuance Date shall have been
issued to the Transferor. Accordingly, the Trust will be characterized as a
division of the Transferor for U.S. federal income tax purposes. See 'Certain
Federal Income Tax Consequences--Tax Characterization of the Trust' in the
prospectus. If the Transferor sells any of the certificates or if the Trust
issues additional certificates, this characterization may change. See 'Certain
Federal Income Tax Consequences--Tax Characterization of the Trust' in the
prospectus.
As discussed in the Prospectus, a series of Notes will be treated as having
been issued with original issue discount ('OID') if the interest payable with
respect to such series of Notes is not treated as qualified stated interest
('QSI'). If a series of Notes does not pay QSI, all of the taxable income
thereon would be includible in income as OID, as described in the Prospectus.
The Transferor believes that all of the interest with respect to each
series of Notes will be treated as QSI. However, there is a minimal risk that
the interest would not be treated as QSI because the interest rate on a series
of Notes is capped at the Asset Receivables Rate, and thus to the extent that
the interest rate on a series of Notes rose to or above the Asset Receivables
Rate, some of the interest with respect to such series of Notes would
effectively be deferred. The Transferor believes that the likelihood that this
could occur is extremely remote, and thus it does not believe that any of the
interest with respect to a series of Notes would be treated as not being QSI.
For a discussion of the consequences to a Noteholder if interest on a
series of Notes was not QSI, please see the prospectus.
See 'Certain Federal Income Tax Consequences' and 'State and Local Tax
Consequences' in the prospectus.
S-33
<PAGE>
FLORIDA INCOME TAXATION
A rule under the Florida Income Tax Code (the 'LOAN RULE') provides that a
'financial organization' earning or receiving interest from loans secured by
tangible property located in Florida will be deemed to be conducting business or
earning or receiving income in Florida, and will be subject to Florida corporate
income tax regardless of where the interest was received. A financial
organization is defined to include any bank, trust company, savings bank,
industrial bank, land bank, safe deposit company, private banker, savings and
loan association, credit union, cooperative bank, small loan company, sales
finance company or investment company. If the Loan Rule were to apply to the
Series 2000-1 Notes, then a financial organization investing in the Series
2000-1 Notes would be subject to Florida corporate income tax on a portion of
its income at a maximum rate of 5.5%, and would be required to file an income
tax return in Florida, even if it has no other Florida contacts. The Transferor
believes the Loan Rule does not apply to an investment in the Series 2000-1
Notes or the receipt of interest on the Series 2000-1 Notes by a financial
organization with no other Florida contacts. We urge you to consult your own tax
advisor as to the applicability of the Loan Rule to an investment in the Series
2000-1 Notes and your ability to offset any such Florida tax against any other
state tax liabilities.
ERISA CONSIDERATION
Although there is little guidance on the subject, the Transferor believes that,
at the time of their issuance, the Series 2000-1 Notes would be treated a
indebtedness without substantial equity features for purposes of the Plan Asset
Regulation. The debt treatment of the Series 2000-1 Notes could change,
subsequent to their issuance, if the Trust incurred losses. However, without
regard to whether Series 2000-1 Notes are treated as an equity interest for such
purposes, the acquisition or holding of Series 2000-1 Notes by or on behalf of a
Benefit Plan could be considered to give rise to a prohibited transaction if the
Transferor, the Trust or any of their respective affiliates is or becomes a
party in interest or a disqualified person with respect to such Benefit Plan.
Certain exemptions from the prohibited transaction rules could be applicable to
the purchase and holding of Series 2000-1 Notes by a Benefit Plan depending on
the type and circumstances of the plan fiduciary making the decision of acquire
such Series 2000-1 Notes. Included among these exemptions are: PTCE 96-23,
regarding transactions affected by in-house asset managers; PTCE 95-60,
regarding investments by insurance company general accounts; PTCE 90-1,
regarding investments by insurance company pooled separate accounts; PTCE 91-38,
regarding investments by bank collective investment funds; and PTCE 84-14,
regarding transactions effected by 'qualified professional asset managers.' For
additional information regarding treatment of the Series 2000-1 Notes under
ERISA, See 'ERISA Considerations' in the prospectus.
S-34
<PAGE>
UNDERWRITING
Under the Underwriting Agreement dated March 22, 2000 with respect to the
Class A Notes (THE 'CLASS A UNDERWRITING AGREEMENT'), the Underwriters named
below (THE 'CLASS A UNDERWRITERS'), for whom Merrill Lynch, Pierce, Fenner &
Smith Incorporated ('MERRILL LYNCH') is acting as representative (THE
'REPRESENTATIVE'), have severally (but not jointly) agreed to purchase from the
Transferor Class A Notes as follows:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITER OF CLASS A NOTES
- ------------------------------------------------------------------------------------------------------ ------------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated............................................................................... $355,300,000
Banc of America Securities LLC........................................................................ 96,900,000
Chase Securities Inc. ................................................................................ 96,900,000
First Union Capital Markets........................................................................... 96,900,000
------------------
Total............................................................................................. $646,000,000
</TABLE>
The Class A Underwriting Agreement provides that, subject to certain
conditions precedent, the Class A Underwriters will be obligated to purchase all
the Class A Notes if any are purchased. The Class A Underwriting Agreement
provides that if a Class A Underwriter defaults, in certain circumstances the
non-defaulting Underwriters' purchase commitments may be increased or the Class
A Underwriting Agreement may be terminated.
The Representative has advised the Transferor that:
(i) The Class A Underwriters proposed to offer the Class A Notes to the
public initially at the public offering prices set forth on the cover
page of this prospectus supplement;
(ii) The Class A Underwriters proposed to offer Class A Notes to certain
dealers at the public offering prices set forth on the cover page of
this prospectus supplement, less a concession of 0.15% of the initial
principal amount of each Class A Note; and
(iii) The Class A Underwriters and the dealers described in clause (ii) may
allow a discount of 0.1125% of the initial principal amount of each
Class A Note on sales to certain other dealers.
Under the Underwriting Agreement dated March 29, 2000 with respect to the
Class B Notes (the 'CLASS B UNDERWRITING AGREEMENT'), Merrill Lynch (the 'CLASS
B UNDERWRITER' and, with the Class A Underwriters, the 'UNDERWRITERS') has
agreed to purchase from the Transferor all of the Class B Notes.
The Class B Underwriting Agreement provides that, subject to certain
conditions precedent, the Class B Underwriter will be obligated to purchase all
the Class B Notes if any are purchased. The Class B Underwriting Agreement
provides that if the Class B Underwriter defaults, the Class B Underwriting
Agreement may be terminated.
Merrill Lynch has advised the Transferor that:
(i) Merrill Lynch proposes to offer the Class B Notes to the public
initially at the public offering prices set forth on the cover page of
this prospectus supplement;
(ii) Merrill Lynch proposes to offer Class B Notes to certain dealers at
the public offering prices set forth on the cover page of this
prospectus supplement, less a concession of 0.18% of the initial
principal amount of each Class B Note; and
S-35
<PAGE>
(iii) The Class B Underwriter and the dealers described in clause (ii) may
allow a discount of 0.135% of the initial principal amount of each
Class B Note on sales to certain other dealers.
After the initial public offering, the Underwriters may change (or may have
changed in the case of the Class A Notes) the public offering price and
concessions and discounts to dealers.
The Transferor and World Omni have agreed to jointly and severally
indemnify the Underwriters against certain liabilities, including civil
liabilities under the Securities Act, as amended, or contribute to any payments
the Underwriters are required to make in respect of those liabilities. In
addition, the Transferor and World Omni have agreed to reimburse the
Underwriters for certain expenses incurred in the offering of the Series 2000-1
Notes.
We expect that we will deliver the Series 2000-1 Notes in return for
payment on or about the date specified in the last paragraph of the cover page
of this prospectus supplement, which is the sixth business day after the date of
this supplement prospectus. Applicable regulations under the Exchange Act
generally require that secondary market transactions settle in three business
days, unless the parties to the trade expressly agree otherwise. Accordingly,
because the Series 2000-1 Notes initially will settle six business days after
the date of this prospectus supplement, purchasers who wish to trade them on the
date of this prospectus supplement must specify an alternate settlement cycle at
the time of the trade to prevent a failed settlement. If you wish to trade
Series 2000-1 Notes on the date of this prospectus supplement, please consult
your own advisor.
The Underwriters may engage in over-allotment, stabilizing transactions,
syndicate covering transactions and penalty bids in accordance with Regulation M
under the Exchange Act. Over-allotment involves syndicate sales in excess of the
offering size, which creates a syndicate short position. Stabilizing
transactions permit bids to purchase the underlying security so long as the
stabilizing bids do not exceed a specified maximum. Syndicate covering
transactions involve purchases of the Series 2000-1 Notes in the open market
after the distribution has been completed in order to cover syndicate short
positions. Penalty bids permit the Underwriters to reclaim a selling concession
from a syndicate member when the Series 2000-1 Notes originally sold by such
syndicate member are purchased in a syndicate covering transactions and penalty
bids may cause the prices of the Series 2000-1 Notes to be higher than they
would otherwise be in the absence of such transactions. If the Underwriters
begin these transactions, they may discontinue them at any time.
Neither we nor the Underwriters makes any representation or prediction as
to the direction or magnitude of any effect that these transactions may have on
the prices of the Series 2000-1 Notes. In addition, neither we nor any
Underwriter makes any representation that the Underwriters will engage in these
transactions or that if they begin these transactions, they will not discontinue
them without notice.
LEGAL MATTERS
In addition to the legal opinions described in the prospectus, certain
legal matters relating to the Series 2000-1 Notes will be passed upon for the
Underwriters by Orrick, Herrington & Sutcliffe LLP.
S-36
<PAGE>
INDEX OF TERMS
The following is a list of the defined terms used in this prospectus
supplement and the pages on which the definitions of such terms may be found in
this prospectus supplement.
Accumulation Period....................... S-17
Accumulation Period Commencement Date..... S-17
Accumulation Period Length................ S-17
Additional Noteholder Collections......... S-28
Additional Noteholder Non-Principal
Collections............................. S-28
Additional Noteholder Principal
Collections............................. S-28
Administrator............................. S-5
Assets Receivables Rate................... S-9, S-29
Available Noteholder Principal
Collections............................. S-29
Available Subordinated Amount............. S-21
Calculation Agent......................... S-29
Carry-over Amount......................... S-16
Certificateholder Percentage.............. S-29
Class A Carry-over Amount................. S-16
Class A Controlled Accumulation Amount.... S-29
Class A Controlled Deposit Amount......... S-29
Class A Initial Invested Amount........... S-30
Class A Invested Amount................... S-30
Class A Monthly Interest.................. S-30
Class A Note Rate......................... S-16
Class A Noteholder Charge-Off............. S-24
Class A Noteholders....................... S-15
Class A Stated Maturity Date.............. S-25
Class A Underwriters...................... S-35
Class A Underwriting Agreement............ S-35
Class B Carry-over Amount................. S-16
Class B Controlled Accumulation Amount.... S-30
Class B Controlled Deposit Amount......... S-30
Class B Initial Invested Amount........... S-30
Class B Invested Amount................... S-30
Class B Monthly Interest.................. S-30
Class B Note Rate......................... S-16
Class B Noteholder Charge-Off............. S-24
Class B Noteholders....................... S-15
Class B Stated Maturity Date.............. S-26
Class B Underwriter....................... S-35
Class B Underwriting Agreement............ S-35
Deficiency Amount......................... S-20
Excess Certificateholder Percentage....... S-31
Excess Reserve Fund Required Amount....... S-21
Expected Principal Payment Date........... S-14
Floating Allocation Percentage............ S-31
Incremental Subordinated Amount........... S-31
Indenture Trustee......................... S-5
Initial Invested Amount................... S-31
Interest Period........................... S-15
Invested Amount........................... S-31
Investment Proceeds....................... S-31
Issuer.................................... S-5
LIBOR..................................... S-31
LIBOR Business Day........................ S-32
LIBOR Determination Date.................. S-31
Loan Rule................................. S-34
Merrill Lynch............................. S-35
Monthly Dilution Amount................... S-32
Monthly Interest.......................... S-32
Monthly Payment Rate...................... S-17
Note Rate................................. S-16
Noteholder Charge-Off..................... S-24
Noteholder Charge-Off Reversal Amount..... S-20
Noteholder Defaulted Amount............... S-32
Noteholder Monthly Servicing Fee.......... S-32
Noteholder Non-Principal Collections...... S-32
Noteholder Principal Collections.......... S-32
OID....................................... S-33
Owner Trustee............................. S-5
Payment Date Statement.................... S-27
Pool of Accounts.......................... S-11
Principal Allocation Percentage........... S-32
Principal Funding Account................. S-27
Principal Funding Account Balance......... S-27
S-37
<PAGE>
Principal Shortfalls...................... S-22
QSI....................................... S-33
Record Date............................... S-23
Representative............................ S-35
Required Draw Amount...................... S-20
Required Participation Percentage......... S-32
Required Subordinated Amount.............. S-33
Reserve Fund.............................. S-20
Reserve Fund Deposit Amount............... S-21
Reserve Fund Required Amount.............. S-20
Revolving Period.......................... S-16
Series Adjusted Invested Amount........... S-18
Series 2000-1 Excess Funding Amount....... S-27
Series 2000-1 Noteholders................. S-15
Series Cut-Off Date....................... S-5
Series Issuance Date...................... S-5
Series Supplement......................... S-15
Servicer.................................. S-5
Subordinated Percentage................... S-33
Subordination Factor...................... S-33
Telerate Page 3750........................ S-31
Transferor................................ S-5
Trust..................................... S-5
Underwriters.............................. S-35
Weighted Average Floating Allocation
Percentage.............................. S-33
S-38
<PAGE>
ANNEX I
OTHER SERIES OF NOTES
This Annex I sets forth the principal characteristics of each series of
Notes outstanding as of the date of this prospectus supplement. As of that date,
the following series of Notes were outstanding: Series 1999-VFN Asset Backed
Notes (the 'Series 1999-VFN Notes'). For more information regarding the Series
1999-VFN Notes, a prospective investor should contact World Omni Financial Corp.
at (954) 429-2200.
<TABLE>
<S> <C>
SERIES 1999-VFN NOTES
Maximum Principal Amount..................... $600,000,000
Scheduled Interest Payment Date.............. Monthly on the 15th day of each month or, if that day is not a business
day, the next business day
Current Principal Amount..................... $600,000,000
Required Subordinated Amount................. Approximately 8.1% of its Invested Amount plus any Incremental
Subordinated Amount
Required Participation Percentage............ 100%
Revolving Period............................. November 22, 1999 to the earlier of November 30, 2000 (which may be
extended) and the occurrence of an Early Amortization Event
Expected Final Payment Date.................. 7th Payment Date after the end of its Revolving Period
Stated Final Maturity Date................... 37th Payment Date after the end of its Revolving Period
</TABLE>
The Transferor expects that on or shortly after the Series Issuance Date for the
Series 2000-1 Notes, the maximum principal amount will be reduced to $150
million, the outstanding principal amount will be reduced to $50 million, the
expected final payment date will be the 4th Payment Date after the end of its
Revolving Period and the stated final maturity date will be the 28th Payment
Date after the end of its Revolving Period.
A-1
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PROSPECTUS
WORLD OMNI MASTER OWNER TRUST
ISSUER
WODFI LLC
TRANSFEROR
WORLD OMNI FINANCIAL CORP.
SERVICER
AUTOMOBILE DEALER FLOORPLAN ASSET BACKED NOTES
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- ---------------------- THE TRUST--
BEFORE YOU o may periodically issue asset backed notes in one or more
PURCHASE ANY OF series;
THE NOTES, YOU
SHOULD CAREFULLY o will own--
CONSIDER THE RISK o receivables arising from a selected portfolio of
FACTORS BEGINNING automobile dealer revolving floorplan financing
ON PAGE 8 IN THIS agreements;
PROSPECTUS. o payments due on those receivables; and
o other property described in this prospectus and in the
The sole source of prospectus supplement; and
payments on the
notes is the o will not own the dealer accounts from which the receivables
assets of the arise.
trust. The notes
are not interests THE NOTES--
in or obligations
of World Omni o will represent indebtedness secured by the assets of the
Financial Corp., trust;
WODFI LLC or any
other entiry or o will be paid only from the assets of the trust;
person.
o will represent the right to payments in the amounts and at
This prospectus the times described in the prospectus supplement for that
may be used to series;
offer and sell
any series of o offered by this prospectus will be rated investment grade
notes only if by at least one nationally recognized rating agency;
accompanied by the
prospectus o may benefit from one or more forms of credit enhancement;
supplement for and
that series.
- ---------------------- o may be issued as part of a designated series which may
include one or more classes.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE NOTES OR DETERMINED IF THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
March 29, 2000
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TABLE OF CONTENTS
PAGE
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WHERE TO FIND INFORMATION IN THIS PROSPECTUS AND
THE PROSPECTUS SUPPLEMENT...................... 4
SUMMARY.......................................... 5
The Parties.................................... 5
Securities to be Issued by the Trust........... 5
Payments on the Notes.......................... 5
Assets of the Trust............................ 6
Servicing Fees................................. 7
Tax Status..................................... 7
ERISA Considerations........................... 7
Ratings........................................ 7
RISK FACTORS..................................... 8
THE SERVICER..................................... 13
THE TRANSFEROR................................... 13
THE TRUST........................................ 14
The Owner Trustee.............................. 15
USE OF PROCEEDS.................................. 16
THE DEALER FLOORPLAN FINANCING BUSINESS.......... 16
Creation of Receivables........................ 16
Credit Approval and Credit
Guidelines.................................. 17
Payment Terms.................................. 19
Billing and Collection Procedures.............. 20
Dealer Monitoring.............................. 20
Intercreditor Agreement for Security Interests
in Vehicles and Non-Vehicle Collateral
Security.................................... 22
Participation Agreements....................... 22
Participation Interests Purchased by World
Omni........................................ 22
Relationship with Affiliates................... 22
THE ACCOUNTS..................................... 23
THE NOTES........................................ 24
General........................................ 24
Interest....................................... 24
Principal...................................... 25
PAGE
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The Indenture and the Series Supplements....... 27
Excluded Series................................ 32
Collection Account............................. 33
Excess Funding Account......................... 34
Allocation Percentages......................... 35
Allocation of Collections; Deposits in
Collection Account.......................... 36
Subordination of Certificate; Enhancements..... 37
Distributions.................................. 38
New Issuances.................................. 38
The Indenture Trustee.......................... 39
Reports to Noteholders......................... 40
Book-Entry Registration........................ 40
Definitive Notes............................... 43
THE TRANSFER AND SERVICING
AGREEMENTS..................................... 44
Receivables Purchase Agreement................. 44
Conveyance of Receivables and Collateral
Security.................................... 47
Representations and Warranties by the
Transferor.................................. 48
Eligible Accounts and Eligible Receivables..... 49
Ineligible Receivables and Excess
Receivables................................. 50
Addition of Accounts........................... 52
Removal of Accounts; Transfers of
Participations.............................. 53
The Certificates............................... 56
Defaulted Receivables and
Recoveries.................................. 56
Optional Repurchase............................ 57
Investment Events and Early Amortization
Events...................................... 57
Termination; Fully Funded Date................. 59
Indemnification................................ 59
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PAGE
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Collection and Other Servicing Procedures...... 60
Servicer Covenants............................. 61
Servicing Compensation and Payment of
Expenses.................................... 62
Certain Matters Regarding the
Servicer.................................... 62
Servicing Default.............................. 63
Rights Upon Servicing Default.................. 64
Waiver of Past Defaults........................ 64
Reports........................................ 64
Evidence as to Compliance...................... 65
Amendments..................................... 65
Intercreditor Arrangements..................... 66
Administration Agreement....................... 67
CERTAIN ADMINISTRATIVE AND LEGAL
PROCEEDINGS.................................... 67
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES......... 67
PAGE
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Transfer of Receivables........................ 67
Certain Matters Relating to
Bankruptcy.................................. 68
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.......... 69
General........................................ 69
Tax Characterization and Treatment of Notes.... 70
Tax Characterization of the Trust.............. 73
STATE AND LOCAL TAX CONSEQUENCES................. 74
ERISA CONSIDERATIONS............................. 75
PLAN OF DISTRIBUTION............................. 75
LEGAL OPINIONS................................... 76
WHERE YOU CAN FIND MORE INFORMATION.............. 76
INCORPORATION BY REFERENCE....................... 77
INDEX OF TERMS................................... 78
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WHERE TO FIND INFORMATION IN THIS PROSPECTUS AND THE
PROSPECTUS SUPPLEMENT
We provide information to you about the notes in two separate documents
that provide varying levels of detail:
(a) this prospectus, which provides general information, some of which may
not apply to a particular series of notes, including your series; and
(b) the prospectus supplement for a series of notes, which will provide
financial and other information regarding the pool of receivables held
by the trust and will specify the terms of a particular series of
notes, including:
o which classes of the series are being offered;
o the timing of interest and principal payments for each class of the
series;
o the priority of interest and principal payments for each class of
the series;
o information about credit enhancement for each class of the series,
if any;
o the ratings for each class of the series; and
o the method for selling each class of the series.
IF THE TERMS OF YOUR SERIES OF NOTES VARY BETWEEN THIS PROSPECTUS AND THE
PROSPECTUS SUPPLEMENT FOR THAT SERIES, 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 for your series of notes. We have not authorized anyone to
provide you with other or different information. You should not assume that the
information in this prospectus and any prospectus supplement is accurate on any
date other than the dates stated on their respective covers.
We are not offering the notes in any state where the offer is not
permitted.
You can find a list of the pages where capitalized terms used in this
prospectus are defined under the caption 'Index of Terms' which appears at the
end of this prospectus.
We include cross-references in this prospectus to captions in this
prospectus where you can find further related discussions.
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SUMMARY
This summary highlights selected information from this prospectus and
provides an overview to aid in your understanding of the notes. It does not
contain all of the information that you need to consider in making your
investment decision. To understand all of the terms of a series of notes,
carefully read this entire prospectus and the prospectus supplement for that
series.
THE PARTIES
ISSUER/TRUST
World Omni Master Owner Trust, a Delaware business trust formed by the
Transferor and the Owner Trustee.
TRANSFEROR
WODFI LLC, a Delaware limited liability company and a wholly-owned
subsidiary of World Omni Financial Corp.
SERVICER
World Omni Financial Corp., a Florida corporation and a wholly-owned
subsidiary of JM Family Enterprises, Inc.
OWNER TRUSTEE
The Owner Trustee is Chase Manhattan Bank Delaware, a Delaware banking
corporation.
INDENTURE TRUSTEE
The Indenture Trustee is Harris Trust and Savings Bank, an Illinois
banking corporation.
SECURITIES TO BE ISSUED BY THE TRUST
NOTES
The trust will issue one or more series of notes. The prospectus
supplement will contain additional information about the notes, including the
classes of notes offered in the series. The trust has previously issued a
series of notes. Each series of notes may include one or more classes. The
trust may issue additional series of notes after the issuance of notes offered
by this prospectus.
THE CERTIFICATES
The trust has also issued certificates. The certificates are not being
offered for sale by this prospectus and are currently held by the Transferor.
SUBORDINATION
A portion of the certificates will be subordinated to a series of notes
to the extent described in this prospectus and the prospectus supplement for
the series.
One or more classes of notes of a series may be subordinate to one or
more other classes of notes. The relative priority of each series and class of
notes will be described in the prospectus supplement for that series.
PAYMENTS ON THE NOTES
INTEREST
The trust will pay interest on the notes with the frequency specified in
the prospectus supplement for that series. Each series or class of notes will
have its own interest rate, which may be fixed, variable, contingent,
adjustable or any combination of these characteristics. The interest rate or
the method for determining the interest rate for a series or class of notes
will be specified in the prospectus supplement for that series.
The sources of funds the trust will use to pay interest on a series or
class of notes will be specified in the prospectus supplement for that series.
Typically, these sources will include:
o interest collections on the receivables held by the trust
o available credit enhancement
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PRINCIPAL
Each series or class of notes will have a stated principal amount.
Ordinarily, principal payments on the notes will occur on one or more
dates specified in the prospectus supplement for that series. The sources of
funds the trust will use to pay principal will be specified in the prospectus
supplement for that series. Typically, these sources will include:
o all or a portion of the principal collections on the receivables held by
the trust
o all or a portion of the interest collections remaining after interest
payments
o available credit enhancement
The manner in which the trust will apply available funds toward principal
payments on a series of notes will be set forth in the prospectus supplement
for that series.
Each series of notes will have a revolving period during which no
principal payments are made. Among the possible ways principal payments may be
made are the following:
o a single targeted final payment date, on which all principal is repaid at
once
o an amortization period, during which principal is repaid on each specified
payment date until all principal has been repaid
o an index amortization period, during which the amount of principal that is
repaid is determined by reference to an index
However, it is possible that principal payments on a class or series of
notes will begin earlier than the date specified in the prospectus supplement
for that series. Upon the occurrence of an early amortization event for a
series of notes, the trust will apply all funds allocated to that series to
the repayment of the outstanding principal of and interest on the notes and
the other securities, if any, in that series, unless the prospectus supplement
for that series provides that those funds will be set aside for payment on a
later date. An early amortization event will likely result in the commencement
of the repayment of principal on the notes occurring earlier than the date
specified in the prospectus supplement for that series. In addition, an early
amortization event may result in delays or reductions in the payments on your
notes.
ASSETS OF THE TRUST
The primary assets of the trust consist of a revolving pool of
receivables arising under selected revolving floorplan financing agreements
entered into with World Omni by retail automotive dealers to finance their
inventory of new and used automobiles and light duty trucks and may also
include participation interests in financing arrangements of a third party.
Receivables are sold by World Omni to the Transferor and are then
transferred by the Transferor to the trust. The trust has granted a security
interest in the receivables and the other property of the trust to the trustee
under the indenture for the notes for the benefit of the noteholders. The
trust property also includes:
o security interests in the collateral securing the dealers' obligations to
pay the receivables, which will include unsold vehicles and which may
include parts inventory, equipment, fixtures, service accounts, real
estate and guarantees;
o amounts held on deposit in specified trust accounts maintained for the
trust or for a series or class of notes;
o recourse World Omni may have against the dealers under the financing
agreements;
o an assignment of the Transferor's rights under its purchase agreement with
World Omni; and
o any additional property, or exclusions of the foregoing types of property,
described in the prospectus supplement.
As new receivables arise under the selected financing agreements, they
generally will be transferred to the trust on a daily basis. Prior to
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the date on which funds are required to be set aside for payment on a series
of notes, the trust generally will transfer the principal collections on the
receivables to the certificateholders, provided there are sufficient assets in
the trust. If there are insufficient assets in the trust, the trust will
retain the principal collections and invest them in eligible investments.
However, if a cash accumulation event specified in the prospectus
supplement for a series of notes occurs, the trust will retain all or a
portion of the principal collections and invest them in eligible investments
in a cash accumulation account dedicated to the noteholders of that series for
future payment on the notes of that series.
SERVICING FEES
For each series of notes, the trust will pay the servicer a set monthly
fee set forth in the related prospectus supplement as compensation for
servicing the receivables.
TAX STATUS
Kirkland & Ellis, special tax counsel, is of the opinion that, for
federal income tax purposes, the notes will be characterized as indebtedness
and the trust will not be characterized as an association (or publicly traded
partnership) taxable as a corporation.
By accepting a note, you agree to treat the notes as indebtedness for
federal, state and local income and franchise tax purposes.
See 'Certain Federal Income Tax Consequences' and 'State and Local Tax
Consequences' in this prospectus concerning the application of federal, state
and local tax laws.
ERISA CONSIDERATIONS
Subject to the considerations discussed under 'ERISA Considerations,' an
employee benefit plan regulated by the Employee Retirement Income Security Act
of 1974 may purchase the notes, including any subordinated notes. See 'ERISA
Considerations' for a description of the limitations on the purchase of notes
by employee benefit plans. Employee benefit plans should consult with their
counsel before purchasing any notes.
RATINGS
All of the notes offered under this prospectus will be rated investment
grade by at least one nationally recognized rating agency. Ratings for a
series or class of notes offered under this prospectus will be described in
the prospectus supplement for that series.
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RISK FACTORS
You should consider carefully the following risk factors in deciding
whether to purchase the notes.
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DEALER CONCENTRATION MAY RESULT IN
LARGER LOSSES FROM A SINGLE DEALER
DEFAULT As of September 30, 1999, World Omni provided new and used car floorplan
financing for approximately 239 dealers or dealer groups. Although no dealer or
dealer group accounted for more than 7.74% of the aggregate principal amount of
the outstanding receivables as of September 30, 1999, approximately 38.60% of the
aggregate principal amount of the receivables outstanding as of that date were
generated by the 8 largest dealers or dealer groups. A default by one or more of
these dealers or dealer groups could result in delays or reductions in payments
on your notes. In addition, as of September 30, 1999, approximately $31.7 million
of receivables were generated by dealers or dealer groups affiliated with JM
Family Enterprises, Inc., the parent company of World Omni.
RECEIVABLES MAY BE UNCOLLECTIBLE DUE
TO SUPERIOR INTERESTS World Omni and the Transferor have filed financing statements covering the
receivables sold by World Omni to the Transferor and then transferred to the
trust. The financing statements will perfect the security interests of the
Transferor and the trust in the receivables. However, World Omni will serve as
the custodian of the receivables and will not physically segregate or mark the
receivables to indicate that they have been sold to the Transferor and then
transferred to the trust. See 'The Transfer and Servicing Agreements--Conveyance
of Receivables and Collateral Security.'
If the receivables are 'chattel paper' under the Uniform Commercial Code and
another party purchases or takes a security interest in the receivables for
value, in the ordinary course of business and without actual knowledge of the
Transferor's or the trust's interest, that purchaser or secured party will
acquire an interest in the receivables superior to the trust's interest. The
trust will not be able to collect on the receivable if there is a superior
interest. This may result in delays or reductions in payments on your notes. See
'Certain Legal Aspects of the Receivables--Transfer of Receivables.'
RECEIVABLES MAY BE UNSECURED DUE TO
SALES OUT OF TRUST Dealers give World Omni a security interest in the vehicles they purchase to
secure their obligations under the receivables. When the financed vehicle is
sold, World Omni's security interest in the vehicle generally will terminate. If
the dealer who sold the vehicle fails to pay World Omni the amount owed on the
receivable, the receivable will become unsecured because the buyer generally
takes the vehicle free of the security interest. If the financed vehicle is sold
'out of trust,' i.e., sold without the dealer applying the proceeds of the sale
to repay the receivable, the trust will not be able to foreclose on the financed
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vehicle. This may result in delays or reductions in payments on your notes.
A BANKRUPTCY OF WORLD OMNI OR THE
TRANSFEROR MAY DELAY OR REDUCE
PAYMENTS ON THE NOTES World Omni will sell receivables to the Transferor, and the Transferor will
transfer the receivables to the trust. Although World Omni and the Transferor
have taken steps, such as the creation of the Transferor as a special purpose
entity, to ensure that the transactions described in this prospectus are
respected, and to reduce the likelihood that the Transferor would voluntarily
file for bankruptcy, if World Omni or the Transferor were to become a debtor in
bankruptcy, a court could conclude that the receivables transferred to the trust
are not owned by the trust, but rather are part of the estate of the debtor in
bankruptcy. The court may conclude that the transfer of the receivables from the
party in bankruptcy was not really a sale, but rather a secured financing, or the
court may conclude that the party in bankruptcy and the owner of the receivables
should be treated as a single entity rather than separate entities. If this were
to occur, you could experience delays or reductions in payments on your notes as
a result of:
o the 'automatic stay' provisions of the U.S. Bankruptcy Code, which prevent
creditors from exercising remedies against a debtor in bankruptcy, and
provisions of the U.S. Bankruptcy Code that permit substitution of collateral
in specified circumstances;
o some tax or government liens on World Omni's or the Transferor's property that
arose prior to the transfer of a receivable to the trust having a right to be
paid from collections on the receivables before those collections are used to
make payments on your notes; and
o the fact that the trust or the indenture trustee may not have a perfected
security interest in the financed vehicles or cash collections on the
receivables held by World Omni at the time a bankruptcy proceeding begins.
If World Omni or the Transferor were to become a debtor in bankruptcy, it may be
able to recover payments made by it to the trust to repurchase receivables prior
to the date of the bankruptcy petition. This could result in delays or reductions
in payments on your notes.
In addition, if World Omni, any of its affiliates, or any of the manufacturers of
the related vehicles filed for bankruptcy, the dealers might respond by delaying
or withholding payments on the receivables, even without legal or contractual
justification. This could result in delays or reductions in payments on your
notes.
FAILURE OF SOUTHEAST TOYOTA
DISTRIBUTORS TO REPURCHASE VEHICLES
FROM TERMINATED DEALERS MAY RESULT
IN INCREASED LOSSES ON THE
RECEIVABLES Southeast Toyota Distributors, Inc., an affiliate of World Omni and the largest
distributor of vehicles to the dealers generating the receivables,
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is obligated to repurchase some of the dealer's vehicles if its dealership
agreement is terminated or expires. If Southeast Toyota Distributors is unwilling
or unable to repurchase those vehicles, losses on the receivables of those
dealers may increase. This could result in delays or reductions in payments on
your notes.
FAILURE OF WORLD OMNI TO GENERATE
SUFFICIENT NEW RECEIVABLES MAY
RESULT IN THE TRUST HOLDING ASSETS
WITH A LOWER YIELD The trust depends upon World Omni to generate new receivables to replace the
receivables that are repaid. In the event that World Omni is unable to generate
sufficient new receivables, or is unable to transfer the receivables it generates
because of restrictions in its financing arrangements or otherwise, the trust
will be required to hold cash or investment securities rather than receivables.
The yield on cash or investment securities may be lower than the yield on
receivables. Because the trust's assets are the sole source of payments on the
notes, this could result in delays or reductions in payments on your notes. World
Omni does not guarantee that it will continue to generate receivables at
historical rates. The following events could negatively impact World Omni's
ability to generate new receivables:
o A decline in the manufacture and sale of automobiles and light trucks due to an
economic downturn, a labor disruption, competitive pressure, or other factors
o A change in vehicle distribution practices
o A change in dealer inventory management practices
o A change in the interest rates charged by World Omni to dealers
o A change in the amounts of the credit lines or other terms offered by World
Omni to dealers
o Defaults on accounts by dealers
o Termination of dealer franchises
o Dealers becoming insolvent or filing for bankruptcy
o Seasonal fluctuations in the sale and leasing of vehicles
As of September 30, 1999, approximately 30% of the aggregate principal balance of
the receivables held by World Omni were related to vehicles sold to dealers by
Southeast Toyota Distributors. Accordingly, the ability of World Omni to supply
new receivables to the trust will be in part dependent upon the ability of
Southeast Toyota Distributors to sell vehicles.
THE FAILURE OF DEALERS TO MAKE
PAYMENTS ON THE RECEIVABLES COULD
DELAY OR REDUCE PAYMENTS ON THE
NOTES The trust's ability to make payments on the notes generally depends on
collections from dealers on the receivables. The prospectus supplement will
describe past patterns of dealer payments on similar receivables.
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The timing of the sale and lease of vehicles is uncertain. It depends on many
economic and social factors that are beyond the control of World Omni, the
Transferor and the trust. Sales incentive programs and financing incentive
programs of vehicle manufacturers, including Toyota, and distributors, including
Southeast Toyota Distributors, also affect the sale and lease of vehicles. World
Omni does not guarantee that dealers will pay on the receivables at the same rate
as in the past or in any particular pattern. If the dealers' ability to pay on
the receivables declines for whatever reason, you might experience delays or
reductions in payments on your notes.
FAILURE OF WORLD OMNI OR THE
TRANSFEROR TO FULFILL ITS REPURCHASE
OBLIGATIONS MAY ADVERSELY AFFECT THE
TRUST World Omni, the Transferor and their respective affiliates generally are not
obligated to make payments to you on your notes and do not insure or guarantee
the payment of the receivables or your notes. However, World Omni will make
representations and warranties to the Transferor regarding the characteristics of
the receivables. The Transferor will assign these representations and warranties
to the trust, and the Transferor will make its own representations and warranties
to the trust in connection with the transfer of the receivables to the trust. If
World Omni or the Transferor breaches its representations and warranties, and the
breach materially and adversely affects the receivable or the interests of the
noteholders in that receivable, the Transferor will be obligated to repurchase
the receivable from the trust, and World Omni would be required to purchase the
receivable from the Transferor. If World Omni fails to repurchase the receivable
from the Transferor, the Transferor may not have adequate funds to repurchase the
affected receivable from the Trust and you may experience delays or reductions in
payments on your notes. See 'The Transfer and Servicing Agreements--Receivables
Purchase Agreement' and '--Representations and Warranties of the Transferor.'
THE TRUST ASSETS ARE LIMITED TO THE
RECEIVABLES AND ANY FORMS OF CREDIT
ENHANCEMENT The notes represent obligations of the trust only. The sole source of payments on
the notes are the assets of the trust. The trust will not have any significant
assets or sources of funds other than the receivables, its limited rights in
specified accounts, and other rights or credit enhancements as specified in the
prospectus supplement for the series. The notes are not obligations of and are
not insured or guaranteed by World Omni, the Transferor or any other entity or
person (including any affiliate of World Omni or the Transferor).
You must rely primarily on payments on the trust's receivables, funds in the
specified accounts and other credit enhancements, if any, for repayment of your
notes. In addition, you may have to look to the proceeds from the repossession
and sale of the collateral that secures defaulted receivables and the proceeds
from any recourse against dealers under the financing agreements. If these
sources are
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insufficient, you might experience delays or reductions in payments on your
notes.
THE TRUST HAS LIMITED RESTRICTIONS
ON ISSUING ADDITIONAL SERIES OF
NOTES The trust, as a master trust, may issue additional series of notes. The terms of
any additional series of notes will be established at the time of their issuance
and may vary substantially from the terms of your notes. The terms of the
agreements creating a new series of notes may not change the terms of any
existing series of notes, and it is a condition to the issuance of any additional
series of notes that it not result in a decrease in the rating of any existing
series of notes. However, the issuance of additional series of notes could
ultimately result in delays or reductions in payments on your notes.
ABILITY TO CHANGE TERMS OF THE
ACCOUNTS World Omni may change at any time the terms of the Accounts, including the
interest rate of the related Receivables. There is no assurance that the interest
rate generated by the Receivables will always be sufficent to cover the stated
interest rate on any series of notes. Failing to maintain an appropriate spread
between the interest rate of the Receivables and the interest rate on the notes
may cause delays or reductions in the amount of interest paid to the noteholders
and may cause an investment event or an early amortization event with respect to
a series to occur.
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THE SERVICER
World Omni Financial Corp. ('WORLD OMNI' or the 'SERVICER') is a Florida
corporation and a subsidiary of JM Family Enterprises, Inc. ('JM FAMILY
ENTERPRISES'), a Delaware corporation. World Omni is primarily engaged in
providing automobile dealerships throughout the United States with a full range
of financial services. World Omni provides wholesale floorplan financing,
capital loans and mortgages to dealers and also provides retail motor vehicle
leasing and installment financing to the customers of these dealers and to
others. The principal executive offices of World Omni are located at 120 N.W.
12th Avenue, Deerfield Beach, Florida 33442, and its telephone number is (954)
429-2200.
THE TRANSFEROR
WODFI LLC (the 'TRANSFEROR') is a Delaware limited liability company and a
wholly-owned subsidiary of World Omni. The Transferor was organized in July 1999
for limited purposes, which include:
o purchasing receivables from World Omni;
o financing the receivables purchased;
o transferring the receivables to third parties; and
o any activities incidental to and necessary or convenient for the
accomplishment of those purposes.
The principal executive office of the Transferor is located at 120 N.W. 12th
Avenue, Deerfield Beach, Florida 33442, and its telephone number is (954)
429-2200.
The Transferor has taken steps in structuring the transactions contemplated
by this prospectus that are intended to ensure that a petition for relief by
World Omni under the U.S. Bankruptcy Code or similar applicable state laws
('INSOLVENCY LAWS') will not result in a court disregarding the Transferor as a
separate entity and consolidating its assets and liabilities with those of World
Omni. These steps include the creation of the Transferor as a separate, limited
purpose entity pursuant to its certificate of formation and limited liability
company agreement, which contain limitations, including restrictions on the
nature of the Transferor's business and a restriction on the Transferor's
ability to file a petition for relief under any Insolvency Law without the
unanimous affirmative vote of all of its board directors. The Transferor's
limited liability company agreement also includes a provision requiring the
Transferor to have two directors who qualify as independent as that term is
defined in the Transferor's limited liability company agreement. See 'Risk
Factors--A Bankruptcy of World Omni or the Transferor May Delay or Reduce
Payments on the Notes' and 'Certain Legal Aspects of the Receivables--Certain
Matters Relating to Bankruptcy.'
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THE TRUST
World Omni Master Owner Trust (the 'TRUST') is a Delaware business trust
formed pursuant to a Trust Agreement (as amended from time to time, the 'TRUST
AGREEMENT'), between the Transferor and Chase Manhattan Bank Delaware, as Owner
Trustee (the 'OWNER TRUSTEE'), dated as of November 22, 1999 (the 'INITIAL
CLOSING DATE').
On the Initial Closing Date the Transferor conveyed to the Trust, without
guaranty that the Trust will be able to collect, the non-participated portion of
receivables (the 'RECEIVABLES') arising under selected revolving financing
agreements (the 'ACCOUNTS') acquired by or entered into with World Omni by
retail automotive dealers (the 'DEALERS') to finance their inventory of new and
used automobiles and light duty trucks. The property of the Trust (the 'TRUST
ESTATE') consists of or will consist of:
o the Receivables existing in the Accounts on November 18, 1999 (the
'INITIAL CUT-OFF DATE');
o all Receivables generated in the Accounts after the Initial Cut-Off Date;
o Receivables existing in or generated in any Accounts added to the Trust
on or after the related addition date;
o the participation interest of the Transferor in Purchased Participation
Receivables added to the Trust on or after the related addition date;
o an assignment of all the Transferor's rights and remedies under the
Receivables Purchase Agreement, dated as of the Initial Closing Date,
between World Omni and the Transferor (as amended from time to time, the
'RECEIVABLES PURCHASE AGREEMENT'), pursuant to which the Transferor will
purchase Receivables from World Omni;
o all collections of principal under the Receivables ('PRINCIPAL
COLLECTIONS'); all collections of interest and other nonprincipal charges
(including insurance service fees, amounts recovered on Defaulted
Receivables and insurance proceeds) under the Receivables and rebate
amounts deposited by the Servicer with respect to specified interest
rebate programs into the Collection Account ('NON-PRINCIPAL COLLECTIONS'
and, together with Principal Collections, 'COLLECTIONS');
o all funds on deposit in specified accounts of the Trust;
o any letter of credit, surety bond, cash collateral account, spread
account, guaranteed rate agreement, swap or other interest rate
protection agreement, maturity liquidity facility, tax protection
agreement or other arrangement (each, an 'ENHANCEMENT') issued for a
series or class of notes; and
o a security interest in motor vehicles securing the Receivables (the
'VEHICLES') and specified parts inventory, equipment, fixtures, service
accounts and, in some cases, realty and/or personal guarantees securing
the Receivables (together, the 'COLLATERAL SECURITY').
See 'The Transfer and Servicing Agreements--Receivables Purchase Agreement' for
an overview of the Receivables Purchase Agreement. The noteholders will not have
any interest in any Enhancements provided for the benefit of the noteholders of
another series or class or in any Receivable or Account removed from the Trust.
See 'The Transfer and Servicing Agreements--Removal of Accounts; Transfers of
Particpations' for information regarding the removal of Receivables and Accounts
from the trust.
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The Transferor, the Trust and World Omni as Servicer entered into a trust
sale and servicing agreement, dated as of the Initial Closing Date (as amended
from time to time, the 'TRUST SALE AND SERVICING AGREEMENT'). Pursuant to the
Trust Sale and Servicing Agreement the Trust acquired the Receivables from the
Transferor and the Servicer agreed to service the Receivables. Under the Trust
Sale and Servicing Agreement, the Transferor is conditionally allowed, and in
some circumstances is obligated:
o to designate new Accounts to be included as Accounts and to convey to the
Trust the Receivables of those new Accounts,
o to acquire certain Purchased Participation Receivables to be conveyed to
the Trust,
o to designate certain Accounts to be removed, and
o to require the Trust to return receivables in certain removed Accounts to
the Transferor.
See 'The Transfer and Servicing Agreements--Addition of Accounts' for
information regarding the addition of Accounts.
The Trust has issued a series of asset backed notes and may issue one or
more series of notes (collectively, the 'NOTES'). The Trust has also issued
certificates (the 'CERTIFICATES'). The Certificates are not being offered for
sale by this prospectus and are currently held by the Transferor.
Prior to its formation, the Trust had no assets or obligations. The Trust
has not and will not engage in any business activity other than:
o acquiring and holding the Receivables, the other assets of the Trust and
proceeds therefrom;
o issuing the Notes and the Certificates; and
o making payments on the above and related activities.
As a consequence, the Trust is not expected to have any need for, or source
of, capital resources other than the assets of the Trust.
THE OWNER TRUSTEE
Chase Manhattan Bank Delaware, a Delaware banking corporation, serves as
Owner Trustee under the Trust Agreement. The principal executive offices of the
Owner Trustee are located at 1201 North Market Street, 8th Floor, Wilmington,
Delaware 19801, and its telephone number is (302) 428-3300.
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USE OF PROCEEDS
As provided in the prospectus supplement, the Transferor will use the net
proceeds from the sale of a series of the notes to repay the outstanding
principal amount of other series of Notes then outstanding, to make deposits
into the Excess Funding Account to the extent required and for the other
purposes specified in the related prospectus supplement.
THE DEALER FLOORPLAN FINANCING BUSINESS
The Receivables to be conveyed to the Trust by the Transferor result from
loans made by World Omni to Dealers under floorplan financing agreements to
finance the Dealers' purchases of new and used Vehicles. Used Vehicles may be
purchased by Dealers at auctions, from other dealers, from finance companies
such as World Omni or directly from vehicle owners.
The vast majority of floorplan financing agreements are structured so that
World Omni lends an amount on the acquisition by the Dealer of a specific
Vehicle and the Dealer is required to repay the loan upon the sale of such
Vehicle. In certain limited circumstances, floorplan financing agreements are
structured so that World Omni lends an aggregate amount based on the value of
all of the Vehicles securing the Receivables. In these financing arrangements,
the Receivables created are referred to as 'ASSET BASED RECEIVABLES,'and, so
long as the aggregate value of Vehicles securing the Receivables exceeds
specified levels, the Dealer is not required to repay the loan upon the sale of
a specific Vehicle. Except as noted below, World Omni originates, underwrites,
services, and monitors Asset Based Receivables in the same manner that it does
for its other Receivables.
World Omni is the major wholesale financing source for Dealers in Southeast
Toyota Distributors' distribution network. As of September 30, 1999, World Omni
provided floorplan financing to approximately 47% of those Dealers. World Omni
services all of the Dealers from its main office located in Deerfield Beach,
Florida.
CREATION OF RECEIVABLES
World Omni generally finances 100% of the invoice price of new Vehicles. A
Receivable is created upon shipment of the new vehicle from the vehicle
manufacturer or distributor to the Dealer. The amount that World Omni will lend
on a used vehicle varies as follows:
o For vehicles purchased by the dealer at an auction and financed by World
Omni via payment directly to the auction, World Omni typically finances
100% of the auction price plus the buyer's fees paid to the auction.
o In some circumstances, the vehicle being financed by World Omni is one
that was sold by World Omni to the dealer. Most of these vehicles were
leased by World Omni to a consumer and were returned to World Omni at the
end of the lease. If the used vehicle being financed under World Omni's
floorplan is one that was sold by World Omni to the dealer, World Omni
will lend 100% of the price the dealer paid to World Omni for the
vehicle.
o For select dealers, World Omni will lend 100% of the 'Black Book' value
of the used vehicle. In some circumstances the Black Book value includes
the value of additional equipment on the vehicle.
o In situations other than those described above, World Omni will finance
up to 80% of the wholesale value of the vehicle as defined in the NADA
Official Used Car Guide's 'Average Trade In' column.
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In asset based floorplan financing programs, World Omni generally permits
the Dealer to draw an amount up to the aggregate of 100% of the invoice price of
all new Vehicles securing the Receivables and a portion of the value of all used
Vehicles securing the Receivables. The value of used Vehicles is typically
limited to the wholesale value of the Vehicle as defined in the NADA Official
Used Car Guide's 'Average Trade In' column.
Used Vehicles represented approximately 14.6% and 16.2% of the total dollar
amount of Receivables outstanding as September 30, 1999, and December 31, 1998,
respectively.
CREDIT APPROVAL AND CREDIT GUIDELINES
World Omni's floorplan programs are administered by its Commercial
Operations Department located in Deerfield Beach.
World Omni provides floorplan financing to Dealers pursuant to
pre-established credit guidelines. World Omni must approve each prospective
Dealer before that Dealer signs a dealer financing agreement. Each dealer
financing agreement generally includes a security agreement, a personal guaranty
by the principal owner of the Dealer and, when necessary, an intercreditor
agreement. The collateral subject to the security agreement always includes the
Vehicles and may include:
o inventory, equipment and other property of the Dealer, including parts
inventory, furniture, fixtures and tools;
o additions, accessories and accessions;
o intangibles, instruments, chattel paper and accounts arising out of the
sale or lease of the foregoing;
o substitutions, returned and repossessed items; and
o proceeds thereof, including insurance proceeds.
Prior to providing floorplan financing to a Dealer, the Commercial
Operations Department performs an analytical and investigative review to
evaluate the character and credit of the principal owners of a prospective
Dealer and to determine whether the Dealer's capital structure is adequate to
support the business. In conducting its review, representatives of the
Commercial Operations Department will conduct interviews with Dealer principals,
check credit references, obtain dealership and personal financial statements and
review the business history of dealership management and existing business
plans.
The key process in approving a floorplan financing request is the
completion of a financial statement review of the prospective borrower. In some
cases, this review will be based on pro forma statements and projections
completed by the prospective Dealer. In its review, World Omni focuses mainly on
the financial strength, integrity and past history of the dealership's
operations and its guarantors. In addition, World Omni analyzes the Dealer's
location, paying particular attention to the market area and the Dealer's
potential to sell Vehicles. When available, World Omni uses state vehicle
registration data to evaluate a Dealer's primary market area and to help
determine the retail penetration ability of a new Dealer. In addition, Dealers
who sell Toyotas generally sign a release letter which enables World Omni to
access Southeast Toyota Distributor's files on those Dealers. World Omni derives
a wide array of financial information and trend analysis from Southeast Toyota
Distributor's files.
When a Dealer requests a floorplan financing program, World Omni conducts a
search of the appropriate records of the filing office or offices to determine
if there are other creditors of the Dealer with current security interest
filings. Prior filings are given particular attention by World Omni
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management, especially if they relate to Vehicles or if the wording is broad
enough to indicate a possible conflict with World Omni's security interest. In
those instances, World Omni works with the particular Dealer to eliminate any
conflicts. Steps taken include executing an intercreditor agreement with any
other creditor and/or arranging for the filing of amendments to any prior
financing statements. World Omni may approve the Dealer's request for a
floorplan financing program but will not advance any funds to the Dealer until
all conflicts are resolved.
If a prospective Dealer is approved by World Omni, the Dealer and World
Omni enter into a dealer financing agreement. The principal owner of the
dealership is generally required to guarantee the Dealer's obligations to World
Omni and to subordinate its loans to the dealership to the Dealer's indebtedness
to World Omni.
Pursuant to the dealer financing agreement, in order to secure all
indebtedness of the Dealer to World Omni, the Dealer grants to World Omni a
first priority security interest in its inventory of Vehicles and, in many
cases, to other assets, such as parts and equipment.
World Omni is, in most cases, the exclusive source of Vehicle financing for
a Dealer. When a Dealer has an additional source of Vehicle financing, the other
financier generally takes a security interest in collateral which overlaps with
World Omni's. In these situations, World Omni will not advance funds until it
has entered into an intercreditor agreement with the other financier in which
each of World Omni and the other financier subordinates its lien on any Vehicle
financed by the other party, and the proceeds thereof, to the lien of the
financing party.
Each Dealer is required by its dealer financing agreement to obtain
physical damage insurance covering all Vehicles, with the Servicer being named
as an additional loss payee. World Omni arranges this insurance for some Dealers
through a master policy issued by St. Paul Fire and Marine Insurance Company,
which is currently rated A+15 by A.M. Best Company, Inc., a nationally
recognized insurance rating agency. An affiliate of World Omni handles claims
adjustments under these policies. As to Dealers who elect to make other coverage
arrangements, World Omni's affiliate maintains a follow-up system, which
includes:
o coverage verification;
o tracking of policy expiration dates;
o renewal follow-up; and
o verification that World Omni is properly identified as a loss payee.
As a matter of practice, World Omni does not, however, require that payments
from the insurer under these policies be paid to it so long as a Dealer is not
'out of trust'; that is, so long as the Dealer does not sell a Vehicle and use
the sale proceeds thereof for its own separate purposes.
During the initial 120-day period after the signing of a dealer financing
agreement, World Omni generally conducts monthly floorplan audits, verifying the
purchase and sale of all Vehicles. At the end of 180 days, World Omni completes
a 'FINANCIAL STATEMENT REVIEW' and updates the Dealer's initial risk
classification. Dealer credit ratings range from one to six, with one being the
most financially sound. This risk classification determines the floorplan audit
and credit review frequency and is important in setting the Dealer's credit
limit.
o 'CLASS I DEALERS' are Dealers that are determined to be low risk due to
their excellent financial condition and performance.
o 'CLASS II DEALERS' are Dealers that are determined to be of acceptable
risk due to their good financial condition and performance.
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o 'CLASS III DEALERS' are Dealers that are determined to have fair
financial condition and performance with some negative trend.
o 'CLASS IV DEALERS' are Dealers that are determined to have weak financial
condition and performance with negative trend. Dealers for which a check has
been returned within the previous twelve months for reason of insufficient funds
will not be rated stronger than Class IV.
o 'CLASS V DEALERS' are Dealers that are determined to be high-risk. Class
V Dealers generally include those Dealers with poor audit histories and
inadequate or negative working capital, net worth and profits.
o 'CLASS VI DEALERS' are Dealers that have sold Vehicles 'out of trust.'
The following tables provides (1) the number of Accounts in each class of
Dealers, (2) the number of Accounts in each class of Dealers as a percentage of
the total number of Accounts in the Wholesale Portfolio, and (3) the principal
balance of Receivables in each class of Dealers as a percent of the total
principal balance of Receivables in the Wholesale Portfolio, each as of
September 30, 1999.
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
NUMBER OF ACCOUNTS ACCOUNTS PRINCIPAL BALANCE
------------------ ------------- -----------------
<S> <C> <C> <C>
Class I Dealers........................................ 119 50% 55%
Class II Dealers....................................... 63 26 24
Class III Dealers...................................... 22 9 9
Class IV Dealers....................................... 21 9 7
Class V Dealers........................................ 8 3 4
Class VI Dealers....................................... 6 3 1
</TABLE>
World Omni establishes a base inventory guideline to provide floorplan
financing adequate for Dealers' normal vehicle sales. Typically, Dealers are
granted credit lines based on a 60-day sales rate for new vehicles and a 45-day
sales rate for used vehicles. These credit lines are monitored on a daily basis
and adjustments are made upon appropriate credit approval or disapproval.
If World Omni determines that a specific Dealer's inventory is excessive,
the Dealer may be placed on finance hold status. In addition, a Dealer may be
placed on finance hold if the dealer financing agreement is violated, a check is
returned unpaid or a Dealer requests controlled Vehicle releases. In these
circumstances, World Omni assumes control of Vehicle releases to the Dealer and
specifically approves the releases on a unit-by-unit basis. Dealers are also
placed on finance hold status if World Omni determines that the Dealer has sold
'out of trust.' Finance hold status on a particular Dealer will remain until
World Omni determines that the circumstances have been remedied.
PAYMENT TERMS
Receivables related to non-asset based floorplan financing of new Vehicles
are due on demand, but generally must be paid upon the earlier of (a) one to ten
days (averaging four days) following the sale or other disposition of the
Vehicle, (b) within one business day of the dealer being funded by the buyer of
the vehicle or by the buyer's financing source and (c) a fixed period after the
Vehicle's initial acquisition by the Dealer. Although dealer financing
agreements may vary as to the precise measurement of the fixed period, generally
the principal balance of the Receivable must be paid down 10% per month
beginning April 1 of the year following the model year of the underlying
Vehicle, and must be paid in full by the next October, unless the Vehicle is
recategorized as a used Vehicle. In very limited cases, World Omni offers a
delayed payment privilege program to select Dealers to finance fleet sales.
Under this program, Receivables must generally be paid in full on the earlier of
(1) the 20th day after delivery to the end user or (2) receipt of payment from
the end user.
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Receivables relating to non-asset based floorplan financing of used
Vehicles are generally stated to be due on demand or on the earlier of (1) one
to ten days (averaging four days) following the sale of the Vehicle, (2) within
one business day of the Dealer being funded by the buyer or the buyer's funding
source or (3) 90 days after the Vehicle is first financed by World Omni. World
Omni, in its sole discretion, may generally grant one extension for a period of
30 days if a principal payment of 10% of the unpaid principal balance is made by
the Dealer prior to the extension.
Receivables related to asset based floorplan financings are due on demand.
In addition, the Dealer must pay all or a portion of these Receivables to the
extent that the outstanding balance exceeds a specified percentage of the value
of the Vehicles securing the Receivables.
World Omni currently charges interest monthly on Receivables based on the
prime rate or the London interbank offered rate ('LIBOR'). As of September 30,
1999, Receivables secured by new Vehicles based on the prime rate and LIBOR were
accruing interest at an annual rate averaging the prime rate + 0.15% and LIBOR +
2.04%, respectively. Receivables secured by used Vehicles based on the prime
rate and LIBOR were accruing interest at an annual rate averaging the prime rate
+ 0.62% and LIBOR + 2.05%, respectively. Upon agreement with the Dealers, World
Omni may change the rate mechanism, the rate to which the Receivables are tied
or the interest rate premium in any manner.
Some Dealers maintain funds with World Omni under an inventory cash escrow
agreement ('FLOOR PLAN EQUITY PROGRAM'), pursuant to which funds are held for
cash management, liquidity and working capital purposes. The Dealers can
withdraw these funds so long as the Dealer has not defaulted under its floorplan
agreements with World Omni. Generally, interest on the prepaid funds is offset
against interest due from the Dealer on the Receivables. For purposes of the
Trust, funds deposited by Dealers with World Omni will be treated by World Omni
as Principal Collections of Receivables, and withdrawals by Dealers will be
treated by World Omni as creating new Receivables.
BILLING AND COLLECTION PROCEDURES
A statement setting forth interest and other billing and account
information is prepared by World Omni and distributed on a monthly basis to each
Dealer. Each Dealer's bills are generated on approximately the first or second
business day of the month, and payments are due on the tenth day of the month in
which they are billed. Interest is billed retroactively and Dealers make
payments by check or electronic funds transfer. Dealers are required to make
principal payments on Receivables when due by check or electronic funds
transfer.
DEALER MONITORING
World Omni produces a daily accounting of the balance outstanding under
each credit line. All exposures above established credit lines require approval
by World Omni's Commercial Operations Department on a monthly basis. A monthly
status report is provided to World Omni senior management. This report is an
all-inclusive summary of the monthly and ongoing developments relating to Dealer
credits. A review of all existing credit lines (the 'FINANCIAL STATEMENT
REVIEW') is completed at least once a year and is not limited to financial
statement and ratio analysis, but is designed to provide an overview of the
entire operation as it relates to World Omni. A security interest search is
conducted on an annual basis in conjunction with the formal review of the Dealer
to ensure that there are no conflicts with World Omni's security interests.
The Commercial Operations Department follows a procedure (the 'BOOK
REVIEW') to verify the validity of new Dealer financial statements. It is World
Omni's intention to complete a Book Review with most new Dealers. The process
mirrors the Financial Statement Review, but includes an actual review and
verification of the Dealer's records. Upon completion, the results are discussed
with the
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Dealer principals and guarantors. Any deficiencies are addressed and action
plans implemented with a timetable for resolution.
Wholesale floorplan audits are generally completed at least once per
quarter at all Dealers and in most cases monthly, based on the Dealer risk
profile and the prior audit experience of the Dealer. The audit includes a
physical verification of every floorplanned Vehicle. If a Vehicle cannot be
located, the Dealer must provide an explanation that is satisfactory to World
Omni's management and must provide the related manufacturer's statement of
origin or title.
World Omni's daily reporting of Dealer exposures and Dealer payments is
intended to provide the Commercial Operations Department with early warning
signs of potential problems. If the results of the Dealer monitoring process
show that a particular Dealer is suffering financial difficulties, World Omni's
Commercial Operations Department will closely monitor the Dealer while working
with the Dealer to improve its financial condition. Floorplan audit frequency
may be increased and a Book Review may be performed with the results being
discussed with the Dealer and principals or guarantors. Operating trends are
generally reviewed, including the Dealer's cash and net working capital
position. Finally, a meeting may be held between World Omni and the Dealer
resulting in the implementation of a plan of action and a corresponding
timetable in which the plan is to be completed.
These risk management procedures could also be activated in the event a
routine audit reveals a shortage in a Dealer's Vehicle inventory, a Dealer check
is returned for which there are insufficient funds or a Dealer specifically
requests assistance. Dealers who demonstrate these or other problems may be
placed on finance hold, which would result in approval on a per unit basis or
cash-on-delivery terms. World Omni also works to protect the dealership by
providing auditing advice, cash flow management and credit relationship
assistance in order to maintain the value of the dealership as an ongoing
entity. However, further deterioration may result in the seizure and liquidation
of Vehicle inventory. The Wholesale Portfolio, and those Receivables arising
from the Portfolio which are transferred to the Trust, may sometimes include
Receivables arising in Accounts with Dealers which were previously placed by
World Omni on finance hold or which were otherwise non-performing for a period
of time.
If World Omni's review reveals that a Dealer has diverted proceeds from
Vehicle sales due to World Omni to other uses, the Commercial Operations
Department suspends the Dealer's credit lines and sends a demand for payment of
the delinquent obligation. The Dealer's manufacturers will be informed by World
Omni of the change in status. Cash-on-delivery terms may be approved depending
on the severity of the situation. At this point a demand may also be made on the
guarantor(s).
If after exhausting all possible options, the Dealer is unable to pay
amounts owed to World Omni, World Omni may terminate the dealer financing
agreement in accordance with its terms and applicable state law. Generally, in
these circumstances the Dealer's new Vehicle inventory will be resold to the
manufacturer, which generally pays the repurchase price to World Omni for credit
against the aggregate amount of outstanding Receivables owed by the Dealer to
World Omni. If the Dealer resists termination, World Omni will declare the
Dealer in default of its obligations, demand payment in full of its Dealer Note
and all Receivables created thereunder and foreclose on its collateral by taking
possession of the Dealer's Vehicle inventory and any other Collateral Security.
If necessary, World Omni may also obtain a court order requiring foreclosure.
Used Vehicles are auctioned off to the highest bidder. All proceeds are applied
against the relevant Dealer liabilities. World Omni will generally pursue any
uncollected amounts from the Dealer's guarantors. Once World Omni has commenced
liquidation of the Dealer's Vehicle inventory, it writes off any amounts it
determines are uncollectible. During the course of a liquidation of a Dealer's
Vehicle inventory, World Omni may recognize additional losses or recoveries.
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INTERCREDITOR AGREEMENT FOR SECURITY INTERESTS IN VEHICLES AND NON-VEHICLE
COLLATERAL SECURITY
As stated above, the agreements constituting the financing arrangements,
including the Accounts, provide for a security interest in the Vehicles in favor
of World Omni, which security interest World Omni represents is a first priority
security interest. The security interests in the Vehicles in favor of World Omni
have been assigned by World Omni to the Transferor pursuant to the Receivables
Purchase Agreement and then by the Transferor to the Trust pursuant to the Trust
Sale and Servicing Agreement. In its other lending activities, World Omni may
have made capital loans, real estate loans or other advances to Dealers that are
also secured by a security interest in the Vehicles. In these instances, World
Omni has agreed in the Receivables Purchase Agreement not to exercise its
security interest in any Vehicle until the Trust shall have been paid in full in
respect of the Receivables secured by the Trust's security interest in that
Vehicle. In addition, in connection with other loans or advances made by World
Omni to a Dealer, World Omni may also have a security interest in Collateral
Security other than a Vehicle ('NON-VEHICLE COLLATERAL SECURITY'), such as
personal guarantees, if any, securing the amounts owed by the Dealer. In these
cases, World Omni, in its sole discretion, may realize on the Non-Vehicle
Collateral Security for its own benefit in respect of its loans or advances
before the Trust is permitted to realize upon the Non-Vehicle Collateral
Security. Because of the subordinate position of the Trust in respect of
Non-Vehicle Collateral Security, there is no assurance that the Trust will
realize any proceeds in respect of any Non-Vehicle Collateral Security.
PARTICIPATION AGREEMENTS
From time to time, World Omni may enable other financing sources to
participate in certain of its financing arrangements ('PARTICIPATIONS').
Pursuant to a typical Participation, the documentation for the underlying loan
will remain in the name of World Omni as lender. In the financing agreement or
in a separate contractual arrangement with World Omni, the participant will
agree to provide a portion of the funding of such loan in exchange for an agreed
upon interest rate. Occasionally fees and other charges may also be shared with
the participant. The Receivables to be sold by World Omni to the Transferor and
in turn by the Transferor to the Trust, may include the non-participated portion
of receivables from accounts which have been participated. In addition, subject
to substantially the same limitations that apply to the removal of Accounts, the
Transferor may cause the Trust to transfer an interest in certain Receivables to
the Transferor, which may thereafter transfer such interest to another party in
the form of a Participation.
PARTICIPATION INTERESTS PURCHASED BY WORLD OMNI
In certain circumstances, World Omni may participate in financing
arrangements of a third party similar to Participations. In these cases, the
receivables are originated and, in some cases, will be serviced by such third
party. The Receivables sold by World Omni to the Transferor and in turn by the
Transferor to the Trust may include World Omni's participation interest in such
receivables ('PURCHASED PARTICIPATION RECEIVABLES') provided that the Rating
Agency Condition has been satisfied with respect to the addition of those
Purchased Participation Receivables to the Trust.
RELATIONSHIP WITH AFFILIATES
In July 1995, World Omni and its insurance and warranty affiliates
instituted a program (the 'SUPERWRAP PROGRAM') to encourage Dealers in the
Southeast Toyota Distributors network who finance floorplan vehicles with World
Omni to purchase other financial products sold by World Omni and its insurance
and warranty affiliates. Under the SuperWRAP Program, World Omni and its
affiliates pay participating Dealers specified amounts based on a pricing grid
and, in most cases, these payments are assigned by the Dealers to World Omni and
applied automatically by World Omni to reduce interest
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<PAGE>
payments on the Receivables. The Dealers remain obligated to pay the full
interest payments on the Receivable in the event World Omni or its affiliates
fail to make the SuperWRAP Program payments to the Dealers. All Dealers in the
Southeast Toyota Distributors network who have floorplan accounts with World
Omni are eligible to participate under the SuperWRAP Program. In the future,
World Omni may offer a similar program to Dealers that are not in the Southeast
Toyota Distributors network. Approximately $941,028, $1,887,944, $2,342,698, and
$882,136 in payments were made by World Omni and its affiliates to Dealers under
the SuperWRAP Program for the nine months ended September 30, 1999, and the
years ended December 31, 1998, 1997, and 1996, respectively.
THE ACCOUNTS
The Receivables arise in the Accounts. The Accounts have been selected from
all the accounts in World Omni's portfolio that were Eligible Accounts at the
time of selection (the 'WHOLESALE PORTFOLIO'). Commercial finance receivables
similar to the current Accounts which meet the criteria set forth in the Trust
Sale and Servicing Agreement may be added to the Trust in the future. In order
to be included in the Trust, each Account must be an account established or
acquired by World Omni in the ordinary course of business and meet the other
criteria provided in the Trust Sale and Servicing Agreement. See 'The Transfer
and Servicing Agreements--Representations and Warranties by Transferor.' World
Omni may at anytime and without notice or consent of any third party modify the
rates being charged Dealers under the floorplan financing agreements or asset
based financing agreements.
Under the Trust Sale and Servicing Agreement, the Transferor has the right
and, in some circumstances, is obligated, subject to the limitations and
conditions, if any, in its other financing arrangements and agreements to
designate additional qualifying Accounts to be included as Accounts. It may also
sell to the Transferor, in the case of World Omni, and convey to the Trust, in
the case of the Transferor, the Receivables of the Additional Accounts,
including Receivables created from the Additional Accounts. These accounts must
meet the eligibility criteria set forth above as of the date the accounts are
designated as Additional Accounts. World Omni will generally sell to the
Transferor the Receivables then existing or thereafter created under the
Additional Accounts, and the Transferor will in turn convey them to the Trust.
See 'The Transfer and Servicing Agreements--Addition of Accounts.' In addition,
as of any Additional Cut-Off Date in respect of Additional Accounts and the date
any new Receivables are generated unless such Receivable arose in an Additional
Account prior to the applicable Addition Date, World Omni will represent and
warrant to the Transferor, and the Transferor will represent and warrant to the
Trust, that the Receivables meet the eligibility requirements set forth in the
Trust Sale and Servicing Agreement. See 'The Transfer and Servicing
Agreements--Conveyance of Receivables and Collateral Security.' Under the
circumstances specified in the Trust Sale and Servicing Agreement, the
Transferor has the right to remove Eligible Accounts, and the Receivables
arising from such Eligible Accounts, from the Trust and is required to remove
Ineligible Accounts, and Receivables arising from such Ineligible Accounts, from
the Trust. Interest collections received after an Account has been designated
for removal will be allocated to the Trust or the Transferor, as applicable,
until the principal balance on the date the Account was so designated has been
reduced to zero. See 'The Transfer and Servicing Agreements--Removal of
Accounts; Transfers of Participations.' Throughout the term of the Trust, the
Accounts from which the Receivables arise will be the same Accounts transferred
by the Transferor on the Closing Date plus any Additional Accounts, minus any
Accounts removed from the Trust.
Information regarding the Accounts will be set forth in the prospectus
supplement.
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THE NOTES
GENERAL
The Notes may be issued in one or more series, each series with one or more
classes. Each series of Notes will be issued pursuant to the terms of the
Indenture (the 'INDENTURE') and a Series Supplement to the Indenture for that
series (each, a 'SERIES SUPPLEMENT'), each between the Trust and the Indenture
Trustee. Forms of the Indenture and the Series Supplement have been filed as
exhibits to the registration statement of which this prospectus forms a part.
The Transferor will provide a copy of the Indenture and relevant Series
Supplement (each without exhibits) upon request of a Noteholder. The following
summary does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all of the provisions of the Notes, the Indenture
and the applicable Series Supplement. Where particular provisions or terms used
in the Indenture or a Series Supplement are referred to, the actual provisions,
including definition of terms, are incorporated by reference as part of this
summary.
The Notes of each series will evidence fixed obligations of the Trust. The
Notes will be secured by the assets of the Trust allocated to that series and
will represent the right to receive Collections and other amounts from those
assets allocated to that series up to the amounts required to make payments of
interest on and principal of the Notes of that series as described in the
related prospectus supplement.
Each series of Notes will initially be represented by one or more Notes
registered in the name of the nominee of DTC (together with any successor
depository selected by the Trust, the 'DEPOSITORY') in the United States, or
Clearstream Banking or Euroclear in Europe, except as set forth below. Notes
will generally be available for purchase in denominations of $1,000 and integral
multiples thereof in book-entry form only. The Transferor has been informed by
DTC that DTC's nominee will be Cede & Co. Accordingly, Cede & Co. is expected to
be the holder of record (the 'NOTEHOLDER') of the Notes.
Unless and until Definitive Notes are issued under the limited
circumstances described in this prospectus or in the related prospectus
supplement, no Noteholder will be entitled to receive a physical certificate
representing a Note. All references herein to actions by Noteholders refer to
actions taken by DTC upon instructions from its participants. All references
herein to distributions, notices, reports and statements to Noteholders 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
Noteholders in accordance with DTC's procedures. See '--Book-Entry Registration'
and '--Definitive Notes.'
Principal and interest on the Notes will generally be paid on the 15th day
of the month or, if that day is not a business day, the next business day (each,
a 'PAYMENT DATE') as set forth in the related prospectus supplement.
INTEREST
Interest on the principal balance of the Notes of a series or class will
accrue at the rate specified in or determined in the manner specified in the
related prospectus supplement. Interest will be payable to the Noteholders of a
series or class as and on the dates specified in the related prospectus
supplement ('INTEREST PAYMENT DATES'). The prospectus supplement for a series or
class of Notes may provide that the interest rate and the Interest Payment Dates
applicable to each Note of that series or class may be subject to adjustment
from time to time, including as a result of a decline in the interest rate of
the Receivables.
Non-Principal Collections and other amounts allocable to the Notes of a
series generally will be used to make interest payments to Noteholders of that
series on each Interest Payment Date. If Interest Payment Dates occur less
frequently than monthly, (1) the Non-Principal Collections or other amounts
allocable to that class will be deposited in a trust account (an 'INTEREST
FUNDING ACCOUNT') and will be
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used to make interest payments to Noteholders of that series or class on the
next Interest Payment Date and (2) during an Early Amortization Period, interest
will be distributed to the Noteholders monthly on each Payment Date (each a
'SPECIAL PAYMENT DATE'). If a series has more than one class of Notes, each
class may have a separate Interest Funding Account.
PRINCIPAL
The timing and priority of payment, seniority and amount of or method of
determining payments of principal on each class of Notes will be described in
the related prospectus supplement. Generally, the Notes of each series will have
a revolving period during which no principal payments are required to be made on
the Notes (the 'REVOLVING PERIOD'). The Revolving Period for a series or class
will begin on the date specified in the related prospectus supplement and end on
the earlier of (a) the close of business of the day immediately preceding the
Accumulation Period Commencement Date or the Principal Commencement Date for
that series and (b) the close of business of the business day immediately
preceding the day on which an Early Amortization Event or an Investment Event
occurs for that series. See 'The Transfer and Servicing Agreements--Investment
Events and Early Amortization Events' for a discussion of the events that might
lead to the early termination of the Revolving Period and the recommencement of
the Revolving Period. If a series of Notes has more than one class, each class
may have a different Revolving Period.
During the Revolving Period, Principal Collections and other specified
amounts allocable to the Notes of a series will not be paid to the Noteholders,
but rather will be used to repay the principal amount of another class or series
of Notes, deposited to the Excess Funding Account or paid to the holders of the
Certificates (the 'CERTIFICATEHOLDERS').
If the principal of the Notes of a series or class is scheduled to be paid
in full on a date specified in the related prospectus supplement (the 'EXPECTED
PRINCIPAL PAYMENT DATE'), the Notes will have an accumulation period (the
'ACCUMULATION PERIOD'). The Accumulation Period will begin at the close of
business on the date specified in or determined in the manner specified in the
related prospectus supplement (the 'ACCUMULATION PERIOD COMMENCEMENT DATE') and
will end on the earliest of (a) the commencement of an Investment Period or an
Early Amortization Period for that series and (b) payment in full of the
outstanding principal amount of the Notes of that series.
During an Accumulation Period, Principal Collections and other specified
amounts allocable to the Notes of a series will be deposited into a trust
account established for the benefit of the Noteholders of that series (a
'PRINCIPAL FUNDING ACCOUNT') and used to make principal distributions to the
Noteholders of that series when due. The amount to be deposited in the Principal
Funding Account for any series of Notes with respect to any Payment Date may be
limited to an amount (the 'CONTROLLED DEPOSIT AMOUNT') specified in the related
prospectus supplement. If a series has more than one class of Notes, each class
may have a different Accumulation Period and a separate Principal Funding
Account and Controlled Deposit Amount, and the related prospectus supplement
will describe any priorities among the classes of a series for deposits of
principal into the Principal Funding Accounts.
In addition, in the event that the Notes of a series are to be redeemed,
the redemption price for that redemption shall be deposited into the Principal
Funding Account for such series.
If the principal of the Notes of a series is scheduled to be paid in
installments commencing on a date specified in the related prospectus supplement
(the 'PRINCIPAL COMMENCEMENT DATE'), the Notes will have an amortization period
(the 'AMORTIZATION PERIOD'). The Amortization Period will begin at the close of
business on the date specified in the related prospectus supplement and will end
on the earliest of (a) the commencement of an Investment Period or an Early
Amortization Period for that series and (b) payment in full of the outstanding
principal amount of the Notes of that series.
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During an Amortization Period, Principal Collections and other specified
amounts allocable to the Notes of a series will be used on each Payment Date to
make principal distributions to any class of Noteholders of that series then
scheduled to receive distributions. The amount to be distributed to Noteholders
of any series of Notes on any Payment Date may be limited to an amount (the
'CONTROLLED AMORTIZATION AMOUNT') for that series specified in the related
prospectus supplement. If a series has more than one class of Notes, each class
may have a different Amortization Period and a separate Controlled Amortization
Amount, and the related prospectus supplement will describe any priorities among
the classes of a series for distributions.
The payment of principal of the Notes of a series or class may commence
earlier than the applicable Expected Principal Payment Date or Principal
Commencement Date, and the final principal payment for the Notes of a series or
class may be made earlier or later than the applicable Expected Principal
Payment Date or other expected date if an Early Amortization Event occurs for
that series or class or under the circumstances described in this prospectus or
in the related prospectus supplement.
If the related prospectus supplement so specifies, the Notes of a series
may have an investment period (the 'INVESTMENT PERIOD'). The Investment Period
for a series of Notes will begin on the day (the 'INVESTMENT PERIOD COMMENCEMENT
DATE') on which an Investment Event for that series has occurred and will end on
the earliest of (a) the commencement of an Early Amortization Period for that
series, (b) the recommencement of the Revolving Period for that series, and (c)
payment of the outstanding principal amount of the Notes of that series in full.
The Investment Events for a series will be set forth in the related prospectus
supplement and Series Supplement.
During an Investment Period, Principal Collections and other specified
amounts allocable to the Notes of a series will be deposited on or before each
Payment Date in a Principal Funding Account and used to make principal
distributions to the Noteholders of that series when due. The amount to be
deposited in a Principal Funding Account for any series of Notes on any Payment
Date will not be limited to any Controlled Deposit Amount or Controlled
Amortization Amount. If a series has more than one class of Notes, each class
may have a separate Principal Funding Account, and the related prospectus
supplement will describe any priorities among the classes of a series for
deposits of principal into the Principal Funding Accounts.
After the date on which the amount on deposit with the Indenture Trustee
for a series of Notes is sufficient to pay and discharge the entire unpaid
principal of and accrued interest on the Notes of that series and the
satisfaction of any other conditions specified in the related Series Supplement
(the 'FULLY FUNDED DATE'), Noteholders of that series will no longer have any
interest in the Receivables and all the representations and covenants of the
Transferor and the Servicer relating to the Receivables, as well as other
specified provisions of the Indenture, and all remedies for breaches of those
representations and warranties will no longer accrue to the benefit of the
Noteholders of that series, in each case unless the Revolving Period for that
series recommences. In addition, upon the occurrence of the Fully Funded Date
for a series, no Non-Principal Collections, Principal Collections, Defaulted
Receivables or Miscellaneous Payments will be allocated to that series unless
the Revolving Period for that series recommences. See 'The Transfer and
Servicing Agreements--Termination; Fully Funded Date.'
During the period (the 'EARLY AMORTIZATION PERIOD') beginning on the day on
which an Early Amortization Event has occurred for a series of Notes and ending
on the earliest of (1) the payment in full of the outstanding principal balance
of the Notes of that series, (2) the recommencement of the Revolving Period for
that series and (3) the Termination Date for that series, the Revolving Period,
the Investment Period, the Amortization Period or the Accumulation Period, as
the case may be, for that series will terminate. See 'The Transfer and Servicing
Agreements--Investment Events and Early Amortization Events' for a description
of events that might result in the commencement of an Early Amortization Period
for a series of Notes.
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During the Early Amortization Period for a series of Notes, Principal
Collections and other specified amounts allocable to the Notes of a series will
be distributed as principal payments to the applicable Noteholders monthly on
each Payment Date beginning with the first Special Payment Date. During the
Early Amortization Period for a series of Notes, distributions of principal to
Noteholders of that series will not be limited to any Controlled Deposit Amount
or Controlled Amortization Amount. In addition, to the extent provided in the
related Series Supplement, any funds on deposit in the Principal Funding Account
for that series will be paid to the Noteholders of the relevant class or series.
Funds on deposit in any Principal Funding Account established for a class
or series of Notes will be invested in Eligible Investments and may be subject
to a guarantee or other mechanism specified in the related prospectus supplement
intended to assure a minimum rate of return on the investment of those funds. In
order to enhance the likelihood of the payment in full of the principal amount
of a series or class of Notes at the end of the related Accumulation Period,
that series or class may be subject to a maturity liquidity facility or other
similar mechanism specified in the related prospectus supplement. A maturity
liquidity facility is a financial contract that generally provides that
sufficient principal will be available to retire the Notes at a specified date.
Notes of a series or class may also be subject to purchase generally at
their respective principal amounts in connection with a remarketing thereof if
so specified in the related prospectus supplement. A purchase of Notes of a
series or class may result in a decrease in the outstanding principal amount of
the series or class prior to the commencement of any related Amortization Period
or Early Amortization Period. The prospectus supplement for any series of Notes
subject to purchase will describe the conditions to and procedures for any
purchase. The proceeds of any purchase would be paid to the holders of the Notes
purchased.
THE INDENTURE AND THE SERIES SUPPLEMENTS
The Indenture contains provisions that generally apply to all series of
Notes. Each Series Supplement will contain provisions that generally apply only
to the series of Notes issued under that Series Supplement.
MODIFICATION OF INDENTURE OR SERIES SUPPLEMENT WITHOUT NOTEHOLDER
CONSENT. The Trust and the Indenture Trustee may, without consent of the
Noteholders but with prior notice to the Rating Agencies, enter into one or more
supplemental indentures or amendments to any Series Supplement for any of the
following purposes:
(1) to correct or amplify the description of the collateral or add
additional collateral;
(2) to provide for the assumption of the Notes and the Indenture
obligations by a permitted successor to the Trust;
(3) to add additional covenants for the benefit of the Noteholders of one
or more series of Notes;
(4) to convey, transfer, assign, mortgage or pledge any property to or with
the Indenture Trustee;
(5) to cure any ambiguity or correct or supplement any provision in the
Indenture or in any Series Supplement or supplemental indenture which
may be inconsistent with any other provision of the Indenture or of any
Series Supplement or supplemental indenture;
(6) to provide for the acceptance of the appointment of a permitted
successor Indenture Trustee or to add to or change any of the
provisions of the Indenture or any Series Supplement as may be
necessary and permitted to facilitate the administration by more than
one trustee;
(7) to modify, eliminate or add to the provisions of the Indenture or any
Series Supplement in order to comply with the Trust Indenture Act of
1939; and
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(8) to add any provisions to change in any manner or eliminate any of the
provisions of the Indenture or modify in any manner the rights of
Noteholders under the Indenture or a Series Supplement; provided that
any action specified in this clause (8) does not adversely affect in
any material respect the interests of any Noteholder unless the
Noteholder consent is obtained as described below.
MODIFICATION OF INDENTURE OR SERIES SUPPLEMENT WITH NOTEHOLDER
CONSENT. With the consent of the holders of a majority in principal amount of
the Controlling Class of each series of Notes affected in any material respect
thereby and prior written notice to the Rating Agencies, the Trust and the
Indenture Trustee may execute a supplemental indenture to add provisions to,
change in any manner or eliminate any provisions of the Indenture or a Series
Supplement, or modify in any manner the rights of the related Noteholders.
'CONTROLLING CLASS' means, with respect to a series of Notes, (1) if there is
only one class of Notes in that series, all the Notes of that series, and (2) if
there is more than one class of Notes outstanding in that series, the class or
classes with the highest rating.
Without the consent of the holder of each outstanding Note affected
thereby, however, 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 applicable
interest rate, unless specifically permitted under the terms of the
Note, or the redemption price for a Note or change any place of payment
where or the coin or currency in which any Note or any interest thereon
is payable or modify any of the provisions of the Indenture in a manner
that would affect the calculation of the amount of any payment of
interest or principal due on any Note on any Payment Date;
(2) impair the right to institute suit for the enforcement of specified
provisions of the Indenture regarding payment;
(3) reduce the percentage of the aggregate principal amount of the
outstanding Notes, the consent of the holders of which is required for
any specified supplemental indenture or the consent of the holders of
which is required for any waiver of compliance with specified
provisions of the Indenture or of specified defaults under the
Indenture and their consequences as provided for in the Indenture;
(4) modify or alter the provisions of the Indenture regarding the voting of
Notes held by the Trust, any other obligor on the Notes, the Transferor
or an affiliate of any of them;
(5) reduce the percentage of the aggregate 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 Trust Estate if the proceeds
of the sale would be insufficient to pay the principal amount and
accrued but unpaid interest on the outstanding Notes;
(6) decrease the percentage of the aggregate outstanding principal amount
of the Notes required to amend the sections of the Indenture which
specify the applicable percentage of aggregate outstanding principal
amount of the Notes necessary to amend the Indenture; or
(7) permit the creation of any lien ranking prior to or on a parity with
the lien of the Indenture on any part of the Trust Estate or, except as
otherwise permitted or contemplated in the Indenture, terminate the
lien of the Indenture on the Trust Estate or deprive the holder of any
Note of the security afforded by the lien of the Indenture.
EVENTS OF DEFAULT; RIGHTS UPON EVENT OF DEFAULT. 'EVENTS OF DEFAULT' for a
series of Notes, in addition to any specified under the applicable Series
Supplement, will consist of:
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(1) any failure to pay interest on the Notes as and when the same becomes
due and payable, which failure continues unremedied for five days;
(2) any failure to make any required payment of principal on the Notes,
other than the final payment, which failure continues unremedied for
five days after the giving of written notice of the failure (a) to the
Servicer by the Indenture Trustee or (b) to the Servicer and the
Indenture Trustee by the holders of not less than 25% of the aggregate
outstanding principal amount of the related Notes;
(3) any failure to observe or perform in any material respect any other
covenants or agreements in the Indenture, which failure materially and
adversely affects the rights of related Noteholders, and which failure
in either case continues for 30 days after the giving of written notice
of the failure (a) to the Trust and the Transferor (or the Servicer, as
applicable) by the Indenture Trustee or (b) to the Trust, the
Transferor (or the Servicer, as applicable) and the Indenture Trustee
by the holders of not less than 25% of the aggregate outstanding
principal amount of the related Notes;
(4) failure to pay the unpaid principal balance of any series or class of
Notes by the final payment date for that series or class, if any, set
forth in the prospectus supplement for that series; and
(5) specified events of bankruptcy, insolvency or receivership relating to
the Trust.
The amount of principal required to be paid to Noteholders under the
Indenture will generally be limited to amounts available to be deposited in the
Principal Funding Account for such series. Therefore, the failure to pay
principal on a series or class of Notes generally will not result in the
occurrence of an Event of Default until the applicable final payment date, if
any, for that series or class.
If an Event of Default should occur and be continuing with respect to any
series of Notes, the Indenture Trustee or the holders of a majority in principal
amount then outstanding of the Controlling Class for that series, may declare
the principal of those Notes to be immediately due and payable. This declaration
will constitute an Early Amortization Event for that series and may, under
specified circumstances, be rescinded by the holders of a majority in principal
amount of the Controlling Class. See 'The Transfer and Servicing
Agreements--Investment Events and Early Amortization Events.'
If the Notes of any series are declared due and payable following an Event
of Default with respect to that series, the Indenture Trustee may institute
proceedings to:
(1) collect amounts due or foreclose on Trust property,
(2) exercise remedies as a secured party,
(3) if the Event of Default relates to the failure to make any required
payment of interest or principal and the principal amount of those
Notes has been declared due and payable, sell the portions of the
related Trust Estate allocated to that series as described in the
prospectus supplement for that series, or
(4) elect to have the Trust maintain possession of the portions of the
Trust Estate allocated to that series and continue to apply Collections
as if there had been no declaration of acceleration (although the Early
Amortization Period commenced by that declaration will continue unless
the declaration is rescinded).
The Indenture Trustee, however, is prohibited from selling or liquidating an
interest in the Trust Estate following an Event of Default, unless:
(1) the holders of all the outstanding Notes of the affected series consent
to the sale,
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(2) the proceeds of the sale are sufficient to pay in full the principal of
and the accrued interest on the outstanding Notes of the affected
series at the date of the sale, or
(3) in specified cases, the Indenture Trustee determines that the Trust
Estate is reasonably unlikely to provide sufficient funds on an ongoing
basis to make all payments on the affected series as those payments
would have become due if the affected series had not been declared due
and payable, and the Indenture Trustee obtains the consent of the
holders of a majority of the aggregate outstanding principal amount of
the Controlling Class of that series.
Following a declaration that the Notes of any series are immediately due
and payable,
(1) Noteholders will be entitled to pro rata repayment of principal on the
basis of their respective unpaid principal balances, and
(2) repayment in full of the accrued interest on and unpaid principal
balances of the Notes of that series will be made prior to any further
distribution on the subordinated portion of the Certificates.
Subject to the provisions of the Indenture regarding the duties of the
Indenture Trustee, if an Event of Default occurs and is continuing with respect
to the Notes of any series or class, the Indenture Trustee will be under no
obligation to exercise any of the rights or powers under the Indenture at the
request or direction of any of the holders of the Notes, if the Indenture
Trustee reasonably believes it will not be adequately indemnified against the
costs, expenses and liabilities which might be incurred by it in complying with
that request. Subject to the provisions for indemnification and limitations
specified in the Indenture, the holders of a majority in aggregate principal
amount of the outstanding Notes of the Controlling Class of a series will have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Indenture Trustee for that series. The holders of a
majority in aggregate principal amount then outstanding of the Controlling
Class, may, in specified cases, waive any default with respect to that series,
except a default in the payment of principal or interest or a default in respect
of a covenant or provision of the Indenture or the applicable Series Supplement
that cannot be modified without the waiver or consent of all of the holders of
the Notes of that series.
No holder of a Note of any series will have the right to institute any
proceeding under the Indenture, unless:
(1) the holder's Note is in the Controlling Class,
(2) the holder previously has given to the Indenture Trustee written
notice of a continuing Event of Default,
(3) the holders of not less than 25% in aggregate principal amount of the
outstanding Notes of the Controlling Class, have made written request
of the Indenture Trustee to institute a proceeding in its own name as
Indenture Trustee,
(4) the holder or holders have offered the Indenture Trustee reasonable
indemnity,
(5) the Indenture Trustee has for 60 days failed to institute a
proceeding, and
(6) no direction inconsistent with the written request has been given to
the Indenture Trustee during the 60-day period by the holders of a
majority in aggregate principal amount of outstanding Notes.
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If an Event of Default occurs and is continuing with respect to any series
of Notes and if it is known to the Indenture Trustee, the Indenture Trustee will
mail notice of the Event of Default to each Noteholder of that series within 60
days after the Event of Default becomes known to the Indenture Trustee. Other
than in the case of a failure to make any required payment of principal or
interest on any Note, the Indenture Trustee may withhold the notice beyond the
60-day period if and so long as it determines in good faith that withholding the
notice is in the interests of the Noteholders of the related series.
In addition, the Indenture Trustee and each Noteholder and Note Owner, by
accepting a Note (or interest in a Note), will covenant that they will not, for
a period of one year and one day after the termination of the Indenture,
institute against the Trust or Transferor any bankruptcy, reorganization or
other proceeding under any federal or state bankruptcy or similar law.
Neither the Indenture Trustee in its individual capacity nor the Owner
Trustee in its individual capacity, nor any holder of a Certificate, including
the Transferor, nor any of their respective owners, beneficiaries, agents,
officers, directors, employees, affiliates, successors or assigns will, in the
absence of an express agreement to the contrary, be personally liable for the
payment of the principal of or interest on the Notes or for the agreements of
the Trust contained in the Indenture or in any Series Supplement.
CERTAIN COVENANTS. The Indenture provides that the Trust may not
consolidate with or merge into any other entity, unless, among other things:
(1) the entity formed by or surviving the merger or the consolidation is
organized under the laws of the United States, any state or the
District of Columbia,
(2) the entity expressly assumes the Trust's obligation to make due and
punctual payments on the Notes and the performance or observance of
every agreement and covenant of the Trust under the Indenture and each
Series Supplement,
(3) no Event of Default shall have occurred and be continuing immediately
after the merger or consolidation,
(4) the Rating Agency Condition has been satisfied with respect to the
merger or consolidation,
(5) any action necessary to maintain the lien and security interest
created by the Indenture has been taken, and
(6) the Trust has received a Tax Opinion regarding the merger or
consolidation.
The Trust will not, among other things, except as expressly permitted by
the Indenture, the Series Supplements or the Transfer and Servicing Agreements
(collectively, the 'RELATED DOCUMENTS'),
(1) 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 or
interest payable in respect of the Notes (other than amounts withheld
under the U.S. Internal Revenue Code 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 any part of
the Trust Estate,
(3) dissolve or liquidate in whole or in part,
(4) permit the validity or effectiveness of the 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,
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(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 Trust Estate or any part thereof, or any interest
therein or the proceeds thereof, or
(6) permit the lien of the Indenture not to constitute a valid first
priority security interest in the Trust Estate.
Except as specified in the related prospectus supplement, the Trust may not
engage in any activity other than as described above under 'The Trust.' The
Trust will not incur, assume or guarantee any indebtedness other than
indebtedness incurred pursuant to the Notes, the Indenture, or otherwise in
accordance with the Transfer and Servicing Agreements.
ANNUAL COMPLIANCE STATEMENT. The Trust will be required to file annually
with the Indenture Trustee a written statement as to the fulfillment of its
obligations under the Indenture.
INDENTURE TRUSTEE'S ANNUAL REPORT. The Indenture Trustee will be required
to mail each year to all Noteholders, to the extent required under the Trust
Indenture Act of 1939, a brief report relating to:
(1) its eligibility and qualification to continue as Indenture Trustee
under the Indenture,
(2) any amounts advanced by it under the Indenture,
(3) the amount, interest rate and maturity date of specified indebtedness
owing by the Trust to the Indenture Trustee in its individual
capacity,
(4) the property and funds physically held by the Indenture Trustee as
trustee, and
(5) any action taken by it that materially affects the Notes and that has
not been previously reported.
SATISFACTION AND DISCHARGE OF INDENTURE. The Indenture will be discharged
with respect to the Notes of any series upon the delivery of all the Notes of
that series to the Indenture Trustee for cancellation or upon deposit of funds
sufficient for the payment in full of all of the Notes of that series with the
Indenture Trustee.
EXCLUDED SERIES
A series of Notes may be designated as an excluded series (an 'EXCLUDED
SERIES') with respect to a series of Notes previously issued by the Trust as to
which the Accumulation Period or Amortization Period has commenced (the
previously issued series being the 'PAIRED SERIES').
Each Excluded Series will be prefunded with an initial deposit to a
prefunding account in an amount equal to the initial principal balance of the
Excluded Series and primarily from the proceeds of the offering of the Excluded
Series. The prefunding account will be held for the benefit of the Excluded
Series and not for the benefit of the Paired Series. As funds are accumulated in
the Principal Funding Account for the Paired Series or are distributed to
holders of Notes of the Paired Series, an equal amount of funds on deposit in
any prefunding account for the prefunded Excluded Series will be released (which
funds are expected to be distributed to the Certificateholders). Until the
Paired Series is paid in full, no Non-Principal Collections, Principal
Collections, Defaulted Amounts or Miscellaneous Payments will be allocated to
the Excluded Series. In addition, it is expected that any Excluded Series will
be excluded from the calculation of the Required Pool Balance until the Invested
Amount of the Paired Series is zero.
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COLLECTION ACCOUNT
The Servicer has established and will maintain an Eligible Deposit Account
for the benefit of the Noteholders in the name of the Indenture Trustee (the
'COLLECTION ACCOUNT') into which the Servicer will deposit collections as
described in '--Allocation of Collections; Deposits in Collection Account.'
'ELIGIBLE DEPOSIT ACCOUNT' means either
(a) a segregated account with an Eligible Institution or
(b) a segregated trust account with the corporate trust department of a
depository institution organized under the laws of the United States
or any one of the states thereof, including the District of Columbia
(or any domestic branch of a foreign bank), having corporate trust
powers and acting as trustee for funds deposited in such account, so
long as any of the securities of the depository institution has a
credit rating from each Rating Agency in one of its generic rating
categories which signifies investment grade.
'ELIGIBLE INSTITUTION' means
(a) the corporate trust department of the Indenture Trustee or
(b) a depository institution organized under the laws of the United States
or any one of the states thereof, or the District of Columbia (or a
domestic branch of a foreign bank), which at all times:
(1) has either:
(x) a long-term unsecured debt rating of Aa2 or better by Moody's
Investors Service, Inc. ('MOODY'S'), AA or better by Standard
& Poor's Ratings Services ('STANDARD & POOR'S') and, if rated
by Fitch IBCA, Inc. ('FITCH')and so long as Fitch is a Rating
Agency, AA or better by Fitch or such other rating as is
acceptable to each Rating Agency or
(y) a certificate of deposit rating of P-1 by Moody's, A-1 by
Standard & Poor's and, if rated by Fitch and so long as Fitch
is a Rating Agency, F-1 by Fitch or such rating as is
acceptable to each Rating Agency
and
(2) is a member of the Federal Deposit Insurance Corporation.
Funds in the Collection Account generally will be invested in Eligible
Investments.
'ELIGIBLE INVESTMENTS' will be specified in the Trust Sale and Servicing
Agreement and will be limited to investments that meet the criteria of the
Rating Agencies from time to time as consistent with the then-current rating of
each series and class of Notes then being rated by the Rating Agencies.
'RATING AGENCY' means any nationally recognized rating agency designated by
the Transferor in the related Series Supplement or otherwise then rating the
Notes of a series.
'RATING AGENCY CONDITION' means that each Rating Agency (other than
Moody's) shall have given its written approval that the contemplated action will
not result in a reduction or withdrawal of the rating of any outstanding series
or class of Notes then rated by that Rating Agency and, if Moody's is a Rating
Agency, unless otherwise specified in the Related Documents, prior written
notice to Moody's.
Any earnings (net of losses and investment expenses) on funds in the
Collection Account will be credited to the Collection Account. The Servicer will
have the revocable power to instruct the Indenture Trustee to make withdrawals
and payments from the Collection Account for the purpose of carrying out
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its duties under the Indenture. The Servicer may select an appropriate agent as
representative of the Servicer for the purpose of designating investments.
EXCESS FUNDING ACCOUNT
The Servicer has established and will maintain an Eligible Deposit Account
for the benefit of the Noteholders in the name of the Indenture Trustee (the
'EXCESS FUNDING ACCOUNT') into which available amounts will be deposited so that
the Pool Balance will not be less than the Required Pool Balance.
On each day, available amounts, including Principal Collections allocated
to each series during the Revolving Period for such series, will be deposited in
the Excess Funding Account to the extent that the Required Pool Balance exceeds
the Pool Balance on such date. Generally, no funds will be deposited in the
Excess Funding Account during an Early Amortization, Amortization, Accumulation
or Investment Period for a series or for any other period specified in the
Series Supplement for that series.
In addition, as described in the prospectus supplement for that series, the
net proceeds from the issuance of a new series of Notes, or the increase in the
principal amount of any series of Notes then outstanding, may be available for
deposit into the Excess Funding Account.
The remainder of such funds may be distributed to the Certificateholders
or, at their direction, deposited in the Excess Funding Account. In addition,
the Certificateholders may direct the Servicer, Owner Trustee and Indenture
Trustee to deposit any amounts otherwise distributable to the Certificateholders
into the Excess Funding Account.
Funds on deposit in the Excess Funding Account will be invested by the
Indenture Trustee at the direction of the Servicer generally in Eligible
Investments. Any earnings (net of losses and investment expenses) on funds in
the Excess Funding Account will be deposited in the Collection Account and shall
be Investment Proceeds when so deposited.
Funds on deposit in the Excess Funding Account will be available for
distribution to the Certificateholders to the extent that the Pool Balance
exceeds the Required Pool Balance for such date. In addition, a portion of the
funds in the Excess Funding Account, if any, will be allocated to a series or
class of Notes which are in an Amortization, Accumulation, Early Amortization or
Investment Period in accordance with the related Series Supplement and as
described in the related prospectus supplement.
'POOL BALANCE' means, as of the time of determination, the aggregate amount
of Principal Receivables, excluding any Defaulted Receivable after the Payment
Date in which it became a Defaulted Receivable in the Trust at such time, minus
the aggregate balance in dealer accounts in World Omni's Floorplan Equity
Program on that date.
'PRINCIPAL RECEIVABLES' means, with respect to an Account, amounts shown on
the Servicer's records as Receivables (other than such amounts which represent
Non-Principal Receivables) payable by the related dealer plus the amount of any
Purchased Participation Receivable or interest therein; provided, that if a
Participation has been created in respect of such Account, the amounts so
payable by the related Dealer that are allocable to such Participation shall not
be a part of the 'Principal Receivables' with respect to such Receivable.
'REQUIRED POOL BALANCE' shall mean, on any day, an amount equal to (a) the
sum of the amounts for each series (other than any series or portion thereof
which is designated as being an Excluded Series until the Invested Amount of the
Paired Series is zero) obtained by multiplying the Required Participation
Percentage (as specified in the related prospectus supplement) by the Invested
Amount for such series at such time plus (b) the sum of the Available
Subordinated Amount (as specified in the related prospectus supplement) for each
series.
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ALLOCATION PERCENTAGES
ALLOCATIONS AMONG SERIES. Pursuant to the Indenture, during each
Collection Period the Servicer will allocate to each outstanding series its
share of Non-Principal Collections, Principal Collections, Defaulted Amount and
Miscellaneous Payments based on the applicable Series Allocable Non-Principal
Collections, Series Allocable Principal Collections, Series Allocable Defaulted
Amount and Series Allocable Miscellaneous Payments.
'INVESTED AMOUNT' means, for a series on any date, the amount specified
in the related Series Supplement. The Invested Amount for any series may be
increased or decreased from time to time as specified in the related Series
Supplement.
'MISCELLANEOUS PAYMENTS' means, for any date, the sum of Adjustment
Payments and Transfer Deposit Amounts deposited into the Collection Account
on that date available to be treated as Miscellaneous Payments.
'RESET DATE' means the last day of a Collection Period and any other
day specified as a Reset Date in a Series Supplement.
'SERIES ADJUSTED INVESTED AMOUNT' means, for any series on any date,
unless otherwise set forth in the Series Supplement for that series, an
amount equal to the sum of (a) the Invested Amount of that series on the
most recent Reset Date (or, during or Early Amortization Period for that
series, the Invested Amount as of the close of business on the date
immediately preceding the date on which such Early Amortization Period
began) and (b) the Available Subordinated Amount for that series on the most
recent Reset Date.
'SERIES ALLOCABLE NON-PRINCIPAL COLLECTIONS,' 'SERIES ALLOCABLE
PRINCIPAL COLLECTIONS,' and 'SERIES ALLOCABLE MISCELLANEOUS PAYMENTS' mean,
for any series for any day, the product of the Series Allocation Percentage
for that series for that day and the amount of Non-Principal Collections,
Principal Collections and Miscellaneous Payments, respectively, for that
day.
'SERIES ALLOCABLE DEFAULTED AMOUNT' means, for any series for any
Collection Period, the product of the weighted average Series Allocation
Percentage for that series for that Collection Period and the Defaulted
Amount for that Collection Period.
'SERIES ALLOCATION PERCENTAGE' means, for a series on any date, the
percentage equivalent of a fraction, the numerator of which is the Series
Adjusted Invested Amount as of such day and the denominator of which is the
Trust Adjusted Invested Amount as of such day.
'TRUST ADJUSTED INVESTED AMOUNT' means, for any day, the sum of the
Series Adjusted Invested Amounts for all outstanding series.
ALLOCATION BETWEEN THE NOTEHOLDERS AND THE CERTIFICATEHOLDERS. The
Servicer will allocate amounts initially allocated to each series between the
Notes and the Certificates for each day and for each Collection Period as
described in the related prospectus supplement. If a series of Notes consists of
more than one class, the amounts allocated to the Notes of that series will be
allocated between the classes as described in the prospectus supplement for that
series.
EXCESS PRINCIPAL COLLECTIONS FOR ALL SERIES. Principal Collections
allocated to the Notes of a series will first be allocated to make required
deposits for the benefit of or payments to the Noteholders of that series or a
class of that series, in each case if and to the extent specified in the Series
Supplement for that series. The Servicer will determine for each day the amount
of available noteholder principal collections for each series remaining after
the required deposits and payments, if any ('EXCESS PRINCIPAL COLLECTIONS'). The
Servicer will allocate Excess Principal Collections to cover any deposits for
the benefit of or payments to Noteholders of any series which are either
scheduled or permitted and which
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have not been covered out of Principal Collections and other specified amounts
allocated to that series ('PRINCIPAL SHORTFALLS'). Excess Principal Collections
will not be used to cover unreversed receivable charge-offs ('INVESTOR
CHARGE-OFFS') for any series. If Principal Shortfalls exceed Excess Principal
Collections for any day, Excess Principal Collections generally will be
allocated pro rata among the applicable series based on the relative amounts of
Principal Shortfalls. To the extent that Excess Principal Collections exceed
Principal Shortfalls, the balance will be first, deposited into the Excess
Funding Account to the extent the Required Pool Balance exceeds the Pool Balance
and second, distributed to the Certificateholders in accordance with the Trust
Agreement.
ALLOCATION OF COLLECTIONS; DEPOSITS IN COLLECTION ACCOUNT
The Servicer, no later than two business days after the processing date,
will deposit all collections received with respect to the Receivables (excluding
portions allocable to the Certificateholders) in each calendar month (each, a
'COLLECTION PERIOD') into the Collection Account. Notwithstanding the foregoing
requirement for daily deposits, for so long as:
(1) World Omni remains the Servicer under the Trust Sale and Servicing
Agreement,
(2) no Servicing Default has occurred and is continuing, and
(3) World Omni either (a) maintains a short-term debt rating of at least
A-1 by Standard & Poor's and P-1 by Moody's, (b) arranges for and
maintains a letter of credit or other form of Enhancement for the
Servicer's obligations to make deposits of collections on the
Receivables in the Collection Account that is acceptable in form and
substance to each Rating Agency or (c) otherwise satisfies the Rating
Agency Condition, then, subject to any limitations in the
confirmations referred to below,
World Omni need not deposit collections into the Collection Account on the day
indicated in the preceding sentence but may use for its own benefit all of those
collections until the Payment Date (whether or not such funds will be
distributed to Noteholders, retained in the Collection Account or deposited in
another account on such Payment Date), at which time World Omni will make the
deposits in an amount equal to the net amount of the deposits and withdrawals
which would have been made had the conditions of this sentence not applied;
provided, however, that prior to ceasing daily deposits the Rating Agency
Condition shall have been satisfied.
In addition, during any Collection Period, the Servicer will generally be
required to deposit collections into the Collection Account only up to the
aggregate amount of collections required to be deposited into any deposit,
trust, reserve or similar account maintained for the benefit of Noteholders of
any series or, without duplication, distributed on the related Payment Date to
Noteholders, to any agent or to any Enhancement Provider pursuant to the terms
of any Series Supplement or enhancement agreement with respect to the related
Collection Period and if, at any time prior to that Payment Date, the amount of
collections deposited in the Collection Account exceeds the amount required to
be deposited, the Servicer will be permitted to withdraw the excess from the
Collection Account.
On any date on which collections are deposited in the Collection Account,
the Servicer will distribute to the Certificateholders in accordance with the
Trust Agreement the portion allocated to the Certificateholders of the
Collections allocable to each series as specified in the related Series
Supplement and described in the related prospectus supplement.
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SUBORDINATION OF CERTIFICATE; ENHANCEMENTS
SUBORDINATION OF CERTIFICATES. The Certificates will be subordinated to
the rights of Noteholders of each series of Notes to the extent described in the
related prospectus supplement. The amount of the subordination for any series of
Notes is referred to herein as the 'AVAILABLE SUBORDINATED AMOUNT' for that
series. The Available Subordinated Amount for any series of Notes will be
subject to decrease and increase if and to the extent provided in the related
Series Supplement and described in the related prospectus supplement. The
prospectus supplement for each series of Notes will describe the manner in which
collections attributable to the Available Subordinated Amount for that series
may be drawn upon to make payments to or for the benefit of the holders of Notes
of that series. If so provided in the related Series Supplement, the Available
Subordinated Amount for a series of Notes may be structured so as to be
available to more than one series of Notes.
ENHANCEMENTS. In addition to the subordination described above, for any
series of Notes, Enhancements may be provided for one or more classes of Notes.
These Enhancements may include a letter of credit, surety bond, cash collateral
account, spread account, guaranteed rate agreement, swap or other interest
protection agreement, repurchase obligation, cash deposit or another form of
credit enhancement described in the related prospectus supplement or any
combination of the foregoing. Enhancements may also be provided to a series or
class or classes of a series by subordination provisions which require that
distributions of principal and/or interest be made with respect to the Notes of
that series, class or classes before distributions are made to one or more other
series or classes. If so specified in the related prospectus supplement, any
form of Enhancement may be structured so as to be available to more than one
class or series to the extent described therein.
If Enhancement is provided for a series of Notes, the related prospectus
supplement will include a description of
o the amount payable under that Enhancement,
o any conditions to payment thereunder not otherwise described herein,
o the conditions under which the amount payable under that Enhancement may
be reduced and the conditions under which that Enhancement may be
terminated or replaced, and
o any material provisions of any agreement applicable relating to that
Enhancement.
Additionally, in specified cases, the related prospectus supplement may set
forth information for the applicable Enhancement Provider, including
o a brief description of its principal business activities,
o its principal place of business, place of organization and the
jurisdiction under which it is chartered or licensed to do business,
o if applicable, the identity of regulatory agencies which exercise
primary jurisdiction over the conduct of its business, and
o its total assets, and its stockholders' equity or policyholders'
surplus, if applicable, as of a date specified in the related prospectus
supplement.
LIMITATIONS ON SUBORDINATION AND ENHANCEMENTS. The presence of an
Available Subordinated Amount or Enhancement for a series or class of Notes is
intended to enhance the likelihood of receipt by Noteholders of that series or
class of the full amount of principal of and interest on that series or class
and to decrease the likelihood that the Noteholders will experience losses.
However, neither subordination of the Certificates nor the Enhancement for that
series or class will provide protection against all risks of loss or will
guarantee repayment of the entire principal balance of and interest on the
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Notes. If losses occur which exceed the amount covered by the subordination or
Enhancement or which are not covered by the subordination or Enhancement,
Noteholders will bear their allocable share of deficiencies. In addition, if
specific Enhancement is provided for the benefit of more than one class or
series, Noteholders of that class or series will be subject to the risk that the
Enhancement will be exhausted by the claims of Noteholders of other classes or
series.
DISTRIBUTIONS
Payments to Noteholders of a series or a class will be made from the
Collection Account and any accounts established for the benefit of Noteholders
of that series or class as described in the related prospectus supplement.
NEW ISSUANCES
The Indenture provides that the Trust may issue additional series of Notes
pursuant to one or more Series Supplements, which shall specify, among other
things, for any series of Notes:
(1) its name or designation,
(2) its initial principal amount (or method for calculating its initial
principal amount),
(3) its interest rate (or the method for determining its interest rate),
(4) a date on which it will begin its Accumulation Period or Amortization
Period, if any,
(5) the method for allocating principal and interest to the Noteholders of
that series,
(6) the percentage used to calculate monthly servicing fees,
(7) the issuer and terms of any Enhancement for that series or the level
of subordination provided by the Certificates,
(8) the terms on which the Notes of the series may be exchanged for Notes
of another series, be subject to repurchase, optional redemption or
mandatory redemption or be remarketed by any remarketing agent,
(9) the final payment date for that series, and
(10) any other terms permitted by the Indenture (all the foregoing terms,
the 'PRINCIPAL TERMS' of that series).
The Transferor may offer any series of Notes to the public under a prospectus or
other disclosure document (a 'DISCLOSURE DOCUMENT') in transactions either
registered under the Securities Act of 1933 or exempt from registration,
directly or through one or more underwriters or placement agents. There is no
limit to the number of series of Notes that may be issued under the Indenture.
The Indenture provides that the Transferor may specify Principal Terms of a
new series of Notes that differ substantially from any other series. Further,
one or more series of Notes may be in their Investment Periods, Early
Amortization Periods, Amortization Periods or Accumulation Periods while other
series are not. Thus, some series of Notes may be amortizing or accumulating
principal, while other series are not. Moreover, different series of Notes may
have the benefits of different forms of Enhancement issued by different
entities. Under the Indenture, the Indenture Trustee will hold each form of
Enhancement only on behalf of the series of Notes (or a particular class within
a series) to which it relates. The Indenture also provides that the Transferor
may specify different rates and Monthly Servicing Fees for each series of Notes
(or a particular class within a series). In addition, the Transferor
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has the option under the Indenture to vary among series of Notes (or classes
within a series) the terms upon which that series (or classes within a series)
may be repurchased by the Transferor.
Under the Indenture and pursuant to a Series Supplement, a new series of
Notes may be issued only upon the satisfaction of specified conditions. However,
the terms of any new series will not be subject to prior review by or consent of
the Noteholders of any previously issued series of Notes. The Transferor may
cause the issuance of a new series by notifying the Indenture Trustee and other
parties at least five business days in advance of the applicable Series Issuance
Date. The notice shall state the designation of any series of Notes (and classes
within a series, if any). The Indenture provides that the Indenture Trustee will
issue a new series only upon delivery to it of the following:
(1) a Series Supplement in form satisfactory to the Indenture Trustee
signed by the Owner Trustee on behalf of the Trust and specifying the
Principal Terms of the series,
(2) any Enhancement and related agreement, signed by the Owner Trustee on
behalf of the Trust and the Servicer, as applicable,
(3) an opinion of counsel to the effect that, for federal income tax
purposes, the issuance will not adversely affect the characterization
of the Notes of any outstanding series or class of Notes as debt, the
issuance will not cause a taxable event to any Noteholders, the Trust
will not be an association or publicly traded partnership taxable as a
corporation (an opinion of counsel to the effect referred to in the
three prior clauses with respect to any action is referred to herein
as a 'TAX OPINION') and the new series of Notes will be characterized
as debt, and
(4) written confirmation that the Rating Agency Condition has been
satisfied.
Each new issuance is also subject to the condition that the Transferor
shall have represented and warranted that the issuance shall not, in the
reasonable belief of the Transferor, cause an Early Amortization Event or
Investment Event to occur for any outstanding series or class of Notes.
Upon satisfaction of all the foregoing conditions, the Indenture Trustee
will issue the new series of Notes.
THE INDENTURE TRUSTEE
Harris Trust and Savings Bank, an Illinois banking corporation, serves as
trustee under the Indenture (the 'INDENTURE TRUSTEE'). The principal executive
offices of the Indenture Trustee are located at 311 West Monroe Street, 12th
Floor, Chicago, Illinois 60601, and its telephone number is (312) 461-6030.
In early 2000, the Indenture Trustee entered into an agreement to sell its
indenture trust business to a subsidiary of the Bank of New York Company, Inc.
The sale is subject to regulatory approval and is expected to close during late
March 2000. The assumption of the role of Indenture Trustee by the The Bank of
New York Company subsidiary is not expected to occur until May 2000.
The Indenture Trustee may give notice of its intent to resign at any time,
in which event the Trust will be obligated to appoint a successor trustee. The
Trust may also remove the Indenture Trustee if the Indenture Trustee ceases to
be eligible to continue as Indenture Trustee under the Indenture, becomes
insolvent, or otherwise becomes incapable of acting. In these circumstances, the
Trust will be obligated to appoint a successor trustee. The holders of a
majority of the aggregate principal amount of the outstanding Notes will also be
entitled to remove the Indenture Trustee and appoint a successor. Any
resignation or removal of the Indenture Trustee and appointment of a successor
trustee does not become effective until acceptance of the appointment by the
successor trustee.
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REPORTS TO NOTEHOLDERS
On or prior to each Payment Date for a series or class of Notes, the
Servicer will prepare and provide to the Indenture Trustee a statement to be
delivered to the related Noteholders on the Payment Date. For each series of
Notes, the statement will include the following information as to the Notes with
respect to that Payment Date, the period since the previous Payment Date or the
related Collection Period, as applicable:
(1) the total amount distributed to Noteholders;
(2) the amount, if any, of the distribution allocable to principal on each
series or class of Notes;
(3) the amount, if any, of the distribution allocable to interest on each
series or class of Notes;
(4) the aggregate outstanding principal balance for each series or class
of Notes, after giving effect to all payments reported under (2) above
on that date;
(5) the amount of the Monthly Servicing Fee paid to the Servicer with
respect to the related Collection Period or Periods, as the case may
be;
(6) the interest rate applicable for the next Interest Payment Date for
any series or classes of Notes with variable or adjustable rates, if
determinable prior to such date;
(7) the amount of Receivables that became Defaulted Receivables during the
related Collection Period;
(8) the accumulated interest and Principal Shortfalls, if any, on each
series or class of Notes and the change in each of such amounts from
the preceding Payment Date;
(9) the balance of the Excess Funding Account on the last day of the
related Collection Period after giving effect to changes therein or
distributions therefrom on such date; and
(10) with respect to each series of Notes, the items set forth in the
applicable Series Supplement.
Each amount set forth pursuant to subclauses (1) and (2) will be expressed
as a dollar amount per $1,000 of the initial principal balance of the Notes.
Within the prescribed period of time for tax reporting purposes after the
end of each calendar year during which any Notes are outstanding, the Indenture
Trustee shall furnish (or cause to be furnished) to each person or entity who at
any time during the preceding calendar year was a holder of record of Notes and
received any payment thereon, a statement containing such information as may be
required by the Code for the purpose of assisting the Noteholders in the
preparation of their federal income tax returns. As long as the holder of record
of the Notes is Cede, as nominee of DTC, beneficial owners of Notes will receive
tax and other information from Participants and Indirect Participants rather
than from the Indenture Trustee. See 'Certain Federal Income Tax Consequences'
in this prospectus.
BOOK-ENTRY REGISTRATION
The Depository Trust Company ('DTC') is a limited purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a 'clearing corporation' within the meaning of the New York
Uniform Commercial Code and a 'clearing agency' registered pursuant to Section
17A of the Securities Exchange Act of 1934. DTC was created to hold securities
for its participating organizations ('PARTICIPANTS') and to facilitate the
clearance and settlement of securities transactions between Participants through
electronic book-entries, thereby eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers, banks, trust
companies and clearing corporations. Indirect access to the DTC system also is
available to others, such
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as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly
('INDIRECT PARTICIPANTS').
Owners of beneficial interest in Notes sold under this prospectus ('NOTE
OWNERS') that are not Participants or Indirect Participants but desire to
purchase, sell or otherwise transfer ownership of or interests in Notes
generally may do so only through Participants and Indirect Participants. In
addition, Note Owners will receive all distributions of principal and interest
through Participants. Under a book-entry format, Note Owners may experience some
delay in their receipt of payments since such payments will be forwarded by the
Indenture Trustee to Cede & Co. ('CEDE'), as nominee for DTC. DTC will forward
such payments to Participants, which thereafter will forward them to Indirect
Participants or Note Owners. It is anticipated that the only 'Noteholder' of
record will be Cede, as nominee of DTC. Note Owners will not be recognized by
the Indenture Trustee as Noteholders, as such term is used in the Indenture, and
Note Owners will be permitted to exercise the rights of Noteholders only
indirectly through DTC and its Participants.
Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC is required to make book-entry transfers of Notes among
Participants on whose behalf it acts with respect to the Notes and to receive
and transmit payments of principal of, and interest on, the Notes. Participants
and Indirect Participants with which Note Owners have accounts with respect to
the Notes similarly are required to make book-entry transfers and receive and
transmit such payments on behalf of their respective Note Owners. Accordingly,
although Note Owners will not possess Notes, these rules provide a mechanism by
which Note Owners will receive payments and will be able to transfer their
interests in Notes.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and some banks, the ability of a holder to
pledge Notes to persons or entities that do not participate in the DTC system,
or to otherwise act with respect to such Notes, may be limited due to the lack
of a physical certificate for such Notes.
DTC has advised the Transferor that it will take any action permitted to be
taken by a Noteholder under the Indenture or other Related Document only at the
direction of one or more Participants to whose accounts with DTC the Notes are
credited. DTC may take conflicting actions with respect to other undivided
interests to the extent that such actions are taken on behalf of Participants
whose holdings include such undivided interests.
In addition to holding Notes through Participants or Indirect Participants
of DTC in the United States as described above, holders of Notes may hold their
Notes through Clearstream or Euroclear in Europe if they are participants of
such systems, or indirectly through organizations which are participants in such
systems.
Clearstream and Euroclear will hold omnibus positions on behalf of their
participants through customers' securities accounts in Clearstream's and
Euroclear's names on the books of their respective depositories which in turn
will hold such positions in customers' securities accounts in the depositories'
names on the books of DTC.
Transfers between the organization participating in the Clearstream system
(the 'CLEARSTREAM PARTICIPANTS') and the Euroclear system (the 'EUROCLEAR
PARTICIPANTS') will occur in accordance with their respective rules and
operating procedures. Cross-market transfers between persons holding directly or
indirectly through DTC, on the one hand, and directly or indirectly through
Clearstream Participants or Euroclear Participants, on the other hand, will be
effected in DTC in accordance with DTC rules on behalf of the relevant European
international clearing systems by its depositary. Cross-market transactions will
require delivery of instructions to the relevant European international clearing
system by the counterparty in such system in accordance with its rules and
procedures and within its established
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deadlines (European time). The relevant European international clearing system
will, if the transaction meets its settlement requirements, deliver instructions
to its depositary to take action to effect final settlement on its behalf by
delivering or receiving securities in DTC, and making or receiving payment in
accordance with normal procedures for same-day funds settlement applicable to
DTC. Clearstream Participants and Euroclear Participants may not deliver
instructions directly to the depositories.
Because of time-zone differences, credits of securities received in
Clearstream or Euroclear as a result of a transaction with a Participant will be
made during subsequent securities settlement processing and dated the Business
Day following the DTC settlement date. Such credits or any transactions in such
securities settled during such processing will be reported to the relevant
Euroclear or Clearstream Participants on such Business Day. Cash received in
Clearstream or Euroclear as a result of sales of securities by or through a
Clearstream Participant or a Euroclear Participant to a Participant will be
received with value on the DTC settlement date but will be available in the
relevant Clearstream or Euroclear cash account only as of the Business Day
following settlement in DTC. For information with respect to tax documentation
procedures, see 'Certain Federal Income Tax Consequences--Tax Characterization
and Treatment of Notes--Tax Consequences to Foreign Noteholders.'
Clearstream is incorporated under the laws of Luxembourg as a professional
depository. Clearstream holds securities for the Clearstream Participants and
facilitates the clearance and settlement of securities transactions between
Clearstream Participants through electronic book-entry changes in accounts of
Clearstream Participants, thereby eliminating the need for physical movement of
certificates. Transactions may be settled in Clearstream in any of 28
currencies, including United States dollars. Clearstream provides to Clearstream
Participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. Clearstream interfaces with domestic markets in several
countries. As a professional depository, Clearstream is subject to regulation by
the Luxembourg Monetary Institute. Clearstream Participants are recognized
financial institutions around the world, including underwriters, securities
brokers and dealers, banks, trust companies, clearing corporations and other
organizations and may include the underwriters of the Notes. Indirect access to
Clearstream is also available to others, such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a
Clearstream Participant, either directly or indirectly.
Euroclear was created in 1968 to hold securities for the Euroclear
Participants and to clear and settle transactions between Euroclear Participants
through simultaneous electronic book-entry delivery against payment, thereby
eliminating the need for physical movement of certificates and any risk from
lack of simultaneous transfers of securities and cash. Transactions may now be
settled in any of 29 currencies, including United States dollars. Euroclear
includes various other services, including securities lending and borrowing and
interfaces with domestic markets in several countries generally similar to the
arrangements for cross-market transfers with DTC described above. Euroclear is
operated by the Brussels, Belgium office of Morgan Guaranty Trust Company of New
York (the 'EUROCLEAR OPERATOR'), under contract with Euro-clear Clearance
Systems S.C., a Belgian cooperative corporation (the 'COOPERATIVE'). All
operations are conducted by the Euroclear Operator, and all Euroclear securities
clearance accounts and Euroclear cash accounts are accounts with the Euroclear
Operator, not the Cooperative. The Cooperative establishes policy for Euroclear
on behalf of Euroclear Participants. Euroclear Participants include banks
(including central banks), securities brokers and dealers and other professional
financial intermediaries and may include the Underwriters. Indirect access to
Euroclear is also available to other firms that clear through or maintain a
custodial relationship with a Euroclear Participant, either directly or
indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of
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Governors of the Federal Reserve System and the New York State Banking
Department, as well as the Belgian Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System and the applicable Belgian
law. These terms and conditions govern transfers of securities and cash with
Euroclear, withdrawals of securities and cash from Euroclear, and receipts of
payments with respect to securities in Euroclear. All securities in Euroclear
are held on a fungible basis without attribution of specific certificates to
specific securities clearance accounts. The Euroclear Operator acts under these
terms and conditions only on behalf of Euroclear Participants, and has no record
of or relationship with persons holding through Euroclear Participants.
Distributions with respect to Notes held through Clearstream or Euroclear
will be credited to the cash accounts of Clearstream Participants or Euroclear
Participants in accordance with the relevant system's rules and procedures, to
the extent received by its depositary. Such distributions will be subject to tax
reporting in accordance with relevant United States tax laws and regulations.
See 'Certain Federal Income Tax Consequences--Tax Characterization and Treatment
of Notes--Information Reporting and Backup Withholding.' Clearstream or the
Euroclear Operator, as the case may be, will take any other action permitted to
be taken by a Noteholder under the Indenture or other Related Document on behalf
of a Clearstream Participant or Euroclear Participant only in accordance with
its relevant rules and procedures and subject to its depositary's ability to
effect such actions on its behalf through DTC.
Although DTC, Clearstream and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of Notes among participants of DTC,
Clearstream and Euroclear, they are under no obligation to perform or continue
to perform such procedures and such procedures may be discontinued at any time.
Except as required by law, neither the Administrator, the Owner Trustee nor
the Indenture Trustee will have any liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests of the
Notes of any series held by Cede, as nominee for DTC, by Clearstream or by
Euroclear in Europe, or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
DEFINITIVE NOTES
Notes generally will be issued in fully registered, certificated form
('DEFINITIVE NOTES') to Noteholders or their nominees, rather than to the
Depository or its nominee, only if
(1) the Administrator advises the Indenture Trustee in writing that the
Depository is no longer willing or able to discharge properly its
responsibilities with respect to the Notes and the Trust is unable to
locate a qualified successor,
(2) the Administrator, at its option, advises the Indenture Trustee in
writing that it elects to terminate the book-entry system through the
Depository, or
(3) after the occurrence of an Event of Default or a Servicing Default,
Note Owners representing beneficial interests aggregating at least a
majority of the outstanding principal amount of the Notes advise the
appropriate trustee through the Depository in writing that the
continuation of a book-entry system through the Depository (or a
successor thereto) is no longer in the best interest of such Note
Owners.
Upon the occurrence of any event described in the immediately preceding
paragraph, the Depository will notify the Note Owners and the Indenture Trustee
in writing of such occurrence and of the availability of Definitive Notes. Upon
surrender by the Depository of the definitive certificates
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representing the Notes accompanied by registration instructions, the Indenture
Trustee will reissue the related Notes as Definitive Notes to holders thereof.
Payments of principal of, and interest on, the Definitive Notes will
thereafter be made in accordance with the procedures set forth in the Indenture
directly to holders of Definitive Notes in whose names the Definitive Notes were
registered at the close of business on the last day of the preceding month. Such
payments will be made by check mailed to the address of such holder as it
appears on the register maintained by the Indenture Trustee. The final payment
on any Definitive Note, however, will be made only upon presentation and
surrender of such Definitive Note at the office or agency specified in the
notice of final payment to the holders thereof.
Definitive Notes will be transferable and exchangeable at the offices of
the appropriate trustee or of a registrar named in a notice delivered to holders
of Definitive Notes. No service charge will be imposed for any registration of
transfer or exchange, but the appropriate trustee may require payment of a sum
sufficient to cover any tax or other governmental charge imposed in connection
therewith.
THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes terms of:
(1) the Receivables Purchase Agreement under which the Transferor
purchased Receivables from World Omni,
(2) the Trust Sale and Servicing Agreement under which the Trust acquired
those Receivables from the Transferor and the Servicer agreed to
service the Receivables,
(3) the Trust Agreement under which the Trust was created and Certificates
were issued; and
(4) the Administration Agreement, dated as of the Initial Closing Date,
among the Owner Trustee, the Indenture Trustee and World Omni as
Administrator (as amended from time to time, the 'ADMINISTRATIVE
AGREEMENT'), under which World Omni, as administrator, has agreed to
undertake specified administrative duties for the Trust.
Collectively, these four agreements are referred to as the 'TRANSFER AND
SERVICING AGREEMENTS.'
Forms of the Transfer and Servicing Agreements have been filed as exhibits
to the registration statement of which this prospectus forms a part. The
Transferor will provide a copy of the Transfer and Servicing Agreements (without
exhibits) upon request of a Noteholder. This summary does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
all of the provisions of the Transfer and Servicing Agreements. Where particular
provisions or terms used in the Transfer and Servicing Agreements are referred
to, the actual provisions are incorporated by reference as part of the summary.
RECEIVABLES PURCHASE AGREEMENT
SALE OF RECEIVABLES. Pursuant to the Receivables Purchase Agreement, World
Omni sold and transferred to the Transferor all of its right, title and interest
in and to all of the Receivables, related Collateral Security and certain other
property. As described herein, pursuant to the Trust Sale and Servicing
Agreement, the Transferor transferred to the Trust all of its right, title and
interest in and to the Receivables Purchase Agreement. All new Receivables
arising under the Accounts during the term of the Trust, including certain
Purchased Participation Receivables, will be sold to the Transferor and
transferred by the Transferor to the Trust. Accordingly, the aggregate amount of
Receivables in the Trust will fluctuate from day to day as new Receivables are
generated and as existing Receivables are collected, charged off as
uncollectible or otherwise adjusted.
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In connection with the sale of Receivables to the Transferor, World Omni
has indicated in its computer files that the Receivables were sold to the
Transferor and that the Receivables have been transferred by the Transferor to
the Trust. In addition, World Omni delivered to the Transferor a list specifying
all of the Receivables, identifying the principal balances of the Receivables as
of the Initial Closing Date and delivered to the Transferor all documents, if
any, evidencing the Receivables which constitute 'instruments' (as defined in
the Uniform Commercial Code). As a precautionary measure, World Omni has filed
financing statements for the Receivables meeting the requirements of Florida
state law. Otherwise, however, World Omni retains all records relating to
Receivables and does not segregate those records from the records relating to
other accounts. Further, World Omni will not stamp or mark the physical records
to reflect the transfer of the Receivables to the Trust which may affect the
priority of the security interest of the Trust. See 'Risk Factors--Receivables
May be Uncollectible due to Superior Interests' and 'Certain Legal Aspects of
the Receivables--Transfer of Receivables.'
REPRESENTATIONS AND WARRANTIES. World Omni has represented to the
Transferor as of the Initial Closing Date and each Series Issuance Date that,
among other representations, it was duly incorporated and in good standing and
has the authority to consummate the transactions contemplated by the Receivables
Purchase Agreement.
World Omni also represents to the Transferor regarding the Receivables
that:
(1) each Receivable and all Collateral Security existing on the Initial
Closing Date or, in the case of Additional Accounts, on the applicable
Addition Date, and on each Transfer Date, has been conveyed to the
Transferor free and clear of any lien (other than the lien held by
World Omni or, with respect to a participation interest, the interest
of the other participants);
(2) with respect to each Receivable and all Collateral Security existing
on the Initial Closing Date or, in the case of Additional Accounts, on
the applicable Addition Date, and on each Transfer Date, all consents,
licenses, approvals or authorizations of or registrations or
declarations with any governmental authority required to be obtained,
effected or given by World Omni in connection with the conveyance of
such Receivable or Collateral Security to the Transferor have been
duly obtained, effected or given and are in full force and effect;
(3) on the Initial Cut-Off Date and the Initial Closing Date, each Initial
Account is an Eligible Account or in the case of an Additional
Account, on the applicable Additional Cut-Off Date and Addition Date,
each Account or Additional Account is an Eligible Account;
(4) On the Initial Closing Date, in the case of the Initial Accounts, and,
in the case of the Additional Accounts, on the applicable Additional
Cut-Off Date, and on each Transfer Date, each Receivable conveyed to
the Transferor on such date is an Eligible Receivable, subject to
certain exceptions provided in the Receivables Purchase Agreement;
and,
(5) Each Participation Agreement, if any, relating to Receivables conveyed
by World Omni permits the transfer of such Receivables to the
Transferor and the Trust and provides that the undivided interest of
such participant is generally pari passu with the remaining undivided
interest in the related Receivables.
In the event of a breach of representation in the preceding paragraph
results in a Disqualified Receivable and the requirement that the Transferor
accept retransfer of that Disqualified Receivable pursuant to the Trust Sale and
Servicing Agreement, then World Omni will repurchase that Disqualified
Receivable from the Transferor on the date of the retransfer. The purchase price
for the Disqualified Receivables will be the face amount of the Disqualified
Receivable, of which at least the amount of any cash deposit required to be made
by the Transferor under the Trust Sale and Servicing Agreement for the
retransfer of the Disqualified Receivables will be paid in cash.
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World Omni also represents to the Transferor that as of the Initial Closing
Date and each Series Issuance Date, as applicable,
(1) the execution and delivery of, the performance of the transactions
contemplated in and the fulfillment of the terms of the Receivables
Purchase Agreement will not conflict with, result in any breach of any
of the material terms and provisions of, or constitute (with or
without notice or lapse of time or both) a material default under, any
indenture, contract, agreement, mortgage, deed of trust, or other
instrument to which World Omni is a party or by which it or its
properties are bound,
(2) the execution and delivery of, the performance of the transactions
contemplated by and the fulfillment of the terms applicable to World
Omni of the Receivables Purchase Agreement will not conflict with or
violate any material requirements of law applicable to World Omni,
(3) there are no proceedings or, to the best knowledge of World Omni,
investigations, pending or threatened against World Omni, before any
governmental authority with respect to certain matters, other than
those disclosed in the Receivables Purchase Agreement,
(4) all appraisals, authorizations, consents, orders, approvals or other
actions of any person or of any governmental body or official required
in connection with the execution and delivery of, the performance of
the transactions contemplated by, and the fulfillment of the terms of
the Receivables Purchase Agreement have been obtained,
(5) the Receivables Purchase Agreement constitutes a legal, valid and
binding obligation of World Omni,
(6) the schedule of various Accounts attached to the Receivables Purchase
Agreement is an accurate and complete listing in all material respects
of all Accounts as of specified dates, and
(7) the Receivables Purchase Agreement or, in the case of Additional
Accounts, the related assignment constitutes a valid sale, transfer
and assignment to the Transferor of all right, title and interest of
World Omni in the Receivables and the Collateral Security and the
proceeds thereof and, upon the taking of certain actions, the
Transferor shall have a first priority perfected ownership interest in
such property.
If the breach of any of the representations and warranties set forth above
results in the obligation of the Transferor to redeem the Notes pursuant to the
Trust Sale and Servicing Agreement and the Indenture, World Omni shall
repurchase the Receivables and the Collateral Security and pay to the Transferor
an amount of cash equal to the amount the Transferor is required to deposit into
the Principal Funding Account.
COVENANTS OF WORLD OMNI. In the Receivables Purchase Agreement, World Omni
agrees to perform its obligations under the agreements relating to the
Receivables and the Accounts in conformity with its then-current policies and
procedures relating to the Receivables and the Accounts.
World Omni also agrees that, except for the transactions occurring pursuant
to the Transfer and Servicing Agreements (including the conveyance of
Participation Interests pursuant to any Participation Agreements), World Omni
will not sell, pledge, assign or transfer any interest in the Receivables to any
other person or grant, create, incur, assume or suffer to exist any lien on any
Receivable or Account, other than a Note or Certificate. In the event World Omni
is unable to transfer Receivables to the Transferor, World Omni also agrees to
allocate payments to the Accounts to the oldest Receivables and have such
payments applied as collections.
World Omni will pay the Servicer all collections received by World Omni in
respect of the Receivables promptly, but in no event later than two business
days after receipt by World Omni.
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In addition, World Omni will notify certain parties after becoming aware of
any lien and will comply in all material respects with all requirements of law
applicable to it.
TERMINATION. The Receivables Purchase Agreement will terminate immediately
after the Trust terminates. In addition, if World Omni becomes party to any
bankruptcy or similar proceeding (other than as a claimant), World Omni will
immediately cease to sell or transfer Receivables to the Transferor and will
promptly give notice of that event to the Transferor, the Trust and the
Indenture Trustee. World Omni may, however, resume sales upon satisfying
specified conditions.
CONVEYANCE OF RECEIVABLES AND COLLATERAL SECURITY
On the Initial Closing Date, the Transferor transferred and assigned to the
Trust all of its right, title and interest in and to the Receivables and the
related Collateral Security as of the Initial Cut-Off Date, all Receivables
thereafter created in the Accounts and its interests in the related Collateral
Security and the Receivables Purchase Agreement, the proceeds of all of the
foregoing and certain other property.
As contemplated above and as described below under '--Addition of
Accounts,' the Transferor has the right, subject to certain limitations and
conditions, and in some circumstancs is obligated, to designate from time to
time additional accounts to be included as Additional Accounts, to purchase from
World Omni the Receivables then existing or thereafter created in such
Additional Accounts and to convey such Receivables to the Trust. Each such
Additional Account must be an Eligible Account. In respect of any conveyance of
Receivables in Additional Accounts, the Transferor will follow the procedures
set forth below, except the list will show information for such Additional
Accounts as of the date such Additional Accounts are identified and selected
(the 'Addition Cut-Off Date').
The Transferor is required to provide to the Trust and to the Indenture
Trustee a true and complete list showing for each Account, as of the Initial
Cut-Off Date or the applicable Additional Cut-Off Date,
o its account number, and
o the aggregate amount of Principal Receivables in the Account.
'ADDITION DATE' means, for an Additional Account, the date from and after
which Additional Accounts are to be included as Accounts pursuant to the Trust
Sale and Servicing Agreement.
'ADDITIONAL CUT-OFF DATE' means, for an Additional Account, the date
specified in the notice of addition delivered with respect to such Additional
Account.
'REPRESENTATION DATE' means:
(1) for each Account, each Series Cut-Off Date and Series Issuance Date,
(2) for each Additional Account, the applicable Additional Cut-Off Date
and Addition Date,
(3) for each Receivable in an Account, each Series Cut-Off Date and the
Transfer Date for the Receivable, and
(4) for each Receivable in an Additional Account, the applicable Transfer
Date.
'SERIES CUT-OFF DATE' means, for a series of Notes, the date designated as
the Series Cut-Off Date in the related prospectus supplement.
'SERIES ISSUANCE DATE' means, with respect to any series, the date on which
the Notes of such series are to be originally issued in accordance with the
Indenture and the applicable Series Supplement.
'TRANSFER DATE' means, for a Receivable arising after the Initial Cut-Off
Date, the date on which the Receivable is originated, unless the Receivable
arose in an Additional Account prior to the applicable Addition Date, in which
case 'Transfer Date' means the Addition Date.
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REPRESENTATIONS AND WARRANTIES BY THE TRANSFEROR
The Transferor represents to the Trust relating to the Accounts, the
Receivables and the Collateral Security that:
(1) for each Account, including each Additional Account, as of each of the
applicable Representation Dates, the Account or Additional Account was
an Eligible Account,
(2) for each Receivable in an Account, including each Receivable in an
Additional Account, the Receivable is an Eligible Receivable or, if
the Receivable is not an Eligible Receivable, the Receivable is
conveyed to the Trust as described below under '--Ineligible
Receivables and Excess Receivables,'
(3) each Receivable and all Collateral Security conveyed to the Trust on
the Transfer Date, and all of the Transferor's right, title and
interest in the Receivables Purchase Agreement, have been conveyed to
the Trust free and clear of any liens, and
(4) all appropriate consents and governmental authorizations required to
be obtained by the Transferor in connection with the conveyance of
each Receivable or Collateral Security have been duly obtained.
If the Transferor breaches any representation described in the preceding
paragraph and the breach remains uncured for 30 days or such longer period as
may be agreed to by the Indenture Trustee, after the earlier to occur of the
discovery of the breach by the Transferor or the Servicer or receipt of written
notice of the breach by the Transferor or the Servicer, and the breach has a
materially adverse effect on the interest of the Noteholders in the Receivable
or, in the case of a breach relating to an Account, all Receivables in the
related Account ('DISQUALIFIED RECEIVABLES') will be reassigned to the
Transferor on the terms and conditions set forth below and the Account shall no
longer be included as an Account.
Each such Disqualified Receivable shall be reassigned to the Transferor on
or before the end of the Collection Period in which the reassignment obligation
arises. The Transferor shall direct the Servicer to deduct the principal balance
of such Disqualified Receivable from the Pool Balance. In the event that the
deduction would cause the Pool Balance to be less than the Required Pool
Balance, on the date on which the reassignment is to occur the Transferor will
be obligated to make a deposit into the Collection Account in immediately
available funds in an amount equal to the amount by which the Pool Balance would
be less than the Required Pool Balance (the amount of the deposit being referred
to herein as a 'TRANSFER DEPOSIT AMOUNT'), provided that if the Transfer Deposit
Amount is not so deposited, the principal balance of the related Receivables
will be deducted from the Pool Balance only to the extent the Pool Balance is
not reduced below the Required Pool Balance and any principal balance not so
deducted will not be reassigned and will remain part of the Trust. Upon
reassignment of any such Receivable, but only after payment by the Transferor of
the Transferor Deposit Amount, if any, the Trust shall automatically transfer,
without recourse, representation or warranty, all of the right, title and
interest of the Trust in and to such Receivable, all Collateral Security and all
monies due or to become due with respect thereto and all proceeds thereof to the
Transferor. The reassignment of the Receivable to the Transferor and the payment
of any related Transfer Deposit Amount will be the sole remedy for any breach of
the representations and warranties described in the preceding paragraph with
respect to the Receivable available to Noteholders or the Indenture Trustee on
behalf of Noteholders.
The Transferor will also represent to the Trust, among other
representations, that as of each Series Issuance Date:
(a) it is duly organized and in good standing, it has the authority to
consummate the transactions contemplated by the Trust Sale and
Servicing Agreement and the Trust Sale and Servicing Agreement
constitutes a valid, binding and enforceable agreement of the
Transferor, and
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(b) the Trust Sale and Servicing Agreement or, in the case of Additional
Accounts, the related assignment constitutes a valid sale, transfer
and assignment to the Trust of all right, title and interest of the
Transferor in the Receivables and the Collateral Security and the
proceeds thereof and, upon the taking of certain actions, the
Transferor shall have an ownership or a first priority perfected
security interest in such property (other than certain liens in favor
of World Omni contemplated by the intercreditor provisions of the
Receivables Purchase Agreement or, with respect to a participation
interest, the interest of the other participants).
In the event that the breach of any representation made by the Transferor
has a materially adverse effect on the Noteholders, and the holders of Notes
evidencing not less than a majority of the aggregate unpaid principal amount of
Notes, by written notice to the Transferor and the Servicer (and to the
Indenture Trustee and the issuer or provider of any Enhancement (an 'ENHANCEMENT
PROVIDER') have exercised their right to have the Notes redeemed pursuant to the
Indenture, the Transferor shall deposit in the Principal Funding Account an
amount equal to the sum of the amounts specified therefor with respect to each
outstanding series in the related Series Supplement. The obligation of the
Transferor to make the deposit into the Principal Funding Account will
constitute the sole remedy respecting a breach of the representations and
warranties available to Noteholders or the Indenture Trustee on behalf of the
Noteholders.
ELIGIBLE ACCOUNTS AND ELIGIBLE RECEIVABLES
An 'ELIGIBLE ACCOUNT' is defined to mean each individual wholesale
financing revolving line of credit extended by World Omni to a Dealer pursuant
to a dealer financing agreement, asset based lending financing agreement or
purchased participation financing agreement or which has been acquired by World
Omni, which line of credit, as of the date of determination thereof:
(1) is established or acquired by World Omni in the ordinary course of
business,
(2) is in favor of a Dealer which is an eligible dealer (which excludes
dealers subject to voluntary or involuntary bankruptcy proceedings or
voluntary or involuntary liquidation),
(3) is in existence and maintained and serviced by World Omni (or a
successor Servicer) or relates to Non-Serviced Participation
Receivables for which the Rating Agency Condition has been satisfied,
and
(4) for which no amounts have been charged off as uncollectible.
An 'ELIGIBLE RECEIVABLE' is defined to mean each Receivable:
(1) which was originated or acquired by World Omni in the ordinary course
of business,
(2) which arose under an Account that at the time was an Eligible Account,
(3) which is owned by World Omni at the time of sale by World Omni to the
Transferor,
(4) which represents the obligation of a Dealer to repay an advance made
to or on behalf of the Dealer (i) to finance the acquisition of
Vehicles or (ii) in connection with the asset based lending business,
(5) which, at the time of creation and at the time of transfer to the
Trust, except at the Initial Closing Date for Receivables relating to
Vehicles that have already been sold, is secured by a perfected first
priority security interest in the Vehicles or assets relating thereto,
(6) which was created in compliance in all respects with all requirements
of law applicable thereto and pursuant to a dealer financing
agreement, asset based lending financing agreement or purchased
participation financing agreement which complies in all respects with
all requirements of law applicable to any party thereto,
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(7) with respect to which all material consents and governmental
authorizations required to be obtained by World Omni or the Transferor
in connection with the creation of the Receivable or the transfer
thereof to the Trust or the performance by World Omni of the dealer
financing agreement, asset based lending financing agreement or
purchased participation financing agreement pursuant to which the
Receivable was created, have been duly obtained,
(8) as to which at all times following the transfer of the Receivable to
the Trust, the Trust will have good and marketable title thereto free
and clear of all liens other than Participations arising prior to the
transfer or arising at any time, other than liens permitted pursuant
to the Trust Sale and Servicing Agreement,
(9) which has been the subject of a valid transfer and assignment from the
Transferor to the Trust of all the Transferor's right, title and
interest therein (including any proceeds thereof),
(10) which will at all times be the legal, valid, binding and assignable
payment obligation of the Dealer relating thereto, enforceable against
the Dealer in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy or other similar laws,
(11) which at the time of transfer to the Trust is not subject to any right
of rescission, setoff, counterclaim or any other defense (including
defenses arising out of violations of usury laws) of the Dealer,
(12) as to which, at the time of transfer of the Receivable to the Trust,
World Omni and the Transferor have satisfied all their respective
obligations relating to that Receivable required to be satisfied at
that time,
(13) as to which, at the time of transfer of the Receivable to the Trust,
neither World Omni nor the Transferor has taken or failed to take any
action which would impair the rights of the Trust, the
Certificateholders or the Noteholders therein,
(14) which constitutes an 'instrument,' 'account,' 'chattel paper' or a
'general intangible' as defined in Article 9 of the Uniform Commercial
Code as then in effect in the State of Florida,
(15) which was transferred to the Trust with all applicable governmental
authorization, and
(16) which is payable in U.S. dollars.
It is not required or anticipated that the Trust or the Indenture Trustee
will make any initial or periodic general examination of the Receivables or any
records relating to the Receivables for the purpose of establishing the presence
or absence of defects, compliance with representations and warranties of the
Transferor or for any other purpose. In addition, it is not anticipated or
required that the Trust or the Indenture Trustee will make any initial or
periodic general examination of the Servicer for the purpose of establishing the
compliance by the Servicer with its representations or warranties, the
observation of its obligations under the Trust Sale and Servicing Agreement or
for any other purpose.
INELIGIBLE RECEIVABLES AND EXCESS RECEIVABLES
For the purpose of facilitating the administration and reporting
requirements of the Servicer under the Trust Sale and Servicing Agreement, all
Receivables that are not Eligible Receivables ('INELIGIBLE RECEIVABLES') arising
in an Eligible Account shall be transferred to the Trust. As a result of the
inclusion of Ineligible Receivables in the Trust, and to account for the
inclusion of Receivables in the Trust in excess of specified limits with respect
to Dealer concentrations, manufacturer concentrations, Asset Based Receivables
concentrations and other limits, and the inclusion in the Trust of Receivables
that arose in Eligible Accounts that are no longer Eligible Accounts, the Trust
will have a Trust Incremental Subordinated Amount. The Trust Incremental
Subordinated Amount will be allocated to each series of Notes (the 'INCREMENTAL
SUBORDINATED AMOUNT' for that series) and included in Available
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Subordinated Amount for that series as provided in the Series Supplement and
described in the prospectus supplement for that series. See 'The
Notes--Allocation of Collections; Deposits in Collection Account' and
'--Subordination of Certificate; Enhancements--Subordination of Certificates.'
'TRUST INCREMENTAL SUBORDINATED AMOUNT' for any Determination Date will
equal the sum of (a) the amount of Excess Receivables as of that Determination
Date, (b) the Overconcentration Amount as of that Determination Date and (c) the
amount of Ineligible Receivables included in the Trust on the last day of the
preceding Collection Period (the 'INELIGIBLE AMOUNT').
'EXCESS RECEIVABLES' means, on any Determination Date, an aggregate amount
equal to the sum, without duplication, of:
(1) the aggregate amount by which Principal Receivables relating to used
Vehicles exceeds 25% of the aggregate amount of the Principal
Receivables included in the Trust, calculated as of the last day of
the preceding Collection Period,
(2) the aggregate amount of Principal Receivables as of the last day of
the preceding Collection Period in Eligible Accounts that are on
'finance hold' for credit reasons by World Omni as of the last day of
such preceding Collection Period, and
(3) the aggregate amount by which Principal Receivables arising in
Eligible Accounts under World Omni's 'Delayed Payment Privilege
Program' exceeds 2% of the aggregate amount of Principal Receivables
included in the Trust as of the last day of the preceding Collection
Period,
'OVERCONCENTRATION AMOUNT' means, on any Determination Date, an amount
equal to the sum, without duplication, of:
(1) the aggregate of the amounts by which the Principal Receivables of a
group of affiliated Dealers exceeds the dealer concentration limit for
such Dealer group, which is 8% of the Pool Balance for two Dealer
groups, 6% for four Dealer groups, 4% for two Dealer groups, 3% for
seven Dealer groups and 2% for all other Dealer groups;
(2) the aggregate of the amounts by which the Principal Receivables
related to a vehicle manufacturer exceeds the manufacturer
concentration limit for that manufacturer, which is 25% of the Pool
Balance for each of Ford, General Motors and DaimlerChrysler and 20%
for all other manufacturers other than Toyota, which has no limit;
(3) the aggregate amount of Asset Based Receivables that exceeds 3% of the
Pool Balance;
(4) the aggregate of the amounts by which the Asset Based Receivables of
each Dealer group exceeds 1% of the Pool Balance; and
(5) with respect to the Principal Receivables of the Dealer groups with
concentration limits of more than 3%, the aggregate of the amounts by
which (a) the Principal Receivables of those Dealer groups related to
the three vehicle manufacturers (other than Toyota) with the highest
amount of Principal Receivables of those Dealer groups exceeds (b) one
half of the aggregate of all of the Principal Receivables of those
Dealer groups.
The percentages and dollar limits set forth in the definitions of Excess
Receivables and Overconcentration Amount may be increased periodically subject
to satisfaction of the Rating Agency Condition.
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ADDITION OF ACCOUNTS
Subject to the conditions described below, the Transferor has the right to
designate additional accounts, including accounts relating to Asset Based
Receivables and Purchased Participation Receivables, to be included as Accounts
(the 'ADDITIONAL ACCOUNTS'). In addition, if, as of the close of business on the
last day of any Collection Period, the Pool Balance on such day is less than the
Required Pool Balance as of the last day of that Collection Period (after giving
effect to the allocations, distributions, withdrawals and deposits to be made on
that Payment Date), the Transferor shall, within five business days following
the end of such Collection Period, designate and transfer to the Trust the
Receivables (and the Collateral Security) of Additional Accounts of the
Transferor to be included as Accounts in a sufficient amount such that after
giving effect to such addition, the Pool Balance as of the close of business on
the last day of the Collection Period would have been at least equal to the
Required Pool Balance as of that last day. The failure of the Transferor to
transfer Receivables to the Trust as required in the prior sentence solely as a
result of the unavailability of a sufficient amount of Eligible Receivables will
not constitute a breach of the Trust Sale and Servicing Agreement; provided,
however, that such failure may result in the occurrence of an Early Amortization
Event.
Any designation of Additional Accounts is subject to the following
conditions, among others:
(1) the Transferor shall have given timely notice of the addition of such
Additional Accounts to the Owner Trustee, the Indenture Trustee, any
agent, the Rating Agencies and any Enhancement Providers;
(2) each Additional Account must be an Eligible Account;
(3) the Transferor shall have delivered to the Owner Trustee a duly
executed written assignment and to the Owner Trustee and the Indenture
Trustee the computer file or microfiche or written list required to be
delivered pursuant to the Trust Sale and Servicing Agreement;
(4) the addition of the Receivables arising in such Additional Accounts
shall not result in the occurrence of an Early Amortization Event or
Investment Event;
(5) the Transferor shall not use selection procedures in selecting
Additional Accounts that it reasonably believes is adverse to the
interests of the Noteholders or any Enhancement Provider;
(6) the Transferor shall deliver the required opinions of counsel relating
to the addition of the Additional Accounts to the Owner Trustee, the
Indenture Trustee, the Rating Agencies and any Enhancement Provider;
(7) the Rating Agency Condition has been satisfied; and
(8) the Transferor shall have, to the extent required, deposited all
Collections with respect to Additional Accounts since the Additional
Cut-Off Date in the Collection Account.
Notwithstanding the foregoing, the Transferor may, at its sole discretion,
and subject only to the limitations specified in this paragraph, voluntarily
designate Additional Accounts (other than those that contain Purchased
Participation Receivables, Participations or Asset Based Receivables unless the
Rating Agency Condition for that Account has been satisfied) to be included as
Accounts and transfer to the Trust the Receivables and the Collateral Security
of such Additional Accounts. (Additional Accounts designated in accordance with
the provisions described in this paragraph are referred to herein as 'AUTOMATIC
ADDITIONAL ACCOUNTS'.) Unless the Rating Agency Condition has been satisfied,
the number of Automatic Additional Accounts designated for any calendar quarter
shall not exceed 15% of the number of Accounts as of the first day of the
calendar quarter, nor shall the number of Automatic Additional Accounts
designated during any calendar year exceed 20% of the number of Accounts as of
the first day of such calendar year. Within 30 days after the end of any
calendar quarter, or such other
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period as shall be required by the Rating Agencies, in which Accounts are
designated as Automatic Additional Accounts, the Transferor will deliver to the
Owner Trustee and the Indenture Trustee and each Rating Agency an opinion of
counsel with respect to any Automatic Additional Accounts included as Accounts
in such quarter, confirming the validity and perfection of the transfer of such
Automatic Additional Accounts. If such opinion is not delivered, the ability of
the Transferor to designate Automatic Additional Accounts will be suspended
until such time as the Rating Agency Condition has been satisfied in writing. If
the Transferor is unable to deliver an opinion of counsel with respect to any
Automatic Additional Account, such inability will be a breach of the
representation and warranty with respect to the Receivables in such Automatic
Additional Account.
Each Additional Account (including each Automatic Additional Account) must
be an Eligible Account at the time of its addition. However, since Additional
Accounts may not have been a part of the initial portfolio of World Omni, the
Additional Accounts may not be of the same credit quality as the initial
Accounts. Additional Accounts may have been originated by World Omni at a later
date using credit criteria different from those which were applied to the
initial Accounts or may have been acquired by World Omni from another wholesale
lender that had different credit criteria. In addition, the Transferor will be
permitted to designate as Additional Accounts any Accounts which contain
receivables that have been sold or pledged to third parties.
REMOVAL OF ACCOUNTS; TRANSFERS OF PARTICIPATIONS
The Transferor shall have the right at any time to remove Eligible Accounts
from the Trust. To remove any Eligible Account, the Transferor (or the Servicer
on its behalf) shall, among other things:
(a) not less than five business days prior to the Removal Commencement
Date, furnish to the Owner Trustee, Indenture Trustee, any agent, any
Enhancement Provider and the Rating Agencies a written notice (the
'REMOVAL NOTICE') specifying the Determination Date on which removal
of one or more Accounts will commence (a 'REMOVAL COMMENCEMENT DATE')
and the Accounts to be removed from the Trust (the 'DESIGNATED
ACCOUNTS'),
(b) determine on the Removal Commencement Date the aggregate principal
balance of Receivables in respect of each Designated Account (the
'DESIGNATED BALANCE') and deliver to the Trust on the Removal
Commencement Date a computer file or microfiche or written list
containing a true and complete list of the Removed Accounts specifying
for each such Account its account number and the aggregate amount of
Receivables outstanding in such Account,
(c) from and after the Removal Commencement Date, cease to transfer to the
Trust any and all Receivables arising in the Designated Accounts,
(d) from and after the Removal Commencement Date, allocate all Principal
Collections in respect of each Designated Account, first to the oldest
outstanding principal balance of the Designated Account, until the
Determination Date on which the Designated Balance in the Designated
Account is reduced to zero (the 'REMOVAL DATE'),
(e) on each business day from and after the Removal Commencement Date to
and until the related Removal Date, allocate:
(1) to the Trust (to be further allocated pursuant to the Trust Sale
and Servicing Agreement), Non-Principal Collections in respect of
each Designated Account for Receivables in all Designated
Accounts transferred to the Trust, and
(2) to the Transferor the remainder of the Non-Principal Collections
in the Designated Accounts,
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(f) represent and warrant that the removal of the Eligible Account on any
Removal Date shall not, in the reasonable belief of the Transferor,
cause an Early Amortization Event or Investment Event to occur for any
series of Notes,
(g) represent and warrant that no selection procedures believed by the
Transferor to be adverse to the interests of the Noteholders were
utilized in selecting the Designated Accounts,
(h) represent and warrant that the removal will not result in a reduction
or withdrawal of the rating of any outstanding series or class of
Notes by any applicable Rating Agency, and
(i) on or before the related Removal Date, deliver to the Trust, the
Indenture Trustee and any Enhancement Provider an officers'
certificate confirming the items set forth in clauses (f), (g) and (h)
above and confirming that the Transferor reasonably believes that the
removal of the Removed Accounts will not result in the occurrence of
an Early Amortization Event or Investment Event.
No Designated Accounts shall be removed if the removal will result in a
reduction or withdrawal of the rating of any outstanding series or class of
Notes by any applicable Rating Agency.
On the fifth business day after any date on which an Account becomes an
Ineligible Account (which fifth business day will be deemed the Removal
Commencement Date for the Account), the Transferor will commence the removal of
the Receivable of such Ineligible Account from the Trust by taking each of the
actions specified above for the removal of Eligible Accounts.
Upon satisfaction of the above conditions, on the Removal Date for the
Designated Account, the Transferor will cease the allocation of collections of
Receivables from the Designated Account and the Designated Account shall be
deemed removed from the Trust for all purposes (a 'REMOVED ACCOUNT').
In addition to the removal rights described above, the Transferor shall
have the right at any time to remove certain Ineligible Accounts from the Trust
and, in connection therewith, repurchase the then existing Receivables in the
Accounts. To remove Accounts and repurchase the then existing Receivables in the
Ineligible Accounts, the Transferor (or the Servicer on its behalf) shall, among
other things:
(1) not less than five business days prior to the Removal and Repurchase
Date, furnish to the Trust and the Owner Trustee, the Indenture
Trustee, any agent, each Enhancement Provider and the Rating Agencies
a Removal Notice specifying the Designated Accounts which are to be
removed, and the then existing Receivables in the Designated Accounts
(the 'DESIGNATED RECEIVABLES') which are to be repurchased from the
Trust and the date on which the removal of the Designated Accounts and
the purchase of the Designated Receivables will occur (a 'REMOVAL AND
REPURCHASE DATE'),
(2) deliver to the Trust on the Removal and Repurchase Date a computer
file or microfiche or written list containing a true and complete list
of the Removed Accounts specifying for each such Account its account
number and the aggregate amount of Receivables outstanding in such
Account,
(3) deposit into the Collection Account on the Removal and Repurchase Date
funds in an amount equal to the aggregate outstanding balance of the
Designated Receivables on such date (the 'REPURCHASED RECEIVABLES
PURCHASE PRICE') which funds will be treated as collections,
(4) represent and warrant that the removal of any such Ineligible Account
and the repurchase of the Receivables then existing in such Account on
any Removal and Repurchase Date shall not, in the reasonable belief of
the Transferor, cause an Early Amortization Event or Investment Event
to occur for any series of Notes or cause the Pool Balance to be less
than the Required Pool Balance,
(5) represent and warrant that no selection procedures believed by the
Transferor to be adverse to the interests of the Noteholders were
utilized in selecting the Designated Accounts,
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(6) represent and warrant as of the Removal and Repurchase Date that the
list of Removed Accounts delivered pursuant to clause (2) above, as of
the Removal and Repurchase Date, is true and complete in all material
respects,
(7) represent and warrant that such removal and repurchase will not result
in a reduction or withdrawal of the rating of any outstanding series
or class of Notes by the applicable Rating Agencies, and
(8) deliver to the Trust, the Indenture Trustee and any Enhancement
Providers an officers' certificate confirming the items set forth in
clauses (4) through (7) above and confirming that the Transferor
reasonably believes that the removal of the Removed Accounts and the
repurchase of the Repurchased Receivables will not result in the
occurrence of an Early Amortization Event or Investment Event.
Upon satisfaction of the above conditions, on the Removal and Repurchase
Date for any such Designated Account and Designated Receivables, such Designated
Account shall be deemed removed, and such Designated Receivables ('REPURCHASED
RECEIVABLES') shall be deemed repurchased, from the Trust for all purposes.
Any amounts deposited into the Collection Account from the payment by the
Transferor of the Repurchased Receivables Purchase Price will be treated as
Collections on the date deposited.
In addition to the foregoing provisions, the Transferor shall have the
right to remove certain Ineligible Accounts and reassign the then existing
Receivables in the Accounts ('AUTOMATIC REMOVED ACCOUNTS'), upon satisfaction by
the Transferor (or the Servicer on its behalf) of the following conditions:
(a) on or before the fifth business day immediately preceding the
Automatic Removal Date, the Transferor shall furnish to the Owner
Trustee, the Indenture Trustee, any agent, any Enhancement Providers
and the Rating Agencies a Removal Notice specifying the Automatic
Removed Accounts which are to be reassigned from the Trust to the
Transferor and the date on which such removal of Automatic Removed
Accounts and reassignment of such Receivables is to occur (the
'AUTOMATIC REMOVAL DATE');
(b) on or prior to the date that is five business days after the Automatic
Removal Date, the Transferor shall deliver to the Trust and the
Indenture Trustee a computer file or microfiche or written list
containing a true and complete list of the Automatic Removed Accounts
specifying for each such Account, as of the removal notice date, its
account number and the aggregate amount of Receivables outstanding in
such Account;
(c) the Transferor shall represent and warrant as of each Automatic
Removal Date that the list of Automatic Removed Accounts delivered
pursuant to clause (b) above, as of the Automatic Removal Date, is
true and complete in all material respects; and
(d) if any of the Accounts to be removed is not liquidated and does not
have a zero balance:
(1) the Rating Agency Condition shall have been satisfied; and
(2) the Transferor shall deliver to the Owner Trustee, the Indenture
Trustee, any agent, and any Enhancement Providers an officers'
certificate, dated the Automatic Removal Date, to the effect that
the Transferor reasonably believes that such removal will not
cause an Early Amortization Event or Investment Event to occur
for any series of Notes.
Upon satisfaction of the above conditions, on the Automatic Removal Date
all the right, title and interest of the Trust in and to the Receivables arising
in the Automatic Removed Accounts, all monies
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due and to become due and all amounts received with respect thereto and all
proceeds thereof shall be deemed removed from the Trust for all purposes.
THE CERTIFICATES
The Transfer and Servicing Agreements provide that the Transferor may
exchange a portion of the certificate evidencing its interest in the Trust (the
'TRANSFEROR CERTIFICATE') for one or more additional certificates (each a
'SUPPLEMENTAL CERTIFICATE') for transfer or assignment to a person designated by
the Transferor upon the execution and delivery of a supplement to the Trust
Agreement (which supplement shall be subject to the amendment section of the
Trust Agreement to the extent that it amends any of the terms of the Trust
Agreement); provided that:
(a) the Transferor shall have delivered to the Owner Trustee, the
Indenture Trustee, the Rating Agencies and any Enhancement Provider a
Tax Opinion dated as of the date of such exchange (or transfer and
exchange), and
(b) the Rating Agency Condition has been satisfied.
Any subsequent transfer or assignment of a Supplemental Certificate is also
subject to the conditions described in clauses (a) and (b) in the preceding
sentence.
DEFAULTED RECEIVABLES AND RECOVERIES
'DEFAULTED RECEIVABLES' on any Determination Date are:
(1) all Receivables which were charged off as uncollectible in respect of
the immediately preceding Collection Period in accordance with the
Servicer's customary and usual servicing procedures for servicing
Dealer floorplan receivables comparable to the Receivables which have
not been sold to third parties and
(2) all Receivables which were Eligible Receivables when transferred to
the Trust on the Initial Closing Date or the related Addition Date or
on their respective Transfer Date, which arose in an Account which
became an Ineligible Account after the date of transfer of such
Receivables to the Trust and which remained outstanding for any six
consecutive Determination Dates (including the Determination Date on
which such determination is being made) after such Account became an
Ineligible Account.
The 'DEFAULTED AMOUNT' for any Collection Period will be an amount equal to
the excess, if any, of:
(a) the principal amount of Receivables that became Defaulted Receivables
during the preceding Collection Period
over
(b) the sum of:
(1) the full amount of any Defaulted Receivables subject to
reassignment to the Transferor or purchase by the Servicer for
such Collection Period unless specified events of bankruptcy,
insolvency or receivership have occurred for either of the
Transferor or the Servicer, in which event the Defaulted Amount
will not be reduced for those Defaulted Receivables
and
(2) the Defaulted Amount Carryover for the prior Collection Period.
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'DEFAULTED AMOUNT CARRYOVER' means, for any Collection Period, an amount
equal to the excess, if any, of the amount specified in clause (b) of the
definition of Defaulted Amount over the amount specified in clause (a) of the
definition of Defaulted Amount.
If the Servicer adjusts downward the amount of any Principal Receivable
because of a rebate, refund, credit adjustment or billing error to a Dealer, or
because such Receivable was created in respect of inventory which was refused or
returned by a Dealer, then, in any such case, the Pool Balance will
automatically be reduced by the amount of the adjustment. Furthermore, if
following such a reduction, the Pool Balance would be less than the Minimum
Required Pool Balance on such day, then the Transferor shall be required to pay
an amount equal to such deficiency (up to the amount of such adjustment) into
the Collection Account within five business days after the day on which such
adjustment or reduction occurs (each such payment, an 'ADJUSTMENT PAYMENT').
The 'MINIMUM REQUIRED POOL BALANCE' for any day equals the Required Pool
Balance that would result if the Required Pool Balance was calculated as if the
Required Participation Percentage for each series of Notes (as specified in the
related prospectus supplement) was 100%.
If the Servicer adjusts downward the amount of interest otherwise payable
on any Receivable with respect to any Collection Period as a result of any
interest rebate program, the Servicer shall deposit into the Collection Account
on or prior to the Payment Date related to such Collection Period an amount
equal to the amount of such rebate (such payment, a 'REBATE PAYMENT').
OPTIONAL REPURCHASE
If so provided in a prospectus supplement relating to a series of Notes, on
any Payment Date occurring after the Invested Amount of the Notes of such series
is reduced to the percentage of the initial outstanding principal amount of the
Notes of such series specified therein, the Transferor will have the option,
subject to specified conditions, to repurchase the Notes of such series. The
purchase price will generally be equal to:
(1) the unpaid principal amount of such series on the Determination Date
preceding the Payment Date on which such repurchase will be made,
plus
(2) accrued and unpaid interest on the unpaid principal amount of the
Notes of such series at the applicable interest rate (together with
interest on overdue interest),
plus
(3) any other amounts specified in the related Series Supplement.
The purchase price will be deposited in the Collection Account in immediately
available funds on the Payment Date on which the Transferor exercises such
option. Following any such purchase, the Noteholders of such series will have no
further rights in any of the assets of the Trust, other than the right to
receive the final distribution on the Notes of that series. In the event that
the Transferor fails for any reason to deposit such purchase price, payments
will continue to be made to the Noteholders of such series as described in the
related prospectus supplement.
INVESTMENT EVENTS AND EARLY AMORTIZATION EVENTS
An 'INVESTMENT EVENT' refers to, for any series of Notes, any of the events
so defined in the Series Supplement relating to that series and described in the
related prospectus supplement. Upon the occurrence of any event so defined, an
Investment Event will be deemed to have occurred for such series without any
notice or other action on the part of any other party immediately upon the
occurrence
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of such event. The Investment Period for such series will commence as of the
close of business on the business day immediately preceding the day on which the
Investment Event is deemed to have occurred.
An 'EARLY AMORTIZATION EVENT' refers to, for any series of Notes, any of
the events so defined in the Series Supplement relating to the series and
described in the related prospectus supplement, as well as the following events:
(1) a failure by the Transferor to convey Receivables in Additional
Accounts to the Trust within 15 business days after the day on which
it is required to convey such Receivables;
(2) the occurrence of specified events of bankruptcy, insolvency or
receivership relating to the Transferor or the Servicer;
(3) the occurrence of specified events of bankruptcy, insolvency or
receivership relating to World Omni or Toyota; and
(4) the Trust or the Transferor becomes an investment company within the
meaning of the Investment Company Act of 1940.
Immediately upon the occurrence of any event described above or in the
related Series Supplement and prospectus supplement for a series of Notes,
subject to applicable law and any other condition specified in the related
Series Supplement, and after the applicable grace period, if any, an Early
Amortization Event shall occur for such series without any notice or other
action on the part of any other party, solely with respect to the affected
series. The Early Amortization Period for such series will commence as of the
close of business on the business day immediately preceding the day on which the
Early Amortization Event is deemed to have occurred.
Notwithstanding the commencement of an Investment Period or an Early
Amortization Period for a series of Notes, such period may terminate and the
Revolving Period for such series and any class thereof may commence when the
event giving rise to the commencement of such Investment Period or Early
Amortization Period no longer exists, whether as a result of the distribution of
principal to Noteholders of such series or otherwise, in each case if and to the
extent provided in the Series Supplement for such series.
In addition to the consequences of an Investment Event or an Early
Amortization Event for any series of Notes discussed above, if the Transferor
violates its covenant not to create any lien on any Receivable as provided in
the Trust Sale and Servicing Agreement, on the day of such violation, the
Transferor will (subject to the actions of the Noteholders) immediately cease to
transfer Receivables to the Trust and promptly give notice to the Indenture
Trustee of such violation, as applicable. Under the terms of the Trust Sale and
Servicing Agreement, within 15 days the Indenture Trustee will publish a notice
of such violation stating that the Indenture Trustee intends to sell, liquidate
or otherwise dispose of the Receivables in a commercially reasonable manner and
on commercially reasonable terms, unless within a specified period of time
holders of Notes of each outstanding series representing more than 50% of the
aggregate unpaid principal amount of the Notes of each such series (or, for any
series with two or more classes, the Notes of each such class) and each person
holding a Supplemental Certificate, instruct the Indenture Trustee not to sell,
dispose of or otherwise liquidate the Receivables and to continue transferring
Receivables as before such insolvency event or violation, as applicable. If the
portion of such proceeds allocated to the Notes and the proceeds of any
collections on the Receivables in the Collection Account allocable to the Notes
are not sufficient to pay the aggregate unpaid principal balance of the Notes in
full plus accrued and unpaid interest thereon, Noteholders will incur a loss.
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TERMINATION; FULLY FUNDED DATE
TERMINATION. The Indenture will terminate on the earlier to occur of:
(a) the outstanding Notes of all series either (1) have been delivered to
the Indenture Trustee for cancellation or (2) have or will become due
and payable or have been called for redemption and there has been
deposited with the Indenture Trustee an amount sufficient to pay and
discharge the entire unpaid principal of and accrued interest on such
Notes;
(b) the Indenture Trustee has been paid all amounts owed to it pursuant to
the Indenture; and
(c) the Indenture Trustee has received an officer's certificate, an
opinion of counsel and other specified documents to the effect that
the conditions precedent for satisfaction and discharge of the
Indenture have been met.
Upon termination of the Indenture, all right, title and interest in the
Receivables and other funds of the Trust (other than amounts in the Collection
Account, any Principal Funding Account, Interest Funding Account or other
account for the final distribution of principal and interest to Noteholders)
will be conveyed and transferred to the Trust.
In any event, the last payment of principal and interest on any series of
Notes will be due and payable no later than the date specified in the related
prospectus supplement (the 'SERIES TERMINATION DATE').
FULLY FUNDED DATE. Following the occurrence of the Fully Funded Date for
any series of Notes, Noteholders of that series will no longer have any interest
in the Receivables and all the representations and covenants of the Transferor
and the Servicer relating to the Receivables, as well as other specified
provisions of the Indenture and all remedies for breaches thereof, will no
longer accrue to the benefit of the Noteholders of that series, in each case,
unless the Revolving Period for such series recommences as provided in the
related Series Supplement. Those representations, covenants and other provisions
include the conditions to the exchange of the Transferor Certificate described
under 'The Transfer and Servicing Agreements--The Certificates,' the conditions
to the issuance of a new series of Notes described under 'The Notes--New
Issuances,' the representations described under 'The Transfer and Servicing
Agreements--Representations and Warranties by the Transferor' to the extent they
relate to the Receivables and the Collateral Security, the limitations on
additions and removals of Accounts described under 'The Transfer and Servicing
Agreements--Addition of Accounts' and '--Removal of Accounts,' respectively, and
the obligations of the Servicer to service the Receivables described under 'The
Transfer and Servicing Agreements-- Collection and Other Servicing Procedures'
and '--Servicer Covenants.' In addition, upon the occurrence of the Fully Funded
Date for any series of Notes, no Non-Principal Collections, Principal
Collections, Defaulted Amount or Miscellaneous Payments will be allocated to
that series, unless the Revolving Period with respect thereto recommences as
described above.
INDEMNIFICATION
The Trust Sale and Servicing Agreement provides that the Servicer will
indemnify the Trust for the benefit of the Certificateholders, the Noteholders,
any Enhancement Provider, the Owner Trustee and the Indenture Trustee from and
against taxes that may be asserted against them with respect to the transactions
contemplated by the Trust Sale and Servicing Agreement and any loss, liability,
expense, damage or injury suffered or sustained arising out of any acts,
omissions or alleged acts or omissions arising out of activities of the Servicer
pursuant to the Trust Sale and Servicing Agreement; provided, however, the
Servicer will not indemnify (a) if such acts, omissions or alleged acts or
omissions constitute fraud, gross negligence, breach of fiduciary duty or
willful misconduct by the Owner Trustee
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or the Indenture Trustee, (b) for any liabilities, cost or expense of the Trust
with respect to any action taken by the Owner Trustee at the request of the
Certificateholders, Noteholders or Enhancement Providers to the extent the Owner
Trustee is fully indemnified by them for that action or (c) for any tax required
to be paid by such party arising out of (i) the sale of any Eligible Receivables
to the Trust, (ii) the issuance and original sale of any Notes or Certificates,
(iii) ownership or sale of any Eligible Receivables in the Accounts or the Notes
and Certificates, (iv) distributions or the receipt of payments on the Notes or
Certificates or (v) any fees or other compensation payable to such party other
than the value-based intangibles tax imposed by the State of Florida on the
assets of the Trust, if any.
The Trust Sale and Servicing Agreement provides that, except as described
above, and except for other specified exceptions, neither the Servicer nor any
of its directors, officers, employees or agents will be under any liability to
the Trust, the Owner Trustee, the Indenture Trustee, the Noteholders,
Enhancement Providers, any agent or any other person for taking any action, or
for refraining from taking any action, pursuant to the Trust Sale and Servicing
Agreement. However, neither the Servicer nor any of its directors, officers,
employees or agents will be protected against any liability which would
otherwise be imposed by reason of willful misfeasance, bad faith or negligence
of any such person in the performance of their duties or by reason of reckless
disregard of their obligations and duties thereunder.
In addition, the Trust Sale and Servicing Agreement provides that the
Servicer is not under any obligation to appear in, prosecute or defend any legal
action which is not incidental to its servicing responsibilities under the Trust
Sale and Servicing Agreement. The Servicer may, in its sole discretion,
undertake any such legal action which it may deem necessary or desirable for the
benefit of the Noteholders and the Certificateholders with respect to the Trust
Sale and Servicing Agreement and the rights and duties of the parties thereto
and the interest of the Certificateholders under the Trust Agreement and the
Noteholders under the Indenture.
COLLECTION AND OTHER SERVICING PROCEDURES
Pursuant to the Trust Sale and Servicing Agreement, the Servicer is
responsible for servicing, collecting and administering the Receivables and
charging off as uncollectible Receivables in accordance with customary and usual
procedures for servicing its own wholesale receivables comparable to the
Receivables, except where the failure to act in accordance with such procedures
would not materially and adversely affect the rights of the Trust, the
Noteholders, the Certificateholders or any Enhancement Provider. In certain
circumstances, the Trust will contain Purchased Participation Receivables. A
portion of the Purchased Participation Receivables will not be serviced by the
Servicer (the 'NON-SERVICED PARTICIPATION RECEIVABLES') other than enforcing the
rights of the Issuer pursuant to the agreement that created the Non-Serviced
Participation Receivable in order to ensure that the Receivable is properly
serviced and that all amounts due to the Issuer under such agreement are
received. However, it is anticipated that the Servicer and each Rating Agency,
prior to issuing written confirmation that the inclusion of such Non-Serviced
Participation Receivable will not result in the reduction or withdrawal of the
rating of any Notes, will review the practices and policies of the party
servicing such Non-Serviced Participation Receivable.
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World Omni covenants that it may only change the terms and provisions
relating to the Accounts if, in the Servicer's reasonable judgment, no Early
Amortization Event or Investment Event will occur for any series of Notes as a
result of the change and none of the Certificateholders, Noteholders or
Enhancement Providers will be materially and adversely affected and the change
is made applicable to the comparable segment of the portfolio of wholesale
accounts with similar characteristics owned or serviced by World Omni and not
only to the Accounts; provided, however, that the Servicer may reduce the rate
of any finance charges if such reduction would not result in the weighted
average of the interest rates of the Receivables being less than the weighted
average of the sum of the interest rates of the Notes plus servicing fees.
Servicing activities to be performed by the Servicer include collecting and
recording payments, communicating with dealers, investigating payment
delinquencies, evaluating the increase of credit limits, and maintaining
internal records for each Account. Managerial and custodial services performed
by the Servicer on behalf of the Trust include providing assistance in any
inspections of the documents and records relating to the Accounts and
Receivables by the Trust and the Indenture Trustee pursuant to the Trust Sale
and Servicing Agreement and Indenture, maintaining the agreements, documents and
files relating to the Accounts and Receivables as custodian for the Trust and
providing related data processing and reporting services for Noteholders and on
behalf of the Trust and the Indenture Trustee.
SERVICER COVENANTS
In the Trust Sale and Servicing Agreement the Servicer covenants that:
(1) it will duly satisfy all obligations on its part to be fulfilled under
or in connection with the Receivables and the Accounts, will maintain
in effect all qualifications required in order to service the
Receivables and the Accounts and will comply in all material respects
with all requirements of law in connection with servicing the
Receivables and the Accounts, the failure to comply with which would
have a materially adverse effect on the Noteholders of any outstanding
series, the Certificateholders or any Enhancement Provider;
(2) it will not permit any rescission or cancellation of a Receivable
except as ordered by a court of competent jurisdiction or other
government authority;
(3) it will do nothing to impair the rights of the Noteholders or any
Enhancement Provider in the Receivables or the Accounts;
(4) it will not reschedule, revise or defer payments due on any Receivable
except in accordance with its guidelines for servicing dealer
wholesale financing revolving line of credit loans; and
(5) it will not sell, pledge, assign or transfer to any person or grant,
create, incur, assume or suffer to exist any lien on any Receivable
sold or assigned to the Trust other than as contemplated by the
Related Documents.
Under the terms of the Trust Sale and Servicing Agreement, if the
Transferor or the Servicer discovers, or receives written notice, that any
covenant of the Servicer set forth in clauses (3) or (4) above has not been
complied with in any material respect and such noncompliance has not been cured
within 30 days thereafter (or such longer period as the Owner Trustee may agree
to) and has a materially adverse effect on the value of such Receivable, World
Omni, as Servicer, will purchase such Receivable or all Receivables in such
Account, as applicable. Such purchase will be made on the Determination Date
following the expiration of the 30-day cure period and the Servicer will be
obligated to deposit into the Collection Account an amount equal to the amount
of such Receivable plus accrued and unpaid interest thereon. The amount of such
deposit shall be deemed a Transfer Deposit Amount. The purchase by the Servicer
constitutes the sole remedy available to the Noteholders if such covenant
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or warranty of the Servicer is not satisfied and the Trust's interest in any
such purchased Receivables shall be automatically assigned to the Servicer.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Servicer's compensation for its servicing activities and reimbursement
for its expenses will be a monthly servicing fee (the 'SERVICING FEE') in an
amount payable in arrears on each Payment Date on or before the Trust
Termination Date equal to the sum of the Monthly Servicing Fees.
The Monthly Servicing Fee with respect to a series of Notes for any Payment
Date shall generally be equal to one-twelfth of the product of:
(1) the 'SERVICING FEE RATE' set forth in the related Series Supplement,
and
(2) the Pool Balance as of the last day of the second preceding Collection
Period (excluding the amount of Principal Receivables relating to
Non-Serviced Participation Receivables); and
(3) the Series Allocation Percentage for such series for the second
preceding Collection Period.
The 'MONTHLY SERVICING FEE' with respect to any series shall be payable to the
Servicer solely to the extent amounts are available for distribution therefor in
accordance with the terms of the Trust Sale and Servicing Agreement. The share
of the Monthly Servicing Fee allocable to the Noteholders of a series (for each
series, the 'NOTEHOLDER MONTHLY SERVICING FEE') shall equal one-twelfth of the
product of (a) the Servicing Fee Rate and (b) the Invested Amount (as defined in
the related prospectus supplement) for such series as of the last day of the
Collection Period second preceding such Payment Date. The remainder of the
Monthly Servicing Fee shall be paid by the Certificateholders and, in no event,
shall the Trust or the Noteholders be liable for the share of the Monthly
Servicing Fee to be paid by the Certificateholders.
The Servicer will pay from its servicing compensation specified expenses
incurred in connection with servicing the Accounts and the Receivables including
payment of fees and disbursements of the Indenture Trustee, the Owner Trustee,
attorneys and independent accountants and all other fees and expenses which are
not expressly stated in the Trust Sale and Servicing Agreement to be payable by
the Trust, the Certificateholders, the Noteholders or the Enhancement Providers
other than federal, state and local income and franchise taxes, if any, of the
Trust or the Noteholders.
CERTAIN MATTERS REGARDING THE SERVICER
The Servicer may not resign from its obligations and duties under the Trust
Sale and Servicing Agreement, except upon (i) a determination that such duties
are no longer permissible under applicable law and there is no reasonable action
which the Servicer could take to make the performance of its duties permissible
under applicable laws, or (ii) satisfaction of the Rating Agency Condition. No
such resignation will become effective until the Indenture Trustee or a
successor to the Servicer has assumed the Servicer's responsibilities and
obligations under the Trust Sale and Servicing Agreement. If the Indenture
Trustee is unable within 120 days of the date of such determination to appoint a
successor to the Servicer, the Indenture Trustee will serve as the successor to
the Servicer.
Any person into which, in accordance with the Trust Sale and Servicing
Agreement, the Servicer may be merged or consolidated or any person resulting
from any merger or consolidation to which the Servicer is a party, or any person
succeeding to the business of the Servicer, will be the successor to the
Servicer under the Trust Sale and Servicing Agreement.
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SERVICING DEFAULT
In the event of any unremedied Servicing Default, the Indenture Trustee, by
written notice to the Servicer with a copy to the Owner Trustee, may terminate
all of the rights and obligations of the Servicer, as servicer, under the Trust
Sale and Servicing Agreement and in and to the Receivables and the proceeds
thereof and appoint a new Servicer (a 'SERVICE TRANSFER'). The Indenture Trustee
shall as promptly as possible appoint a successor Servicer, subject to the
consent of any Enhancement Provider, and if no successor Servicer has been
appointed by the Indenture Trustee and has accepted such appointment by the time
the Servicer ceases to act as Servicer, all rights, authority, power and
obligations of the Servicer under the Trust Sale and Servicing Agreement shall
automatically pass to and be vested in the Indenture Trustee. Prior to any
Service Transfer, the Indenture Trustee will review any bids obtained from
potential servicers meeting specified eligibility requirements set forth in the
Trust Sale and Servicing Agreement to serve as successor Servicer for servicing
compensation not in excess of the Servicing Fee, plus specified excess amounts
payable to the Transferor.
A 'SERVICING DEFAULT' refers to any of the following events:
(1) failure by the Servicer to make any payment, transfer or deposit, or
to give instructions to the Owner Trustee or the Indenture Trustee to
make such payment, transfer or deposit or to give notice to the Owner
Trustee or the Indenture Trustee as to be taken with respect to any
agreement relating to an Enhancement, on the date the Servicer is
required to do so under the Trust Sale and Servicing Agreement, which
is not cured within a five business day grace period;
(2) failure on the part of the Servicer duly to observe or perform any
other covenants or agreements of the Servicer in the Trust Sale and
Servicing Agreement which failure has a materially adverse effect on
the Noteholders of any outstanding series and which continues
unremedied for a period of 30 days after the date written notice of
such failure, requiring same to be remedied, shall have been given to
the Servicer by the Indenture Trustee or the Owner Trustee, or the
Servicer delegates its duties under the Trust Sale and Servicing
Agreement, except as specifically permitted thereunder;
(3) any representation, warranty or certification made by the Servicer in
the Trust Sale and Servicing Agreement or in any certificate delivered
pursuant to the Trust Sale and Servicing Agreement proves to have been
incorrect when made, has a materially adverse effect on the rights of
the Noteholders of any outstanding series, and which material adverse
effect continues for a period of 60 days after written notice thereof
shall have been given to the Servicer by the Indenture Trustee or the
Owner Trustee; or
(4) the occurrence of specified events of bankruptcy, insolvency or
receivership of the Servicer.
Notwithstanding the foregoing, a delay in or failure of performance
referred to under clause (1) above for a period of ten business days or referred
to under clauses (2) or (3) for a period of 60 business days, shall not
constitute a Servicing Default if such delay or failure could not be prevented
by the exercise of reasonable diligence by the Servicer and was caused by an act
of God or other similar occurrence. Upon the occurrence of any such event, the
Servicer shall not be relieved from using its best efforts to perform its
obligations in a timely manner in accordance with the terms of the Trust Sale
and Servicing Agreement and the Servicer shall provide the Owner Trustee,
Indenture Trustee, any agent, any Enhancement Provider, the Transferor and the
Noteholders prompt notice of such failure or delay by it, together with a
description of its efforts to so perform its obligations. The Servicer shall
immediately notify the Owner Trustee in writing of any Servicing Default.
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RIGHTS UPON SERVICING DEFAULT
As long as a Servicing Default under the Trust Sale and Servicing Agreement
remains unremedied, the Indenture Trustee may terminate all the rights and
obligations of the Servicer under such Trust Sale and Servicing Agreement,
whereupon such Indenture Trustee will succeed to all the responsibilities,
duties and liabilities of the Servicer under such agreement and will be entitled
to similar compensation arrangements.
If, however, a bankruptcy trustee or similar official has been appointed
for the Servicer, and no Servicing Default other than such appointment has
occurred, such trustee or official may have the power to prevent the Indenture
Trustee or the Owner Trustee or the Certificateholders from effecting a transfer
of servicing. 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 any established institution with a net worth of at least
$100,000,000 and whose regular business includes the servicing of wholesale
receivables as successor. The Indenture Trustee may make such arrangements for
compensation to be paid, which in no event may be greater than the servicing
compensation to the Servicer under the Trust Sale and Servicing Agreement.
WAIVER OF PAST DEFAULTS
The holders of Notes evidencing at least a majority in principal amount of
the Notes (or, if the Notes have been paid in full, by the Certificateholders
whose Certificates evidence not less than a majority interest in the Trust) then
outstanding, voting as a single class, may, on behalf of all such Noteholders
and any Certificateholders, waive any default by the Servicer in the performance
of its obligations under the Trust Sale and Servicing Agreement and the
Receivables Purchase Agreement and its consequences, except a Servicing Default
in making any required distributions, payments, transfers or deposits in
accordance with the Trust Sale and Servicing Agreement. No such waiver will
impair the rights of the Indenture Trustee, the Owner Trustee, or the
Noteholders for subsequent defaults.
REPORTS
On the second business day preceding each Payment Date (each, a
'DETERMINATION DATE'), the Servicer will calculate the amounts to be allocated
in respect of Collections on Receivables received with respect to the related
Collection Period to the Noteholders of each outstanding series and class of
Notes or to the Transferor and the holder of any Supplemental Certificate in
accordance with the Series Supplement and the Transfer and Servicing Agreements.
On or before each Payment Date (including each Payment Date that
corresponds to an Interest Payment Date or any Special Payment Date), the
Indenture Trustee will forward to each Noteholder of record of any series a
statement (the 'PAYMENT DATE STATEMENT') prepared by the Servicer setting forth
information relating to the Trust and the Notes of such series, as specified in
the related Series Supplement and described in the related prospectus
supplement.
For each Interest Payment Date or Special Payment Date, the Payment Date
Statement for any series of Notes will include the following information for the
Notes of such series:
(a) the total amount distributed on the Notes of such series,
(b) the amount of such distribution allocable to principal on the Notes of
such series, and
(c) the amount of such distribution allocable to interest on the Notes of
such series.
Within a reasonable time after the Servicer has provided the Indenture
Trustee with information required by the Indenture Trustee to furnish such
statement, the Indenture Trustee will furnish (or cause
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to be furnished) to each person who at any time during the preceding calendar
year was a Noteholder of record a statement containing the information required
to be provided by an issuer of indebtedness under the U.S. Internal Revenue Code
for such preceding calendar year or the applicable portion thereof during which
such person was a Noteholder, together with such other customary information as
is required to be provided by an issuer of indebtedness under the U.S. Internal
Revenue Code and such other customary information as is necessary to enable the
Noteholders to prepare their tax returns. See 'Certain Federal Income Tax
Consequences.'
EVIDENCE AS TO COMPLIANCE
The Trust Sale and Servicing Agreement provides that a firm of independent
public accountants will furnish to the Owner Trustee, the Indenture Trustee, the
Rating Agencies, each agent and any Enhancement Provider on or before April 30
of each year, beginning on April 30, 2000, a report to the effect that such firm
has examined (a) the financial statements of the Servicer in accordance with
specified standards and (b) certain documents and records of the Servicer
relating to servicing. The report shall include a statement that nothing caused
such firm to believe that the Servicer did not comply with the Trust Sale and
Servicing Agreement during the preceding twelve months ended December 31 (or in
the case of the first such statement, the period from the Initial Closing Date
to December 31 of such year).
The Trust Sale and Servicing Agreement also provides for delivery to the
Owner Trustee and the Indenture Trustee, the Rating Agencies, each agent and any
Enhancement Provider on or before April 30 of each year, beginning April 30,
2000, a certificate signed by an officer of the Servicer stating that the
Servicer has fulfilled in all material respects its obligations under the Trust
Sale and Servicing Agreement throughout the preceding twelve months ended
December 31 (or in the case of the first such certificate, the period from the
Initial Closing Date to December 31 of such year) or, if there has been a
material default in the fulfillment of any such obligation, describing each such
default and the status thereof. The Servicer agrees to give the Owner Trustee
notice of Servicing Defaults under the Trust Sale and Servicing Agreement.
Copies of such statements and certificates may be obtained by Noteholders
by request in writing addressed to the Owner Trustee.
AMENDMENTS
Each of the Transfer and Servicing Agreements may be amended by the parties
thereto without the consent of the related Noteholders:
(1) to cure any ambiguity,
(2) to correct or supplement any provision therein that may be defective
or inconsistent with any other provision therein,
(3) to add or supplement any credit, liquidity or other enhancement
arrangement for the benefit of any Noteholders (provided that if any
such addition affects any series or class of Noteholders differently
than any other series or class of Noteholders, then such addition will
not, as evidenced by an officer's certificate, adversely affect in any
material respect the interests of any series or class of Noteholders),
(4) to add to the covenants, restrictions or obligations of the
Transferor, the Servicer, the Trust, the Owner Trustee or the
Indenture Trustee for the benefit of Noteholders, or
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(5) to add, change or eliminate any other provision of such agreement in
any manner that will not, as evidenced by an officer's certificate,
adversely affect in any material respect the interests of the
Noteholders.
Each such Agreement may also be amended by the parties thereto with either
(a) the consent of the holders of at least a majority in principal amount of the
Controlling Class of each series of Notes adversely affected in any material
respect thereby or (b) satisfaction of the Rating Agency Condition, except that
no such amendment may:
(1) reduce in any manner the amount of, or accelerate or delay the timing
of, distributions or payments that are required to be made on any Note
or the amount available under any Enhancement without the consent of
the holder thereof,
(2) change the definition of or the manner of calculating the interest of
any Note without the consent of the holder thereof,
(3) adversely affect the rating of any series or class of Notes by any
Rating Agency without the consent of two-thirds of the principal
amount of the outstanding Notes of such series or class, or
(4) reduce the aforesaid percentage required to consent to any such
amendment without the consent of such aforesaid percentage of
Noteholders.
INTERCREDITOR ARRANGEMENTS
The agreements governing the Accounts provide for a security interest in
favor of World Omni in the Vehicles related to Receivables thereunder. For the
Receivables to be conveyed to the Trust, World Omni will represent in the
Receivables Purchase Agreement that the security interest in the related
Vehicles is a first priority perfected security interest. The security interest
in favor of World Omni in the Vehicles related to each Account the Receivables
of which are transferred to the Trust will be assigned by World Omni to the
Transferor pursuant to the Receivables Purchase Agreement and assigned to the
Trust by the Transferor pursuant to the Trust Sale and Servicing Agreement. In
its other lending activities, World Omni may have made capital loans, real
estate loans or other loans to Dealers that are also secured by a security
interest in such Vehicles. In the Receivables Purchase Agreement, World Omni
agrees that any security interests in such Vehicles that it may have in respect
of advances or loans to Dealers other than the related Receivables shall be
junior and subordinate to the security interests therein granted in connection
with the related Receivables and that it will not realize on any such collateral
in a manner materially adverse to the Transferor or the Trust and the
Noteholders until the Transferor and the Trust have been paid in full in respect
of their interests in the Receivables related to such Vehicles.
In addition, in connection with any such other loans or advances made by
World Omni to a Dealer, World Omni may also have a security interest in property
constituting Collateral Security other than Vehicles. In such cases, World Omni,
in its sole discretion, may realize on such other Collateral Security for its
own benefit in respect of such loans or advances before the Trust or the
Indenture Trustee, on behalf of any Noteholders, is permitted to realize upon
such other Collateral Security and the security interests of the Trust and
Indenture Trustee therein shall be junior and subordinate to the security
interests of World Omni granted in connection with such other loans and
advances. Because of the subordinate position of the Indenture Trustee in
respect of such other Collateral Security, there is no assurance that the Trust
or the Indenture Trustee will realize any proceeds in respect of any such other
Collateral Security.
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ADMINISTRATION AGREEMENT
World Omni, in its capacity as administrator (the 'ADMINISTRATOR'), entered
into the Administration Agreement, dated as of November 22, 1999 with the Trust
and the Indenture Trustee pursuant to which the Administrator agrees, to the
extent provided in such 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 a monthly administration fee in an amount
equal to $1,500, which fee will be paid by the Servicer.
CERTAIN ADMINISTRATIVE AND LEGAL PROCEEDINGS
As part of its regular examination process of the consolidated federal
income tax returns of JM Family Enterprises and its subsidiaries (including
World Omni) for certain prior years, the IRS is reviewing, among other things,
some transactions that were consummated in prior years relating to retail lease
contracts. The IRS has proposed treating these transactions as sales rather than
financings for federal income tax purposes, which would affect World Omni's
depreciation deductions. It has also proposed treating the origination trust and
each securization trust created for those transactions as an association taxable
as a corporation rather than a trust for federal income tax purposes. In
connection with each transaction, World Omni received an opinion of tax counsel
to the effect that these transactions were properly treated as financings for
federal income tax purposes and that neither the origination trust nor the
relevant securitization trusts would be treated as an association taxable as a
corporation for federal income tax purposes. While management believes that a
challenge by the IRS would be unsuccessful, we cannot assure you of this result.
The IRS has also proposed changes to other positions that were taken on the tax
returns it is examining.
Management is vigorously defending its positions and believes that the
ultimate resolution of all of the issues will not have a material adverse effect
on security holders, or on JM Family Enterprises' or World Omni's operations and
financial condition. However, if the IRS were to prevail on certain of these
issues, it could have a material adverse effect on JM Family Enterprises' or
World Omni's operations and financial condition. Nevertheless, management
believes that even if the IRS were to prevail on all of these issues, it would
not result in any material impairment of World Omni's ability to perform its
obligations and its duties as Servicer under the Trust Sale and Servicing
Agreement. Management cannot, however, assure you of this result.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
TRANSFER OF RECEIVABLES
On the Initial Closing Date World Omni sold, and on each day thereafter
World Omni will sell, Receivables to the Transferor, and the Transferor will
immediately transfer the Receivables to the Trust, which the Trust will pledge
to the Indenture Trustee for the benefit of the Noteholders. The Transferor
represents that:
o the sale or transfer to the Trust constitutes a valid transfer and
assignment to the Trust of all right, title and interest of the
Transferor in, to and under the Receivables;
o under applicable Florida law, there exists a valid ownership or
perfected first priority security interest in the Receivables; and
o in the event the sale by the Transferor to the Trust is recharacterized
as a grant of a security interest instead of a true sale, the Trust will
have an enforceable first priority perfected security interest in the
Receivables following their transfer to the Trust.
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For a discussion of the Trust's rights arising from a breach of these
representations, see 'The Transfer and Servicing Agreements--Representations and
Warranties of the Transferor.'
Each of World Omni and the Transferor has represented that the Receivables
are 'instruments,' 'accounts,' 'chattel paper' or 'general intangibles' for
purposes of Florida's Uniform Commercial Code. Any dealer promissory notes
evidencing the Receivables which constitute 'instruments' under the Uniform
Commercial Code have been and will continue to be transferred by the Transferor,
to the Trust and to the Indenture Trustee's office currently located in Chicago,
Illinois. However, if the Receivables are deemed to be accounts, chattel paper
or general intangibles and the transfer of the Receivables by World Omni to the
Transferor, by the Transferor to the Trust or by the Trust to the Indenture
Trustee is deemed either to be a sale or to create a security interest, the
Uniform Commercial Code or other applicable law applies. In the case of chattel
paper, the Indenture Trustee, as transferee, would then have to take possession
of the chattel paper or file an appropriate financing statement or statements in
order to perfect its interests in the Receivables. As a precautionary measure,
financing statements covering the Receivables have been filed under the Florida
Uniform Commercial Code by the Transferor, the Trust and the Indenture Trustee
to perfect their respective interests in the Receivables and continuation
statements will be filed, as required, to continue the perfection of their
interests in the Receivables.
There are limited circumstances under the Uniform Commercial Code and
applicable federal law in which prior or subsequent transferees of Receivables
could have an interest in the Receivables with priority over the Trust's and the
Indenture Trustee's interest. A purchaser of the Receivables who gives new value
and takes possession of the documents which evidence the Receivables in the
ordinary course of the purchaser's business may have priority over the Trust's
and the Indenture Trustee's interest in the Receivables. A tax or other
government lien on property of World Omni or the Transferor arising before a
Receivable is conveyed to the Trust or to the Indenture Trustee may also have
priority over the Trust's and the Indenture Trustee's interest in the
transferred Receivable. Under the Receivables Purchase Agreement, World Omni
represents to the Transferor, under the Trust Sale and Servicing Agreement the
Transferor represents to the Trust, and under the Indenture the Trust represents
to the Indenture Trustee that the Receivables have been transferred free and
clear of any third party lien. In addition, the Transferor agrees under the
Trust Sale and Servicing Agreement to deliver to the Trust, and the Trust agrees
under the Indenture to deliver to the Indenture Trustee any necessary
instruments, such as any promissory notes received from Dealers, which evidence
the Receivables. Each of World Omni, the Transferor and the Trust also covenants
that it will not transfer or grant any lien on any Receivable other than to the
Trust or the Indenture Trustee. In addition, while World Omni is the Servicer,
cash collections on the Receivables may, under specified circumstances, be
commingled with the funds of World Omni prior to each Payment Date and, in the
event of a World Omni bankruptcy, the Trust and the Indenture Trustee may not
have a perfected interest in the commingled collections.
CERTAIN MATTERS RELATING TO BANKRUPTCY
If World Omni were to become a debtor in a bankruptcy case, a creditor or
trustee in bankruptcy of World Omni or World Omni may attempt to characterize
the transfer of the Receivables from World Omni to the Transferor as a pledge of
the Receivables to secure a borrowing by World Omni rather than a true sale of
the Receivables. World Omni represents to the Transferor in the Receivables
Purchase Agreement that the sales of the Receivables by World Omni to the
Transferor are valid sales of the Receivables to the Transferor. In addition,
World Omni and the Transferor agree to treat these transfers as sales of the
Receivables to the Transferor, and World Omni will take all actions that are
required under Florida law to perfect the Transferor's ownership interest in the
Receivables. If these transfers are treated as sales, the Receivables would not
be part of World Omni's bankruptcy estate and would not be available to World
Omni's creditors.
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In Octagon Gas Systems, Inc. v. Rimmer, 995 F.2d 948 (10th Cir. 1993), the
United States Court of Appeals for the Tenth 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. The Transferor has been advised by counsel
that the reasoning of the Octagon court appears to be inconsistent with
established precedent and the Uniform Commercial Code. In addition, the
Permanent Editorial Board of the Uniform Commercial Code has issued an official
commentary (P&B Commentary No. 14) which characterizes the Octagon court's
interpretation of Article 9 of the Uniform Commercial Code as erroneous. Such
commentary states that nothing in Article 9 is intended to prevent the transfer
of ownership of accounts or chattel paper.
In addition, if World Omni were to become a debtor in a bankruptcy case, a
creditor or the bankruptcy trustee or World Omni itself might request that World
Omni be substantively consolidated with the Transferor. Delays or reductions in
payments on the Notes could occur while the court decides these issues. In
addition, should a court rule that the Receivables are part of World Omni's
bankruptcy estate, or that World Omni should be substantively consolidated with
the Transferor, additional reductions or delays in payments on the Notes could
result. See 'Risk Factors--A Bankruptcy of World Omni or the Transferor May
Delay or Reduce Payments on the Notes.'
If the Transferor were to become a bankrupt debtor, an Early Amortization
Event would occur which may result in a lack of funds available to make full and
timely payment on the Notes. The Transferor has attempted to reduce the
likelihood that it will file for bankruptcy. The Transferor's limited liability
company agreement provides that, under specified circumstances, the Transferor
is required to have two independent directors, as such term is defined in its
limited liability company agreement. The Transferor's limited liability company
agreement also provided that the Transferor will not file a voluntary
application for relief under the U.S. Bankruptcy Code without the affirmative
vote of its two independent directors. Under the Trust Sale and Servicing
Agreement, the Indenture Trustee, the Trust, the Owner Trustee, all the
Noteholders and any Enhancement Provider agree that they will not until one year
and one day after termination of the Indenture institute against the Transferor
any bankruptcy, reorganization or other proceedings under any federal or state
bankruptcy or similar law. The Transferor does not intend to file a voluntary
application for relief under the Bankruptcy Code or any similar applicable state
law regarding the Transferor so long as the Transferor is solvent, and the
Transferor does not foresee it becoming insolvent.
If World Omni or the Transferor filed for bankruptcy under the federal
bankruptcy code or any state insolvency laws, then World Omni or the Transferor
may be able to recover payments they made to the Trust to repurchase
Receivables. In general, World Omni or the Transferor might recover any payments
made by them to the Trust during the one-year period before the date World Omni
or the Transferor filed for bankruptcy. The one-year period may be extended by
the court if it determines that the bankrupt entity was insolvent more than one
year prior to filing its bankruptcy petition.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
Set forth below is a discussion of the anticipated material United States
federal income tax consequences of the purchase, ownership and disposition of
the Notes offered by this prospectus. This discussion is based upon current
provisions of the U.S. Internal Revenue Code, existing and proposed Treasury
regulations, current administrative rulings, judicial decisions and other
applicable authorities. There are no cases or IRS rulings on similar
transactions involving debt issued by a trust with terms similar to those of the
Notes. As a result, there can be no assurance that the IRS will not challenge
the conclusions reached in this section, and no ruling from the IRS has been or
will be sought on any of the
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issues discussed below. Furthermore, legislative, judicial or administrative
changes may occur, perhaps with retroactive effect, which could affect the
accuracy of the statements and conclusions set forth in this prospectus as well
as the tax consequences to Noteholders.
This discussion does not claim to deal with all aspects of federal income
taxation that may be relevant to the holders of Notes in light of their personal
investment circumstances nor, except for specific limited discussions of
particular topics, to Noteholders subject to special treatment under the federal
income tax laws, such as financial institutions, broker-dealers, life insurance
companies and tax-exempt organizations. This information is directed only to
prospective purchasers who:
o purchase Notes in the initial distribution of the Notes;
o are citizens or residents of the United States, including domestic
corporations, limited liability companies and partnerships; and
o hold the Notes as 'capital assets' within the meaning of Section 1221 of
the U.S. Internal Revenue Code.
PROSPECTIVE INVESTORS SHOULD CONSULT WITH THEIR TAX ADVISORS AS TO THE FEDERAL,
STATE, LOCAL, FOREIGN AND ANY OTHER TAX CONSEQUENCES TO THEM OF THE PURCHASE,
OWNERSHIP AND DISPOSITION OF NOTES.
TAX CHARACTERIZATION AND TREATMENT OF NOTES
CHARACTERIZATION AS DEBT. For each series of Notes, except for any series
which is specifically identified as receiving different tax treatment in the
related prospectus supplement, Kirkland & Ellis, special tax counsel to the
Transferor ('TAX COUNSEL'), will deliver its opinion to the effect that the
Notes will be treated as debt for federal income tax purposes. The Transferor,
the Servicer and each Noteholder, by acquiring an interest in a Note, will agree
to treat the Notes as indebtedness for federal, state and local income and
franchise tax purposes. See '--Tax Characterization of the Trust--Risks of
Alternative Characterization' below for a discussion of the potential federal
income tax consequences to Noteholders if the IRS were successful in challenging
the characterization of the Notes for federal income tax purposes.
TREATMENT OF STATED INTEREST. Based on Tax Counsel's opinion that the
Notes will be treated as debt for federal income tax purposes, and assuming the
Notes are not issued with original issue discount ('OID'), the stated interest
on a Note will be taxable to a Noteholder as ordinary income when received or
accrued in accordance with each Noteholder's method of tax accounting. Interest
received on a Note may constitute 'investment income' for purposes of some
provisions in the U.S. Internal Revenue Code limiting the deductibility of
investment interest expense.
ORIGINAL ISSUE DISCOUNT. Except to the extent indicated in the related
prospectus supplement, no series of Notes will be issued with OID. In general,
OID is the excess of the 'stated redemption price at maturity' of a debt
instrument over its 'issue price,' unless the OID is small enough to fall within
a statutorily defined de minimis exception. A Note's 'stated redemption price at
maturity' is the total of all payments required to be made under the Note
through maturity except 'qualified stated interest.' 'QUALIFIED STATED INTEREST'
is generally interest that is unconditionally payable in cash or property, other
than debt instruments of the issuer, at fixed intervals of one year or less
during the entire term of the instrument at specified rates. The 'issue price'
will be the initial price at which a substantial amount of the Notes are sold,
excluding sales to bond holders, brokers or similar persons acting as
underwriters, placement agents or wholesalers.
Although it is not anticipated, except to the extent indicated in the
related prospectus supplement, that any series of Notes will be issued at a
greater than de minimis discount, a series of Notes may nevertheless be deemed
to have been issued with OID. First, under Treasury regulations, interest
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payments on a series of Notes may not be deemed 'qualified stated interest' if
(i) reasonable legal remedies do not exist to compel timely payment or (ii) the
Notes do not otherwise provide terms and conditions that make the likelihood of
late payment (other than a late payment that occurs within a reasonable grace
period) or nonpayment a remote contingency. If a series of Notes does not pay
qualified stated interest, all of the taxable income thereon would be includible
in income as OID. Second, the IRS could take the position (under regulations
that have not yet been issued pursuant to Section 1272(a)(6) of the Code) that a
series of Notes has OID.
If a Note were treated as being issued with OID, a Noteholder would be
required to include OID in its income as interest over the term of the Note
under a constant yield method. In general, OID must be included in income in
advance of the receipt of cash representing that income. Thus, each cash
distribution would be treated as an amount already included in income (to the
extent OID has accrued as of the date of the interest distribution and is not
allocated to prior distributions), or as a repayment of principal. This
treatment would have no significant effect on Noteholders using the accrual
method of accounting. However, cash method Noteholders may be required to report
income with respect to the Notes in advance of the receipt of cash attributable
to such income. In this situation you would have to rely on other sources to pay
the taxes on your OID income. Even if a note has OID falling within the de
minimis exception, the Noteholder must include such OID in income
proportionately as principal payments are made on such Note.
A holder of a Note which has a fixed maturity date not more than one year
from the issue date of such Note (a 'SHORT-TERM NOTE') will generally not be
required to include OID income on the Note as it accrues. However, the foregoing
rule may not apply if such holder holds the instrument as part of a hedging
transaction, or as a stripped bond or stripped coupon or if the holder is:
o an accrual method taxpayer;
o a bank;
o a broker or dealer that holds the Note as inventory;
o a regulated investment company or common trust fund; or
o the beneficial owner of specified pass-through entities specified in the
U.S. Internal Revenue Code.
A holder of a Short-Term Note who is not required to include OID income on the
note as it accrues will instead include the OID accrued on the Note in gross
income upon a sale or exchange of the Note or at maturity, or if the Short-Term
Note is payable in installments, as principal is paid thereon. A holder would be
required to defer deductions for any interest expense on an obligation incurred
to purchase or carry the Short-Term Note to the extent it exceeds the sum of any
interest income and OID accrued on such Note. However, a holder may elect to
include OID in income as it accrues on all obligations having a maturity of one
year or less held by the holder in that taxable year or thereafter, in which
case the deferral rule of the preceding sentence will not apply. For purposes of
this paragraph, OID accrues on a Short-Term Note on a straight-line basis,
unless the holder irrevocably elects, under regulations to be issued by the
Treasury Department, to apply a constant interest method, using the holder's
yield to maturity and daily compounding.
A holder who purchases a Note after its initial distribution at a discount
that exceeds a statutorily defined de minimis amount will be subject to the
'market discount' rules of the U.S. Internal Revenue Code, and a holder who
purchases a Note at a premium will be subject to the bond premium amortization
rules of the U.S. Internal Revenue Code.
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DISPOSITION OF NOTES. If a Noteholder sells a Note, the holder will
recognize gain or loss in an amount equal to the difference between the amount
realized on the sale and the holder's adjusted tax basis in the Note. The
adjusted tax basis of the Note to a particular Noteholder will equal the
holder's cost for the Note, increased by any OID and market discount previously
included by such Noteholder in income with respect to the Note and decreased by
any bond premium previously amortized and any payments of principal and OID
previously received by such Noteholder with respect to such Note. Any gain or
loss on sale will be capital gain or loss if the Note was held as a capital
asset, except for gain representing accrued interest or accrued market discount
not previously included in income. Capital gain or loss will be long-term if the
Note was held by the holder for more than one year and otherwise will be
short-term. Any capital losses realized generally may be used by a corporate
taxpayer only to offset capital gains, and by an individual taxpayer only to the
extent of capital gains plus $3,000 of other income.
NOTES SUBJECT TO CONTINGENCIES. The United States federal income tax
consequences to an owner or seller of Notes that provide for one or more
contingent payments will vary depending on the exact terms of the Notes and
related factors. The Notes may be subject to rules that differ from the general
rules discussed above. The United States federal income tax consequences to a
holder of Notes that provide for contingent payments will be summarized in the
related prospectus supplement.
INFORMATION REPORTING AND BACKUP WITHHOLDING. The Trustee will be required
to report annually to the IRS, and to each related Noteholder of record, the
amount of interest paid on the Notes, and any amount of interest withheld for
federal income taxes, for each calendar year, except as to exempt holders
(generally, corporations, tax-exempt organizations, qualified pension and
profit-sharing trusts, individual retirement accounts, or nonresident aliens who
provide certification as to their status). Each holder will be required to
provide to the Trustee, under penalties of perjury, a certificate containing the
holder's name, address, correct federal taxpayer identification number and a
statement that the holder is not subject to backup withholding. Should a
Noteholder who is not exempt from backup withholding fail to provide the
required certification, the Trustee will be required to withhold, from interest
otherwise payable to the holder, 31% of the holder's interest income and pay the
withheld amount to the IRS as a credit against the holder's federal income tax
liability.
The IRS has issued new regulations governing the backup withholding and
information reporting requirements. The new regulations are generally effective
for payments made after December 31, 2000. Noteholders should consult their tax
advisors with respect to the impact, if any, of the new regulations.
Because the Transferor will, for federal income tax purposes, treat all
Notes as indebtedness issued by the Trust characterized as either a partnership
or a division of whichever entity owns all of its Certificates, the Transferor
will not comply with the tax reporting requirements that would apply under any
alternative characterization of the Trust.
TAX CONSEQUENCES TO FOREIGN NOTEHOLDERS. If interest paid or accrued to a
Noteholder who is a nonresident alien, foreign corporation or other non-United
States person (a 'FOREIGN PERSON') is not effectively connected with the conduct
of a trade or business within the United States by the foreign person, the
Note's interest generally will be considered 'portfolio interest,' and generally
will not be subject to United States federal income tax and withholding. This
exemption generally will apply only if the foreign person:
o is not actually or constructively a '10 percent shareholder' of the
Trust or the Transferor (including a holder of 10% of the outstanding
certificates of the Trust) or a 'controlled foreign corporation' for
which the Trust or the Transferor is a 'related person' within the
meaning of the U.S. Internal Revenue Code; and
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o provides an appropriate statement, signed under penalties of perjury,
certifying that the beneficial owner of the Note is a foreign person and
providing that foreign person's name and address.
If the information provided in this statement changes, the foreign person must
inform the Indenture Trustee within 30 days of the change. If the interest were
not portfolio interest, then it would be subject to United States federal income
and withholding tax at a rate of 30 percent, unless such tax were reduced or
eliminated pursuant to an applicable tax treaty. The IRS has amended the
transition period relating to new regulations governing withholding, backup
withholding and information reporting requirements. Withholding certificates or
statements that are valid on December 31, 1999, may be treated as valid until
the earlier of their expiration or December 31, 2000. All existing certificates
or statements will cease to be effective after December 31, 2000.
Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a Note by a foreign person will be exempt from United
States federal income and withholding tax, provided that:
o the gain is not effectively connected with the conduct of a trade or
business in the United States by the foreign person; and
o in the case of a foreign individual, the foreign person is not present
in the United States for 183 days or more in the taxable year.
If the interest, gain or income on a Note held by a foreign person is
effectively connected with the conduct of a trade or business in the United
States by the foreign person, such holder, although exempt from the withholding
tax previously discussed if an appropriate statement is furnished, will
generally be subject to United States federal income tax on the interest, gain
or income at regular federal income tax rates. In addition, if the foreign
person is a foreign corporation, it may be subject to a branch profits tax equal
to 30 percent of its 'effectively connected earnings and profits' within the
meaning of the U.S. Internal Revenue Code for the taxable year, subject to
adjustment, unless it qualifies for a lower rate under an applicable tax treaty.
TAX CHARACTERIZATION OF THE TRUST
Depending upon whether Certificates are owned by one or more persons, the
Trust will be treated as a division of the Transferor or as a partnership for
federal income tax purposes. The related prospectus supplement will specify the
treatment of the Trust for federal income tax purposes.
If the Trust issues Certificates only to the Transferor, the equity of the
Trust will be wholly-owned by the Transferor. In this case, under the
'check-the-box' Treasury regulations, the Trust will be treated as a division of
the Transferor and disregarded for federal income tax purposes. In other words,
for federal income tax purposes, the Transferor will be treated as the owner of
all the assets of the Trust and the obligor of all the liabilities of the Trust.
Accordingly, the Trust would not be directly liable for any federal income taxes
as it would be deemed not to exist for federal income tax purposes. Under the
'check-the-box' Treasury regulations, unless it is treated as a trust for
federal income tax purposes, an unincorporated domestic entity with more than
one equity owner is automatically classified as a partnership for federal income
tax purposes. Because it is a business trust, the Trust will not qualify as a
trust for federal income tax purposes, and accordingly, if Certificates are sold
or issued in any manner which results in there being more than one equity owner,
the Trust will be treated as a partnership.
If Certificates are issued to more than one person, the Transferor and the
Servicer will agree, and the applicable Certificateholders will agree by their
purchase, to treat the Trust as a partnership for purposes of federal, state and
local income and franchise tax purposes, with the partners of such
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partnership being the Certificateholders and the Notes being debt of the
partnership. However, the proper characterization of the arrangement involving
the Certificates, the Transferor and the Servicer is not clear because there is
no authority on transactions closely comparable to that contemplated in this
prospectus.
RISK OF ALTERNATIVE CHARACTERIZATION. Under the U.S. Internal Revenue Code
and specified Treasury Regulations (the 'PTP REGULATIONS') a partnership may be
classified as a publicly traded partnership ('PTP') if equity interests in the
partnership are traded on an 'established securities market' or are 'readily
tradeable' on a 'secondary market' or its 'substantial equivalent.' For federal
income tax purposes, a PTP is taxable as a corporation and subject to corporate
income tax. Any corporate income tax could materially reduce or eliminate cash
that would otherwise be distributable for the applicable Notes and Certificates,
and Certificateholders could be liable for any tax that is unpaid by the Trust.
However, the Trust will comply with available safe harbors under the PTP
Regulations to avoid PTP characterization. Furthermore, even if the Trust were
classified as a PTP, it would avoid taxation as a corporation if 90% or more of
its annual income constituted 'qualifying income' not derived in the conduct of
a 'financial business.' It is unclear whether the Trust's income would be so
classified. However, Tax Counsel will deliver its opinion that the Trust will
not be classified as a publicly traded partnership taxable as a corporation.
STATE AND LOCAL TAX CONSEQUENCES
The State of Florida imposes a value-based intangibles tax on January 1 of
each year at the rate of $1.50 per $1,000 of value on certain intangibles owned,
managed or controlled by Florida domiciliaries or intangibles having a business
situs in Florida. On the last business day of each year, in an effort to
minimize the impact of this intangibles tax, the Transferor intends to transfer
99% of its right, title and interest in, to and under the Certificates owned by
the Transferor as of such day, together with all of its duties, rights and
obligations under the Trust Sale and Servicing Agreement to World Omni
Wholesale, Inc. ('WOWI'), a wholly-owned subsidiary of World Omni, located and
managed outside the State of Florida (such transfer, the 'ANNUAL SERVICING
TRANSFER'). In connection with such Annual Servicing Transfer, the Servicer
shall transfer all of its rights, obligations and duties under the Trust Sale
and Servicing Agreement to WOWI. The Trust will continue to maintain its first
priority perfected security interest in the Receivables. Only the Transferor's
interest in the Certificates, together with the Servicer's management and
control authority and obligations will be transferred to WOWI, to be held in
escrow and returned to the Transferor and the Servicer, respectively, on the
first business day of the following year. This annual transfer is consistent
with the Technical Assistance Advisement 95(C)2-021 issued by the Florida
Department of Revenue, which holds that a transfer of receivables to a
wholly-owned subsidiary located outside the State of Florida and having no
contacts with the State of Florida was sufficient to avoid the imposition of the
intangibles tax on the receivables subject to such tax. As additional
protection, the Trust will be indemnified by World Omni with respect to any
liability for this intangibles tax. The Servicer has agreed in the Trust Sale
and Servicing Agreement not to conduct any servicing activities during the
period of the Annual Servicing Transfer.
The above discussion does not address the tax treatment of any series of
Notes or the holders of Notes under any state or local tax laws. The activities
to be undertaken by the Servicer in servicing and collecting the Receivables
will take place throughout the United States and, therefore, many different tax
regimes could apply to this transaction. Prospective investors are urged to
consult with their tax advisors regarding the state and local tax treatment of
the Trust as well as any state and local tax consequences to investors by
purchasing, holding and disposing of Notes.
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ERISA CONSIDERATIONS
Section 406 of ERISA and Section 4975 of the U.S. 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 specified transactions with persons that are 'parties
in interest' under ERISA or 'disqualified persons' under the U.S. Internal
Revenue Code with respect to such Benefit Plan. A violation of these 'prohibited
transaction' rules may result in an excise tax or other penalties and
liabilities under ERISA and the U.S. Internal Revenue Code for such persons.
Some transactions involving the Trust might be deemed to constitute
prohibited transactions under ERISA and the U.S. Internal Revenue Code for a
Benefit Plan that purchased Notes if assets of the Trust were deemed to be
assets of the Benefit Plan. Under a regulation issued by the United States
Department of Labor (the 'PLAN ASSETS REGULATION'), the assets of the Trust
would be treated as plan assets of a Benefit Plan for the purposes of ERISA and
the U.S. Internal Revenue Code only if the Benefit Plan acquired an 'equity
interest' in the Trust and none of the exceptions contained in the Plan Assets
Regulation was applicable. An equity interest is defined under the Plan Assets
Regulation as an interest other than an instrument which is treated as
indebtedness under applicable local law and which has no substantial equity
features. Although there is little guidance on the subject, the Transferor
believes the Notes of the Trust should be treated as indebtedness without
substantial equity features for purposes of the Plan Assets Regulation. Other
exceptions, if any, from application of the Plan Assets Regulation available for
any Notes will be discussed in the related prospectus supplement.
However, disregarding whether Notes are treated as equity interests for
Plan Asset Regulation purposes, the acquisition or holding of Notes by or on
behalf of a Benefit Plan could be considered to give rise to a prohibited
transaction if the Transferor, the Servicer, the Trust or any of their
respective affiliates is or becomes a party in interest or a disqualified person
with respect to such Benefit Plan. Limited exemptions from the prohibited
transaction rules could be applicable to the purchase and holding of Notes by a
Benefit Plan depending on the type and circumstances of the plan fiduciary
making the decision to acquire the Notes. Included among these exemptions are:
o Prohibited Transaction Class Exemption ('PTCE') 90-1, regarding
investments by insurance company pooled separate accounts;
o PTCE 91-38, regarding investments by bank collective investment funds;
o PTCE 84-14, regarding transactions effected by qualified professional
asset managers;
o PTCE 95-60, regarding transactions by life insurance company general
accounts; and
o PTCE 96-23, regarding transactions effected by in-house asset managers.
Employee benefit plans that are governmental plans, as defined in Section
3(32) of ERISA, and some church plans, as defined in Section 3(33) of ERISA, are
not subject to ERISA requirements.
A plan fiduciary considering the purchase of Notes should consult its tax
and/or legal advisors regarding whether the assets of the Trust would be
considered plan assets and the possibility of exemptive relief from the
prohibited transaction rules as well as related issues and their potential
consequences.
PLAN OF DISTRIBUTION
The Transferor will sell each series of Notes offered for sale, on the
terms and conditions set forth in an underwriting agreement (each, an
'UNDERWRITING AGREEMENT'). For each offering, the Transferor will agree to sell
to each of the underwriters named in the Underwriting Agreement and in the
related
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prospectus supplement and each of the underwriters will severally agree to
purchase from the Transferor, the principal amount of Notes set forth in the
Underwriting Agreement and in the related prospectus supplement.
In each Underwriting Agreement, the underwriters will agree, subject to the
terms and conditions set forth in the Underwriting Agreement, to purchase all
the Notes described in the Underwriting Agreement which are offered by this
prospectus and by the related prospectus supplement, if any of the Notes are
purchased. In the event of a default by any underwriter, each Underwriting
Agreement will provide that, in specified circumstances, purchase commitments of
the nondefaulting underwriters may be increased or the Underwriting Agreement
may be terminated.
Each prospectus supplement will either:
(1) set forth the price at which each series or class of Notes being
offered by the prospectus supplement will be offered to the public and
any concessions that may be offered to the dealers participating in
the offering of the Notes; or
(2) specify that the Notes are to be resold by the Underwriters in
negotiated transactions at varying prices to be determined at the time
of such sale.
After the initial public offering of any Notes, the public offering price and
such concessions may be changed.
The extent, if any, to which the closing of any series of Notes is
conditioned upon the closing of any other series of Notes will be set forth in
the related prospectus supplement.
Each Underwriting Agreement will provide that the Transferor will indemnify
the underwriters against specified liabilities, including liabilities under the
Securities Act of 1933.
The Indenture Trustee may invest the funds in the Eligible Deposit Accounts
in Eligible Investments acquired from the underwriters.
The place and time of delivery for the Notes for which this prospectus is
delivered will be set forth in the related prospectus supplement.
LEGAL OPINIONS
Certain legal matters relating to the Notes will be passed upon for the
Trust, the Transferor and World Omni by Kirkland & Ellis, special counsel to the
Trust, the Transferor and World Omni. Certain federal income tax matters will be
passed upon for the Trust, the Transferor and the Servicer by Kirkland & Ellis.
WHERE YOU CAN FIND MORE INFORMATION
The Transferor, as originator of the Trust, filed a registration statement
relating to the Notes with the Securities and Exchange Commission (the 'SEC')
under the Securities Act of 1933. This prospectus is part of the registration
statement, but the registration statement includes additional information.
The Transferor 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 filed by
the Transferor or the Registrant at the SEC's public reference room at 450 Fifth
Street, Washington, D.C. 20549. You can request copies of these documents, upon
payment of a duplicating fee, by writing to the SEC. Please call
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the SEC at (800) SEC-0330 for further information on the operation of the public
reference rooms. These SEC filings are also available to the public on the SEC
Internet site (http://www.sec.gov).
INCORPORATION BY REFERENCE
The SEC allows information filed with it to be 'incorporated by reference'
into this prospectus, which means that the Registrant 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 the Transferor files with the SEC after the date of this
prospectus will automatically update the information in this prospectus. In all
cases, you should rely on the later information over different information
included in this prospectus or the prospectus supplement.
The Transferor incorporates by reference any future annual, monthly and
special reports and proxy materials filed by or on behalf of the Trust with the
SEC until the offering of the Notes is terminated. The Transferor will not be
required to file reports pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, except for the filing of monthly Current Reports on Form
8-K. As of the date of this prospectus, the Transferor had not filed any Current
Reports on Form 8-K.
As a recipient of this prospectus, you may request a copy of any document
incorporated by reference into this prospectus, except exhibits to the documents
(unless the exhibits are specifically incorporated by reference), at no cost, by
writing or calling: World Omni Financial Corp., 120 N.W. 12th Avenue, Deerfield
Beach, Florida 33442, Attention: Corporate Secretary, telephone: (954) 429-2200.
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INDEX OF TERMS
The following is a list of the defined terms used in this prospectus and
any prospectus supplement and the pages on which the definitions of such terms
may be found in this prospectus.
<TABLE>
<S> <C>
Accounts........................................ 14
Accumulation Period............................. 25
Accumulation Period Commencement Date........... 25
Addition Date................................... 47
Additional Accounts............................. 52
Additional Cut-Off Date......................... 47
Adjustment Payment.............................. 57
Administrative Agreement........................ 44
Administrator................................... 67
Amortization Period............................. 25
Annual Servicing Transfer....................... 74
Asset Based Receivables......................... 16
Automatic Additional Accounts................... 52
Automatic Removal Date.......................... 55
Automatic Removed Accounts...................... 55
Available Subordinated Amount................... 37
Benefit Plan.................................... 75
Book Review..................................... 20
Cede............................................ 41
Certificateholders.............................. 25
Certificates.................................... 15
Class I Dealers................................. 18
Class II Dealers................................ 18
Class III Dealers............................... 19
Class IV Dealers................................ 19
Class V Dealers................................. 19
Class VI Dealers................................ 19
Clearstream Participants........................ 41
Collateral Security............................. 14
Collection Account.............................. 33
Collection Period............................... 36
Collections..................................... 14
Controlled Amortization Amount.................. 26
Controlled Deposit Amount....................... 25
Controlling Class............................... 28
Cooperative..................................... 42
Dealers......................................... 14
Defaulted Amount................................ 56
Defaulted Amount Carryover...................... 57
Defaulted Receivables........................... 56
Definitive Notes................................ 43
Depository...................................... 24
Designated Accounts............................. 53
Designated Balance.............................. 53
Designated Receivables.......................... 54
Determination Date.............................. 64
Disclosure Document............................. 38
Disqualified Receivables........................ 48
DTC............................................. 40
Early Amortization Event........................ 58
Early Amortization Period....................... 26
Eligible Account................................ 49
Eligible Deposit Account........................ 33
Eligible Institution............................ 33
Eligible Investments............................ 33
Eligible Receivable............................. 49
Enhancement..................................... 14
Enhancement Provider............................ 49
Euroclear Operator.............................. 42
Euroclear Participants.......................... 41
Events of Default............................... 29
Excess Funding Account.......................... 34
Excess Principal Collections.................... 35
Excess Receivables.............................. 51
Excluded Series................................. 32
Expected Principal Payment Date................. 25
Financial Statement Review...................... 18, 20
Fitch........................................... 33
Floor Plan Equity Program....................... 20
foreign person.................................. 72
Fully Funded Date............................... 26
Incremental Subordinated Amount................. 50
Indenture....................................... 24
Indenture Trustee............................... 39
Indirect Participants........................... 41
Ineligible Amount............................... 51
Ineligible Receivables.......................... 50
Initial Closing Date............................ 14
Initial Cut-Off Date............................ 14
Insolvency Laws................................. 13
Interest Funding Account........................ 24
Interest Payment Dates.......................... 24
Invested Amount................................. 35
Investment Event................................ 57
Investment Period............................... 26
Investment Period Commencement Date............. 26
Investor Charge-Offs............................ 36
JM Family Enterprises........................... 13
</TABLE>
78
<PAGE>
<TABLE>
<S> <C>
LIBOR........................................... 20
Minimum Required Pool Balance................... 57
Miscellaneous Payments.......................... 35
Monthly Servicing Fee........................... 62
Moody's......................................... 33
Non-Principal Collections....................... 14
Non-Serviced Participation Receivables.......... 60
Non-Vehicle Collateral Security................. 22
Note Owners..................................... 41
Noteholder...................................... 24
Noteholder Monthly Servicing Fee................ 62
Notes........................................... 15
OID............................................. 70
Overconcentration Amount........................ 51
Owner Trustee................................... 14
Paired Series................................... 32
Participants.................................... 40
Participations.................................. 22
Payment Date.................................... 24
Payment Date Statement.......................... 64
Plan Assets Regulation.......................... 75
Pool Balance.................................... 34
Principal Collections........................... 14
Principal Commencement Date..................... 25
Principal Funding Account....................... 25
Principal Receivables........................... 34
Principal Shortfalls............................ 36
Principal Terms................................. 38
PTCE............................................ 75
PTP............................................. 74
PTP Regulations................................. 74
Purchased Participation Receivables............. 22
qualified stated interest....................... 70
Rating Agency................................... 33
Rating Agency Condition......................... 33
Rebate Payment.................................. 57
Receivables..................................... 14
Receivables Purchase Agreement.................. 14
Related Documents............................... 31
Removal and Repurchase Date..................... 54
Removal Commencement Date....................... 53
Removal Date.................................... 53
Removal Notice.................................. 53
Removed Account................................. 54
Representation Date............................. 47
Repurchased Receivables......................... 55
Repurchased Receivables Purchase Price.......... 54
Required Pool Balance........................... 34
Reset Date...................................... 35
Revolving Period................................ 25
SEC............................................. 76
Series Adjusted Invested Amount................. 35
Series Allocable Defaulted Amount............... 35
Series Allocable Miscellaneous Payments......... 35
Series Allocable Non-Principal Collections...... 35
Series Allocable Principal Collections.......... 35
Series Allocation Percentage.................... 35
Series Cut-Off Date............................. 47
Series Issuance Date............................ 47
Series Supplement............................... 24
Series Termination Date......................... 59
Service Transfer................................ 63
Servicer........................................ 13
Servicing Default............................... 63
Servicing Fee................................... 62
Servicing Fee Rate.............................. 62
Short-Term Note................................. 71
Special Payment Date............................ 25
Standard & Poor's............................... 33
SuperWRAP Program............................... 22
Supplemental Certificate........................ 56
Tax Counsel..................................... 70
Tax Opinion..................................... 39
Transfer and Servicing Agreements............... 44
Transfer Date................................... 47
Transfer Deposit Amount......................... 48
Transferor...................................... 13
Transferor Certificate.......................... 56
Trust........................................... 14
Trust Adjusted Invested Amount.................. 35
Trust Agreement................................. 14
Trust Estate.................................... 14
Trust Incremental Subordinated Amount........... 51
Trust Sale and Servicing Agreement.............. 15
Underwriting Agreement.......................... 75
Vehicles........................................ 14
Wholesale Portfolio............................. 23
World Omni...................................... 13
WOWI............................................ 74
</TABLE>
79
<PAGE>
$700,000,000
WORLD OMNI MASTER OWNER TRUST
$646,000,000 SERIES 2000-1 FLOATING RATE AUTOMOBILE DEALER FLOORPLAN ASSET
BACKED NOTES, CLASS A
$54,000,000 SERIES 2000-1 FLOATING RATE AUTOMOBILE DEALER FLOORPLAN ASSET BACKED
NOTES, CLASS B
WODFI LLC
TRANSFEROR
WORLD OMNI FINANCIAL CORP.
SERVICER
---------------------------------------------
PROSPECTUS
---------------------------------------------
Underwriters of the Class A Notes
MERRILL LYNCH & CO.
CHASE SECURITIES INC.
BANC OF AMERICA SECURITIES LLC
FIRST UNION CAPITAL MARKETS
Underwriter of the Class B Notes
MERRILL LYNCH & CO.
Until the expiration of 90 days after the date of this
prospectus supplement, all dealers selling the Class A
Notes or Class B Notes, whether or not participating in
this distribution, will deliver a prospectus. This
delivery requirement is in addition to the obligation of
dealers to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments
or subscriptions.
MARCH 29, 2000
