<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 12, 1999
REGISTRATION NO. 333-30037
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 3
TO
FORM S-3*
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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HONDA AUTO RECEIVABLES 1999-1 OWNER TRUST
(Issuer with respect to the Securities)
AMERICAN HONDA RECEIVABLES CORP.
(Originator of the Trust described herein)
(Exact name of Co-Registrant as specified in its charter)
CALIFORNIA 6146 33-0526079
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification Number)
incorporation or Classification Code
organization) Number)
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700 VAN NESS AVENUE
TORRANCE, CALIFORNIA 90501
(310) 781-4100
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(Address, including zip code, and telephone number, including
area code, of Originator's principal executive offices)
Y. KOHAMA
700 VAN NESS AVENUE
TORRANCE, CALIFORNIA 90501
(310) 781-4100
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(Name, address, including zip code, and telephone number, including
area code, of agent for service with respect to the originator)
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COPIES TO:
Dale W. Lum, Esq. C. Thomas Kunz, Esq.
Brown & Wood LLP Skadden, Arps, Slate, Meager & Flom
LLP
555 California Street 919 Third Avenue
San Francisco, California 94104 New York, New York 10022
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
* This Registration Statement was initially filed on Form S-1.
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CALCULATION OF REGISTRATION FEE
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<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
PROPOSED TITLE OF AMOUNT TO AGGREGATE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PRICE PER UNIT OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Asset Backed Notes.................. $1,000,000.00 100%(1) $1,000,000.00(1) $303.03(2)
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee on the
basis of the proposed maximum offering price per unit.
(2) Previously paid.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, PRELIMINARY PROSPECTUS DATED JANUARY 12, 1999
$
Honda Auto Receivables 1999-1 Owner Trust
$ % Asset Backed Notes, Class A-1
$ % Asset Backed Notes, Class A-2
$ % Asset Backed Notes, Class A-3
$ % Asset Backed Notes, Class A-4
American Honda Receivables Corp.
Seller
American Honda Finance Corporation
Servicer
THE HONDA AUTO RECEIVABLES 1999-1 OWNER TRUST (THE "TRUST") WILL BE GOVERNED BY
AN AMENDED AND RESTATED TRUST AGREEMENT TO BE DATED AS OF JANUARY 1, 1999,
BETWEEN AMERICAN HONDA RECEIVABLES CORP. AND THE BANK OF NEW YORK
(DELAWARE), AS OWNER TRUSTEE. THE TRUST WILL ISSUE FOUR CLASSES OF NOTES
(RESPECTIVELY, THE "CLASS A-1 NOTES", THE "CLASS A-2 NOTES", THE
"CLASS A-3 NOTES" AND THE "CLASS A-4 NOTES") PURSUANT TO AN
INDENTURE TO BE DATED AS OF JANUARY 1, 1999, BETWEEN THE TRUST
AND BANKERS TRUST COMPANY, AS INDENTURE TRUSTEE. THE TRUST WILL
ALSO ISSUE ONE CLASS OF CERTIFICATES WHICH WILL REPRESENT
FRACTIONAL UNDIVIDED INTERESTS IN THE TRUST (THE
"CERTIFICATES"). THE CERTIFICATES ARE NOT BEING OFFERED
HEREBY. THE ASSETS OF THE TRUST WILL PRIMARILY INCLUDE A
POOL OF RETAIL INSTALLMENT SALE CONTRACTS (THE
"RECEIVABLES") SECURED BY THE NEW OR USED HONDA AND
ACURA MOTOR VEHICLES FINANCED THEREBY, CERTAIN MONIES
DUE OR RECEIVED UNDER THE RECEIVABLES ON OR AFTER
JANUARY 1, 1999, SECURITY INTERESTS IN THE
RECEIVABLES AND MONIES ON DEPOSIT IN THE RESERVE
FUND AND THE YIELD SUPPLEMENT ACCOUNT
DESCRIBED HEREIN. THE RECEIVABLES WILL BE
SERVICED BY AMERICAN HONDA FINANCE
CORPORATION ("AHFC" OR THE "SERVICER").
THE NOTES WILL BE SECURED BY THE
ASSETS OF THE TRUST PURSUANT TO THE
INDENTURE.
INTEREST ON THE NOTES AT THE RELATED INTEREST RATES SPECIFIED ABOVE WILL BE
DISTRIBUTED TO NOTEHOLDERS ON THE FIFTEENTH DAY OF EACH MONTH OR, IF ANY SUCH
DAY IS NOT A BUSINESS DAY, ON THE IMMEDIATELY SUCCEEDING BUSINESS DAY
(EACH, A "DISTRIBUTION DATE"), COMMENCING FEBRUARY 15, 1999. PRINCIPAL
ON THE NOTES WILL BE PAYABLE ON EACH DISTRIBUTION DATE TO THE EXTENT
DESCRIBED HEREIN; HOWEVER, UNLESS THE NOTES HAVE BEEN ACCELERATED
FOLLOWING AN EVENT OF DEFAULT UNDER THE INDENTURE, NO PRINCIPAL
PAYMENTS WILL BE MADE ON THE (I) CLASS A-2 NOTES UNTIL THE CLASS
A-1 NOTES HAVE BEEN PAID IN FULL, (II) CLASS A-3 NOTES UNTIL THE
CLASS A-1 AND CLASS A-2 NOTES HAVE BEEN PAID IN FULL OR (III)
CLASS A-4 NOTES UNTIL THE CLASS A-1, CLASS A-2 AND CLASS
A-3 NOTES HAVE BEEN PAID IN FULL. PAYMENTS IN RESPECT OF
THE CERTIFICATES WILL BE SUBORDINATED TO PAYMENTS ON
THE NOTES TO THE EXTENT DESCRIBED HEREIN.
TO THE EXTENT NOT PREVIOUSLY PAID PRIOR TO SUCH DATES, THE OUTSTANDING PRINCIPAL
AMOUNT OF EACH CLASS OF NOTES WILL BE PAYABLE IN FULL ON THE FOLLOWING
DATES, IN THE CASE OF (I) THE CLASS A-1 NOTES, THE
DISTRIBUTION DATE, (II) THE CLASS A-2 NOTES, THE DISTRIBUTION
DATE, (III) THE CLASS A-3 NOTES, THE DISTRIBUTION DATE
AND (IV) THE CLASS A-4 NOTES, THE DISTRIBUTION DATE.
For a discussion of certain factors that should be considered in connection with
an investment in the Notes, see "Risk Factors" on Page 11.
For the purposes hereof, AHFC considers a Receivable to be past due or
delinquent when an obligor fails to make at least 60% of a scheduled monthly
payment on a cumulative basis by the related due date. If a Receivable was
considered delinquent when an obligor failed to pay any portion of a
scheduled monthly payment, AHFC's historical delinquency experience may
have been materially higher than its historical delinquency experience
disclosed in this prospectus. Other issuers may calculate
delinquencies differently. AHFC's historical delinquency experience
may not be comparable to the historical delinquency information
disclosed by other issuers.
THE NOTES WILL REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES WILL REPRESENT
BENEFICIAL INTERESTS IN, THE TRUST AND WILL NOT REPRESENT OBLIGATIONS OF OR
INTERESTS IN AMERICAN HONDA RECEIVABLES CORP., AMERICAN HONDA
FINANCE CORPORATION OR ANY OF THEIR RESPECTIVE AFFILIATES.
THE NOTES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO THE
PUBLIC(1) COMMISSIONS SELLER(2)
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PER CLASS A-1 NOTE.................................... % % %
PER CLASS A-2 NOTE....................................
PER CLASS A-3 NOTE....................................
PER CLASS A-4 NOTE....................................
TOTAL................................................. $ $ $
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(1) PLUS ACCRUED INTEREST, IF ANY, FROM , 1999.
(2) BEFORE DEDUCTING EXPENSES PAYABLE BY THE SELLER ESTIMATED AT $ .
THE NOTES ARE OFFERED BY THE SEVERAL UNDERWRITERS WHEN, AS AND IF ISSUED BY
THE TRUST, DELIVERED TO AND ACCEPTED BY THE UNDERWRITERS AND SUBJECT TO THEIR
RIGHT TO REJECT ORDERS IN WHOLE OR IN PART. IT IS EXPECTED THAT DELIVERY OF THE
NOTES, IN BOOK-ENTRY FORM, WILL BE MADE THROUGH THE FACILITIES OF THE DEPOSITORY
TRUST COMPANY ON OR ABOUT JANUARY , 1999, AGAINST PAYMENT IN IMMEDIATELY
AVAILABLE FUNDS.
CREDIT SUISSE FIRST BOSTON
[ ]
[ ]
[ ]
[ ]
[ ]
THE DATE OF THIS PROSPECTUS IS JANUARY , 1999.
<PAGE>
Certain persons participating in this offering may engage in transactions
that stabilize, maintain or otherwise affect the price of any Class of Notes.
Such transactions may include stabilizing. For a description of these
activities, see "Underwriting".
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AVAILABLE INFORMATION
The Seller has filed with the Securities and Exchange Commission (the
"Commission") on behalf of the Trust a Registration Statement (together with all
amendments and exhibits thereto, the "Registration Statement"), of which this
Prospectus is a part, under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Notes being offered hereby. This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which have been omitted in accordance with the rules
and regulations of the Commission. For further information, reference is made to
the Registration Statement which is available for inspection without charge at
the public reference facilities of the Commission at Judiciary Plaza, Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549, and the regional offices of the
Commission at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511, and Seven World Trade Center, Suite 1300, New York, New
York 10048. Copies of such information can be obtained from the Public Reference
Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Commission maintains a Web Site
that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission at http:
//www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All reports and other documents filed by the Seller on behalf of the Trust,
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), subsequent to the date of this Prospectus
and prior to the termination of the offering of the Notes shall be deemed to be
incorporated by reference into this Prospectus and to be part hereof. Any
statement contained in a document incorporated or deemed to be incorporated by
reference in this Prospectus shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement contained in this
Prospectus or in any subsequently filed document that also is or is deemed to be
incorporated by reference in this Prospectus modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Seller will provide without charge to each person to whom a copy of this
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all of the documents incorporated herein by reference, except the
exhibits to such documents (unless such exhibits are specifically incorporated
by reference in such documents). Written requests for such copies should be
directed to American Honda Receivables Corp., 700 Van Ness Avenue, Torrance,
California 90501 (Telephone: (310) 781-4100).
REPORTS TO NOTEHOLDERS
The Servicer, on behalf of the Trust, will prepare and the Indenture Trustee
will provide to Noteholders of record (which shall be Cede & Co. as the nominee
of DTC unless Definitive Notes are issued under the limited circumstances
described herein) monthly and annual unaudited reports concerning the
Receivables. The Seller, as originator of the Trust, will also file or cause to
be filed with the Commission such periodic reports as are required under the
Exchange Act, and the rules and regulations of the Commission thereunder. The
filing with the Commission of periodic reports with respect to the Trust will
cease following completion of the reporting period required by Rule 15d-1 under
the Exchange Act, which period is expected to end on September 30, 1999.
2
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SUMMARY
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus. Capitalized terms
used and not otherwise defined herein shall have the meanings ascribed thereto
elsewhere in this Prospectus. See Index of Capitalized Terms at page 64 for the
location herein of defined terms.
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Trust............... Honda Auto Receivables 1999-1 Owner Trust (the "Trust").
Seller.............. American Honda Receivables Corp. (the "Seller"), a wholly
owned, limited purpose subsidiary of American Honda
Finance Corporation.
Servicer............ American Honda Finance Corporation ("AHFC" or, in its
capacity as Servicer, the "Servicer"), a wholly owned
subsidiary of American Honda Motor Co., Inc. ("AHMC").
AHMC is the exclusive distributor of Honda and Acura motor
vehicles, Honda motorcycles and power products and Honda
and Acura parts and accessories in the United States and
is a wholly owned subsidiary of Honda Motor Co., Ltd., a
Japanese corporation.
Owner Trustee....... The Bank of New York (Delaware) (the "Owner Trustee").
Indenture Trustee... Bankers Trust Company (the "Indenture Trustee" and,
together with the Owner Trustee, the "Trustees").
Securities The Trust will issue four classes of Notes (each, a
Offered............ "Class") pursuant to an indenture to be dated as of
January 1, 1999 (the "Indenture"), between the Trust and
the Indenture Trustee, as follows: (i) $ aggregate
principal amount of % Asset Backed Notes, Class A-1
(the "Class A-1 Notes"), (ii) $ aggregate
principal amount of % Asset Backed Notes, Class A-2
(the "Class A-2 Notes"), (iii) $ aggregate
principal amount of % Asset Backed Notes, Class A-3 (the
"Class A-3 Notes") and (iv) $ aggregate principal
amount of % Asset Backed Notes, Class A-4 (the "Class
A-4 Notes" and, together with the Class A-1 Notes, the
Class A-2 Notes and the Class A-3 Notes, the "Notes").
Payments of principal and interest on the Notes will be
made in accordance with the priorities set forth under
"Certain Information Regarding the Securities --
Distributions on the Securities" -- Deposits to the
Distribution Accounts; Priority of Payments". The Notes
will be secured by the assets of the Trust pursuant to the
Indenture.
Each Class of Notes will be issued in minimum
denominations of $1,000 and integral multiples of $1,000
in excess thereof. Definitive Notes will be issued only
under the limited circumstances described herein. See
"Description of the Notes -- Book-Entry Registration" and
"-- Definitive Notes".
Securities Not The Trust will also issue $ aggregate principal
Offered............ amount of % Asset Backed Certificates (the
"Certificates" and, together with the Notes, the
"Securities") pursuant to an amended and restated trust
agreement to be dated as of January 1, 1999 (the "Trust
Agreement"), between the Seller and the Owner Trustee. The
Certificates will represent fractional undivided interests
in the Trust. Payments in respect of the Certificates will
be subordinated to payments on the Notes to the limited
extent described herein. The Certificates are not being
offered
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3
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hereby and initially will be retained by the Seller. The
information set forth in this Prospectus regarding the
Certificates is intended only to give the investors in the
Notes a fuller understanding of the Notes.
The Receivables..... On the date of initial issuance of the Securities (the
"Closing Date"), pursuant to a sale and servicing
agreement to be dated as of January 1, 1999 (the "Sale and
Servicing Agreement"), among the Trust, the Seller and the
Servicer, the Trust will purchase from the Seller a pool
of retail installment sale contracts (the "Receivables")
secured by the new or used Honda and Acura motor vehicles
financed thereby (the "Financed Vehicles"). The
Receivables will be purchased by the Seller from AHFC
pursuant to a receivables purchase agreement, to be dated
as of January 1, 1999 (the "Receivables Purchase
Agreement"), between the Seller and AHFC, providing for
such purchase on or prior to the Closing Date. The
Receivables will be selected by AHFC from its portfolio of
retail motor vehicle installment sale contracts based upon
the criteria to be specified in the Sale and Servicing
Agreement and described herein. As of January 1, 1999 (the
"Cutoff Date"), the Receivables had an aggregate unpaid
principal balance of $ (the "Cutoff Date Pool
Balance"). Based on Cutoff Date Pool Balance, the
Receivables had a weighted average annual percentage rate
(the "APR") of approximately %, a weighted average
original maturity of approximately months and a weighted
average remaining maturity of approximately months. See
"The Receivables".
Distribution Distributions of interest and principal on the Securities
Dates.............. will be made on the fifteenth day of each month or, if any
such day is not a Business Day, on the next succeeding
Business Day (each, a "Distribution Date"), commencing
February 16, 1999. Payments on the Securities on each
Distribution Date will be paid to the holders of record of
the related Securities on the Business Day immediately
preceding such Distribution Date or, if Definitive Notes
are issued under the limited circumstances described
herein, on the last day of the immediately preceding month
(each, a "Record Date").
A "Business Day" will be any day other than a Saturday, a
Sunday or a day on which banking institutions or trust
companies in New York, New York, Newark, Delaware or Los
Angeles, California are authorized or obligated by law,
regulation, executive order or government decree to remain
closed.
To the extent not previously paid prior to such dates, the
outstanding principal amount of (i) the Class A-1 Notes
will be payable on the Distribution Date (the
" Distribution Date"), (ii) the Class A-2 Notes will be
payable on the Distribution Date (the "
Distribution Date"), (iii) the Class A-3 Notes will be
payable on the Distribution Date (the "
Distribution Date") and (iv) the Class A-4 Notes will be
payable on the Distribution Date (the "
Distribution Date" and, together with the Distribution
Date, the Distribution Date and the Distribution
Date, the "Final Distribution Dates").
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Terms of the The principal terms of the Notes will be as described
Notes.............. below:
A. Interest Rates... Interest will be borne on (i) the Class A-1 Notes at the
rate of % per annum (the "Class A-1 Rate"), (ii) the
Class A-2 Notes at the rate of % per annum (the "Class
A-2 Rate"), (iii) the Class A-3 Notes at the rate of %
per annum (the "Class A-3 Rate") and (iv) the Class A-4
Notes at the rate of % per annum (the "Class A-4 Rate"
and, together with the Class A-1 Rate, the Class A-2 Rate
and the Class A-3 Rate, the "Interest Rates"). Interest on
the Class A-1 Notes and the Class A-2 Notes will be
calculated on the basis of the actual number of days in
the related Accrual Period divided by 360 and interest on
the Class A-3 Notes and the Class A-4 Notes will be
calculated on the basis of a 360-day year consisting of
twelve 30-day months.
B. Interest......... Interest on the outstanding principal amount of each Class
of Notes will accrue at the related Interest Rate from and
including the most recent Distribution Date on which
interest has been paid (or from and including the Closing
Date with respect to the first Distribution Date) to but
excluding the current Distribution Date (each, an "Accrual
Period"). Interest on the Notes for any Distribution Date
due but not paid on such Distribution Date will be due on
the immediately succeeding Distribution Date, together
with, to the extent permitted by applicable law, interest
on such shortfall at the related Interest Rate. See
"Description of the Notes -- Payments of Interest" and
"Certain Information Regarding the Securities --
Distributions on the Securities" -- Deposits to the
Distribution Accounts; Priority of Payments".
C. Principal........ On each Distribution Date, as described under "Certain
Information Regarding the Securities -- Distributions on
the Securities -- Deposits to the Distribution Accounts;
Priority of Payments", principal on the Notes will be
payable generally in an amount equal to the Note Per-
centage of the Principal Distributable Amount. Principal
payments on the Notes will be made from the Available
Amount after the Total Servicing Fee and Trust Fees and
Expenses have been paid and after the Note Interest
Distributable Amount has been distributed. Allocations of
principal payments will be made to the Notes so that no
principal payments will be made on the (i) Class A-2 Notes
until the Class A-1 Notes have been paid in full, (ii)
Class A-3 Notes until the Class A-1 and Class A-2 Notes
have been paid in full or (iii) Class A-4 Notes until the
Class A-1, Class A-2 and Class A-3 Notes have been paid in
full.
Notwithstanding the foregoing, on each Distribution Date
after the Notes have been accelerated following an Event
of Default, the Notes will receive 100% of the Principal
Distributable Amount until the Notes have been paid in
full. Such principal payments will be made to holders of
record of the Notes (the "Noteholders") on a pro rata
basis based on the principal balance of each Class of
outstanding Notes.
If the principal amount of a Class of Notes has not been
paid in full prior to its Final Distribution Date, the
Note Principal Distributable Amount for such Final
Distribution Date will, to the extent the remaining
Available Amount is sufficient, include an amount
sufficient to reduce the unpaid principal amount of such
Class of Notes to zero on
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such Final Distribution Date. See "Description of the
Notes -- Payments of Principal" and "Certain Information
Regarding the Securities -- Distributions on the
Securities -- Deposits to the Distribution Accounts;
Priority of Payments".
D. Optional In the event of an Optional Termination, each Class of
Redemption......... outstanding Notes will be redeemed in whole, but not in
part, at a redemption price equal to the unpaid principal
amount of such Class of Notes plus accrued interest
thereon at the related Interest Rate. See "Summary --
Optional Termination" and "Description of the Notes --
Optional Redemption".
Terms of the The principal terms of the Certificates will be as
Certificates....... described below:
A. Interest......... On each Distribution Date, the Owner Trustee or the Paying
Agent will distribute to holders of record of the
Certificates (the "Certificateholders") as of the related
Record Date accrued interest for the related Accrual
Period at the rate of % per annum (the "Certificate
Rate") on the Certificate Balance as of the immediately
preceding Distribution Date (after giving effect to
distributions of principal to be made on such immediately
preceding Distribution Date) or, in the case of the first
Distribution Date, the Original Certificate Balance.
Interest on the Certificates will be calculated on the
basis of a 360-day year consisting of twelve 30-day
months. See "Description of the Certificates -- Distri-
butions of Interest" and "Certain Information Regarding
the Securities -- Distributions on the Securities --
Deposits to the Distribution Accounts; Priority of
Payments".
The "Certificate Balance" will initially equal $
(the "Original Certificate Balance") and on any
Distribution Date will equal the Original Certificate
Balance reduced by all distributions of principal
previously made in respect of the Certificates.
Distributions on the Certificates will be subordinated to
payments of interest and principal on the Notes to the
extent described under "Description of the Certificates"
and "Certain Information Regarding the Securities --
Distributions on the Securities".
B. Principal........ No principal will be paid on the Certificates until the
Distribution Date on which the principal amount of the
Class A-1 Notes has been reduced to zero. On such
Distribution Date and each Distribution Date thereafter
until the Class A-2, Class A-3 and Class A-4 Notes have
been paid in full, as described under "Certain Information
Regarding the Securities -- Distributions on the
Securities -- Deposits to the Distribution Accounts;
Priority of Payments", principal on the Certificates will
be payable in an amount equal to the Certificate
Percentage of the Principal Distributable Amount.
Principal payments on the Certificates will be made from
the Available Amount after the Total Servicing Fee and
Trust Fees and Expenses have been paid, after the Note
Distributable Amount has been paid, after giving effect to
any reduction in the Available Amount by virtue of any
deposit into the Reserve Fund and after payment of
interest to Certificateholders on such Distribution Date.
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Notwithstanding the foregoing, on each Distribution Date
after the Notes have been accelerated following an Event
of Default, the Certificates will not receive any of the
Principal Distributable Amount until the Notes have been
paid in full.
C. Optional In the event of an Optional Termination, the Certificates
Prepayment......... will be prepaid in whole, but not in part, at a prepayment
price equal to the Certificate Balance plus accrued
interest thereon at the Certificate Rate. See "Summary --
Optional Termination" and "Description of the Certificates
-- Optional Prepayment".
The Reserve Fund.... The Noteholders will be afforded certain limited
protection, to the extent described herein, against losses
in respect of the Receivables by the establishment of a
segregated trust account in the name of the Indenture
Trustee for the sole benefit of the Noteholders (the
"Reserve Fund").
The Reserve Fund will be funded by the Seller on the
Closing Date in an amount equal to $ (the "Reserve
Fund Initial Deposit"). On each Distribution Date, any
Available Amount remaining after all Trust Fees and
Expenses have been paid and after the Noteholders have
been paid all interest and principal required to be paid
("Excess Amounts") will be deposited in the Reserve Fund
to the extent necessary to maintain the amount on deposit
in the Reserve Fund at the Specified Reserve Fund Balance.
The "Specified Reserve Fund Balance" for any Distribution
Date will be $ , or under certain circumstances,
the amount calculated as described under "Certain In-
formation Regarding the Securities -- The Reserve Fund".
On each Distribution Date, funds will be withdrawn from
the Reserve Fund for distribution to Noteholders to cover
any shortfalls in interest and principal required to be
paid on the Notes.
The Yield Supplement
Account............ On or prior to the Closing Date, a yield supplement
account will be established with the Indenture Trustee for
the benefit of the Noteholders and the Certificateholders
(collectively, the "Securityholders") (the "Yield
Supplement Account"). The Yield Supplement Account is de-
signed solely to supplement the interest collections on
those Receivables (the "Discount Receivables") that have
APRs which are less than the sum of (i) the Weighted
Average Interest Rate and (ii) the Servicing Fee Rate (the
"Required Rate").
The "Weighted Average Interest Rate" will mean, with
respect to any calendar month (each, a "Collection
Period") and the related Distribution Date, a per annum
rate equal to (i) the sum of (a) the product of the
Interest Rate for each outstanding Class of Notes and the
aggregate principal amount of such Class of Notes as of
the immediately preceding Distribution Date (or, in the
case of the first Distribution Date, the aggregate initial
principal amount of the Notes) and (b) the product of the
Certificate Rate and the Certificate Balance as of the
immediately preceding Distribution Date (or in the case of
the first Distribution Date, the Original Certificate
Balance) divided by (ii) the sum of the aggregate
principal amount of the Notes and the Certificate Balance
as of the immediately preceding Distribution Date (or, in
the case of the
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
first Distribution Date, the aggregate initial principal
amount of the Notes and the Original Certificate Balance),
in each case after giving effect to any principal payment
made on such preceding Distribution Date.
The Yield Supplement Account will be funded by the Seller
on the Closing Date with an initial deposit in an amount
(the "Yield Supplement Account Deposit") to be specified
in the Indenture; provided, that such aggregate amount may
be discounted at a rate to be specified in the Sale and
Servicing Agreement.
On the Business Day immediately preceding each
Distribution Date (each, a "Deposit Date"), the Indenture
Trustee shall withdraw from monies on deposit in the Yield
Supplement Account and deposit into the Collection Account
to be included in amounts distributed on the related
Distribution Date (i) the aggregate amount by which one
month's interest on the Principal Balance as of the first
day of such Collection Period of each Discount Receivable
(other than a Discount Receivable that is a Defaulted
Receivable) at a rate equal to the Required Rate, exceeds
one month's interest on such Principal Balance at the APR
of each such Receivable (the "Yield Supplement Amount")
and (ii) after giving effect to the withdrawal of the
amount described in clause (i) above, the amount by which
the amount on deposit in the Yield Supplement Account
exceeds the maximum amount required to be on deposit
therein on the immediately succeeding Distribution Date
(together with the Yield Supplement Amount, the "Yield
Supplement Withdrawal Amount"). On each Distribution Date,
the amount required to be on deposit in the Yield
Supplement Account will decline and be equal to the sum of
all Yield Supplement Amounts for all future Distribution
Dates, assuming that future scheduled payments on the
Discount Receivables are made on the date on which they
are scheduled as being due. The amount on deposit in the
Yield Supplement Account will decrease as payments are
made with respect to the Yield Supplement Amount and funds
in excess of the maximum required balance are released as
described above. See "Certain Information Regarding the
Securities -- The Accounts -- The Yield Supplement
Account".
Advances............ On each Deposit Date, the Servicer will advance to the
Trust, in respect of the related Collection Period and
each (i) Precomputed Receivable, that portion, if any, of
the related Scheduled Payment that was not timely made
after application of any Payments Ahead (each, a
"Precomputed Advance") and (ii) Simple Interest
Receivable, an amount equal to the product of the
principal balance of such Receivable as of the first day
of such Collection Period and one-twelfth of its APR,
minus the amount of interest actually received on such
Receivable during such Collection Period (each, a "Simple
Interest Advance" and, together with Precomputed Advances,
the "Advances"). If such calculation in respect of a
Simple Interest Receivable results in a negative number,
an amount equal to such negative number shall be paid to
the Servicer in reimbursement of outstanding Simple
Interest Advances. The Servicer will be required to make
an Advance only to the extent that it determines such
Advance will be recoverable from future
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
payments and collections on or in respect of the related
Receivable. Upon the determination by the Servicer that
such reimbursement is unlikely, the Servicer will be
entitled to recover such non-recoverable Advances from
payments and collections on or in respect of other
Receivables. See "Certain Information Regarding the
Securities -- Advances".
Servicing Fee....... The Servicer will receive a monthly fee, payable on each
Distribution Date (the "Servicing Fee"), equal to
one-twelfth of the product of 1.00% (the "Servicing Fee
Rate") and the Pool Balance as of the first day of the
related Collection Period. The Servicer will be entitled
to receive additional servicing compensation in respect of
each Collection Period, any interest earned from
investment of monies on deposit in the Trust Accounts
(excluding the Yield Supplement Account and the Reserve
Fund) net of investment expenses and any losses from such
investments plus any late fees, prepayment charges and
other administrative fees and expenses or similar charges
received by the Servicer during such Collection Period
(collectively, the "Supplemental Servicing Fee" and,
together with the Servicing Fee, the "Total Servicing
Fee"). See "Certain Information Regarding the Securities
-- Servicing Compensation".
Optional The Seller or the Servicer, or any successor to the
Termination........ Servicer, may purchase all the Receivables on the
Distribution Date following the last day of any Collection
Period as of which the aggregate unpaid principal balance
of the Receivables is 10% or less of the Cutoff Date Pool
Balance, at a purchase price determined as described under
"Certain Information Regarding the Securities --
Termination". The exercise of such purchase option is
referred to herein as an "Optional Termination".
Ratings............. It is a condition to the issuance of the Notes that the
Class A-1 Notes be rated F-1+ by Fitch IBCA, Inc. ("Fitch
IBCA"), P-1 by Moody's Investors Service, Inc.
("Moody's"), A-1+ by Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc. ("Standard &
Poor's" and, together with Fitch IBCA and Moody's, the
"Rating Agencies"), and that the Class A-2, Class A-3 and
Class A-4 Notes each be rated Aaa by Moody's and AAA by
each of Standard & Poor's and Fitch IBCA. A security
rating is not a recommendation to buy, sell or hold
securities and may be subject to revision or withdrawal at
any time by the assigning rating agency. The ratings on
the Notes do not assess the likelihood that principal
prepayments on the Receivables will occur, the degree to
which the rate of such prepayments might differ from that
originally anticipated or otherwise address the timing of
distributions of principal on the Notes prior to their
respective Final Distribution Dates. See "Rating of the
Notes".
Tax Status.......... In the opinion of counsel to the Seller, for both federal
and California income tax purposes, the Notes will be
characterized as debt and the Trust will not be
characterized as an association (or a publicly traded
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
partnership) taxable as a corporation. Each Noteholder, by
the acceptance of a Note (or a beneficial interest
therein), will agree to treat the Notes as indebtedness.
See "Material Federal Income Tax Consequences" and
"Certain California Income Tax Consequences".
ERISA Subject to the considerations discussed under "ERISA
Considerations..... Considerations", the Notes may, in general, be purchased
by or on behalf of employee benefit plans that are subject
to the Employee Retirement Income Security Act of 1974, as
amended. Any benefit plan fiduciary considering purchasing
Notes should, among other things, consult with its counsel
regarding the availability of an exemption from the
prohibited transaction rules of ERISA and Section 4975 of
the Internal Revenue Code of 1986, as amended, and whether
such purchase is consistent with its fiduciary duties
under ERISA in determining whether all required conditions
have been satisfied. See "ERISA Considerations".
Legal Investment.... The Class A-1 Notes have been structured to be eligible
securities for purchase by money market funds under Rule
2a-7 of the Investment Company Act of 1940, as amended. A
money market fund should consult its legal advisors
regarding the eligibility of the Class A-1 Notes under
Rule 2a-7, the fund's investment policies and objectives
and an investment in the Class A-1 Notes.
</TABLE>
10
<PAGE>
RISK FACTORS
Prospective investors should consider the following risk factors in
considering the purchase of Notes.
PERFECTION OF SECURITY INTERESTS IN THE FINANCED VEHICLES
Pursuant to the Receivables Purchase Agreement, AHFC will sell and assign
its security interests in the Financed Vehicles to the Seller and, pursuant to
the Sale and Servicing Agreement, the Seller will sell and assign its security
interests in the Financed Vehicles to the Trust. However, because of the
administrative burden and expense, neither AHFC, the Seller nor the Trustees
will amend any certificate of title to identify the Trust as the new secured
party on the certificates of title relating to the Financed Vehicles. In the
absence of such an amendment, the Trust may not have a perfected security
interest in the Financed Vehicles in all states.
If the protection provided to the Noteholders by the Reserve Fund and by the
subordination of payments on the Certificates to the extent described herein is
insufficient, the Noteholders will have to look to payments made by or on behalf
of the obligors on or in respect of the Receivables (the "Obligors"), the
proceeds from the repossession and sale of Financed Vehicles which secure
defaulted Receivables and the proceeds of any Dealer Recourse to make
distributions on the Notes. In such event, certain factors, such as the
possibility that the Trust may not have a perfected security interest in the
Financed Vehicles in all states, may affect the Trust's ability to repossess and
sell the collateral securing the Receivables or may limit the amount realized to
less than the amount due by the related Obligors. Noteholders may thus be
subject to delays in payment and may incur losses on their investment in the
Notes as a result of defaults or delinquencies by Obligors and because of
depreciation in the value of the related Financed Vehicles. See "Certain
Information Regarding the Securities -- The Reserve Fund", "-- Insurance on
Financed Vehicles" and "Certain Legal Aspects of the Receivables".
DELINQUENCIES, REPOSSESSIONS AND NET LOSSES
The number of delinquencies and repossessions and the amount of net losses
in AHFC's portfolio of new and used Honda and Acura motor vehicle retail
installment sale and conditional sale contracts ("installment sale contracts")
have increased as the portfolio has grown. AHFC considers an installment sale
contract to be past due or delinquent for servicing and enforcement of
collection purposes when the obligor fails to make at least 60% of the scheduled
monthly payment on a cumulative basis (after giving effect to any past due
payments) by the related due date. If AHFC considered an installment sale
contract to be delinquent when an obligor failed to pay any portion of a
scheduled monthly payment, then its historical delinquency experience may have
been materially higher in each period for which historical delinquency
information has been disclosed in this prospectus. If the protection provided to
the Noteholders by the subordination of the Certificates and by the Reserve Fund
is insufficient, as a result of defaults or delinquencies on the Receivables,
Noteholders could incur a loss on their investment.
RISKS DUE TO POTENTIAL YEAR 2000 ISSUE
The inability of AHFC to address the necessary year 2000 modifications of
computerized information systems could result in a significant adverse effect on
AHFC's operations and financial results, including the inability to collect
receivables, pay obligations, process loan and obligor data. Any such inability
could have a material adverse effect on Noteholders. See "American Honda Finance
Corporation--Year 2000 Issues".
11
<PAGE>
FORMATION OF THE TRUST
GENERAL
The Trust is a business trust formed under the laws of the State of Delaware
pursuant to the Trust Agreement for the transactions described herein. The Trust
will not engage in any activity other than (i) acquiring, holding and managing
the Receivables and the other assets of the Trust and proceeds therefrom; (ii)
issuing the Notes and the Certificates; (iii) making payments on the Notes and
the Certificates; and (iv) engaging in other activities that are necessary,
suitable or convenient to accomplish the foregoing purposes or are incidental
thereto or connected therewith.
On the Closing Date, the Seller will sell and assign the Receivables and the
related assets to the Trust. AHFC will act as Servicer of the Receivables and
will be compensated for such services. To facilitate servicing and to minimize
administrative burden and expense, pursuant to the Sale and Servicing Agreement,
the Servicer will be appointed custodian for the Receivables and documents
relating thereto by the Owner Trustee but will not stamp the Receivables to
reflect the sale and assignment of the Receivables to the Trust nor amend the
certificates of title to the Financed Vehicles to reflect the assignment of the
security interest in the Financed Vehicles to the Trust. In the absence of such
an amendment, the Trust's security interest in the Financed Vehicles may not be
perfected in all states. See "Certain Information Regarding the Securities --
Sale and Assignment of the Receivables" and "Certain Legal Aspects of the
Receivables -- Security Interests in the Financed Vehicles".
The Trust's principal offices will be in Newark, Delaware in care of The
Bank of New York (Delaware), as Owner Trustee, at the address listed below under
"The Owner Trustee".
CAPITALIZATION
The following table illustrates the capitalization of the Trust as of the
Closing Date, as if the issuance and sale of the Securities had taken place on
such date:
<TABLE>
<S> <C>
Class A-1 Notes................................... $
Class A-2 Notes...................................
Class A-3 Notes...................................
Class A-4 Notes...................................
Certificates......................................
---------------
Total......................................... $
---------------
---------------
</TABLE>
THE OWNER TRUSTEE
The Bank of New York (Delaware) will be the Owner Trustee under the Trust
Agreement. The Bank of New York (Delaware) is a Delaware corporation and its
Corporate Trust Office is located at White Clay Center, Route 273, Newark,
Delaware 19711.
The Owner Trustee will have the rights and duties set forth herein under
"Certain Information Regarding the Securities -- The Trustees" and "-- Duties of
the Trustees".
12
<PAGE>
PROPERTY OF THE TRUST
Each Note will represent an obligation of, and each Certificate will
represent a fractional undivided interest in, the Trust. The property of the
Trust will include, among other things, the Receivables and certain monies due
thereunder on and after the Cutoff Date. The Receivables were originated by
motor vehicle dealers (the "Dealers") in accordance with AHFC's requirements and
subsequently purchased by AHFC. The Receivables evidence the indirect financing
made available by AHFC to the related Obligors. On or before the Closing Date,
AHFC will sell the Receivables and the related assets to the Seller pursuant to
the Receivables Purchase Agreement. The Seller will, in turn, sell the
Receivables and the related assets to the Trust pursuant to the Sale and
Servicing Agreement.
During the term of the Sale and Servicing Agreement, neither the Seller nor
AHFC may substitute any other retail installment sale contract for any
Receivable sold to the Trust. The assets of the Trust will also include: (i)
such amounts as from time to time may be held in the Trust Accounts (other than
investment earnings, net of losses and expenses, on the Reserve Fund and the
Yield Supplement Account); (ii) security interests in the Financed Vehicles and
any accessions thereto; (iii) the rights to proceeds from physical damage,
credit life and disability insurance policies, if any, covering individual
Financed Vehicles or Obligors, as the case may be; (iv) the right to receive
proceeds of Dealer Recourse, if any; (v) the rights of the Seller under the
Receivables Purchase Agreement and Sale and Servicing Agreement; (vi) the right
to realize upon any property (including the right to receive future proceeds
from liquidating the assets) that shall have secured a Receivable and have been
repossessed on behalf of the Trust; and (vii) any and all proceeds of the
foregoing. The Reserve Fund will be maintained for the benefit of the
Noteholders and the Yield Supplement Account will be maintained for the benefit
of the Securityholders.
Pursuant to agreements between AHFC and the Dealers, each Dealer is
obligated, after purchase by AHFC of retail installment sale contracts from such
Dealer, to repurchase from AHFC such contracts which do not meet certain
representations and warranties made by such Dealer (such Dealer repurchase
obligations, "Dealer Recourse"). Such representations and warranties relate
primarily to the origination of the contracts and the perfection of the security
interests in the related financed vehicles, and do not typically relate to the
creditworthiness of the related obligors or the collectability of such
contracts. Although the Dealer agreements with respect to the Receivables will
not be assigned to the Trust, the Sale and Servicing Agreement will require that
any recovery by AHFC pursuant to any Dealer Recourse be deposited in the
Collection Account in satisfaction of its repurchase obligations under the
Receivables Purchase Agreement. It is expected that substantially all sales by
the Dealers of installment sale contracts to AHFC do not provide for recourse to
the Dealer for unpaid amounts in the event of a default by an obligor
thereunder, other than in connection with the breach of the foregoing
representations and warranties.
THE RECEIVABLES
PAYMENTS ON THE RECEIVABLES
Except as otherwise described under "Selection Criteria", the scheduled
monthly payment on each Receivable (each, a "Scheduled Payment") is a fixed
level monthly payment which will amortize the full amount of the Receivable over
its term. Each Receivable provides for allocation of payments according to (i)
the "sum of periodic balances" or "sum of monthly payments" method (each, a
"Rule of 78s Receivable"), (ii) the "actuarial" method (each, an "Actuarial
Receivable" and, together with Rule of 78s Receivables, the "Precomputed
Receivables") or (iii) the simple interest method (each, a "Simple Interest
Receivable").
Each Rule of 78s Receivable provides for the payment by the Obligor of a
specified total amount of payments, payable in monthly installments on the
related due date, which total represents the principal amount financed and
finance charges in an amount calculated on the basis of a stated APR for the
term of such Receivable. The rate at which such amount of finance charges is
earned and, correspondingly, the amount of each Scheduled Payment allocated to
reduction of the outstanding principal balance of the
13
<PAGE>
related Receivable are calculated in accordance with the Rule of 78s. Under the
Rule of 78s, the portion of each payment allocable to interest is higher during
the early months of the term of a Rule of 78s Receivable and lower during later
months than that under a constant yield method for allocating payments between
interest and principal.
An Actuarial Receivable provides for amortization of the loan over a series
of fixed level monthly installments. Each Scheduled Payment is deemed to consist
of an amount of interest equal to one-twelfth of the APR of the Receivable
multiplied by the scheduled principal balance of the Receivable and an amount of
principal equal to the remainder of the Scheduled Payment.
All payments received by the Servicer on or in respect of Precomputed
Receivables will be allocated pursuant to the Sale and Servicing Agreement on an
actuarial basis, under which each Scheduled Payment, including the final
Scheduled Payment, consists of an amount of interest equal to one-twelfth of the
APR of such Receivable multiplied by the unpaid principal balance of such
Receivable, and an amount of principal equal to the remainder of the Scheduled
Payment. No adjustment will be made in the event of early or late payments,
although in the latter case the Obligor will be subject to a late charge.
Payments on Simple Interest Receivables will be applied first to interest
accrued through the date immediately preceding the date of payment and then to
unpaid principal. Accordingly, if an Obligor pays an installment before its due
date, the portion of the payment allocable to interest for the payment period
will be less than if the payment had been made on the due date, the portion of
the payment applied to reduce the principal balance will be correspondingly
greater and the principal balance will be amortized more rapidly than scheduled.
Conversely, if an Obligor pays an installment after its due date, the portion of
the payment allocable to interest for the payment period will be greater than if
the payment had been made on the due date, the portion of the payment applied to
reduce the principal balance will be correspondingly less, and the principal
balance will be amortized more slowly than scheduled, in which case a larger
portion of the principal balance may be due on the final scheduled payment date.
In the event of a prepayment in full (voluntarily or by acceleration) of a
Precomputed Receivable, a "rebate" will be made to the Obligor of that portion
of the total amount of payments under such Receivable allocable to "unearned"
finance charges. In the event of the prepayment in full (voluntarily or by
acceleration) of a Simple Interest Receivable, a "rebate" will not be made to
the Obligor, but the Obligor will be required to pay interest only to the date
immediately preceding the date of prepayment. The amount of a rebate under a
Precomputed Receivable will in no event cause the unrebated portion to be less
than the remaining scheduled payments of interest that would have been due under
a Simple Interest Receivable for which all remaining payments were made on
schedule.
The amount of a rebate under a Rule of 78s Receivable calculated in
accordance with the Rule of 78s will always be less than had such rebate been
calculated on an actuarial basis. However, Rule of 78s Receivables originated in
certain states require rebates based on the actuarial method. Distributions to
Noteholders will not be affected by Rule of 78s rebates under the Rule of 78s
Receivables because pursuant to the Sale and Servicing Agreement such
distributions will be determined using the actuarial method.
SELECTION CRITERIA
The Receivables were purchased by AHFC from Dealers through its nationwide
branch system in the ordinary course of business in accordance with AHFC's
underwriting standards. See "American Honda Finance Corporation -- Underwriting
of Motor Vehicle Loans". The Receivables were randomly selected from AHFC's
portfolio of installment sale contracts that met the selection criteria
described herein and under "Certain Information Regarding the Securities -- Sale
and Assignment of the Receivables". Such selection criteria included that (i)
each Receivable is secured by a new or used Honda or Acura motor vehicle; (ii)
each Receivable was originated in the United States and the Obligor is not a
federal, state or local governmental entity; (iii) each Receivable provides for
level Scheduled Payments that fully amortize the amount financed over its
original term, except that the payment in the first or last month in the life of
the
14
<PAGE>
Receivable may be minimally different from the level payment; (iv) each
Receivable was originated prior to , 1999; (v) each Receivable had
an original term of to months and, as of the Cutoff Date, had a remaining
term to maturity of not less than months and not more than months; (vi) each
Receivable provides for the payment of a finance charge based on an APR ranging
from % to %; (vii) no portion of any payment on each Receivable shall
be more than 30 days past due as of the Cutoff Date; (viii) to the best
knowledge of the Seller, no Receivable shall be due from any Obligor who is
presently the subject of a bankruptcy proceeding or is bankrupt or insolvent;
and (ix) no Financed Vehicle has been repossessed without reinstatement as of
the Cutoff Date. This Prospectus contains a summary of the material terms of the
Receivables.
The Receivables represent financing of new and used Honda and Acura motor
vehicles manufactured by Honda Motor Co., Ltd. and its affiliates. Based on
Cutoff Date Pool Balance, % and % of the Receivables represented
financing of Honda motor vehicles and Acura motor vehicles, respectively, and
% and % of the Receivables represented financing of new and used motor
vehicles, respectively. Based on the addresses of the originating Dealers, the
Receivables were originated in 48 states, excluding New York and Wisconsin.
The composition, distribution by APR and geographical distribution of the
Receivables are as set forth in the following tables.
COMPOSITION OF THE RECEIVABLES
<TABLE>
<CAPTION>
Aggregate Cutoff Date Principal Balance..................... $
<S> <C>
Number of Receivables.......................................
Average Cutoff Date Principal Balance....................... $
Average Original Amount Financed............................ $
Range of Original Amounts Financed........................ $ to $
Weighted Average APR (1).................................... %
Range of APRs............................................. % to %
Weighted Average Original Maturity (1)...................... months
Range of Original Maturities.............................. months to months
Weighted Average Remaining Maturity (1)..................... months
Range of Remaining Maturities as of the Cutoff Date....... months to months
</TABLE>
- - --------------
(1) Weighted by Principal Balance as of the Cutoff Date.
15
<PAGE>
DISTRIBUTION OF THE RECEIVABLES BY APR
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
AGGREGATE CUTOFF DATE CUTOFF DATE
NUMBER OF NUMBER OF PRINCIPAL POOL
RANGE OF APRS RECEIVABLES RECEIVABLES BALANCE BALANCE
- - ----------------------------------------- ----------- -------------- ------------------- --------------
<S> <C> <C> <C> <C>
1.000% to 1.999%....................... % $ %
2.000% to 2.999%.......................
3.000% to 3.999%.......................
4.000% to 4.999%.......................
5.000% to 5.999%.......................
6.000% to 6.999%.......................
7.000% to 7.999%.......................
8.000% to 8.999%.......................
9.000% to 9.999%.......................
10.000% to 10.999%.......................
11.000% to 11.999%.......................
12.000% to 12.999%.......................
13.000% to 13.999%.......................
14.000% to 14.999%.......................
15.000% to 15.999%.......................
16.000% to 16.999%.......................
17.000% to 17.999%.......................
18.000% to 18.999%.......................
19.000% to 19.999%.......................
20.000% to 20.999%.......................
----------- ------ ------------------- ------
Total.................................. % (1) $ % (1)
----------- ------ ------------------- ------
----------- ------ ------------------- ------
</TABLE>
- - --------------
(1) Percentages may not add up to 100% due to rounding.
16
<PAGE>
DISTRIBUTION OF THE RECEIVABLES BY STATE
<TABLE>
<CAPTION>
PERCENTAGE OF
CUTOFF DATE
CUTOFF DATE POOL
STATE(1) PRINCIPAL BALANCE BALANCE
- - ---------------------------------------- ------------------- -------------
<S> <C> <C>
Alabama................................. $ %
Alaska..................................
Arizona.................................
Arkansas................................
California..............................
Colorado................................
Connecticut.............................
Delaware................................
Florida.................................
Georgia.................................
Hawaii..................................
Idaho...................................
Illinois................................
Indiana.................................
Iowa....................................
Kansas..................................
Kentucky................................
Louisiana...............................
Maine...................................
Maryland................................
Massachusetts...........................
Michigan................................
Minnesota...............................
Mississippi.............................
Missouri................................
Montana.................................
Nebraska................................
Nevada..................................
New Hampshire...........................
New Jersey..............................
New Mexico..............................
North Carolina..........................
North Dakota............................
Ohio....................................
Oklahoma................................
Oregon..................................
Pennsylvania............................
Rhode Island............................
South Carolina..........................
South Dakota............................
Tennessee...............................
Texas...................................
Utah....................................
Vermont.................................
Virginia................................
Washington..............................
West Virginia...........................
Wyoming.................................
------------------- -------------
Total................................. $ %(2)
------------------- -------------
------------------- -------------
</TABLE>
- - --------------
(1) Based on the addresses of the originating Dealers.
(2) Percentages may not add up to 100% due to rounding.
17
<PAGE>
WEIGHTED AVERAGE LIFE OF THE NOTES
The weighted average life of the Notes will generally be influenced by the
rate at which the principal balances of the Receivables are paid, which payment
may be in the form of scheduled amortization or prepayments.
All of the Receivables are prepayable at any time without any penalty.
However, partial prepayments on Precomputed Receivables made by Obligors will
not be distributed on the Distribution Date following the Collection Period in
which they were received but will be retained and applied towards payments due
in one or more future Collection Periods. See "Certain Information Regarding the
Securities -- Collections". If prepayments in full are received on Precomputed
Receivables or if full or partial prepayments are received on Simple Interest
Receivables, the actual weighted average life of the Receivables can be shorter
than the scheduled weighted average life, which is calculated based on the
assumption that payments will be made as scheduled and that no such prepayments
in full will be made. For this purpose, the term "prepayments in full" includes,
among other items, voluntary prepayments in full by Obligors, liquidations due
to default, proceeds from physical damage, credit life and credit disability
insurance policies, repurchases by the Seller or the Servicer, as the case may
be, of certain Receivables and the sale of the Receivables and other property of
the Trust following the occurrence of certain specified Events of Default, as
described herein. Weighted average life means the average amount of time during
which each dollar of principal of a Receivable is outstanding. The rate of
prepayments on the Receivables may be influenced by a variety of economic,
social and other factors, including the fact that an Obligor generally may not
sell or transfer a Financed Vehicle without the consent of the Servicer. Any
reinvestment risk resulting from the rate of prepayments of the Receivables and
the distribution of such prepayments to Noteholders will be borne entirely by
the Noteholders. In addition, early retirement of the Notes may be effected by
the exercise of the option of the Seller or the Servicer, or any successor to
the Servicer, to purchase all of the Receivables remaining in the Trust in
connection with an Optional Termination. See "Certain Information Regarding the
Securities -- Termination".
No prediction can be made as to the rate of prepayments on the Receivables
in either stable or changing interest rate environments. AHFC maintains limited
records of the historical prepayment experience of the motor vehicle retail
installment sale contracts included in its portfolio and its experience is
insufficient to draw any specific conclusions with respect to the expected rates
of prepayments in full on the Receivables. AHFC is not aware of any publicly
available statistics for the entire auto finance industry on an aggregate basis
that set forth principal prepayment experience for retail installment sale
contracts similar to the Receivables over an extended period of time.
Prepayments on motor vehicle receivables can be measured relative to a
prepayment standard or model. The model used herein, the Absolute Prepayment
Model ("ABS"), represents an assumed rate of prepayment each month relative to
the original number of receivables in a pool of receivables. ABS further assumes
that all the receivables are the same size and amortize at the same rate and
that each receivable in each month of its life will either be paid as scheduled
or be prepaid in full. For example, in a pool of receivables originally
containing 10,000 receivables, a 1% ABS rate means that 100 receivables prepay
each month. ABS does not purport to be an historical description of prepayment
experience or a prediction of the anticipated rate of prepayment of any pool of
receivables, including the Receivables.
In light of the foregoing considerations, there can be no assurance as to
the amount of principal payments to be made on the Notes on each Distribution
Date since such amount will depend, in part, on the amount of principal
collected on the related Receivables during the related Collection Period.
Unless the Notes have been accelerated following an Event of Default, no
principal payments will be made on the (i) Class A-2 Notes until the Class A-1
Notes have been paid in full, (ii) Class A-3 Notes until the Class A-1 and Class
A-2 Notes have been paid in full and (iii) the Class A-4 Notes until the Class
A-1, Class A-2 and Class A-3 Notes have been paid in full. Additionally, no
principal payments will be made on the Certificates until the Class A-1 Notes
have been paid in full.
18
<PAGE>
Because the rate of distribution of principal on the Notes will depend on
the rate of payment (including prepayments) on the Receivables, the final
distribution on each Class of Notes could occur significantly earlier than the
related Final Distribution Date. Any reinvestment risk resulting from a faster
or slower incidence of payments on the Receivables will be borne entirely by the
related Noteholders.
The tables captioned "Percent of Initial Class A-1 Note and Class A-2 Note
Principal Balances at Various ABS Percentages" and "Percent of Initial Class A-3
Note and Class A-4 Note Principal Balances at Various ABS Percentages" (the "ABS
Tables") have been prepared on the basis of the characteristics of the
Receivables. The ABS Tables assume that (a) the Receivables prepay in full at
the specified constant percentage of ABS monthly, (b) no defaults,
delinquencies, losses or repurchases occur with respect to the Receivables, (c)
each Scheduled Payment on the Receivables is made on the last day of each month
and each month has 30 days, (d) payments on the Notes are made on each
Distribution Date (and each such date is assumed to be the fifteenth day of each
applicable month) and (e) an Optional Termination occurs at the earliest time
permitted, causing a redemption of the outstanding Notes. The ABS Tables
indicate the projected weighted average life of each Class of Notes and set
forth the percent of the initial principal amount of each Class of Notes that is
projected to be outstanding after each of the Distribution Dates shown at
various constant ABS percentages.
The ABS Tables also assume that the Receivables have been aggregated into
hypothetical pools with all of the Receivables within each such pool having the
following characteristics and that the level of scheduled monthly payment for
each of the pools (which is based on its aggregate principal balance, APR,
original number of scheduled payments and remaining number of scheduled payments
as of the Cutoff Date) will be such that each pool will be fully amortized by
the end of its remaining term to maturity. Each hypothetical pool has an assumed
cutoff date of the Cutoff Date.
<TABLE>
<CAPTION>
REMAINING TERM TO
AGGREGATE MATURITY SEASONING
POOL PRINCIPAL BALANCE APR (IN MONTHS) (IN MONTHS)
- - -------------------------- ----------------- ------------- ----------------------- -----------------
<S> <C> <C> <C> <C>
1 $
2 $
3 $
4 $
5 $
</TABLE>
The actual characteristics and performance of the Receivables will differ
from the assumptions used in constructing the ABS Tables. The assumptions used
are hypothetical and have been provided only to give a general sense of how the
principal cash flows might behave under varying prepayment scenarios. For
example, it is very unlikely that the Receivables will prepay at a constant
level of ABS until maturity or that all of the Receivables will prepay at the
same level of ABS. Moreover, the diverse terms of Receivables within each of the
hypothetical pools could produce slower or faster principal distributions than
indicated in the ABS Tables at the various constant percentages of ABS
specified, even if the original and remaining terms to maturity of the
Receivables are as assumed. Any difference between such assumptions and the
actual characteristics and performance of the Receivables, or actual prepayment
experience, will affect the percentages of initial balances outstanding over
time and the weighted average lives of each Class of Notes.
THE FOLLOWING ABS TABLES HAVE BEEN PREPARED BASED ON THE ASSUMPTIONS
DESCRIBED ABOVE (INCLUDING THE ASSUMPTIONS REGARDING THE CHARACTERISTICS AND
PERFORMANCE OF THE RECEIVABLES, WHICH WILL DIFFER FROM THE ACTUAL
CHARACTERISTICS AND PERFORMANCE THEREOF) AND SHOULD BE READ IN CONJUNCTION
THEREWITH.
19
<PAGE>
PERCENT OF INITIAL CLASS A-1 NOTE AND CLASS A-2 NOTE PRINCIPAL BALANCES AT
VARIOUS ABS PERCENTAGES
<TABLE>
<CAPTION>
CLASS A-2
CLASS A-1 NOTES NOTES
--------------------------------------------------------------- -----------
DISTRIBUTION DATE 0.5% 1.0% 1.5% 1.7% 2.0% 0.5%
- - -------------------------------------------- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Closing Date................................ % % % % % %
February 1999...............................
March 1999..................................
April 1999..................................
May 1999....................................
June 1999...................................
July 1999...................................
August 1999.................................
September 1999..............................
October 1999................................
November 1999...............................
December 1999...............................
January 2000................................
February 2000...............................
March 2000..................................
April 2000..................................
May 2000....................................
June 2000...................................
July 2000...................................
August 2000.................................
September 2000..............................
October 2000................................
November 2000...............................
December 2000...............................
January 2001................................
February 2001...............................
March 2001..................................
April 2001..................................
May 2001....................................
June 2001...................................
July 2001...................................
August 2001.................................
September 2001..............................
October 2001................................
November 2001...............................
December 2001...............................
January 2002................................
February 2002...............................
March 2002..................................
April 2002..................................
May 2002....................................
June 2002...................................
July 2002...................................
August 2002.................................
September 2002..............................
October 2002................................
November 2002...............................
December 2002...............................
January 2003................................
February 2003...............................
March 2003..................................
April 2003..................................
May 2003....................................
June 2003...................................
Weighted Average Life (years)(1)............
<CAPTION>
DISTRIBUTION DATE 1.0% 1.5% 1.7% 2.0%
- - -------------------------------------------- ----- ----- ----- -----
<S> <C> <C> <C> <C>
Closing Date................................ % % % %
February 1999...............................
March 1999..................................
April 1999..................................
May 1999....................................
June 1999...................................
July 1999...................................
August 1999.................................
September 1999..............................
October 1999................................
November 1999...............................
December 1999...............................
January 2000................................
February 2000...............................
March 2000..................................
April 2000..................................
May 2000....................................
June 2000...................................
July 2000...................................
August 2000.................................
September 2000..............................
October 2000................................
November 2000...............................
December 2000...............................
January 2001................................
February 2001...............................
March 2001..................................
April 2001..................................
May 2001....................................
June 2001...................................
July 2001...................................
August 2001.................................
September 2001..............................
October 2001................................
November 2001...............................
December 2001...............................
January 2002................................
February 2002...............................
March 2002..................................
April 2002..................................
May 2002....................................
June 2002...................................
July 2002...................................
August 2002.................................
September 2002..............................
October 2002................................
November 2002...............................
December 2002...............................
January 2003................................
February 2003...............................
March 2003..................................
April 2003..................................
May 2003....................................
June 2003...................................
Weighted Average Life (years)(1)............
</TABLE>
- - ------------------
(1) The weighted average life of a Note is determined by (a) multiplying the
amount of each principal payment of such Note by the number of years from
the date of the issuance of such Note to the related Distribution Date, (b)
adding the results and (c) dividing the sum by the related initial principal
amount of such Note.
20
<PAGE>
PERCENT OF INITIAL CLASS A-3 NOTE AND CLASS A-4 NOTE PRINCIPAL BALANCES AT
VARIOUS ABS PERCENTAGES
<TABLE>
<CAPTION>
CLASS A-4
CLASS A-3 NOTES NOTES
--------------------------------------------------------------- -----------
DISTRIBUTION DATE 0.5% 1.0% 1.5% 1.7% 2.0% 0.5%
- - -------------------------------------------- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Closing Date................................ % % % % % %
February 1999...............................
March 1999..................................
April 1999..................................
May 1999....................................
June 1999...................................
July 1999...................................
August 1999.................................
September 1999..............................
October 1999................................
November 1999...............................
December 1999...............................
January 2000................................
February 2000...............................
March 2000..................................
April 2000..................................
May 2000....................................
June 2000...................................
July 2000...................................
August 2000.................................
September 2000..............................
October 2000................................
November 2000...............................
December 2000...............................
January 2001................................
February 2001...............................
March 2001..................................
April 2001..................................
May 2001....................................
June 2001...................................
July 2001...................................
August 2001.................................
September 2001..............................
October 2001................................
November 2001...............................
December 2001...............................
January 2002................................
February 2002...............................
March 2002..................................
April 2002..................................
May 2002....................................
June 2002...................................
July 2002...................................
August 2002.................................
September 2002..............................
October 2002................................
November 2002...............................
December 2002...............................
January 2003................................
February 2003...............................
March 2003..................................
April 2003..................................
May 2003....................................
June 2003...................................
Weighted Average Life (years)(1)............
<CAPTION>
DISTRIBUTION DATE 1.0% 1.5% 1.7% 2.0%
- - -------------------------------------------- ----- ----- ----- -----
<S> <C> <C> <C> <C>
Closing Date................................ % % % %
February 1999...............................
March 1999..................................
April 1999..................................
May 1999....................................
June 1999...................................
July 1999...................................
August 1999.................................
September 1999..............................
October 1999................................
November 1999...............................
December 1999...............................
January 2000................................
February 2000...............................
March 2000..................................
April 2000..................................
May 2000....................................
June 2000...................................
July 2000...................................
August 2000.................................
September 2000..............................
October 2000................................
November 2000...............................
December 2000...............................
January 2001................................
February 2001...............................
March 2001..................................
April 2001..................................
May 2001....................................
June 2001...................................
July 2001...................................
August 2001.................................
September 2001..............................
October 2001................................
November 2001...............................
December 2001...............................
January 2002................................
February 2002...............................
March 2002..................................
April 2002..................................
May 2002....................................
June 2002...................................
July 2002...................................
August 2002.................................
September 2002..............................
October 2002................................
November 2002...............................
December 2002...............................
January 2003................................
February 2003...............................
March 2003..................................
April 2003..................................
May 2003....................................
June 2003...................................
Weighted Average Life (years)(1)............
</TABLE>
- - ------------------
(1) The weighted average life of a Note is determined by (a) multiplying the
amount of each principal payment of such Note by the number of years from
the date of the issuance of such Note to the related Distribution Date, (b)
adding the results and (c) dividing the sum by the related initial principal
amount of such Note.
21
<PAGE>
USE OF PROCEEDS
The net proceeds from the sale of the Notes (I.E., the proceeds of the
public offering of the Notes minus expenses relating thereto) will be applied by
the Seller to the purchase of the Receivables from AHFC.
THE SELLER
The Seller was incorporated in the State of California in August 1992 as a
wholly owned, limited purpose finance subsidiary of AHFC. The principal
executive offices of the Seller are located at 700 Van Ness Avenue, Torrance,
California 90501 and its telephone number is (310) 781-4376.
The Seller was organized primarily for the purpose of acquiring installment
sale contracts similar to the Receivables and associated rights from AHFC,
causing the issuance of securities similar to the Securities and engaging in
related transactions. The Seller's articles of incorporation limit the
activities of the Seller to the foregoing purposes and to any activities
incidental to and necessary for such purposes.
AMERICAN HONDA FINANCE CORPORATION
GENERAL
AHFC was incorporated in the State of California in February 1980. AHFC and
its wholly-owned subsidiary Honda Canada Finance, Inc. ("HCFI"), provide
wholesale and retail financing to authorized dealers of Honda and Acura motor
vehicles, Honda motorcycles, including scooters and all terrain vehicles, and
power products such as lawn and garden products, snow throwers, water pumps,
outboard motors, outboard marine engines and generators, and Honda and Acura
parts and accessories to their customers in the United States and Canada. AHFC
and HCFI also offer retail leasing for Honda and Acura motor vehicles throughout
the United States and Canada. AHFC and its wholly owned subsidiary, American
Honda Service Contracts Corporation, administer the sale of vehicle service
contracts for AHMC throughout the United States. AHFC has three wholly owned
special purpose finance subsidiaries, American Honda Receivables Corp., American
Honda Receivables Corp. II and Honda Titling Inc.
AHFC is a wholly owned subsidiary of AHMC, a California corporation that is
the sole authorized distributor of Honda and Acura motor vehicles, Honda
motorcycles and power products and Honda and Acura parts and accessories in the
United States. AHMC is a wholly owned subsidiary of Honda Motor Co., Ltd., a
Japanese corporation which is a worldwide manufacturer of motorcycles, motor
vehicles and a variety of power products.
The principal executive offices of AHFC are located at 700 Van Ness Avenue,
Torrance,
California 90501. Its telephone number is (310) 781-4100.
UNDERWRITING OF MOTOR VEHICLE LOANS
AHFC purchases installment sale contracts secured by new and used Honda and
Acura motor vehicles from approximately 1,256 Dealers located throughout the
United States. In keeping with the practice of AHFC, the Receivables were
originated by Dealers in accordance with AHFC's requirements under existing
agreements with such Dealers. The Receivables were purchased in accordance with
AHFC's underwriting standards, which emphasize the prospective purchaser's
ability to pay and creditworthiness, as well as the asset value of the motor
vehicle to be financed.
Applications submitted to AHFC must list sufficient information to process
the application, including the applicant's income, residential status, monthly
mortgage or rent payment and other personal information. Upon receipt of an
application, AHFC obtains a credit report from an independent credit bureau. The
credit report is reviewed by AHFC to determine the applicant's current credit
status and past credit
22
<PAGE>
performance. Factors considered negative generally include past due credit,
repossessions, loans charged off by other lenders and previous bankruptcy.
Positive factors such as amount of credit and favorable payment history are also
considered.
The credit decision is made utilizing a credit scoring system and other
considerations. The credit scoring system includes an assessment of residence
and employment stability and credit bureau information. Other considerations
include income requirements and the ratio of income to total debt. An assessment
is made of the relative degree of credit risk indicated by these criteria and
the decision to grant or deny credit is made at the appropriate management
level. The system will recommend approval of applicants scoring above a
predetermined threshold and will recommend rejection for scores below that
level, although the underwriting staff for the appropriate region has the
ultimate approval or rejection authority.
AHFC's installment sale contract requires that obligors maintain specific
levels and types of insurance coverage, including physical damage insurance, to
protect the related financed vehicle against loss. At the time of purchase, an
obligor signs a statement which indicates that he either has or will have the
necessary insurance, and which shows the name and address of the insurance
company along with a description of the type of coverage. Obligors are generally
required to provide AHFC with evidence of compliance with the foregoing
insurance requirements; however, AHFC performs no ongoing verification of such
insurance coverage.
The amount of an installment sale contract secured or, in the case of used
motor vehicles, the NADA average trade-in value (as adjusted for higher/lower
mileage) by a new or used Honda or Acura motor vehicle generally will not exceed
120% of the dealer invoice cost of the related vehicle plus optional features at
the dealer cost, sales tax, title and registration fees, insurance premiums for
credit life and credit disability insurance and certain fees for extended
service contracts.
SERVICING OF MOTOR VEHICLE LOANS
AHFC considers an installment sale contract to be past due or delinquent for
servicing and enforcement of collection purposes when the obligor fails to make
at least 60% of a scheduled payment on a cumulative basis (after giving effect
to any past due payments) by the related due date; any portion of a scheduled
payment not paid on the related due date automatically becomes due with the next
scheduled payment. A computer generated delinquency notice is mailed to the
obligor on the eleventh and twenty-first day of delinquency. If the delinquent
contract cannot be brought current or completely collected within approximately
60 days, AHFC generally attempts to repossess the related vehicle. Repossessed
vehicles are held in inventory to comply with statutory requirements and then
are sold (generally within 60 days after repossession). Any deficiencies
remaining after repossession and sale of the vehicle or after the full
charge-off of the related contract are pursued by AHFC to the extent practicable
and legally permitted. See "Certain Legal Aspects of the Receivables --
Deficiency Judgments and Excess Proceeds". Obligors are contacted and, when
warranted by individual circumstances, repayment schedules are established and
monitored until the deficiencies are either paid in full or become impractical
to pursue.
YEAR 2000 ISSUES
AHFC has an ongoing program designed to address the potential impact of the
year 2000 on the ability of AHFC's computerized information systems to
accurately process information that may be date sensitive. AHFC has identified
the critical data storage and operating systems and developed plans to ensure
the readiness of AHFC's system to process dates beyond the year 2000. It is
anticipated that AHFC's systems will be year 2000 compliant by the end of 1999.
The inability of AHFC to address the necessary year 2000 modifications of
computerized information systems could result in a significant adverse effect on
AHFC's operations and financial results, including the inability to collect
receivables, pay obligations and process loan and obligor data. Any such
inability could have a material adverse effect on Noteholders.
23
<PAGE>
FORWARD LOOKING STATEMENTS
Certain statements included or incorporated by reference herein constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 (the "Reform Act"), that involve a number of risks
and uncertainties. Certain such forward-looking statements can be identified by
the use of forward-looking terminology such as "believes," "expects," "may,"
"will," "should," "seeks," or "anticipates" or similar expressions or the
negative thereof or other variations thereof or comparable terminology, or by
discussions of strategy, plans or intentions. In addition, all information
included herein with respect to projected or future results of operations,
financial condition, financial performance or other financial or statistical
matters constitute such forward-looking statements. Such forward-looking
statements are necessarily dependent on assumptions, data or methods that may be
incorrect or imprecise and that may be incapable of being realized and in some
instances are based on consensus estimates of analysts not affiliated with the
Seller. The following factors, among others, could cause actual results and
other matters to differ materially from those in such forward-looking
statements: increases in defaults by obligors on installment sale contracts;
increases in the provision for credit losses for installment sale contracts;
renewal or prepayment of installment sale contracts prior to contractual
maturity dates; the highly competitive nature of the motor vehicle financing
business; government regulation and tax matters; the outcome of pending or
threatened legal or regulatory disputes and proceedings; credit and other risks
of lending and investment activities; and changes in regional and national
business and economic conditions and inflation.
DELINQUENCY, REPOSSESSION AND LOAN LOSS INFORMATION
Set forth below is certain information concerning AHFC's experience with
respect to its portfolio of new and used Honda and Acura motor vehicle
installment sale contracts, which includes contracts that have been sold but are
still being serviced by AHFC. Credit losses are an expected cost in the business
of extending credit and are considered in AHFC's rate-setting process. AHFC's
strategy is to minimize credit losses while providing financing support for the
sale of Honda and Acura motor vehicles. Losses and delinquencies are affected
by, among other things, general and regional economic conditions and the supply
of and demand for motor vehicles.
AHFC establishes an allowance for expected credit losses and deducts amounts
reflecting charged-off installment sale contracts against such allowance. For
retail financing, the account balance related to an installment sale contract is
charged against the allowance for credit losses when the contract has been
delinquent for 120 days, unless AHFC has repossessed the collateral associated
with the contract. In such cases, the account balances are not charged against
the allowance for credit losses until either AHFC has sold the repossessed
collateral or has held it in repossession inventory for more than 90 days. Any
recoveries from charge offs related to an installment sale contract are credited
to the allowance.
The data presented in the following tables are for illustrative purposes
only. There is no assurance that AHFC's delinquency, credit loss and
repossession experience with respect to installment sale contracts in the
future, or the experience of the Trust with respect to the Receivables, will be
similar to that set forth below. See "Risk Factors -- Delinquencies,
Repossessions and Net Losses".
24
<PAGE>
IN THE TABLE BELOW, THE PERIOD OF DELINQUENCY IS BASED ON THE NUMBER OF DAYS
MORE THAN 40% OF A SCHEDULED PAYMENT ON A CUMULATIVE BASIS IS CONTRACTUALLY PAST
DUE. IF THE PERIOD OF DELINQUENCY USED BY AHFC WAS BASED ON THE NUMBER OF DAYS
ANY PORTION OF A SCHEDULED PAYMENT ON A CUMULATIVE BASIS WAS CONTRACTUALLY PAST
DUE, THEN ITS HISTORICAL DELINQUENCY EXPERIENCE MAY HAVE BEEN MATERIALLY HIGHER
IN EACH OF THE YEARS PRESENTED BELOW.
DELINQUENCY EXPERIENCE (1)
<TABLE>
<CAPTION>
AT MARCH 31,
AT OCTOBER 31, ------------------------------------------
1998 1998 1997 1996 1995
--------------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Principal Amount Outstanding (2)................... $ 3,958,102 $2,929,360 $2,486,957 $2,149,145 $1,396,919
Delinquencies (3)
30-59 Days....................................... $ 35,173 $ 29,330 $ 37,070 $ 19,222 $ 12,727
60-89 Days....................................... 5,840 4,400 6,327 2,937 1,573
90 or More Days.................................. 2,327 1,699 2,911 1,322 636
Repossessions (4).................................. 6,437 7,438 13,334 5,423 3,412
--------------- --------- --------- --------- ---------
Total Delinquencies and Repossessions.............. $ 49,777 $ 42,867 $ 59,642 $ 28,904 $ 18,349
Total Delinquencies and Repossessions as a
Percentage of Principal Amount Outstanding....... 1.26% 1.46% 2.40% 1.35% 1.31%
</TABLE>
- - ------------------
(1) Includes contracts that have been sold but are still being serviced by AHFC.
(2) Remaining principal balance and unearned finance charges for all outstanding
contracts.
(3) The period of delinquency is based on the number of days more than 40% of a
scheduled payment is contractually past due.
(4) Amounts shown represent the outstanding principal balance for contracts for
which the related vehicle had been repossessed and not yet liquidated.
NET CREDIT LOSS AND REPOSSESSION EXPERIENCE (1)
<TABLE>
<CAPTION>
AT OR FOR THE
SEVEN MONTHS AT OR FOR THE YEAR ENDED MARCH 31,
ENDED OCTOBER ----------------------------------------------
31, 1998 1998 1997 1996 1995
--------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Principal Amount Outstanding (2).............. $ 3,958,102 $2,929,360 $2,486,957 $2,149,145 $1,396,919
Average Principal Amount Outstanding (3)...... $ 3,556,664 $2,675,524 $2,545,288 $1,842,750 $1,173,715
Number of Contracts Outstanding............... 369,625 278,261 235,521 190,042 126,046
Average Number of Contracts Outstanding (3)... 331,349 252,723 228,287 162,955 109,142
Number of Repossessions....................... 1,743 3,576 3,166 2,175 1,551
Number of Repossessions as a Percentage of the
Average Number of Contracts Outstanding..... 0.90%(6) 1.42% 1.39% 1.34% 1.42%
Gross Charge-Offs (4)......................... $ 14,182 $ 32,598 $ 25,857 $ 14,701 $ 7,927
Recoveries (5)................................ $ 6,710 $ 8,245 $ 6,014 $ 3,940 $ 2,904
--------------- ---------- ---------- ---------- ----------
Net Losses.................................... $ 7,472 $ 24,353 $ 19,843 $ 10,761 $ 5,023
Net Losses as a Percentage of Average
Principal Amount Outstanding................ 0.36%(6) 0.91% 0.78% 0.58% 0.43%
</TABLE>
- - ------------------
(1) Includes contracts that have been sold but are still being serviced by AHFC.
(2) Remaining principal balance and unearned finance charges for all outstanding
contracts.
(3) Average of the loan balance or number of contracts, as the case may be, is
calculated for a period by dividing the total monthly amounts by the number
of months in the period.
(4) Amount charged off is the remaining principal balance, excluding any
expenses associated with collection, repossession or disposition of the
related vehicle, plus earned but not yet received finance charges, net of
any proceeds collected prior to charge-off.
(5) Proceeds received on previously charged-off contracts.
(6) Annualized.
25
<PAGE>
POOL FACTORS AND TRADING INFORMATION
The "Note Pool Factor" for each Class of Notes will be a seven-digit decimal
which the Servicer will compute prior to each Distribution Date indicating the
unpaid principal amount of such Class of Notes, after giving effect to payments
to be made on such Distribution Date, as a fraction of the initial outstanding
principal amount of such Class of Notes. The "Certificate Pool Factor" for the
Certificates will be a seven-digit decimal which the Servicer will compute prior
to each Distribution Date indicating the remaining Certificate Balance, after
giving effect to payments to be made on such Distribution Date, as a fraction of
the Original Certificate Balance. Each Note Pool Factor and the Certificate Pool
Factor will be 1.0000000 as of the Closing Date, and thereafter will decline to
reflect reductions in the outstanding principal amount of the applicable Class
of Notes, or the reduction in the Certificate Balance, as the case may be. A
Noteholder's portion of the aggregate outstanding principal amount of the
related Class of Notes will be the product of (i) the original denomination of
such Noteholder's Note and (ii) the applicable Note Pool Factor at the time of
determination.
Noteholders will receive reports on or about each Distribution Date
concerning payments received on the Receivables, the Pool Balance, each Note
Pool Factor, the Certificate Pool Factor and various other items of information.
In addition, Noteholders of record during any calendar year will be furnished
information for tax reporting purposes not later than the latest date permitted
by law. See "Certain Information Regarding the Securities -- Statements to
Securityholders".
DESCRIPTION OF THE NOTES
GENERAL
The Notes will be issued pursuant to the Indenture, a form of which has been
filed as an exhibit to the Registration Statement. Copies of the Indenture
(without exhibits) may be obtained by Noteholders upon request in writing to the
Indenture Trustee at its Corporate Trust Office. The following summary describes
the material terms of the Notes and the Indenture. The summary does not purport
to be complete and is subject to, and is qualified in its entirety by reference
to, all the provisions of the Notes and the Indenture. Where particular
provisions or terms used in the Notes or the Indenture are referred to, the
actual provisions of such documents (including definitions of terms) are
incorporated by reference as part of such summaries.
26
<PAGE>
PAYMENTS OF INTEREST
Interest on the outstanding principal amount of each Class of Notes will
accrue during each Accrual Period at the applicable Interest Rate and will be
payable to the Noteholders of such Class on the related Distribution Date.
Interest accrued but not paid on any Distribution Date will be due on the
immediately succeeding Distribution Date, together with, to the extent permitted
by applicable law, interest on such shortfall at the related Interest Rate.
Interest payments on the Notes generally will be made from the Available Amount
and from amounts on deposit in the Reserve Fund after the Total Servicing Fee,
non-recoverable advances and all accrued and unpaid Trustees' fees and other
administrative fees of the Trust ("Trust Fees and Expenses") have been paid. See
"Certain Information Regarding the Securities -- Distributions on the Securities
- - -- Deposits to the Distribution Accounts; Priority of Payments".
Interest payments to all Classes of Notes will have the same priority. Under
certain circumstances, the amount available for interest payments on any
Distribution Date could be less than the amount of interest due on the Notes, in
which case each Class of Notes will receive their ratable share (based on the
aggregate amount of interest due on such Class of Notes) of the aggregate amount
available to be distributed in respect of interest on the Notes, and an Event of
Default will occur if the full amount of interest due is not paid within five
days.
PAYMENTS OF PRINCIPAL
Until the Notes have been paid in full, principal payments to Noteholders
will be made on each Distribution Date in the amount and order of priority
described under "Summary -- Terms of the Notes -- Principal" and "Certain
Information Regarding the Securities -- Distributions on the Securities --
Deposits to the Distribution Accounts; Priority of Payments". Principal payments
on the Notes generally will be made from the Principal Distributable Amount and
from amounts on deposit in the Reserve Fund after the Total Servicing Fee,
non-recoverable Advances and all Trust Fees and Expenses have been paid and
after the Note Interest Distributable Amount has been distributed to
Noteholders.
The principal amount of each Class of Notes, to the extent not previously
paid, will be payable on the related Final Distribution Date. The actual
Distribution Date on which the outstanding principal amount of any Class of
Notes is paid may be significantly earlier than its Final Distribution Date
based on a variety of factors, including the factors described under "Weighted
Average Life of the Notes".
OPTIONAL REDEMPTION
Each Class of outstanding Notes will be subject to redemption in whole, but
not in part, on any Distribution Date relating to an Optional Termination. The
redemption price will equal the unpaid principal amount of such Class of Notes
plus accrued interest thereon at the applicable Interest Rate. See "Certain
Information Regarding the Securities -- Termination".
THE INDENTURE TRUSTEE
Bankers Trust Company will be the Indenture Trustee. The Indenture Trustee
is a Delaware banking corporation and its Corporate Trust Office is located at
Four Albany Street, 10th Floor, New York, New York 10006.
The Indenture Trustee will have the rights and duties set forth under
"Certain Information Regarding the Securities -- The Trustees" and " -- Duties
of the Trustees".
EVENTS OF DEFAULT; RIGHTS UPON EVENT OF DEFAULT
"Events of Default" under the Indenture will consist of: (i) a default for
five days or more in the payment of any interest on the Notes of any Class when
the same becomes due and payable; (ii) a default in the payment of the principal
of or any installment of the principal of the Notes of any Class when the same
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becomes due and payable; (iii) a default in the observance or performance of any
covenant or agreement of the Trust made in the Indenture or any representation
or warranty made by the Trust in the Indenture or in any certificate delivered
pursuant thereto or in connection therewith having been incorrect in a material
respect as of the time made, and the continuation of any such default for a
period of 30 days after notice thereof is given to the Trust by the Indenture
Trustee or to the Trust and the Indenture Trustee by the holders of Notes
evidencing at least 25% of the voting interests thereof, voting together as a
single class; and (iv) certain events of bankruptcy, insolvency, receivership or
liquidation relating to the Trust. However, 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 Note Distribution Account and amounts on
deposit in the Reserve Fund. Therefore, the failure to pay principal on a Class
of Notes generally will not result in the occurrence of an Event of Default
until the related Final Distribution Date.
Upon the occurrence of an Event of Default, the Indenture Trustee may, or if
so requested in writing by holders of Notes evidencing a majority of the voting
interests thereof, voting together as a single class, shall, declare the Notes
to be immediately due and payable. Notwithstanding the foregoing, such
declaration may, under certain circumstances, be rescinded by the holders of
Notes evidencing a majority of the voting interests thereof, voting together as
a single class.
If the Notes have been declared due and payable following an Event of
Default, the Indenture Trustee may institute proceedings to collect amounts due
or foreclose on the property of the Trust, exercise remedies as a secured party,
sell the Receivables and other property of the Trust or elect to have the Trust
maintain possession and continue to apply collections on or in respect of the
Receivables as if there had been no event of acceleration. Notwithstanding the
foregoing, the Indenture Trustee will be prohibited from selling the Receivables
and other property of the Trust following an Event of Default, other than a
default in the payment of any principal of or a default for five days or more in
the payment of any interest on any Note, unless (i) holders of Notes evidencing
100% of the voting interests thereof, voting together as a single class, consent
to such sale or liquidation, (ii) the proceeds of such sale are sufficient to
pay in full the principal of and accrued interest on the Notes at the date of
such sale or (iii) the Indenture Trustee determines that the proceeds of the
Receivables would not be sufficient on an ongoing basis to make all payments on
the Notes as such payments would have become due if such obligations had not
been declared due and payable, and the Indenture Trustee obtains the consent of
holders of Notes evidencing 66 2/3% of the voting interests thereof, voting
together as a single class.
In the event of the sale of the property of the Trust following the
occurrence of an Event of Default, the proceeds of such sale will be distributed
first to the Servicer in respect of Total Servicing Fee and non-recoverable
Advances, if any; second to the Trustee(s) for amounts due as Trustees Fees and
Expenses; third, to the Noteholders for interest which is due and unpaid; and
fourth, to the Noteholders for principal which is due and unpaid. Any remaining
amounts will be distributed to the Certificateholders for amounts due and unpaid
in accordance with the Trust Agreement and the Sale and Servicing Agreement.
Subject to the provisions of the Indenture relating to the duties of the
Indenture Trustee, if an Event of Default occurs and is continuing, 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 such request. Subject to the provisions for
indemnification and certain limitations contained in the Indenture, the holders
of Notes evidencing at least a majority of the voting interests thereof, voting
together as a single class, will have the right to direct the time, method and
place of conducting any proceeding or any remedy available to the Indenture
Trustee, and the holders of Notes evidencing at least a majority of the voting
interests thereof, voting together as a single class, may, in certain cases,
waive any default with respect thereto, except a default in the payment of
principal or interest or a default in respect of a covenant or provision of such
Indenture that cannot be modified without the waiver or consent of all holders
of outstanding Notes.
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No holder of a Note will have the right to institute any proceeding with
respect to the related Indenture, unless (i) such holder previously has given to
the Indenture Trustee written notice of a continuing Event of Default, (ii) the
holders of Notes evidencing at least 25% of the voting interests thereof, voting
together as a single class, have made written request to the Indenture Trustee
to institute such proceeding in its own name as Indenture Trustee, (iii) such
holder or holders have offered the Indenture Trustee reasonable indemnity
against the costs, expenses and liabilities to be incurred with complying with
such request, (iv) the Indenture Trustee has for 60 days failed to institute
such proceeding and (v) no direction inconsistent with such written request has
been given to the Indenture Trustee during such 60-day period by the holders of
Notes evidencing at least a majority of the voting interests thereof, voting
together as a single class.
CERTAIN COVENANTS
The Indenture will provide that the Trust may not consolidate with or merge
into any other entity, unless (i) the entity formed by or surviving such
consolidation or merger is organized under the laws of the United States, any
state or the District of Columbia and such entity expressly assumes the Trust's
obligation to make due and punctual payments upon the Notes and the performance
or observance of every agreement and covenant of the Trust under the Indenture,
(ii) no Event of Default shall have occurred and be continuing immediately after
such merger or consolidation, (iii) each Rating Agency delivers a letter to the
Indenture Trustee to the effect that such consolidation or merger will not
result in a qualification, reduction or withdrawal of its then-current rating on
any Class of Notes, (iv) the Trust has received an opinion of counsel to the
effect that such consolidation or merger would have no material adverse tax
consequence to the Trust or to any Securityholder, (v) any action that is
necessary to maintain the lien and security interest created by the Indenture
shall have been taken and (vi) the Indenture Trustee has received an officer's
certificate and an opinion of counsel stating that such consolidation or merger
comply with the terms of the Indenture and all conditions precedent provided in
the Indenture relating to such transaction have been taken.
The Trust will not, among other things, (i) except as expressly permitted by
the Indenture, Sale and Servicing Agreement or certain related documents with
respect to the Trust, sell, transfer, exchange or otherwise dispose of any of
its assets, (ii) claim any credit on or make any deduction from the principal
and interest payable in respect of the Notes (other than amounts withheld under
the Code or applicable state law) or assert any claim against any present or
former holder of Notes because of the payment of taxes levied or assessed upon
the Trust, (iii) dissolve or liquidate in whole or in part, (iv) 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 or (v) permit any
lien, charge, excise, claim, security interest, mortgage or other encumbrance to
be created on or extend to or otherwise arise upon or burden the assets of the
Trust or any part thereof, or any interest therein or the proceeds thereof.
SATISFACTION AND DISCHARGE OF INDENTURE
The Indenture will be discharged with respect to the collateral securing the
Notes upon the delivery to the Indenture Trustee for cancellation of all the
Notes or, with certain limitations, upon deposit with such Indenture Trustee of
funds sufficient for the payment in full of all the Notes.
ADDITIONAL INFORMATION
Certain additional information regarding the Indenture and the Indenture
Trustee may be found under "Certain Information Regarding the Securities --
Amendment -- The Indenture" and " -- The Trustees".
BOOK-ENTRY REGISTRATION
Each Class of Notes will be offered for purchase in denominations of $1,000
and integral multiples thereof in book-entry form. Each Class of Notes will
initially be represented by certificates registered in the
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name of Cede & Co. ("Cede"), the nominee of The Depository Trust Company
("DTC"). No beneficial owner of a Note (a "Note Owner") will be entitled to
receive a certificate representing such owner's interest, except as set forth
below. Unless and until Notes are issued in fully registered certificated form
("Definitive Notes") under the limited circumstances described below, all
references herein to distributions, notices, reports and statements to
Noteholders will refer to the same actions made with respect to DTC or Cede, as
the case may be, for the benefit of the related Note Owners in accordance with
DTC procedures. Note Owners will only be permitted to exercise the rights of
Noteholders indirectly through DTC and its Participants, as more fully described
below.
DTC is a limited purpose trust company organized under the laws of the State
of New York, a "banking organization" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the Uniform Commercial Code (the "UCC") in effect in the State of New
York and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC was created to hold securities for its
participating members ("DTC Participants") and to facilitate the clearance and
settlement of securities transactions between DTC Participants through
electronic book-entry changes in accounts of its Participants, thereby
eliminating the need for physical movement of certificates. DTC Participants
include securities brokers and dealers (including the Underwriters), banks,
trust companies and clearing corporations. Indirect access to the DTC system
also is available to banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a Participant, either directly
or indirectly (the "Indirect Participants"). The rules applicable to DTC and DTC
Participants are on file with the Commission.
Note Owners that are not DTC Participants or Indirect Participants but
desire to purchase, sell or otherwise transfer ownership of, or an interest in,
Notes may do so only through DTC Participants and Indirect Participants. DTC
Participants will receive a credit for the related Notes on DTC's records. The
ownership interest of each Note Owner will in turn be recorded on the respective
records of Participants and Indirect Participants. Note Owners will not receive
written confirmation from DTC of their purchase, but Note Owners are expected to
receive written confirmations providing details of the transaction, as well as
periodic statements of their holdings, from the DTC Participant or Indirect
Participant through which the Note Owner entered into the transaction. Transfers
of ownership interests in the Notes will be accomplished by entries made on the
books of DTC Participants acting on behalf of Note Owners.
To facilitate subsequent transfers, all Notes deposited by DTC Participants
with DTC will be registered in the name of Cede, as nominee of DTC. The deposit
of Notes with DTC and their registration in the name of Cede will effect no
change in beneficial ownership. DTC will have no knowledge of the actual Note
Owners and its records will reflect only the identity of the DTC Participants to
whose accounts such Notes are credited, which may or may not be the Note Owners.
DTC Participants and Indirect Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to DTC Participants,
by DTC Participants to Indirect Participants and by DTC Participants and
Indirect Participants to Note Owners will be governed by arrangements among
them, subject to any statutory or regulatory requirements as may be in effect
from time to time.
Neither DTC nor Cede will consent or vote with respect to the Notes. Under
its usual procedures, DTC will mail an "Omnibus Proxy" to the Indenture Trustee
or the Owner Trustee, as the case may be, as soon as possible after each
applicable record date for such a consent or vote. The Omnibus Proxy will assign
Cede's consenting or voting rights to those DTC Participants to whose accounts
the related Notes will be credited on that record date (identified in a listing
attached to the Omnibus Proxy).
Payments on the Notes will be made to DTC. DTC's practice is to credit DTC
Participants' accounts on each Distribution Date in accordance with their
respective holdings of Notes shown on DTC's records unless DTC has reason to
believe that it will not receive payment on such Distribution Date. Payments by
DTC
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Participants and Indirect Participants to Note Owners will be governed by
standing instructions and customary practices, as is the case with securities
held for the accounts of customers in bearer form or registered in "street
name", and will be the responsibility of such DTC Participant or Indirect
Participant and not of DTC, the Indenture Trustee or the Seller, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Payment of principal of and interest on the Notes to DTC will be the
responsibility of the Indenture Trustee, disbursement of such payments to DTC
Participants will be the responsibility of DTC and disbursement of such payments
to Note Owners will be the responsibility of DTC Participants and Indirect
Participants. As a result, under the book-entry format, Note Owners may
experience some delay in their receipt of payments. DTC will forward such
payments to its DTC Participants which thereafter will forward them to Indirect
Participants or Note Owners.
Because DTC can only act on behalf of DTC Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a Note Owner
to pledge Notes to persons or entities that do not participate in the DTC
system, or otherwise take actions with respect to such Notes, may be limited due
to the lack of a physical certificate for such Notes.
DTC has advised the Seller that it will take any action permitted to be
taken by a Noteholder under the Indenture only at the direction of one or more
DTC Participants to whose accounts with DTC the applicable 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 DTC Participants whose
holdings include such undivided interests.
Except as required by law, none of the Administrator, the Servicer, the
Seller, the Indenture Trustee or the Owner 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 held by Cede, as nominee for DTC, or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of Notes among participants of DTC, it is under no obligation to
perform or continue to perform such procedures and such procedures may be
discontinued at any time. In the event that DTC should discontinue its services,
the Administrator would seek an alternative depository (if available) or cause
the issuance of Definitive Notes to the owners thereof or their nominees in the
manner described under "-- Definitive Notes".
DEFINITIVE NOTES
Definitive Notes representing any Class of Notes will be issued to the
related Note Owners rather than to DTC, only if (i) DTC is no longer willing or
able to discharge its responsibilities as depository with respect to the Notes,
and neither the Indenture Trustee nor the Administrator is able to locate a
qualified successor, (ii) the Administrator, at its option, elects to terminate
the book-entry system through DTC or (iii) after an Event of Default or Servicer
Default, as described under "-- Events of Default; Rights Upon Event of Default"
and "Certain Information Regarding the Securities -- Servicer Default", Note
Owners evidencing not less than 51% of the voting interests of the related Notes
advise the related Trustee through DTC and its participants in writing that the
continuation of a book-entry system through DTC or its successor is no longer in
the best interest of the related Note Owners.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Indenture Trustee will be required to notify the
related Note Owners, through DTC Participants, of the availability through DTC
of Definitive Notes. Upon surrender by DTC of the certificates representing all
Notes of any affected Class and the receipt of instructions for re-registration,
the Trustee will issue Definitive Notes to the related Note Owners, who
thereupon will become Noteholders for all purposes of the Indenture.
Distributions on the Definitive Notes will thereafter be made by the
Indenture Trustee directly to holders of such Definitive Notes in accordance
with the procedures described herein and to be set forth in the Indenture.
Interest payments and any principal payments on the Notes on each Distribution
Date will be
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made to holders in whose names the Definitive Notes were registered at the close
of business on the Record Date with respect to such Distribution Date.
Distributions will be made by check mailed to the address of such holders as
they appear on the register specified in the Indenture. The final payment on any
Notes (whether Definitive Notes or Notes registered in the name of Cede),
however, will be made only upon presentation and surrender of such Notes at the
office or agency specified in the notice of final distribution to Noteholders.
The Indenture Trustee will mail such notice to registered Noteholders within
five Business Days of receipt from the Servicer of notice of termination of the
Trust.
Definitive Notes will be transferable and exchangeable at the offices of the
Indenture Trustee (or any security registrar appointed thereby), as will be set
forth in the Indenture. No service charge will be imposed for any registration
of transfer or exchange, but the Indenture Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge imposed in connection
therewith.
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the Trust Agreement, a form of
which has been filed as an exhibit to the Registration Statement of which this
Prospectus is a part. Copies of the Trust Agreement (without exhibits) may be
obtained by holders of Notes upon request in writing to the Owner Trustee at its
Corporate Trust Office. The following summary describes the material terms of
the Certificates and the Trust Agreement. The summary does not purport to be
complete and is subject to, and qualified in its entirety by, reference to all
of the provisions of the Certificates and the Trust Agreement. Where particular
provisions or terms used in the Trust Agreement are referred to, the actual
provisions (including definitions of terms and section references) are
incorporated by reference as part of such summaries. The Certificates are not
being offered hereby and initially will be retained by the Seller. The
information set forth in this Prospectus regarding the Certificates is intended
only to give the investors in the Notes a fuller understanding of the Notes.
DISTRIBUTIONS OF INTEREST
Interest on the Certificate Balance will accrue during each Accrual Period
at the Certificate Rate and will be payable to Certificateholders on the related
Distribution Date. Interest distributions with respect to the Certificates
generally will be made from the Available Amount after non-recoverable Advances,
the Total Servicing Fee and all Trust Fees and Expenses have been paid, after
the Note Distributable Amount has been distributed to Noteholders and after the
amount on deposit in the Reserve Fund equals the Specified Reserve Fund Balance.
See "Certain Information Regarding the Securities -- Distributions on the
Securities -- Deposits to the Distribution Accounts; Priority of Payments".
DISTRIBUTIONS OF PRINCIPAL
No principal will be paid on the Certificates until the Distribution Date on
which the principal amount of the Class A-1 Notes has been paid in full. On such
Distribution Date and each Distribution Date thereafter, principal payments to
Certificateholders will be made in the amount and order of priority described
under "Summary -- Terms of the Certificates -- Principal" and "Certain
Information Regarding the Securities -- Distributions on the Securities --
Deposits to the Distribution Accounts; Priority of Payments". Distributions with
respect to principal payments generally will be made from a designated portion
of the Available Amount remaining after non-recoverable Advances, the Total
Servicing Fee and all Trust Fees and Expenses have been paid, the Note
Distributable Amount has been distributed to the Noteholders, the amount on
deposit in the Reserve Fund equals the Specified Reserve Fund Balance and after
the Certificate Interest Distributable Amount has been distributed to
Certificateholders.
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OPTIONAL PREPAYMENT
The Certificates will be subject to prepayment in whole, but not in part, on
any Distribution Date relating to an Optional Termination. Certificateholders
will receive an amount in respect of the Certificates equal to the Certificate
Balance, together with accrued interest at the Certificate Rate. Any such
distribution will effect early retirement of the Certificates. See "Certain
Information Regarding the Securities -- Termination".
ADDITIONAL INFORMATION
Certain additional information regarding the Trust Agreement and the Owner
Trustee may be found under "Certain Information Regarding the Securities --
Evidence as to Compliance", "-- Insolvency Event" and "-- The Trustees".
CERTAIN INFORMATION REGARDING THE SECURITIES
SALE AND ASSIGNMENT OF THE RECEIVABLES
On or prior to the Closing Date, pursuant to the Receivables Purchase
Agreement, AHFC will sell and assign to the Seller, without recourse, its entire
interest in the Receivables, including the security interests in the Financed
Vehicles. On the Closing Date, pursuant to the Sale and Servicing Agreement, the
Seller will sell and assign to the Trust, without recourse, all of its right,
title and interest in and to the Receivables, including its security interests
in the Financed Vehicles. Each Receivable will be identified in a schedule
referred to in the Sale and Servicing Agreement and the Trust Agreement and on
file with the Trustees (the "Schedule of Receivables"). The applicable Trustee
will, concurrently with such transfer and assignment, execute, authenticate and
deliver the Notes or the Certificates, as the case may be, to or upon the order
of the Seller. Thereafter, the Seller will sell the Notes to the Underwriters.
As more fully described under "The Receivables -- Selection Criteria", AHFC,
pursuant to the Receivables Purchase Agreement, and the Seller, pursuant to the
Sale and Servicing Agreement, will make certain representations and warranties
with respect to the Receivables and the Financed Vehicles. Such representations
and warranties will include, among other things, that (i) on the Cutoff Date,
the information set forth in the Schedule of Receivables is true and correct in
all material respects; (ii) at the time of origination of each Receivable, the
related Obligor was required to maintain physical damage insurance in accordance
with AHFC's normal requirements; (iii) to the best of its knowledge, the
Receivables are free and clear of all prior security interests, liens, charges
and encumbrances and no offsets, defenses or counterclaims have been asserted or
threatened; (iv) each of the Receivables is secured by a first priority
perfected security interest in the related Financed Vehicle in favor of AHFC;
and (v) each Receivable at the time it was originated complied, and on the
Closing Date complies, in all material respects with applicable state and
federal laws, including, without limitation, consumer credit, truth-in-lending,
equal credit opportunity and disclosure laws.
As of the last day of the second Collection Period (or, if the Seller so
elects, the last day of the first Collection Period) following the Collection
Period in which the Seller, the Servicer or the Owner Trustee discovers a breach
of any representation or warranty of the Seller that materially and adversely
affects the interests of the Noteholders in a Receivable, the Seller, unless the
breach is cured, will repurchase such Receivable (a "Warranty Receivable") from
the Trustee and, pursuant to the Receivables Purchase Agreement, AHFC will
purchase such Receivable from the Seller, at a price equal to the Warranty
Purchase Payment for such Receivable. The "Warranty Purchase Payment" (1) for a
Precomputed Receivable will be equal to (a) the sum of (i) all remaining
Scheduled Payments, (ii) all past due Scheduled Payments for which an Advance
has not been made, (iii) all outstanding Advances made by the Servicer in
respect of such Precomputed Receivable and (iv) an amount equal to any
reimbursements of outstanding Advances made to the Servicer with respect to such
Precomputed Receivable from collections made on or in respect of other
Receivables, minus (b) the sum (i) of all Payments Ahead in respect of such
Warranty Receivable held by the Servicer or on deposit in the Payahead Account,
(ii) the rebate, calculated on an actuarial basis, that would
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be payable to the Obligor on such Precomputed Receivable were the Obligor to
prepay such Precomputed Receivable in full on such day (a "Rebate") and (iii)
any proceeds of the liquidation of such Precomputed Receivable previously
received (to the extent applied to reduce the Principal Balance of such
Precomputed Receivable) and (2) for a Simple Interest Receivable, will be equal
to its unpaid principal balance, plus interest thereon at a rate equal to the
APR to the last day of the Collection Period relating to such repurchase. This
repurchase obligation will constitute the sole remedy available to the
Noteholders and the Indenture Trustee for any such uncured breach by the Seller.
The obligation of the Seller to repurchase a Receivable will not be conditioned
on performance by AHFC of its obligation to purchase such Receivable from the
Seller pursuant to the Receivables Purchase Agreement.
Pursuant to the Sale and Servicing Agreement, to assure uniform quality in
servicing both the Receivables and other motor vehicle installment sale
contracts serviced by the Servicer, as well as to reduce administrative costs,
the Owner Trustee will appoint the Servicer as custodian of the Receivables and
all documents related thereto. The Receivables will not be physically segregated
from other motor vehicle installment sale contracts of the Servicer, or those
which the Servicer services for others, to reflect the transfer to the Trust.
However, UCC financing statements reflecting the sale and assignment of the
Receivables by AHFC to the Seller and by the Seller to the Trust will be filed,
and the respective accounting records and computer files of AHFC and the Seller
will reflect such sale and assignment. Because the Receivables will remain in
the possession of the Servicer and will not be stamped or otherwise marked to
reflect the assignment thereof to the Trust, if a subsequent purchaser were able
to take physical possession of the Receivables without knowledge of the
assignment, the Trust's interest in the Receivables could be defeated. See
"Certain Legal Aspects of the Receivables -- General" and "-- Security Interests
in the Financed Vehicles". In addition, under certain circumstances the Trust's
security interest in collections that have been received by the Servicer but not
yet remitted to the Collection Account could be defeated.
See "-- Collections".
SERVICING PROCEDURES
The Servicer will make reasonable efforts to collect all payments due with
respect to the Receivables and, in a manner consistent with the Sale and
Servicing Agreement, will continue such collection procedures as it follows with
respect to comparable motor vehicle installment sale contracts it services for
itself and others. The Servicer will be authorized to grant certain rebates,
adjustments or extensions with respect to a Receivable. See "American Honda
Finance Corporation -- Servicing of Motor Vehicle Loans". However, if any such
modification of a Receivable extends the maturity of a Receivable beyond six
months after the scheduled maturity of the Receivable with the latest scheduled
maturity as of the Cutoff Date, the Servicer will be obligated to purchase such
Receivable as described in the immediately succeeding paragraph.
In the Sale and Servicing Agreement, the Servicer will covenant that except
as otherwise contemplated therein, (i) it will not release any Financed Vehicle
from the security interest created by the related Receivable, (ii) it will do
nothing to impair the rights of the Trust in the Receivables and (iii) except as
otherwise provided in the Sale and Servicing Agreement, it will not amend any
Receivable such that the total number of Scheduled Payments, the amount financed
or the APR is altered or the maturity of a Receivable is extended beyond six
months after the scheduled maturity of the Receivable with the latest scheduled
maturity as of the Cutoff Date. As of the last day of the second Collection
Period (or, if the Servicer so elects, the last day of the first Collection
Period) following the Collection Period in which the Seller, the Servicer or the
Owner Trustee discovers a breach of any such covenant that materially and
adversely affects the interests of the Noteholders in a Receivable, the
Servicer, unless the breach is cured, will purchase the Receivable (an
"Administrative Receivable") from the Owner Trustee at a price equal to the
Administrative Purchase Payment for such Receivable. The "Administrative
Purchase Payment" (1) for a Precomputed Receivable will be equal to (a) the sum
of (i) all remaining Scheduled Payments, (ii) all past due Scheduled Payments
for which an Advance has not been made, and (iii) an amount equal to any
reimbursements of outstanding Advances made by the Servicer with respect to such
Administrative Receivable from the proceeds of other Receivables minus (b) the
sum of (i) all Payments Ahead in respect of such Precomputed Receivable held by
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the Servicer or on deposit in the Payahead Account, (ii) the Rebate and (iii)
any proceeds of the liquidation of such Receivable previously received (to the
extent applied to reduce the Principal Balance of such Receivable) and (2) for a
Simple Interest Receivable, will be equal to its unpaid principal balance, plus
interest thereon at a rate equal to the APR to the last day of the Collection
Period relating to such repurchase. Upon the repurchase of any Administrative
Receivable, the Servicer shall for all purposes of the Sale and Servicing
Agreement be deemed to have released all claims for the reimbursement of
outstanding Advances made in respect of such Receivable. This repurchase
obligation will constitute the sole remedy available to the Noteholders and the
Indenture Trustee for any such uncured breach by the Servicer.
If the Servicer determines that eventual payment in full of a Receivable is
unlikely, the Servicer will follow its normal practices and procedures to
recover all amounts due upon such Receivable, including the repossession and
disposition of the related Financed Vehicle at a public or private sale, or the
taking of any other action permitted by applicable law.
INSURANCE ON FINANCED VEHICLES
Each Receivable requires the related Obligor to maintain insurance covering
physical damage to the Financed Vehicle in an amount not less than the unpaid
principal balance of such Receivable pursuant to which AHFC is named as a loss
payee. Since the Obligors may select their own insurers to provide the requisite
coverage, the specific terms of their policies may vary. AHFC will not be
required to monitor the maintenance of such insurance. A failure by an Obligor
to maintain such physical damage insurance will constitute a default under the
related Receivable. See "American Honda Finance Corporation -- Underwriting of
Motor Vehicle Loans". In the event that the failure of an Obligor to maintain
any such required insurance results in a shortfall in amounts to be distributed
to Noteholders and such shortfall is not covered by amounts on deposit in the
Reserve Fund or by subordination of payments on the Certificates to the extent
described herein, the Noteholders could suffer a loss on their investment.
THE ACCOUNTS
THE COLLECTION AND PAYAHEAD ACCOUNTS. The Servicer will establish and
maintain in the name of the Indenture Trustee on behalf of the Securityholders,
(i) one or more accounts into which all payments made on or in respect of the
Receivables will be deposited (the "Collection Account") and (ii) an account
into which payments made by Obligors in excess of the related Scheduled Payments
on Precomputed Receivables (each, a "Payment Ahead"), to the extent that such
payments do not constitute a prepayment in full of the related Receivable, will
be deposited until the Deposit Date relating to the Collection Period in which
such payments become due (the "Payahead Account") or, if the Servicer has
satisfied certain conditions set forth under "Collections", the Servicer may
retain such amounts as Payments Ahead.
THE DISTRIBUTION ACCOUNTS. The Servicer will establish and maintain an
account, in the name of the Indenture Trustee on behalf of the Noteholders, in
which amounts released from the Collection Account for distribution to
Noteholders will be deposited and from which all distributions to Noteholders
will be made (the "Note Distribution Account"). The Owner Trustee shall
establish and maintain in the name of the Issuer an account on behalf of the
Certificateholders, in which amounts released from the Collection Account for
distribution to Certificateholders will be deposited and from which all
distributions to Certificateholders will be made (the "Certificate Distribution
Account" and, together with the Note Distribution Account, the "Distribution
Accounts").
THE YIELD SUPPLEMENT ACCOUNT. The Servicer will establish and maintain the
Yield Supplement Account in the name of the Indenture Trustee for the benefit of
the Securityholders. The Yield Supplement Account is designed solely to
supplement the interest collections on the Receivables that have APRs which are
less than the Required Rate.
The Yield Supplement Account will be funded on the Closing Date with the
Yield Supplement Deposit Amount. On each Distribution Date, the amount required
to be on deposit in the Yield Supplement
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Account will decline and be equal to the sum of all projected Yield Supplement
Amounts for all future Distribution Dates, assuming that future scheduled
payments on the Receivables are made on the date on which they are scheduled as
being due. The amount on deposit in the Yield Supplement Account will decrease
on each Deposit Date as the Yield Supplement Withdrawal Amount is deposited into
the Collection Account for distribution on the related Distribution Date. See
"Summary -- The Yield Supplement Account".
MAINTENANCE OF TRUST ACCOUNTS. The Collection Account, Payahead Account,
Distribution Accounts, Yield Supplement Account and the Reserve Fund
(collectively, the "Trust Accounts") will be maintained with a depository
institution or a trust company (which may include the related Trustee) (i) the
commercial paper or other short-term unsecured debt obligations of which is
rated at least P-1 by Moody's and A-1+ by Standard & Poor's or (ii) having
corporate trust powers and organized under the laws of the United States or any
state thereof, the District of Columbia or the Commonwealth of Puerto Rico with
a long-term deposit rating from (A) Moody's of at least Baa3 or (B) Standard and
Poor's of at least AA- (or such lower rating as either Rating Agency shall
approve in writing). Initially, all Trust Accounts other than the Certificate
Distribution Account will be maintained with the Indenture Trustee and the
Certificate Distribution Account will be maintained with the Owner Trustee.
INVESTMENT OF TRUST ACCOUNT MONIES. Funds on deposit in the Trust Accounts
may, at the direction of the Servicer, be invested in Permitted Investments that
mature on the Deposit Date immediately succeeding the date of investment (other
than instruments of the entity at which the related Trust Account is located,
which may mature on the related Distribution Date). With the exception of the
Yield Supplement Account and the Reserve Fund, all income or other gain from
such investments, net of any loss and investment expenses resulting from such
investment, shall be paid to the Servicer as additional servicing compensation.
Any net loss and investment expenses resulting from such investment shall be
charged to the related Trust Account. "Permitted Investments" will be specified
in the Sale and Servicing Agreement and will be limited to investments which
meet the criteria of each Rating Agency from time to time as being consistent
with its then-current ratings of the Notes.
COLLECTIONS
The Servicer will deposit all payments on or in respect of the Receivables
received from or on behalf of Obligors and all proceeds of Receivables collected
during each Collection Period into the Collection Account not later than two
Business Days after receipt. However, the Servicer may retain such amounts until
the related Deposit Date so long as (i) AHFC is the Servicer, (ii) no Servicer
Default exists and is continuing and (iii) either (a) the short-term unsecured
debt of AHFC is rated at least P-1 by Moody's and A-1 by Standard & Poor's, or
(b) AHFC obtains a letter of credit, surety bond or insurance policy (the
"Servicer Letter of Credit") as provided in the Sale and Servicing Agreement
under which demands for payment will be made to secure timely remittance of
monthly collections to the Collection Account and, in the case of clause (b)
above, the Indenture Trustee is provided with a letter from each Rating Agency
to the effect that the utilization of such alternative remittance schedule will
not result in a qualification, reduction or withdrawal of its then-current
rating of any Class of Notes. Pending deposit into the Collection Account,
collections may be invested by the Servicer at its own risk and for its own
benefit and will not be segregated from its own funds. The Seller or the
Servicer, as the case may be, will remit the aggregate Administrative Purchase
Payments and Warranty Purchase Payments of any Receivables to be repurchased
from the Trust into the Collection Account on or before each Deposit Date.
Collections on or in respect of a Receivable made during a Collection Period
which are not late fees, prepayment charges, extension fees or certain other
similar fees or charges will be applied first to any outstanding Advances made
by the Servicer with respect to such Receivable, and then to the related
Scheduled Payment. Any collections on or in respect of a Receivable remaining
after such applications will be considered an "Excess Payment". Excess Payments
constituting a prepayment in full of the related Receivable will be applied as a
prepayment in full of such Receivable (each, a "Prepayment") and all other
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Excess Payments on Precomputed Receivables will be held by the Servicer as a
Payment Ahead (or if the Servicer has not satisfied the conditions in clauses
(i) through (iii) of the immediately preceding paragraph, deposit in the
Payahead Account) and on Simple Interest Receivables will be applied as a
partial prepayment.
On each Deposit Date, (i) the Indenture Trustee will cause Payments Ahead
previously deposited in the Payahead Account or held by the Servicer in respect
of the related Collection Period to be transferred to the Collection Account and
(ii) the Indenture Trustee will cause the Yield Supplement Withdrawal Amount to
be deposited into the Collection Account.
ADVANCES
If the Scheduled Payment due on a Precomputed Receivable is not received in
full by the end of the month in which it is due, whether as the result of any
extension granted to the Obligor or otherwise, the amount of Payments Ahead, if
any, not previously applied with respect to such Precomputed Receivable shall be
applied by the Servicer to the extent of the shortfall and Payments Ahead shall
be reduced accordingly. If any shortfall remains, the Servicer will make a
Precomputed Advance to the Trust in an amount equal to the amount of such
shortfall. In addition, if the Scheduled Payment on a Simple Interest Receivable
is not received in full by the end of the month in which it is due, the Servicer
will be required, subject to the limitations set forth below, to make a Simple
Interest Advance to the Trust in an amount equal to the product of the Principal
Balance of such Simple Interest Receivable as of the first day of the related
Collection Period and one-twelfth of its APR minus the amount of interest
actually received on such Simple Interest Receivable during such Collection
Period. If such a calculation results in a negative number, an amount equal to
such negative amount shall be paid to the Servicer in reimbursement of
outstanding Simple Interest Advances. In addition, in the event that a Simple
Interest Receivable becomes a Liquidated Receivable, the amount of accrued and
unpaid interest thereon (but not including interest for the current Collection
Period) shall, up to the amount of all outstanding Simple Interest Advances in
respect thereof, be withdrawn from the Collection Account and paid to the
Servicer in reimbursement of such outstanding Simple Interest Advances. No
advances of principal will be made with respect to Simple Interest Receivables.
The obligation of the Servicer to make an Advance (other than a Simple
Interest Advance in respect of an interest shortfall arising from the prepayment
of a Simple Interest Receivable) will be limited to the extent that it
determines, in its sole discretion, that such Advance will be recovered from
subsequent collections on or in respect of such Receivable. In making Advances,
the Servicer will endeavor to maintain monthly payments of interest to
Securityholders at the related Interest Rate or Certificate Rate rather than to
guarantee or insure against losses. Accordingly, all Advances shall be
reimbursable to the Servicer, without interest, if and when a payment relating
to a Receivable with respect to which an Advance has previously been made is
subsequently received. Upon the determination by the Servicer that reimbursement
from the preceding source is unlikely, it will be entitled to recover
unreimbursed Advances from collections on or in respect of other Receivables.
The Servicer will make all Advances by depositing into the Collection
Account any amount equal to the aggregate of the Precomputed Advances and Simple
Interest Advances due in respect of a Collection Period on the related Deposit
Date.
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SERVICING COMPENSATION
On each Distribution Date, the Servicer will receive the Servicing Fee for
the related Collection Period equal to one-twelfth of the Servicing Fee Rate
multiplied by the Pool Balance as of the first day of such Collection Period or,
in the case of the first Collection Period, the Cutoff Date Pool Balance. The
Servicing Fee will be calculated and paid based upon a 360-day year consisting
of twelve 30-day months. The Servicer will be entitled to the Total Servicing
Fee. The Servicer shall pay all expenses incurred by it in connection with its
servicing activities under the Sale and Servicing Agreement and shall not be
entitled to reimbursement of such expenses except to the extent they constitute
liquidation expenses or expenses recoverable under an applicable insurance
policy.
The Servicing Fee will compensate the Servicer for performing the functions
of a third party servicer of the Receivables as an agent for the Trust,
including collecting and posting all payments, responding to inquiries of
Obligors, investigating delinquencies, sending payment statements and reporting
tax information to Obligors, paying costs of collections and policing the
collateral. The Servicing Fee will also compensate the Servicer for
administering the Receivables, including making Advances, accounting for
collections, furnishing monthly and annual statements to the Indenture Trustee
and the Owner Trustee with respect to distributions and generating federal
income tax information and certain taxes, accounting fees, outside auditor fees,
data processing costs and other costs incurred in connection with administering
the Receivables.
The "Pool Balance" will equal the aggregate Principal Balance of the
Receivables (exclusive of all Administrative Receivables for which the Servicer
has paid the Administrative Purchase Payment, Warranty Receivables for which the
Seller has paid the Warranty Purchase Payment and Defaulted Receivables). The
"Principal Balance" of a Receivable as of any date will equal the original
principal balance of such Receivable minus the sum of the following amounts (i)
in the case of a Precomputed Receivable, that portion of all Scheduled Payments
due on or prior to such date allocable to principal, computed in accordance with
the actuarial method, (ii) in the case of a Simple Interest Receivable, that
portion of all Scheduled Payments actually received on or prior to such date
allocable to principal, computed in accordance with the simple interest method,
(iii) any Warranty Purchase Payment or Administrative Purchase Payment with
respect to such Receivable allocable to principal and (iv) any Prepayments or
other payments applied to reduce the unpaid principal balance of such
Receivable.
NET DEPOSITS
For so long as AHFC is the Servicer, the Servicer will cause to be deposited
into the Trust Accounts only the net amount distributable to Securityholders on
the related Distribution Date. The Servicer, however, will account to the
Trustees and the Securityholders as if all deposits and distributions were made
individually.
DISTRIBUTIONS ON THE SECURITIES
GENERAL. On or before the tenth calendar day of the month in which such
Distribution Date occurs or, if such day is not a Business Day, the immediately
succeeding Business Day (each, a "Determination Date"), the Servicer will
deliver to the Indenture Trustee, the Owner Trustee and each Rating Agency a
statement (the "Distribution Date Statement") setting forth, among other things,
the following amounts with respect to such Distribution Date: (i) Payments Ahead
and Applied Payments Ahead; (ii) the Total Servicing Fee; (iii) Trust Fees and
Expenses; (iv) the amount of funds in the Collection Account allocable to
collections on or in respect of the Receivables during the related Collection
Period (excluding any Advances, Administrative Purchase Payments and Warranty
Purchase Payments); (v) the Administrative Purchase Payments and Warranty
Purchase Payments of all Receivables repurchased by the Seller or the Servicer
during such Collection Period; (vi) the Advances made by the Servicer, the
amounts for which the Servicer is entitled to be reimbursed for unreimbursed
Advances and the amount of nonrecoverable Advances; (vii) the Available Amount;
(viii) the Note Interest Distributable Amount; (ix) the Note Principal
Distributable Amount; (x) the Note Distributable Amount; (xi) the Certificate
Interest Distributable Amount; (xii) the Certificate
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Principal Distributable Amount (xiii) the Principal Distributable Amount; (xiv)
the Yield Supplement Deposit Amount, if any; and (xv) the maximum amount
required to be on deposit in the Yield Supplement Account on the immediately
succeeding Distribution Date and the Yield Supplement Withdrawal Amount, if any.
DETERMINATION OF AVAILABLE AMOUNTS. The amount of funds available for
distribution on a Distribution Date will generally equal the sum of Available
Interest and Available Principal (collectively, the "Available Amount").
"Available Interest" for a Distribution Date will equal the sum of the
following amounts allocable to interest received or allocated by the Servicer on
or in respect of the Receivables during the related Collection Period (computed,
in the case of Precomputed Receivables, by the actuarial method and, in the case
of Simple Interest Receivables, by the simple interest method): all (i)
collections on or in respect of the Receivables other than Defaulted Receivables
(including Payments Ahead being applied in such Collection Period ("Applied
Payments Ahead") but excluding Payments Ahead to be applied in one or more
future Collection Periods); (ii) proceeds of the liquidation of Defaulted
Receivables, net of expenses incurred by the Servicer in accordance with its
customary servicing procedures in connection with such liquidation ("Net
Liquidation Proceeds"); (iii) Advances made by the Servicer; (iv) Warranty
Purchase Payments with respect to Warranty Receivables repurchased by the Seller
in respect of such Collection Period; (v) Administrative Purchase Payments with
respect to Administrative Receivables purchased by the Servicer, in respect of
such Collection Period; and (vi) the Yield Supplement Withdrawal Amount.
"Available Principal" for a Distribution Date will equal the sum of the
amounts described in clauses (i) through (v) of the immediately preceding
paragraph received or allocated by the Servicer in respect of principal on or in
respect of the Receivables during the related Collection Period (computed, in
the case of Precomputed Receivables, in accordance with the actuarial method
and, in the case of Simple Interest Receivables, by the Simple Interest Method).
Available Interest and Available Principal on any Distribution Date will
exclude (i) amounts received on a particular Receivable (other than a Defaulted
Receivable) to the extent that the Servicer has previously made an unreimbursed
Advance in respect of such Receivable and (ii) Net Liquidation Proceeds with
respect to a particular Receivable to the extent of unreimbursed Advances in
respect of such Receivable. A "Defaulted Receivable" will be a Receivable (other
than an Administrative Receivable or a Warranty Receivable) as to which (a) all
or any part of a Scheduled Payment is 120 or more days past due and the Servicer
has not repossessed the related Financed Vehicle or (b) the Servicer has, in
accordance with its customary servicing procedures, determined that eventual
payment in full is unlikely and has either repossessed and liquidated the
related Financed Vehicle or repossessed and held the related Financed Vehicle in
its repossession inventory for 90 days, whichever occurs first.
DEPOSITS TO THE DISTRIBUTION ACCOUNTS; PRIORITY OF PAYMENTS. On each
Distribution Date, the Servicer will allocate amounts on deposit in the
Collection Account with respect to the related Collection Period as described
below and will instruct the Indenture Trustee to make the following deposits and
distributions in the following amounts and order of priority:
(i) to the Servicer, the Total Servicing Fee, including any unpaid
Servicing Fees with respect to one or more prior Collection Periods and
non-recoverable Advances;
(ii) to the Indenture Trustee and the Owner Trustee, any accrued and
unpaid Trust Fees and Expenses, in each case to the extent such fees and
expenses have not been previously paid by the Servicer;
(iii) to the Note Distribution Account, from the Available Amount (after
giving effect to the reduction in the Available Amount described in clauses
(i) and (ii) above), the Note Interest Distributable Amount to be
distributed to the holders of the Notes at their respective Interest Rates;
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(iv) to the Note Distribution Account, from the Available Amount (after
giving effect to the reduction in the Available Amount described in clauses
(i) through (iii) above), the Note Principal Distributable Amount to be
distributed to the related Noteholders;
(v) to the Reserve Fund, from the Available Amount (after giving effect
to the reduction in the Available Amount described in clauses (i) through
(iv) above), an amount until the amount on deposit therein equals the
Specified Reserve Fund Balance;
(vi) to the Certificate Distribution Account, from the Available Amount
(after giving effect to the reduction in the Available Amount described in
clauses (i) through (v) above), the Certificate Interest Distributable
Amount to be distributed to the Certificateholders;
(vii) to the Certificate Distribution Account, from the Available Amount
(after giving effect to the reduction in the Available Amount described in
clauses (i) through (vi) above), the Certificate Principal Distributable
Amount to be distributed to the Certificateholders; and
(viii) any Available Amount remaining after giving effect to the reduction
in the Available Amount described in clauses (i) through (vii) above, to the
Seller.
Allocations of the Note Principal Distributable Amount will be allocated
among the Notes so that no principal payments will be made on the (i) Class A-2
Notes until the Class A-1 Notes have been paid in full, (ii) Class A-3 Notes
until the Class A-1 and the Class A-2 Notes have been paid in full or (iii)
Class A-4 Notes until the Class A-1, Class A-2 and Class A-3 Notes have been
paid in full.
Notwithstanding the foregoing, to the extent that the amount on deposit in
the Note Distribution Account with respect to a Distribution Date is less than
the Note Distributable Amount, funds will be withdrawn from the Reserve Fund and
deposited in the Note Distribution Account for distribution to the Noteholders.
In addition, if at any time that the Notes have not been paid in full and
the principal balance of the Notes has been declared due and payable following
the occurrence of an Event of Default under the Indenture, until such time as
the Notes have been paid in full or such declaration has been rescinded and any
continuing Events of Default have been waived pursuant to the Indenture, no
amounts will be distributed to the Certificateholders. Any such amounts
otherwise distributable to the Certificateholders will be distributed instead as
payments of principal on the Notes.
For the purposes hereof, the following terms will have the following
meanings:
The "Certificate Interest Distributable Amount" will mean, with respect to
any Distribution Date, interest accrued for the related Accrual Period at the
Certificate Rate on the Certificate Balance on the immediately preceding
Distribution Date, after giving effect to all payments of principal to
Certificateholders on or prior to such Distribution Date (or, in the case of the
first Distribution Date, on the Original Certificate Balance).
The "Certificate Monthly Principal Distributable Amount" will mean, with
respect to any Distribution Date, the Certificate Percentage of the Principal
Distributable Amount for such Distribution Date.
The "Certificate Percentage" will mean (i) for each Distribution Date until
the principal amount of the Class A-1 Notes has been paid in full, 0%; (ii) for
each Distribution Date to and including the Distribution Date on which the
principal amount of the Class A-4 Notes is reduced to zero, %, provided
that, if the amount on deposit in the Reserve Fund on any such Distribution Date
would be, after giving effect to the distribution of the Principal Distributable
Amount on such Distribution Date, less than the Specified Reserve Fund Balance,
0% until either the Notes are paid in full or the amount on deposit in the
Reserve Fund equals or exceeds the Specified Reserve Fund Balance; and (iii) for
each Distribution Date on and after the Distribution Date on which the principal
amount of the Class A-4 Notes is reduced to zero, 100%.
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The "Certificate Principal Carryover Shortfall" will mean, with respect to
any Distribution Date, the excess of the Certificate Monthly Principal
Distributable Amount plus any outstanding Certificate Principal Carryover
Shortfall for the preceding Distribution Date, over the amount in respect of
principal that is actually deposited in the Certificate Distribution Account on
such Distribution Date.
The "Certificate Principal Distributable Amount" will mean, with respect to
any Distribution Date, the sum of the Certificate Monthly Principal
Distributable Amount for each Distribution Date and any outstanding Certificate
Principal Carryover Shortfall as of the close of the immediately preceding
Distribution Date; provided, however, that the Certificate Principal
Distributable Amount shall not exceed the Certificate Balance. In addition, on
the Certificate Final Distribution Date, the principal required to be deposited
into the Certificate Distribution Account will include the amount necessary to
reduce the Certificate Balance to zero.
The "Note Distributable Amount" will mean, with respect to any Distribution
Date, the sum of the Note Interest Distributable Amount and the Note Principal
Distributable Amount for such Distribution Dates.
The "Note Interest Carryover Shortfall" will mean, with respect to any
Distribution Date and a Class of Notes, the excess, if any, of the sum of the
Note Monthly Interest Distributable Amount for such Class for the preceding
Distribution Date plus any outstanding Note Interest Carryover Shortfall for
such Class on such preceding Distribution Date, over the amount in respect of
interest that is actually paid on the Notes on such preceding Distribution Date,
plus, to the extent permitted by applicable law, interest on the Note Interest
Carryover Shortfall at the related Interest Rate for the related Accrual Period.
The "Note Interest Distributable Amount" will mean, with respect to any
Distribution Date and a Class of Notes, the sum of the Note Monthly Interest
Distributable Amount and the Note Interest Carryover Shortfall for such Class of
Notes for one or more prior Distribution Dates.
The "Note Monthly Interest Distributable Amount" will mean, with respect to
any Distribution Date, interest accrued for the related Accrual Period at the
related Interest Rate for each Class of Notes on the outstanding amount of the
Notes of each such Class on the immediately preceding Distribution Date, after
giving effect to all payments of principal to Noteholders of such Class on or
prior to such Distribution Date (or, in the case of the first Distribution Date,
on the original principal amount of such Class of Notes).
The "Note Monthly Principal Distributable Amount" will mean, with respect to
any Distribution Date, the Note Percentage of the Principal Distributable Amount
for such Distribution Date.
The "Note Percentage" will mean (i) for each Distribution Date until the
principal amount of the Class A-1 Notes has been paid in full, 100%; (ii) for
each Distribution Date on or after the principal amount of the Class A-1 Notes
has been paid in full to and including the Distribution Date on which the
principal amount of the Class A-4 Notes is reduced to zero, %, provided
that, if the amount on deposit in the Reserve Fund on any such Distribution Date
would be, after giving effect to distribution of the Principal Distributable
Amount on such Distribution Date, less than the Specified Reserve Fund Balance,
100% until either the Notes are paid in full or the amount on deposit in the
Reserve Fund equals or exceeds the Specified Reserve Fund Balance; and (iii) for
each Distribution Date on and after the Distribution Date on which the principal
amount of the Class A-4 Notes is reduced to zero, 0%.
The "Note Principal Carryover Shortfall" will mean, with respect to any
Distribution Date, the excess, if any, of the Note Monthly Principal
Distributable Amount plus any outstanding Note Principal Carryover Shortfall for
the preceding Distribution Date over the amount in respect of principal that is
actually paid as principal on the Notes on such Distribution Date.
The "Note Principal Distributable Amount" will mean, with respect to any
Distribution Date, the sum of (i) the Note Monthly Principal Distributable
Amount, (ii) any outstanding Note Principal Carryover Shortfall as of the close
of the immediately preceding Distribution Date and (iii) on the Final
Distribution
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Date for a Class of Notes, the amount necessary to reduce the outstanding
principal amount of such Class of Notes to zero; provided, however, that the
Note Principal Distributable Amount with respect to a Class of Notes shall not
exceed the outstanding amount of such Class of Notes.
The "Principal Distributable Amount" will mean, with respect to any
Distribution Date and the related Collection Period, the sum of the following
amounts (i) in the case of (a) Precomputed Receivables, the principal portion of
all Scheduled Payments due during such Collection Period, computed in accordance
with the actuarial method, and (b) Simple Interest Receivables, the principal
portion of all Scheduled Payments actually received during such Collection
Period, computed in accordance with the simple interest method, (ii) the
principal portion of all Prepayments, and in the case of Simple Interest
Receivables, partial prepayments, received during such Collection Period (to the
extent such amounts are not included in clause (i) above) and (iii) the
Principal Balance of each Receivable that the Servicer became obligated to
purchase, the Seller became obligated to repurchase or that became a Defaulted
Receivable during such Collection Period (to the extent such amounts are not
included in clauses (i) or (ii) above).
THE RESERVE FUND
GENERAL. The rights of the Noteholders to receive distributions with
respect to the Receivables will be subordinated to the rights of the Servicer
(to the extent that the Servicer has not been reimbursed for any non-recoverable
Advances and has not been paid the Total Servicing Fees), the Trustees and
certain other entities (to the extent the Trustees and such other entities have
not received all other Trust Fees and Expenses payable to them). In addition,
the rights of the Noteholders to receive distributions with respect to the
Receivables will be subject to the priorities set forth under "-- Distributions
on the Securities -- Deposits to the Distribution Accounts; Priority of
Payments", and the rights of the Certificateholders to receive distributions
with respect to the Receivables will be subordinated to the rights of the
Noteholders and the maintenance of amounts on deposit in the Reserve Fund at the
Specified Reserve Fund Balance, in each case to the extent described herein.
The foregoing protection afforded to the Noteholders will be effected both
by the preferential right of the Noteholders to receive, to the extent described
herein, current distributions with respect to the Receivables and by the
establishment of the Reserve Fund. The Reserve Fund will be a segregated account
in the name of the Indenture Trustee. The Reserve Fund will be created with an
initial deposit by the Seller on the Closing Date of an amount equal to the
Reserve Fund Initial Deposit. The Reserve Fund will thereafter be funded by the
deposit therein of all Excess Amounts, if any, in respect of each Distribution
Date to the extent necessary to restore the amount on deposit in the Reserve
Fund to the Specified Reserve Fund Balance.
Amounts held from time to time in the Reserve Fund will continue to be held
for the benefit of holders of the Notes and may be invested in Permitted
Investments. Investment income on such investments (net of losses and expenses)
will be paid to the Seller, upon the direction of the Servicer, to the extent
that funds on deposit therein exceed the Specified Reserve Fund Balance.
The Reserve Fund and the subordination of the Certificates are intended to
enhance the likelihood of receipt by Noteholders of the full amount of principal
and interest due them and to decrease the likelihood that the Noteholders will
experience losses. However, in certain circumstances, the Reserve Fund could be
depleted. If the amount required to be deposited into or required to be
withdrawn from the Reserve Fund to cover shortfalls in collections on the
Receivables exceeds the amount of available cash in the Reserve Fund,
Noteholders could incur losses or a temporary shortfall in the amounts
distributed to the Noteholders could result.
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The "Specified Reserve Fund Balance" with respect to any Distribution Date
will be $ , except that, if on any Distribution Date (i) the average
of the Charge-off Rates for the three preceding Collection Periods exceeds %
or (ii) the average of the Delinquency Percentages for the three preceding
Collection Periods exceeds %, then the Specified Reserve Fund Balance will
be an amount equal to a specified percentage of the Pool Balance as of the last
day of the immediately preceding Collection Period. Such percentage shall be
determined by deducting from % the following fraction, expressed as a
percentage: (a) one minus (b) a fraction, the numerator of which is the
outstanding principal amount of the Notes with respect to such Distribution Date
and the denominator of which is such Pool Balance. Notwithstanding the
foregoing, in no event will the Specified Reserve Fund Balance be more than
$ or more than the then outstanding principal amount of the Notes or
less than $ . As of any Distribution Date, the amount of funds
actually on deposit in the Reserve Fund may, in certain circumstances, be less
than the Specified Reserve Fund Balance.
The "Charge-off Rate" with respect to a Collection Period will equal the
Aggregate Net Losses with respect to the Receivables expressed, on an annualized
basis, as a percentage of the average of (i) the Pool Balance on the last day of
the immediately preceding Collection Period and (ii) the Pool Balance on the
last day of such current Collection Period. "Aggregate Net Losses" with respect
to a Collection Period will equal the Principal Balance of all Receivables newly
designated during such Collection Period as Defaulted Receivables minus Net
Liquidation Proceeds collected during such Collection Period with respect to all
Defaulted Receivables. The "Delinquency Percentage" with respect to a Collection
Period will equal the number of (a) all outstanding Receivables 61 days or more
delinquent (after taking into account permitted extensions) as of the last day
of such Collection Period, determined in accordance with the Servicer's normal
practices, plus (b) the number of Receivables the related Financed Vehicles of
which have been repossessed but have not been liquidated (to the extent the
related Receivable is not otherwise reflected in clause (a) above or is not a
Defaulted Receivable), expressed as a percentage of the aggregate number of
Current Receivables on the last day of such Collection Period. A "Current
Receivable" will be a Receivable that is not a Defaulted Receivable or a
Liquidated Receivable. A "Liquidated Receivable" will be a Receivable that has
been the subject of a Prepayment in full or otherwise has been paid in full or,
in the case of a Defaulted Receivable, a Receivable as to which the Servicer has
determined that the final amounts in respect thereof have been paid.
The Servicer may, from time to time after the date of this Prospectus,
request each Rating Agency to approve a formula for determining the Specified
Reserve Fund Balance or funding the Reserve Fund that is different from that
described above and would result in a decrease in the amount of the Specified
Reserve Fund Balance or the manner by which the Reserve Fund is funded. If each
Rating Agency delivers a letter to the Indenture Trustee and the Owner Trustee
to the effect that the use of any such new formulation will not in and of itself
result in a qualification, reduction or withdrawal of its then-current rating of
any Class of Notes, then the Specified Reserve Fund Balance or the funding of
the Reserve Fund, as the case may be, will be determined in accordance with such
new formula. The Sale and Servicing Agreement will accordingly be amended to
reflect such new calculation without the consent of any Securityholder.
WITHDRAWALS. Amounts held from time to time in the Reserve Fund will be
held for the benefit of the Noteholders. On each Distribution Date, funds will
be withdrawn from the Reserve Fund to the extent that the amount on deposit in
the Note Distribution Account with respect to such Distribution Date is less
than the Note Distributable Amount and will be deposited in the Note
Distribution Account for distribution to the Noteholders.
If the amount on deposit in the Reserve Fund on any Distribution Date (after
giving effect to all deposits thereto and withdrawals therefrom on such
Distribution Date) is greater than the Specified Reserve Fund Balance for such
Distribution Date, subject to certain limitations, the Indenture Trustee will
include the amount of such excess in the amounts to be distributed to
Certificateholders pursuant to clauses (vi) and (vii) in the first paragraph
under "-- Distributions on the Securities -- Deposits to the Distribution
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Accounts; Priority of Payments". Upon any distribution to the Certificateholders
of amounts in excess of the Specified Reserve Fund Balance, the Noteholders will
not have any rights in, or claims to, such amounts. Any excess amounts remaining
thereafter shall be paid to the Seller.
None of the Securityholders, the Indenture Trustee, the Owner Trustee or the
Seller will be required to refund any amounts properly distributed or paid to
them, whether or not there are sufficient funds on any subsequent Distribution
Date to make full distributions to the Securityholders.
STATEMENTS TO SECURITYHOLDERS
On or prior to each Distribution Date, the Servicer will prepare and provide
to the Indenture Trustee and the Owner Trustee a statement to be delivered to
each Noteholder on such Distribution Date (the "Statement to Securityholders"),
setting forth with respect to the related Distribution Date or Collection
Period, as applicable, among other things, the following information:
(i) total Payments Ahead and the Applied Payments Ahead;
(ii) the amount of the Total Servicing Fee paid to the Servicer with
respect to such Collection Period;
(iii) the amount of non-recoverable Advances;
(iv) the amount of Trust Fees and Expenses;
(v) the amount of the Noteholder's or Certificateholder's distribution
allocable to interest (stated separately for each Class of Notes and the
Certificates);
(vi) the amount of the Noteholder's or Certificateholder's distribution
allocable to principal (stated separately for each Class of Notes and the
Certificates);
(vii) the Note Distributable Amount;
(viii) the Certificate Distributable Amount;
(ix) the Available Amount;
(x) the Yield Supplement Withdrawal Amount, if any and the amount on
deposit in the Yield Supplement Account after giving effect to the
distributions made on such Distribution Date;
(xi) the Pool Balance as of the close of business on the last day of
such Collection Period, after giving effect to payments allocated to
principal reported under clause (vi) above;
(xii) the amount of any Note Interest Carryover Shortfall and Note
Principal Carryover Shortfall on such Distribution Date and the change in
such amounts from those with respect to the immediately preceding
Distribution Date;
(xiii) the Note Pool Factor for each Class of Notes and the Certificate
Pool Factor, in each case as of such Distribution Date;
(xiv) the balance on deposit in the Reserve Fund on such Distribution
Date, after giving effect to distributions made on such Distribution Date,
and the change in such balance from the immediately preceding Distribution
Date; and
(xv) the amount available under the Servicer Letter of Credit, if any,
and such amount as a percentage of the Pool Balance as of the last day of
such Collection Period.
Each amount set forth pursuant to subclauses (v), (vi), (xi) and (xiii)
above will be expressed in the aggregate and as a dollar amount per $1,000 of
original principal amount of a Note or the original Certificate Balance of a
Certificate, as the case may be. Copies of such statements may be obtained by
any Noteholder by a request in writing addressed to the Indenture Trustee or by
any Certificateholder by a request in writing
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addressed to the Owner Trustee, in either case addressed to its applicable
Corporate Trust Office. In addition, within the prescribed period of time for
tax reporting purposes after the end of each calendar year during the term of
the Sale and Servicing Agreement, the Indenture Trustee will mail to each person
who at any time during such calendar year shall have been a Noteholder a
statement containing the sum of the amounts described in clauses (v), (vi), (xi)
and (xiii) above for the purposes of such holder's preparation of federal income
tax returns. See "Material Federal Income Tax Consequences".
EVIDENCE AS TO COMPLIANCE
THE SALE AND SERVICING AGREEMENT. The Sale and Servicing Agreement will
provide that a firm of independent public accountants will furnish to the
Indenture Trustee and the Owner Trustee, on or before June 30, beginning June
30, 1999, a statement as to compliance by the Servicer during the preceding
fiscal year (or since the Closing Date in the case of the first such statement)
with certain standards relating to the servicing of the Receivables.
The Sale and Servicing Agreement will also provide for delivery to the
Indenture Trustee and the Owner Trustee, on or before 90 days after the end of
each fiscal year of the Servicer, commencing with the fiscal year ended March
31, 1999, of a certificate signed by an officer of the Servicer stating that the
Servicer has fulfilled its obligations under the Sale and Servicing Agreement
throughout the preceding fiscal year (or since the Closing Date in the case of
the first such certificate) or, if there has been a default in the fulfillment
of any such obligation, describing each such default.
Copies of such statements and certificates may be obtained by any Noteholder
by request in writing addressed to the Indenture Trustee, or by any
Certificateholder by request in writing to the Owner Trustee, in either case
addressed to its applicable Corporate Trust Office.
THE INDENTURE. 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.
The Indenture Trustee will be required to mail each year to all related
Noteholders a brief report relating to, among other things, the following events
which may have occurred within the previous 12 months (but if no such event has
occurred no report need be transmitted), any change to its eligibility and
qualification to continue as Indenture Trustee under the Indenture, any amounts
advanced by it under the Indenture, the amount, interest rate and maturity date
of certain indebtedness owing by the Trust to the Indenture Trustee in its
individual capacity, the property and funds physically held by such Indenture
Trustee as such and any action taken by it that materially affects the Notes and
that has not been previously reported.
CERTAIN MATTERS REGARDING THE SERVICER
The Sale and Servicing Agreement will provide that the Servicer may not
resign from its obligations and duties as Servicer thereunder except upon
determination that the Servicer's performance of such duties is no longer
permissible under applicable law. No such resignation will become effective
until the Indenture Trustee or a successor servicer has assumed the Servicer's
servicing obligations and duties under the Sale and Servicing Agreement.
The Sale and Servicing Agreement will further provide that neither the
Servicer nor any of its directors, officers, employees or agents shall be under
any liability to the Trust or the Securityholders for taking any action or for
refraining from taking any action pursuant to the Sale and Servicing Agreement,
or for errors in judgment; provided, however, that neither the Servicer nor any
such person will be protected against any liability that would otherwise be
imposed by reason of willful misfeasance, bad faith or negligence in the
performance of duties or by reason of reckless disregard of obligations and
duties thereunder. The Servicer will be under no obligation to appear in,
prosecute or defend any legal action that is not incidental to its servicing
responsibilities under the Sale and Servicing Agreement and that, in its
opinion, may cause it to incur any expense or liability. The Servicer may,
however, undertake any reasonable action that it may deem
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necessary or desirable in respect of the Sale and Servicing Agreement and the
rights and duties of the parties thereto and the interests of the
Securityholders. In any event, the legal expenses and costs of such action and
any liability resulting therefrom will be expenses, costs and liabilities of the
Trust, and the Servicer will be entitled to be reimbursed therefor out of funds
on deposit in the Collection Account. Any such indemnification or reimbursement
could reduce the amount otherwise available for distribution to Noteholders.
Any corporation into which the Servicer may be merged or consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Servicer is a party or any corporation succeeding to all or substantially
all of the business of the Servicer will be the successor of the Servicer under
the Sale and Servicing Agreement.
SERVICER DEFAULT
"Servicer Defaults" under the Sale and Servicing Agreement will consist of
(i) any failure by the Servicer to deposit in or credit to any Trust Account any
amount required to be so deposited or credited or to make the required
distributions therefrom, which failure continues unremedied for three Business
Days after discovery thereof by the Servicer or after the giving of written
notice of such failure to (a) the Servicer by the Indenture Trustee or the Owner
Trustee or (b) the Servicer and the Trustees by holders of Notes or
Certificateholders evidencing not less than 25% of the voting interests thereof,
voting together as a single class, (ii) any failure by the Servicer or the
Seller (so long as AHFC is the Servicer) duly to observe or perform in any
material respect any other covenant or agreement in the Sale and Servicing
Agreement, which failure materially and adversely affects the rights of
Securityholders and which continues unremedied for 90 days after the giving of
written notice of such failure (a) to the Servicer or the Seller, as the case
may be, by the Owner Trustee or the Indenture Trustee or (b) to the Servicer or
the Seller, as the case may be, and to the Indenture Trustee or the Owner
Trustee by holders of Notes or Certificateholders evidencing not less than 25%
of the voting interests thereof, voting together as a single class or (iii)
certain events of bankruptcy, insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings and certain actions by the
Servicer (or the Seller, so long as AHFC is the Servicer) indicating its
insolvency, reorganization pursuant to bankruptcy or similar proceedings or
inability to pay its obligations (each, an "Insolvency Event").
RIGHTS UPON SERVICER DEFAULT
As long as a Servicer Default remains unremedied, the Indenture Trustee or
holders of Notes representing not less than 25% of the voting interests thereof,
voting together as a single class (or, if the Notes have been paid in full and
the Indenture has been discharged in accordance with its terms, by holders of
Certificates evidencing not less than 25% of the voting interests thereof), may
terminate all the rights and obligations of the Servicer under the Sale and
Servicing Agreement, whereupon the Indenture Trustee or a successor servicer
appointed by the Indenture Trustee will succeed to all the responsibilities,
duties and liabilities of the Servicer in its capacity as such under the Sale
and Servicing Agreement and will be entitled to similar compensation
arrangements. If, however, a bankruptcy trustee or similar official has been
appointed for the Servicer, and no Servicer Default other than such appointment
has occurred, such trustee or official may have the power to prevent the
Indenture Trustee or the Noteholders (or Certificateholders) from effecting a
transfer of servicing. In the event that the Indenture Trustee is unwilling or
unable so to act, it may appoint or petition a court of competent jurisdiction
to appoint a successor with a net worth of at least $50,000,000 and whose
regular business includes the servicing of motor vehicle receivables. The
Indenture Trustee may make such arrangements for compensation to be paid, which
in no event may be greater than the servicing compensation paid to the Servicer
under the Sale and Servicing Agreement. Notwithstanding such termination, the
Servicer shall be entitled to payment of certain amounts payable to it prior to
such termination, for services rendered prior to such termination.
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WAIVER OF PAST DEFAULTS
The holders of Notes evidencing at least a majority of the voting interests
thereof, voting together as a single class (or the holders of Certificates
evidencing not less than a majority of the voting interests thereof, in the case
of any Servicer Default that does not adversely affect the Indenture Trustee or
the Noteholders), may, on behalf of all Securityholders, waive any default by
the Servicer in the performance of its obligations under the Sale and Servicing
Agreement and its consequences, except a default in making any required deposits
to or payments from any Trust Account in accordance with the Sale and Servicing
Agreement. No such waiver will impair the Securityholders' rights with respect
to subsequent Servicer Defaults.
VOTING INTERESTS
The "voting interests" of the (i) Notes of a Class or Classes will be
allocated among the Noteholders or related Note Owners, as the case may be, in
accordance with the unpaid principal amount of the Notes of such Class or
Classes represented thereby and (ii) Certificates will be allocated among the
Certificateholders or related Certificate Owners, as the case may be, in
accordance with the Certificate Balance represented thereby; provided, that,
where the voting interests are relevant to determine whether the vote of the
requisite percentage of Securityholders necessary to effect a consent, waiver,
request or demand shall have been obtained, any Class of Notes or Certificates,
as the case may be, held by the Seller, the Servicer or any of their respective
affiliates shall be excluded from such determination.
AMENDMENT
THE SALE AND SERVICING AGREEMENT. The Sale and Servicing Agreement may be
amended, without the consent of any Securityholders, to cure any ambiguity,
correct or supplement any provision therein which may be inconsistent with any
other provision therein, to add, change or eliminate any other provisions with
respect to matters or questions arising thereunder which are not inconsistent
with the provisions thereof or to permit certain changes with respect to the
Specified Reserve Fund Balance, the funding of the Reserve Fund, the remittance
schedule with respect to collections to be deposited into the Trust Accounts or
the Servicer Letter of Credit or the acquisition thereof; provided, that any
such action will not, in the opinion of counsel satisfactory to the Trustees,
materially and adversely affect the interests of any such Securityholder, and
provided further, that in the case of a change with respect to the Specified
Reserve Fund Balance or any Servicer Letter of Credit, the Trustee receives a
letter from each Rating Agency to the effect that its then-current rating on
each Class of Notes will not be qualified, reduced or withdrawn due to such
amendment.
The Sale and Servicing Agreement may also be amended from time to time with
the consent of the holders of Notes evidencing at least a majority of the voting
interests thereof, voting together as a single class, and the holders of
Certificates evidencing at least a majority of the voting interests thereof, for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of such agreement or of modifying in any manner the rights
of the related Securityholders of each Class; provided, that no such amendment
may (i) except as described above, increase or reduce in any manner the amount
of or accelerate or delay the timing of collections of payments on or in respect
of the Receivables, required distributions on the Notes or the Certificates or
(ii) reduce the aforesaid percentage of the voting interests of which the
holders of any Class of Securities are required to consent to any such
amendment, without the consent of the holders of all of the relevant Class of
Securities.
THE TRUST AGREEMENT. The Trust Agreement may be amended, without the
consent of the Securityholders, to cure any ambiguity, to correct or supplement
any provision therein which may be inconsistent with any other provision
therein, to add any other provisions with respect to matters or questions
arising thereunder which are not inconsistent with the provisions thereof;
provided, that any such action will not, in the opinion of counsel satisfactory
to the related Trustee, materially and adversely affect the interests of any
Securityholder.
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The Trust Agreement may also be amended from time to time with the consent
of the holders of Notes evidencing at least a majority of the voting interests
thereof, voting together as a single class, and the holders of Certificates
evidencing at least a majority of the voting interests thereof, for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of such agreement or of modifying in any manner the rights of the
Noteholders or the Certificateholders; provided, that no such amendment may (i)
increase or reduce in any manner the amount of or accelerate or delay the timing
of collections of payments on or in respect of the Receivables or required
distributions on the Notes or the Certificates or any Interest Rate or the
Certificate Rate or (ii) reduce the aforesaid percentage of the voting interests
of which the holders of any Class of Securities are required to consent to any
such amendment, without the consent of the holders of all of the relevant Class
of Securities.
THE INDENTURE. The Trust and the Indenture Trustee (on behalf of the Trust)
may, without the consent of the Noteholders, enter into one or more supplemental
indentures for any of the following purposes: (i) to correct or amplify the
description of the property subject to the lien of the Indenture or to subject
additional property to the lien of the Indenture; (ii) to provide for the
assumption of the Notes and the Indenture obligations by a permitted successor
to the Trust; (iii) to add additional covenants for the benefit of the related
Noteholders or to surrender any rights or powers conferred upon the Trust; (iv)
to convey, transfer, assign, mortgage or pledge any property to the Indenture
Trustee; (v) to cure any ambiguity or correct or supplement any provision in the
Indenture or in any supplemental indenture which may be inconsistent with any
other provision in the Indenture, any supplemental indenture, the Sale and
Servicing Agreement or certain other agreements; provided, that any such action
shall not adversely affect the interests of any Noteholder; (vi) to provide for
the acceptance of the appointment of a successor Indenture Trustee or to add to
or change any of the provisions of the Indenture as shall be necessary and
permitted to facilitate the administration by more than one trustee; (vii) to
modify, eliminate or add to the provisions of the Indenture in order to comply
with the Trust Indenture Act of 1939, as amended; and (viii) 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;
provided that any such action specified in clause (viii) shall not, as evidenced
by any opinion of counsel, adversely affect in any material respect the
interests of any Noteholder unless such Noteholder's consent is otherwise
obtained as described below.
Without the consent of the holder of each outstanding Note affected thereby,
no supplemental indenture may: (i) change the due date of any installment of
principal of or interest on any Note or reduce the principal amount thereof, the
Interest Rate thereon or the redemption price with respect thereto or change any
place of payment where or the coin or currency in which any such Note or any
interest thereon is payable or impair the right to institute suit for the
enforcement of provisions of the Indenture regarding payment; (ii) reduce the
percentage of the voting interests of the Notes, the consent of the holders of
which is required for any such supplemental indenture or the consent of the
holders of which is required for any waiver of compliance with certain
provisions of the Indenture or of certain defaults thereunder and their
consequences as provided for in the Indenture; (iii) modify or alter the
provisions of the Indenture regarding the voting of Notes held by the Trust, any
other obligor on such Notes, the Seller or any of their respective affiliates;
(iv) reduce the percentage of the voting interests of the Notes, the consent of
the holders of which is required to direct the Indenture Trustee to sell or
liquidate the property of the Trust if the proceeds of such sale or liquidation
would be insufficient to pay the principal amount and accrued but unpaid
interest on the outstanding Notes; (v) modify the provisions of the Indenture
except to increase any percentage specified therein or to provide certain
additional provisions in the Indenture or the other related documents cannot be
modified or waived without the consent of all Noteholders affected thereby; (vi)
modify the provisions of the Indenture to affect the calculation of the amount
of any payment of interest or principal due on any Note on any Distribution Date
or to affect the rights of Noteholders to the benefits of any mandatory
redemption of the Notes contained in the Indenture; or (vii) permit the creation
of any lien ranking prior to or on a parity with the lien of the Indenture with
respect to any of the collateral for the Notes or, except as otherwise permitted
or contemplated in the Indenture, terminate the lien of the Indenture on any
such collateral or deprive the holder of any such Note of the security afforded
by the lien of the Indenture.
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ACCESS TO NOTEHOLDER LISTS
Three or more holders of Notes may, by written request to the Indenture
Trustee, obtain access to the list of all Noteholders maintained by such
Indenture Trustee for the purpose of communicating with the other Noteholders
with respect to their rights under the Indenture or under the Notes. The
Indenture Trustee may elect not to afford the requesting Noteholders access to
the list of Noteholders if it agrees to mail the desired communication or proxy,
on behalf of and at the expense of the requesting Noteholders, to all
Noteholders.
Neither the Trust Agreement nor the Indenture will provide for the holding
of any annual or other meetings of Securityholders.
INSOLVENCY EVENT
The Trust Agreement will provide that the Owner Trustee will not have the
power to commence a voluntary proceeding in bankruptcy with respect to the Trust
without the unanimous prior approval of all Certificateholders (including the
Seller) and the delivery to the Trustee by each such Certificateholder of a
certificate certifying that such Certificateholder reasonably believes that the
Trust is insolvent.
The Trust Agreement will provide that the Owner Trustee, each
Certificateholder, the Indenture Trustee and each Noteholder, shall agree that
they will not at any time institute, or join in any institution against, the
Trust or the Seller, any bankruptcy proceedings relating to the Certificates,
the Notes, the Trust Agreement, the Indenture or certain other agreements.
PAYMENT IN FULL OF NOTES
Upon the payment in full of all outstanding Notes and the satisfaction and
discharge of the Indenture, the Owner Trustee will succeed to all the rights of
the Indenture Trustee, and the Certificateholders will succeed to all the rights
of the Noteholders, under the Sale and Servicing Agreement, except as otherwise
provided therein.
TERMINATION
The obligations of the Servicer, the Seller, the Owner Trustee and the
Indenture Trustee with respect to the related Securityholders pursuant to the
Trust Agreement, Sale and Servicing Agreement or Indenture will terminate upon
the earliest to occur of (i) the payment to such Securityholders of all amounts
required to be paid to them pursuant to such agreement and (ii) the occurrence
of the event described below.
In order to avoid excessive administrative expenses, the Seller, the
Servicer, or any successor to the Servicer will be permitted to purchase the
remaining Receivables from the Trust on any Distribution Date following a
Collection Period as of which the Pool Balance is less than 10% of the Cutoff
Date Pool Balance at a price equal to the aggregate Administrative Purchase
Payments for the Receivables (including Defaulted Receivables), plus the
appraised value of any such other property held by the Issuer other than the
Trust Accounts. Notwithstanding the foregoing, no purchase will be permitted
unless the price to be paid is greater than or equal to the sum of the
outstanding principal balance of the Notes and all accrued interest thereon
together with the unpaid principal amount of the Certificates and all accrued
but unpaid interest thereon. In the event that both the Seller and the Servicer,
or any successor to the Servicer, elect to purchase the Receivables as described
above, the party first notifying the Indenture Trustee (based on the Indenture
Trustee's receipt of such notice) shall be permitted to purchase the
Receivables. The related Trustee will give written notice of termination to each
Securityholder of record.
The Owner Trustee and Indenture Trustee will give written notice of
termination to each Securityholder of record. The final distribution to each
Securityholder will be made only upon surrender and cancellation of
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such holder's Securities at the office or agency of the related Trustee
specified in the notice of termination. Any funds remaining in the Trust, after
such Trustee has taken certain measures to locate a Securityholder and such
measures have failed, will be distributed by the Owner Trustee to the Issuer.
Any outstanding Notes will be redeemed concurrently with any Optional
Termination described above, and the subsequent distribution to the related
Certificateholders of all amounts required to be distributed to them pursuant to
the Trust Agreement will effect early retirement of the Certificates.
THE TRUSTEES
A Trustee may resign at any time, in which event the Administrator, or its
successor, will be obligated to appoint a successor trustee. The Administrator
may also remove the Owner Trustee or the Indenture Trustee, in each case if such
Trustee becomes insolvent or ceases to be eligible to continue as such under the
Trust Agreement or Indenture, as the case may be. In such event, the
Administrator will be obligated to appoint a successor Trustee. Any resignation
or removal of a Trustee and appointment of a successor Trustee will not become
effective until acceptance of the appointment by the successor Trustee.
Each Trustee and any of its affiliates may hold Securities in their own
names or as pledgees. For the purpose of meeting the legal requirements of
certain jurisdictions, the Administrator and the Owner Trustee or Indenture
Trustee acting jointly (or in some instances, the Owner Trustee and Indenture
Trustee acting without the Administrator) will have the power to appoint
co-trustees or separate trustees of all or any part of the Trust. In the event
of such an appointment, all rights, powers, duties and obligations conferred or
imposed upon the related Trustee by the Indenture, Sale and Servicing Agreement
or Trust Agreement will be conferred or imposed upon such Trustee and such
separate trustee or co-trustee jointly, or, in any jurisdiction in which such
Trustee will be incompetent or unqualified to perform certain acts, singly upon
such separate trustee or cotrustee who will exercise and perform such rights,
powers, duties and obligations solely at the direction of such Trustee.
The Trust Agreement will provide that the Seller will pay the fees of the
Owner Trustee and the Indenture will provide that the Trust will, or will cause
the Administrator to, pay the fees of the Indenture Trustee. The Trust Agreement
will further provide that the Owner Trustee will be held harmless against, any
loss, liability or expense incurred by such Trustee not resulting from its own
willful misconduct, bad faith or negligence (other than by reason of a breach of
any of its representations or warranties set forth in such agreement). The
Indenture will further provide that the Indenture Trustee will be entitled to
indemnification by the Trust or the Administrator for any loss, liability or
expense incurred by such Trustee not resulting from its own willful misconduct,
negligence or bad faith.
DUTIES OF THE TRUSTEES
Neither Trustee will make any representations as to the validity or
sufficiency of the Trust Agreement or the Indenture, the Securities issued
pursuant thereto (other than the execution and authentication thereof), or of
any Receivables or related documents, and will not be accountable for the use or
application by the Seller or the Servicer of any funds paid to the Seller or the
Servicer in respect of such Securities or the related Receivables, or the
investment of any monies by the Servicer before such monies are deposited into
the Collection Account. The Trustees will not independently verify the existence
or characteristics of the Receivables. If no Event of Default or Servicer
Default has occurred and is continuing, each Trustee will be required to perform
only those duties specifically required of it under the Indenture, Trust
Agreement or the Sale and Servicing Agreement, as the case may be. Generally
those duties will be limited to the receipt of the various certificates and
reports or other instruments required to be furnished to such Trustee under such
agreements, in which case it will only be required to examine them to determine
whether they conform to the requirements of such agreements. No Trustee will be
charged with knowledge of a failure by the Servicer to perform its duties under
the relevant agreements which failure constitutes an Event of Default or a
Servicer Default unless such Trustee obtains actual knowledge of such failure as
specified in such agreements.
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No Trustee will be under any obligation to exercise any of the rights or
powers vested in it by the Trust Agreement or Indenture, as the case may be, or
to make any investigation of matters arising thereunder or to institute, conduct
or defend any litigation thereunder or in relation thereto at the request order
or direction of any of the Securityholders, unless such Securityholders have
offered to such Trustee reasonable security or indemnity against the costs,
expenses and liabilities that may be incurred therein or thereby.
No Noteholder will have any right under the Indenture to institute any
proceeding with respect thereto, unless such holder previously has given to the
Indenture Trustee written notice of default and the holders of Notes evidencing
not less than 25% of the voting interests of all Notes, voting together as a
single class, have made written request upon the Indenture Trustee to institute
such proceeding in its own name as Indenture Trustee thereunder and have offered
to the Indenture Trustee reasonable indemnity and the Indenture Trustee for 60
days has neglected or refused to institute any such proceedings.
ADMINISTRATION AGREEMENT
AHFC, in its capacity as administrator (the "Administrator"), will enter
into an agreement (the "Administration Agreement") with the Trust, the Seller
and the Indenture Trustee pursuant to which the Administrator will agree, to the
extent provided in the Administration Agreement, to provide the notices and to
perform other administrative obligations required to be provided or performed by
the Trust or the Owner Trustee under 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 payable by the
Seller.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
GENERAL
The transfer of the Receivables to the Owner Trustee, the perfection of the
security interests in the Receivables and the enforcement of rights to realize
on the Financed Vehicles as collateral for the Receivables are subject to a
number of federal and state laws, including the UCC as in effect in various
states. The Servicer and the Seller will take such action as is required to
perfect the rights of the Owner Trustee in the Receivables. If, through
inadvertence or otherwise, another party purchases (including the taking of a
security interest in) the Receivables for new value in the ordinary course of
its business, without actual knowledge of the Trust's interest, and takes
possession of the Receivables, such purchaser would acquire an interest in the
Receivables superior to the interest of the Trust.
SECURITY INTERESTS IN THE FINANCED VEHICLES
GENERAL. Retail installment sale contracts such as the Receivables evidence
the credit sale of motor vehicles by dealers to obligors; the contracts also
constitute personal property security agreements and include grants of security
interests in the related vehicles under the UCC. Perfection of security
interests in motor vehicles is generally governed by state certificate of title
statutes or by the motor vehicle registration laws of the state in which each
vehicle is located. In most states (including California, the state in which the
largest number of Financed Vehicles is located), a security interest in a motor
vehicle is perfected by notation of the secured party's lien on the vehicle's
certificate of title.
All retail installment sale contracts that AHFC acquires from Dealers name
AHFC as obligee or assignee and as the secured party. AHFC also takes all
actions necessary under the laws of the state in which the related vehicles are
located to perfect its security interest in such vehicles, including, where
applicable, having a notation of its lien recorded on the related certificate of
title and obtaining possession of the certificate of title.
PERFECTION. Pursuant to the Receivables Purchase Agreement, AHFC will sell
and assign its security interests in the Financed Vehicles to the Seller and,
pursuant to the Sale and Servicing Agreement, the Seller
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will sell and assign its security interests in the Financed Vehicles to the
Trust. However, because of the administrative burden and expense, neither AHFC,
the Seller nor either Trustee will amend any certificate of title to identify
the Trust as the new secured party on the certificates of title relating to the
Financed Vehicles. In the absence of such an amendment and vehicle
reregistration, the Trust may not have a perfected security interest in the
Financed Vehicles in all states. However, UCC financing statements with respect
to the transfer to the Seller of AHFC's security interest in the Financed
Vehicles and the transfer to the Trust of the Seller's security interest in the
Financed Vehicles will be filed. In addition, the Servicer will continue to hold
any certificates of title relating to the Financed Vehicles in its possession as
custodian for the Owner Trustee pursuant to the Sale and Servicing Agreement.
See "Risk Factors -- Perfection of Security Interests in the Financed Vehicles"
and "Certain Information Regarding the Securities -- Sale and Assignment of the
Receivables".
In most states, assignments such as those under the Receivables Purchase
Agreement and the Sale and Servicing Agreement are an effective conveyance of a
security interest without amendment of any lien noted on a vehicle's certificate
of title, and the assignee succeeds thereby to the assignor's rights as secured
party. In such states, although re-registration of the vehicle is not necessary
to convey a perfected security interest in the Financed Vehicles to the Trust,
because the Trust will not be listed as legal owner on the certificates of title
to the Financed Vehicles, its security interest could be defeated through fraud
or negligence. Moreover, in certain other states, in the absence of such
amendment and reregistration, a perfected security interest in the Financed
Vehicles may not have been effectively conveyed to the Trust. Except in such
event, however, in the absence of fraud, forgery or administrative error, the
notation of AHFC's lien on the certificates of title will be sufficient to
protect the Trust against the rights of subsequent purchasers of a Financed
Vehicle or subsequent creditors who take a security interest in a Financed
Vehicle. In the Receivables Purchase Agreement, AHFC will represent and warrant,
and in the Sale and Servicing Agreement, the Seller will represent and warrant,
that all action necessary for AHFC to obtain a perfected security interest in
each Financed Vehicle has been taken. If there are any Financed Vehicles as to
which AHFC failed to obtain a first perfected security interest, its security
interest would be subordinate to, among others, subsequent purchasers of such
Financed Vehicles and holders of perfected security interests therein. Such a
failure, however, would constitute a breach of AHFC's representations and
warranties under the Receivables Purchase Agreement and the Seller's
representations and warranties under the Sale and Servicing Agreement.
Accordingly, pursuant to the Sale and Servicing Agreement, the Seller would be
required to repurchase the related Receivable from the Trust and, pursuant to
the Receivables Purchase Agreement, AHFC would be required to purchase such
Receivable from the Seller, in each case unless the breach were cured. See
"Certain Information Regarding the Securities -- Sale and Assignment of the
Receivables". The Seller will assign its rights under the Receivables Purchase
Agreement to the Trust.
CONTINUITY OF PERFECTION. Under the laws of most states, a perfected
security interest in a vehicle continues for four months after the vehicle is
moved to a new state from the one in which it is initially registered and
thereafter until the owner re-registers such vehicle in the new state. A
majority of states require surrender of the related certificate of title to
re-register a vehicle. In those states (such as California) that require a
secured party to hold possession of the certificate of title to maintain
perfection of the security interest, the secured party would learn of the
re-registration through the request from the obligor under the related
installment sale contract to surrender possession of the certificate of title.
In the case of vehicles registered in states providing for the notation of a
lien on the certificate of title but not possession by the secured party, the
secured party would receive notice of surrender from the state of
re-registration if the security interest is noted on the certificate of title.
Thus, the secured party would have the opportunity to re-perfect its security
interest in the vehicles in the state of relocation. However, these procedural
safeguards will not protect the secured party if through fraud, forgery or
administrative error, the debtor somehow procures a new certificate of title
that does not list the secured party's lien. Additionally, in states that do not
require a certificate of title for registration of a vehicle, re-registration
could defeat perfection. In the ordinary course of servicing the Receivables,
AHFC will take steps to effect re-perfection upon receipt of notice of
re-registration or information from the Obligor as to relocation. Similarly,
when an Obligor sells a
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Financed Vehicle, AHFC must surrender possession of the certificate of title or
will receive notice as a result of its lien noted thereon and accordingly will
have an opportunity to require satisfaction of the related Receivable before
release of the lien. Under the Sale and Servicing Agreement, the Servicer will
be obligated to take appropriate steps, at its own expense, to maintain
perfection of security interests in the Financed Vehicles.
PRIORITY OF CERTAIN LIENS ARISING BY OPERATION OF LAW. Under the laws of
most states (including California, the state in which the largest number of
Receivables were originated), liens for repairs performed on a motor vehicle and
liens for unpaid taxes take priority over even a first perfected security
interest in such vehicle. The Internal Revenue Code of 1986, as amended, also
grants priority to certain federal tax liens over the lien of a secured party.
The laws of certain states and federal law permit the confiscation of motor
vehicles by governmental authorities under certain circumstances if used in
unlawful activities, which may result in the loss of a secured party's perfected
security interest in a confiscated vehicle. AHFC will represent and warrant in
the Receivables Purchase Agreement and the Seller will represent and warrant in
the Sale and Servicing Agreement that, as of the Closing Date, the security
interest in each Financed Vehicle is prior to all other present liens upon and
security interests in such Financed Vehicle. However, liens for repairs or taxes
could arise at any time during the term of a Receivable. No notice will be given
to the Trustees or Securityholders in the event such a lien or confiscation
arises and any such lien or confiscation arising after the Closing Date would
not give rise to the Seller's repurchase obligation under the Sale and Servicing
Agreement or AHFC's repurchase obligation under the Receivables Purchase
Agreement.
REPOSSESSION
In the event of default by an obligor, the holder of the related installment
sale contract has all the remedies of a secured party under the UCC, except
where specifically limited by other state laws. The UCC remedies of a secured
party include the right to repossession by self-help means, unless such means
would constitute a breach of the peace. Unless a vehicle is voluntarily
surrendered, self-help repossession is the method employed by AHFC in most cases
and is accomplished simply by taking possession of the related vehicle. In cases
where the obligor objects or raises a defense to repossession, or if otherwise
required by applicable state law, a court order must be obtained from the
appropriate state court, and the vehicle must then be recovered in accordance
with that order. In some jurisdictions, the secured party is required to notify
the debtor of the default and the intent to repossess the collateral and be
given a time period within which to cure the default prior to repossession. In
most states, under certain circumstances after the vehicle has been repossessed,
the obligor may reinstate the related contract by paying the delinquent
installments and other amounts due.
NOTICE OF SALE; REDEMPTION RIGHTS
In the event of default by the obligor, some jurisdictions require that the
obligor be notified of the default and be given a time period within which to
cure the default prior to repossession. Generally, this right of cure may only
be exercised on a limited number of occasions during the term of the related
contract.
The UCC and other state laws require the secured party to provide the
obligor with reasonable notice of the date, time and place of any public sale
and/or the date after which any private sale of the collateral may be held. The
obligor has the right to redeem the collateral prior to actual sale by paying
the secured party the unpaid principal balance of the obligation, accrued
interest thereon plus reasonable expenses for repossessing, holding and
preparing the collateral for disposition and arranging for its sale, plus, in
some jurisdictions, reasonable attorneys' fees or in some states, by payment of
delinquent installments or the unpaid balance.
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DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS
The proceeds of resale of the repossessed vehicles generally will be applied
first to the expenses of resale and repossession and then to the satisfaction of
the indebtedness. While some states impose prohibitions or limitations on
deficiency judgments if the net proceeds from resale do not cover the full
amount of the indebtedness, a deficiency judgment can be sought in those states
that do not prohibit or limit such judgments. In addition to the notice
requirement, the UCC requires that every aspect of the sale or other
disposition, including the method, manner, time, place and terms, be
"commercially reasonable". Generally, courts have held that when a sale is not
"commercially reasonable", the secured party loses its right to a deficiency
judgment. In addition, the UCC permits the debtor or other interested party to
recover for any loss caused by noncompliance with the provisions of the UCC.
Also, prior to a sale, the UCC permits the debtor or other interested person to
prohibit the secured party from disposing of the collateral if it is established
that the secured party is not proceeding in accordance with the "default"
provisions under the UCC. However, the deficiency judgment would be a personal
judgment against the obligor for the shortfall, and a defaulting obligor can be
expected to have very little capital or sources of income available following
repossession. Therefore, in many cases, it may not be useful to seek a
deficiency judgment or, if one is obtained, it may be settled at a significant
discount or be uncollectible.
Occasionally, after resale of a repossessed vehicle and payment of all
expenses and indebtedness, there is a surplus of funds. In that case, the UCC
requires the creditor to remit the surplus to any holder of a subordinate lien
with respect to such vehicle or if no such lienholder exists, the UCC requires
the creditor to remit the surplus to the obligor.
CERTAIN BANKRUPTCY CONSIDERATIONS
The Seller has taken steps in structuring the transactions contemplated
hereby that are intended to make it unlikely that the voluntary or involuntary
application for relief by AHFC under the United States Bankruptcy Code or
similar applicable state laws (collectively, "Insolvency Laws") will result in
consolidation of the assets and liabilities of the Seller with those of AHFC.
These steps include the maintenance of the Seller as a wholly owned, limited
purpose subsidiary pursuant to articles of incorporation containing certain
limitations (including requiring that the Seller must have at least two
"Independent Directors" and restrictions on the nature of the Seller's business
and on its ability to commence a voluntary case or proceeding under any
Insolvency Law without the affirmative vote of a majority of its directors,
including each Independent Director). In addition, to the extent that the Seller
granted a security interest in the Receivables to the Trust, and that interest
was validly perfected before the bankruptcy or insolvency of AHFC and was not
taken or granted in contemplation of insolvency or with the intent to hinder,
delay or defraud AHFC or its creditors, that security interest should not be
subject to avoidance, and payments to the Trust with respect to the Receivables
should not be subject to recovery by a creditor or trustee in bankruptcy of
AHFC. If, notwithstanding the foregoing, (i) a court concluded that the assets
and liabilities of the Seller should be consolidated with those of AHFC in the
event of the application of applicable Insolvency Laws to AHFC or following the
bankruptcy or insolvency of AHFC the security interest in the Receivables
granted by the Seller to the Owner Trustee should be avoided, (ii) a filing were
made under any Insolvency Law by or against the Seller or (iii) an attempt were
made to litigate any of the foregoing issues, delays in payments on the
Securities and possible reductions in the amount of such payments could occur.
On the Closing Date, counsel to the Seller will render an opinion which
concludes that following the bankruptcy of AHFC, a court, applying the
principles set forth in such opinion, should not allow a creditor or trustee in
bankruptcy to consolidate the assets and liabilities of AHFC and the Seller on
the basis of any applicable legal theory theretofore recognized by a court of
competent jurisdiction so as to adversely affect the ultimate payment of all
amounts owing under the Securities.
AHFC will warrant in the Receivables Purchase Agreement that the sale of the
Receivables by it to the Seller is a valid sale. Notwithstanding the foregoing,
if AHFC were to become a debtor in a bankruptcy case and a creditor or
trustee-in-bankruptcy of such debtor or such debtor itself were to take the
position that the
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sale of Receivables to the Seller should instead be treated as a pledge of such
Receivables to secure a borrowing of such debtor, then delays in payments of
collections of Receivables to the Seller could occur or (should the court rule
in favor of any such trustee, debtor or creditor) reductions in the amount of
such payments could result. If the transfer of Receivables to the Seller is
treated as a pledge instead of a sale, a tax or government lien on the property
of AHFC arising before the transfer of a Receivable to the Seller may have
priority over the Seller's interest in such Receivable. If the transactions
contemplated herein are treated as a sale, the Receivables would not be part of
AHFC's bankruptcy estate and would not be available to AHFC's creditors, except
under certain limited circumstances. In addition, while AHFC is the Servicer,
collections on the Receivables may, under certain circumstances, be commingled
with the funds of AHFC and, in the event of the bankruptcy of AHFC, the Trust
may not have a perfected interest in such collections.
A case (OCTAGON GAS SYSTEMS, INC. V. RIMMER, 995 F.2d 948 (10th Cir.), CERT.
DENIED 114 S.Ct. 554 (1993)) decided by the United States Court of Appeals for
the Tenth Circuit contains language to the effect that under the UCC, accounts
sold by a debtor would remain property of the debtor's bankruptcy estate,
whether or not the sale of accounts was perfected under the UCC. UCC Article 9
applies to the sale of chattel paper as well as the sale of accounts and
although the receivables constitute chattel paper under the UCC rather than
accounts, perfection of a security interest in both chattel papers and accounts
may be accomplished by the filing of a UCC-1 financing statement. If, following
a bankruptcy of AHFC, a court were to follow the reasoning of the Tenth Circuit
reflected in the case described above, then the Receivables would be included in
the bankruptcy estate of AHFC and delays in payments of collections on or in
respect of the Receivables could occur. Counsel to AHFC has advised AHFC that
the reasoning in the Tenth Circuit case appears to be inconsistent with other
precedent. In addition, the Permanent Editorial Board of the UCC has issued an
official commentary (PEB Commentary No. 14) which characterizes the Tenth
Circuit Court's interpretation of Article 9 of the UCC as erroneous. Such
commentary states that nothing in Article 9 is intended to prevent the transfer
of ownership of accounts or chattel paper.
CONSUMER PROTECTION LAWS
Numerous federal and state consumer protection laws and related regulations
impose substantial requirements upon creditors and servicers involved in
consumer finance. These laws include the Truth-in-Lending Act, the Equal Credit
Opportunity Act, the Federal Trade Commission Act, the Fair Credit Billing Act,
the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the
Magnuson-Moss Warranty Act, the Federal Reserve Board's Regulations B and Z, the
Soldiers' and Sailors' Civil Relief Act of 1940, the Military Reservist Relief
Act, state adaptations of the National Consumer Act and of the Uniform Consumer
Credit Code and state motor vehicle retail installment sale acts, retail
installment sales acts and other similar laws. Also, the laws of certain states
impose finance charge ceilings and other restrictions on consumer transactions
and require contract disclosures in addition to those required under federal
law. These requirements impose specific statutory liabilities upon creditors who
fail to comply with their provisions. In some cases, this liability could affect
the ability of an assignee such as the Indenture Trustee to enforce consumer
finance contracts such as the Receivables.
The so-called "Holder-in-Due-Course Rule" of the Federal Trade Commission
(the "FTC Rule"), has the effect of subjecting a seller (and certain related
lenders and their assignees) in a consumer credit transaction to all claims and
defenses which the obligor in the transaction could assert against the seller of
the goods. Liability under the FTC Rule is limited to the amounts paid by the
obligor under the contract, and the holder of the contract may also be unable to
collect any balance remaining due thereunder from the obligor. The FTC Rule is
generally duplicated by the Uniform Consumer Credit Code, other state statutes
or the common law in certain states.
Most of the Receivables will be subject to the requirements of the FTC Rule.
Accordingly, the Trust, as holder of the Receivables, will be subject to any
claims or defenses that the purchaser of a Financed Vehicle may assert against
the seller of the Financed Vehicle. Such claims are limited to a maximum
liability equal to the amounts paid by the obligor on the Receivable.
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If an Obligor were successful in asserting any such claim or defense as
described in the two immediately preceding paragraphs, such claim or defense
would constitute a breach of a representation and warranty under the Receivables
Purchase Agreement and the Sale and Servicing Agreement and would create an
obligation of AHFC and the Seller to repurchase such Receivable unless the
breach were cured, See "Certain Information Regarding the Securities -- Sale and
Assignment of the Receivables".
Courts have applied general equitable principles to secured parties pursuing
repossession or litigation involving deficiency balances. These equitable
principles may have the effect of relieving an Obligor from some or all of the
legal consequences of a default.
In several cases, consumers have asserted that the self-help remedies of
secured parties under the UCC and related laws violate the due process
protection of the Fourteenth Amendment to the Constitution of the United States.
Courts have generally either upheld the notice provisions of the UCC and related
laws as reasonable or have found that the creditor's repossession and resale do
not involve sufficient state action to afford constitutional protection to
consumers.
From time to time, AHFC has been involved in litigation under consumer
protection laws. In addition, substantially all of the Receivables originated in
California (the "California Receivables") after 1990, having an aggregate
Principal Balance as of the Cutoff Date of approximately $ million, provide
that the Receivable may be rescinded by the related Dealer if such Dealer is
unable to assign the Receivable to a lender within ten days of the date of such
Receivable. As of the date of this Prospectus, the ten day rescission period had
run in respect of all of the California Receivables in which the rescission
provision appears. Although there is authority, which is not binding upon any
court, providing that a conditional sale contract containing such a provision
does not comply with California law and would render the Receivable
unenforceable, to the knowledge of AHFC and the Seller, the issue has not been
presented before any California court. On the Closing Date, the Seller will
receive an opinion of counsel to the effect that all of the California
Receivables are enforceable under California law and applicable federal laws.
AHFC and the Seller will represent and warrant under the Receivables
Purchase Agreement and the Sale and Servicing Agreement, respectively, that each
Receivable complies with all requirements of law in all material respects.
Accordingly, if an Obligor has a claim against the Trust for violation of any
law or claims that the related Receivable is unenforceable and such claim
materially and adversely affects the Owner Trustee's interest in a Receivable,
such violation would constitute a breach of such representation and warranty
under the Receivables Purchase Agreement and the Sale and Servicing Agreement
and will create an obligation of AHFC and the Seller to repurchase such
Receivable unless the breach were cured. The foregoing repurchase obligations
would similarly apply in the event that a court found a California Receivable
containing a rescission provision described above to be unenforceable. See
"Certain Information Regarding the Securities -- Sale and Assignment of the
Receivables".
OTHER LIMITATIONS
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including federal bankruptcy laws and
related state laws, may interfere with or affect the ability of a creditor to
realize upon collateral or enforce a deficiency judgment. For example, in a
Chapter 13 proceeding under the federal bankruptcy law, a court may prevent a
creditor from repossessing a motor vehicle, and, as part of the rehabilitation
plan, reduce the amount of the secured indebtedness to the market value of the
motor vehicle at the time of bankruptcy (as determined by the court), leaving
the party providing financing as a general unsecured creditor for the remainder
of the indebtedness. A bankruptcy court may also reduce the monthly payments due
under the related contract or change the rate of interest and time of repayment
of the indebtedness.
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MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of all material federal income tax
consequences of the purchase, ownership and disposition of the Notes. This
summary is based upon laws, regulations, rulings and decisions currently in
effect, all of which are subject to change. The discussion does not deal with
all federal tax consequences applicable to all categories of investors, some of
which may be subject to special rules. In addition, this summary is generally
limited to investors who will hold the Notes as "capital assets" (generally,
property held for investment) within the meaning of Section 1221 of the Internal
Revenue Code of 1986, as amended (the "Code").
Prospective investors should note that no rulings have been or will be
sought from the Internal Revenue Service (the "IRS") with respect to any of the
federal income tax consequences discussed below, and no assurance can be given
that the IRS will not take contrary positions. Moreover, there are no cases or
IRS rulings on transactions similar to those described herein with respect to
the Trust, involving both debt and equity interests issued by a trust with terms
similar to those of the Notes and the Certificates. Prospective investors are
urged to consult their own tax advisors in determining the federal, state,
local, foreign and any other tax consequences to them of the purchase, ownership
and disposition of the Notes.
TAX CHARACTERIZATION OF TRUST
In the opinion of Brown & Wood LLP, counsel to the Seller, the Trust will
not be an association (or a publicly traded partnership) taxable as a
corporation for federal income tax purposes. This opinion will be based on the
assumption that the terms of the Trust Agreement and related documents will be
complied with, and on such counsel's conclusions that the nature of the income
of the Trust will exempt it from the rule that certain publicly traded
partnerships are taxable as corporations.
If the Trust were taxable as a corporation for federal income tax purposes,
it would be subject to corporate income tax on its taxable income. The Trust's
taxable income would include all its income on the related Receivables, which
may be reduced by its interest expense on the Notes. Any such corporate income
tax could materially reduce cash available to make payments on the Notes and
distributions on the Certificates, and Certificateholders could be liable for
any such tax that is unpaid by the Trust.
TREATMENT OF THE NOTES AS INDEBTEDNESS
The Seller will agree, and the Noteholders will agree by their purchase of
Notes, to treat the Notes as debt for federal income tax purposes. Brown & Wood
LLP, counsel to the Seller, will render an opinion that the Notes will be
classified as debt for federal income tax purposes. The discussion below assumes
this characterization of the Notes is correct.
OID
The discussion below assumes that all payments on the Notes are denominated
in U.S. dollars. Moreover, the discussion assumes that the interest formula for
the Notes meets the requirements for "qualified stated interest" under Treasury
regulations relating to original issue discount ("OID"), and that any OID on the
Notes (I.E., any excess of the principal amount of the Notes over their issue
price) does not exceed a DE MINIMIS amount (I.E., 1/4% of their principal amount
multiplied by the number of full years included in their term), all within the
meaning of such OID regulations.
INTEREST INCOME ON THE NOTES
Based on the above assumptions, except as discussed in the following
paragraph, the Notes will not be considered issued with OID. The stated interest
thereon will be taxable to a Noteholder as ordinary interest income when
received or accrued in accordance with such Noteholder's method of tax
accounting. Under the OID regulations, a holder of a Note issued with a DE
MINIMIS amount of OID must include such OID in
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income, on a pro rata basis, as principal payments are made on the Note. A
purchaser who buys a Note for more or less than its principal amount will
generally be subject, respectively, to the premium amortization or market
discount rules of the Code.
However, because a failure to pay interest currently on the Notes is not a
default and does not give rise to a penalty, under the OID regulations the Notes
might be viewed as having been issued with OID. This interpretation would not
significantly affect accrual basis holders of Notes, although it would somewhat
accelerate taxable income to cash basis holders by, in effect, requiring them to
report interest income on the accrual basis.
SALE OR OTHER DISPOSITION
If a Noteholder sells a Note, the holder will recognize gain or loss in an
amount equal to the difference between the amount realized on the sale and the
holder's adjusted tax basis in the Note. The adjusted tax basis of a Note to a
particular Noteholder will equal the holder's cost for the Note, increased by
any market discount, acquisition discount, OID and gain previously included by
such Noteholder in income with respect to the Note and decreased by the amount
of bond premium (if any) previously amortized and by the amount of principal
payments previously received by such Noteholder with respect to such Note. Any
such gain or loss will be capital gain or loss if the Note was held as a capital
asset except for amounts representing accrued interest and accrued market
discount not previously included in income and will generally be long-term
capital gain or loss if the Noteholder held the Notes for more than one year.
Long-term capital gains of non-corporate taxpayers are subject to reduced
maximum tax rates. The use of capital losses is subject to limitations.
FOREIGN HOLDERS
Interest payments made (or accrued) to a Noteholder who is a nonresident
alien, foreign corporation or other non-United States person (a "foreign
person") generally will be considered "portfolio interest", and generally will
not be subject to United States federal income tax and withholding tax, if the
interest is not effectively connected with the conduct of a trade or business
within the United States by the foreign person and the foreign person (i) is not
actually or constructively a "10 percent shareholder", within the meaning of the
Code, of the Trust or the Seller (including a holder of 10% or more of the
outstanding Certificates) or a "controlled foreign corporation" with respect to
which the Trust or the Seller is a "related person" within the meaning of the
Code and (ii) provides the Owner Trustee or other person who is otherwise
required to withhold U.S. tax with respect to the Notes with an appropriate
statement (on Form W-8 or a similar form), signed under penalty of perjury,
certifying that the beneficial owner of the Note is a foreign person and
providing the foreign person's name and address. If a Note is held through a
securities clearing organization or certain other financial institutions, the
organization or institution may provide the relevant signed statement to the
withholding agent; in that case, however, the signed statement must be
accompanied by a Form W-8 or substitute form provided by the foreign person that
owns the Note. If such interest is not portfolio interest and is not effectively
connected with the conduct of a trade or business within the United States, then
it will be subject to United States federal income and withholding tax at a rate
of 30%, unless reduced or eliminated pursuant to an applicable tax treaty.
Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a Note by a foreign person will be exempt from United
States federal income and withholding tax, provided that (i) such gain is not
effectively connected with the conduct of a trade or business in the United
States by the foreign person and (ii) in the case of an individual foreign
person, the foreign person is not present in the United States for 183 days or
more in the taxable year and certain other requirements are satisfied.
58
<PAGE>
BACKUP WITHHOLDING
Each holder of a Note (other than an exempt holder such as a corporation,
tax exempt organization, qualified pension and profit sharing trust, individual
retirement account or nonresident alien who provides certification as to status
as a nonresident) will be required to provide, under penalty of perjury, a
certificate containing the holder's name, address, correct federal taxpayer
identification number and a statement that the holder is not subject to backup
withholding. Should a nonexempt Noteholder fail to provide the required
certification, the Trust will be required to withhold 31% of the amount
otherwise payable to the holder, and remit the withheld amount to the IRS as a
credit against the holder's federal income tax liability.
NEW WITHHOLDING REGULATIONS
Recently, the Treasury Department issued new regulations (the "New
Regulations") which make certain modifications to the backup withholding and
information reporting rules described above. The New Regulations attempt to
unify certification requirements and modify reliance standards. The New
Regulations will generally be effective for payments made after December 31,
1999, subject to certain transition rules. Prospective investors are urged to
consult their own tax advisors regarding the New Regulations.
POSSIBLE ALTERNATIVE TREATMENTS OF THE NOTES
If, contrary to the opinion of counsel to the Seller, the IRS successfully
asserted that one or more Classes of Notes did not represent debt for federal
income tax purposes, the Notes might be treated as equity interests in the
Trust. In the view of counsel to the Seller, the Trust would be treated as a
partnership that would not be taxable as a corporation (even if the
recharacterization of the Notes caused it to be treated as a publicly traded
partnership) because it would meet certain qualifying income tests. Nonetheless,
treatment of the Notes as equity interests in such a partnership could have
adverse tax consequences to certain holders. For example, income to certain
tax-exempt entities (including pension funds) could be "unrelated business
taxable income" on such recharacterized Notes if some but not all Notes
outstanding were recharacterized, income to foreign holders generally would be
subject to United States tax and withholding requirements and possibly United
States tax return filing requirements and individual holders would be subject to
certain limitations on their ability to deduct their share of Trust expenses.
CERTAIN CALIFORNIA INCOME TAX CONSEQUENCES
In the opinion of Brown & Wood LLP, counsel to the Seller, the Trust will
not be an association taxable as a corporation for California income tax
purposes. This opinion will be based on the assumption that the terms of the
Trust Agreement and related documents will be followed. Brown & Wood LLP will
further render an opinion that Noteholders who are not residents of or otherwise
subject to tax in California will not, solely by reason of their acquisition of
an interest in any Class of Notes, be subject to California income, franchise,
excise or similar taxes with respect to interest on any Class of Notes.
Investors should consult their own tax advisors to determine the state,
local and other tax consequences to them of the purchase, ownership and
disposition of the Notes.
59
<PAGE>
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and the Code impose certain restrictions on (a) employee benefit plans (as
defined in Section 3(3) of ERISA) that are subject to Title I of ERISA, (b)
plans described in Section 4975(e)(1) of the Code that are subject to Section
4975 of the Code, including individual retirement accounts or Keogh Plans, (c)
any entities whose underlying assets include plan assets by reason of a plan's
investment in such entities (each of (a), (b) and (c), a "Benefit Plan") and (d)
persons who have certain specified relationships to a Benefit Plan
("Parties-in-Interest" under ERISA and "Disqualified Persons" under the Code).
Moreover, based on the reasoning of the United States Supreme Court in JOHN
HANCOCK LIFE INS. CO. v. HARRIS TRUST AND SAV. BANK, 114 S.Ct. 517 (1993), the
general account of an insurance company may be deemed to include assets of
Benefit Plans investing in the general account (E.G., through the purchase of an
annuity contract), and the insurance company might be treated as a
Party-in-Interest with respect to a Benefit Plan by virtue of such an
investment. ERISA also imposes certain duties on persons who are fiduciaries of
Benefit Plans subject to ERISA, and ERISA and Section 4975 of the Code prohibit
certain transactions between a Benefit Plan and Parties-in-Interest or
Disqualified Persons with respect to such Benefit Plan. Violation of these rules
may result in the imposition of excise taxes and other penalties and liabilities
under ERISA and the Code.
PLAN ASSETS AND PROHIBITED TRANSACTIONS ISSUES
Certain transactions involving the Trust might be deemed to constitute
prohibited transactions under ERISA and the Code if assets of the Trust were
deemed to constitute assets of a Benefit Plan investing in the Notes. 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 purposes of ERISA and Section 4975 of the Code only if the
Benefit Plan acquires an "Equity Interest" in the Trust and none of the
exceptions contained in the Plan Assets Regulation is applicable. An Equity
Interest is defined under the Plan Assets Regulation as an interest other than
an instrument which is treated as indebtedness under applicable local law and
which has no substantial equity features. Although there can be no assurance in
this regard, the Seller believes that the Notes should be treated as
indebtedness without substantial equity features for purposes of the Plan Assets
Regulation. However, without regard to whether the Notes are treated as an
Equity Interest for such purposes, the acquisition or holding of Notes by or on
behalf of a Benefit Plan could be considered to give rise to a prohibited
transaction if the Trust, the Owner Trustee, the Indenture Trustee, any holder
of the Certificates (including any holder to whom the Seller transfers
Certificates) or any of their respective affiliates, is or becomes a party in
interest or a disqualified person with respect to such Benefit Plan. In such
case, certain exemptions from the prohibited transaction rules could be
applicable depending on the type and circumstances of the Benefit Plan fiduciary
making the decision to acquire a Note. These exemptions include Prohibited
Transaction Class Exemption ("PTCE") 90-1, regarding investments by insurance
company pooled separate accounts, PTCE 91-38, regarding investments by bank
collective investment funds, PTCE 84-14, regarding transactions effected by
"qualified professional asset managers", PTCE 95-60, regarding investments by
insurance company general accounts and PTCE 96-23, regarding transactions
effected by "in-house asset managers". A violation of the prohibited transaction
rules may result in the imposition of an excise tax and other liabilities under
ERISA and Section 4975 of the Code, unless one or more statutory or
administrative exemptions is available.
Prior to making an investment in the Notes, each prospective Benefit Plan
investor should consult with its legal advisors concerning the impact of ERISA
and the Code and the potential consequences of such investment in its specific
circumstances. Moreover, each Benefit Plan fiduciary should take into account,
among other considerations, whether the fiduciary has the authority to make the
investment, the composition of the Benefit Plan's portfolio with respect to
diversification by type of asset, the Benefit Plan's funding objectives, the tax
effects of the investment and whether under the general fiduciary standards of
investment prudence and diversification an investment in the Notes is
appropriate for the Benefit Plan, taking into account the overall investment
policy of the Benefit Plan and the composition of the Benefit Plan's investment
portfolio.
Governmental plans, church plans and foreign plans are not generally subject
to the prohibited transaction rules of ERISA and Section 4975 of the Code.
However, such plans may be subject to similar provisions of state, local and
federal law.
60
<PAGE>
UNDERWRITING
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated January , 1999 (the "Underwriting Agreement"), the
Underwriters named below (the "Underwriters"), for whom Credit Suisse First
Boston Corporation, [ ]
are acting as representatives (the "Representatives"), have severally but not
jointly agreed to purchase, from the Seller the principal amount of the Notes
set forth opposite its name below:
<TABLE>
<CAPTION>
CLASS A-1 CLASS A-2 CLASS A-3 CLASS A-4
UNDERWRITERS NOTES NOTES NOTES NOTES
- - -------------------------------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Credit Suisse First Boston
Corporation.......................... $ $ $ $
[ ]..........................
[ ]..........................
[ ]..........................
[ ]..........................
[ ]..........................
[ ]..........................
[ ]..........................
[ ]..........................
[ ]..........................
[ ]..........................
-------------- -------------- -------------- --------------
Total................................. $ $ $ $
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent and that the Underwriters will be
obligated to purchase all of the Notes, if any are purchased. The Underwriting
Agreement provides that, in the event of a default by an Underwriter, in certain
circumstances the purchase commitments of the non-defaulting Underwriter may be
increased or the Underwriting Agreement may be terminated.
The Seller has been advised by the Underwriters that the Underwriters
propose to offer the Notes to the public initially at the offering price set
forth on the cover page of this Prospectus, and to certain dealers at such price
less a concession of, in the case of (i) the Class A-1 Notes, % of the
principal amount per Note, (ii) the Class A-2 Notes, % of the principal
amount per Note, (iii) the Class A-3 Notes, % of the principal amount per
Note and (iv) the Class A-4 Notes, % of the principal amount per Note and the
Underwriters and such dealers may allow a discount of, in the case of (i) the
Class A-1 Notes, % of the principal amount per Note, (ii) the Class A-2
Notes, % of the principal amount per Note, (iii) the Class A-3 Notes, % of
the principal amount per Note and (iv) the Class A-4 Notes, % of the principal
amount per Note.
There currently is no secondary market for any Class of Notes and there is
no assurance that one will develop. The Underwriters expect, but will not be
obligated, to make a market in each Class of Notes. There is no assurance that
any such market will develop, or if one does develop, that it will continue or
that it will provide sufficient liquidity.
The Seller and AHFC have agreed to indemnify, jointly and severally, the
Underwriters against certain liabilities, including civil liabilities under the
Securities Act, or contribute to payments that the Underwriters may be required
to make in respect thereof.
Until the distribution of the Notes is completed, rules of the Commission
may limit the ability of the Underwriters and certain selling group members to
bid for and purchase the Notes. As an exemption to these rules, the Underwriters
are permitted to engage in certain transactions that stabilize the price of each
Class of Notes. Such transactions may consist of bids or purchases for the
purpose of pegging, fixing or maintaining the price of the Notes. The closing of
the sale of the Notes is conditioned upon the closing of the sale of the
Certificates.
61
<PAGE>
Neither the Seller nor any Underwriter makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the prices of the Notes. In addition, neither the
Seller nor any Underwriter makes any representation the Underwriters will engage
in such transactions or that such transactions, once commenced, will not be
discontinued without notice.
Upon receipt of a request by an investor who has received an electronic
Prospectus from an Underwriter or a request by such investor's representative
within the period during which there is an obligation to deliver a Prospectus,
the Seller or the Underwriter will promptly deliver, or cause to be delivered,
without charge, a paper copy of the Prospectus.
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the Notes in Canada is being made only on a private
placement basis exempt from the requirement that the Seller, on behalf of the
Trust, prepare and file a prospectus with the securities regulatory authorities
in each province where trades of Notes are effected. Accordingly, any resale of
the Notes in Canada must be made in accordance with applicable securities laws
which will vary depending on the relevant jurisdiction, and which may require
resales to be made in accordance with available statutory exemptions or pursuant
to a discretionary exemption granted by the applicable Canadian securities
regulatory authority. Purchasers are advised to seek legal advice prior to any
resale of the Notes.
REPRESENTATIONS OF PURCHASERS
Each purchaser of Notes in Canada who receives a purchase confirmation will
be deemed to represent to the Seller, the Servicer, the related Trustee, the
Trust and the dealer from whom such purchase confirmation is received that (i)
such purchaser is entitled under applicable provincial securities laws to
purchase such Notes without the benefit of a prospectus qualified under such
securities laws, (ii) where required by law, that such purchaser is purchasing
as principal and not as agent, and (iii) such purchaser has reviewed the text
above under "Resale Restrictions".
RIGHTS OF ACTION AND ENFORCEMENT
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
Section 32 of the Regulation under the SECURITIES ACT (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available, including
common law rights of action for damages or rescission or rights of action under
the civil liability provisions of the U.S. federal securities laws.
All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be possible
for Ontario purchasers to effect service of process within Canada upon the
issuer or such persons. All or a substantial portion of the assets of the issuer
and such persons may be located outside of Canada and, as a result, it may not
be possible to satisfy a judgment against the issuer or such persons in Canada
or to enforce a judgment obtained in Canadian courts against such issuer or
persons outside of Canada.
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of Notes to whom the SECURITIES ACT (British Columbia) applies
is advised that such purchaser is required to file with the British Columbia
Securities Commission a report within ten days of the sale of any Notes acquired
by such purchaser pursuant to this offering. Such report must be in the form
attached to British Columbia Securities Commission Blanket Order BOR #95/17, a
copy of which may be obtained from the Seller. Only one such report must be
filed in respect of Notes acquired on the same date and under the same
prospectus exemption.
62
<PAGE>
RATING OF THE NOTES
It is a condition to issuance of the Notes that the Class A-1 Notes will be
rated F-1+ by Fitch IBCA, P-1 by Moody's and A-1+ by Standard & Poor's, and that
each of the Class A-2, Class A-3 and Class A-4 Notes will be rated Aaa by
Moody's and AAA by each of Standard & Poor's and Fitch IBCA. The ratings of the
Notes will be based primarily on the value of the Receivables, the terms of the
Notes and the Reserve Fund and the subordination of the Certificates to the
extent described herein. The ratings of the Notes should be evaluated
independently from similar ratings on other types of securities. A security
rating is not a recommendation to buy, sell or hold securities and may be
subject to revision or withdrawal at any time by the assigning rating agency.
The ratings on the Notes do not assess the likelihood that principal prepayments
on the Receivables will occur, the degree to which the rate of such prepayments
might differ from that originally anticipated or otherwise address the timing of
distributions of principal on the Notes prior to their respective Final
Distribution Dates.
There can be no assurance as to whether any rating agency other than the
Rating Agencies will rate the Notes, or, if one does, what rating will be
assigned by any such other rating agency. A rating on any or all of the Notes by
other rating agencies, if assigned at all, may be lower than the rating assigned
to such Notes by the Rating Agencies.
LEGAL MATTERS
Certain legal matters with respect to the Notes, including certain federal
income tax consequences with respect thereto, will be passed upon for the Seller
by Brown & Wood LLP, San Francisco, California. Skadden, Arps, Slate, Meager &
Flom LLP, New York, New York will act as counsel for the Underwriters.
63
<PAGE>
INDEX OF CAPITALIZED TERMS
Set forth below is a list of the capitalized or defined terms used in this
Prospectus and the pages on which the definitions of such terms may be found.
<TABLE>
<CAPTION>
TERM PAGE
- - ---------------------------------------------- ---------
<S> <C>
ABS........................................... 18
ABS Tables.................................... 19
Accrual Period................................ 5
Actuarial Receivable.......................... 13
Administrator................................. 51
Administration Agreement...................... 51
Administrative Purchase Payment............... 34
Administrative Receivable..................... 34
Advances...................................... 8
Aggregate Net Losses.......................... 43
AHFC.......................................... 1, 3
AHMC.......................................... 3
APR........................................... 4
Applied Payments Ahead........................ 39
Available Amount.............................. 39
Available Interest............................ 39
Available Principal........................... 39
Benefit Plan.................................. 60
Business Day.................................. 4
California Receivables........................ 56
Cede.......................................... 30
Certificate Balance........................... 6
Certificate Distribution Account.............. 35
Certificate Interest Distributable Amount..... 40
Certificate Monthly Principal Distributable
Amount...................................... 40
Certificate Percentage........................ 40
Certificate Pool Factor....................... 26
Certificate Principal Carryover Shortfall..... 41
Certificate Principal Distributable Amount.... 41
Certificate Rate.............................. 6
Certificateholders............................ 6
Certificates.................................. 1, 3
Charge-off Rate............................... 43
Class......................................... 3
Distribution Date............................. 1,4
Class A-1 Notes............................... 1, 3
Class A-1 Rate................................ 5
Distribution Date............................. 4
Class A-2 Notes............................... 1, 3
Class A-2 Rate................................ 5
Distribution Date............................. 4
Class A-3 Notes............................... 1, 3
Class A-3 Rate................................ 5
Distribution Date............................. 4
<CAPTION>
TERM PAGE
- - ---------------------------------------------- ---------
<S> <C>
Class A-4 Notes............................... 1, 3
Class A-4 Rate................................ 5
Closing Date.................................. 4
Code.......................................... 57
Collection Account............................ 35
Collection Period............................. 7
Commission.................................... 2
Current Receivable............................ 43
Cutoff Date................................... 4
Cutoff Date Pool Balance...................... 4
Dealer Recourse............................... 13
Dealers....................................... 13
Defaulted Receivable.......................... 39
Definitive Notes.............................. 30
Delinquency Percentage........................ 43
Deposit Date.................................. 8
Determination Date............................ 38
Discount Receivables.......................... 7
Distribution Accounts......................... 35
Distribution Date............................. 1, 4
Distribution Date Statement................... 38
DTC........................................... 30
DTC Participants.............................. 30
Equity Interest............................... 60
ERISA......................................... 60
Events of Default............................. 27
Excess Amounts................................ 7
Excess Payment................................ 36
Exchange Act.................................. 2
Final Distribution Dates...................... 4
Financed Vehicles............................. 4
Fitch IBCA.................................... 9
foreign person................................ 58
FTC Rule...................................... 55
HCFI.......................................... 22
Indenture..................................... 3
Indenture Trustee............................. 3
Indirect Participants......................... 30
Insolvency Event.............................. 46
Insolvency Laws............................... 54
installment sale contracts.................... 11
Interest Rates................................ 5
IRS........................................... 57
Liquidated Receivable......................... 43
Moody's....................................... 9
Net Liquidation Proceeds...................... 39
</TABLE>
64
<PAGE>
<TABLE>
<CAPTION>
TERM PAGE
- - ---------------------------------------------- ---------
<S> <C>
New Regulations............................... 59
Note Distributable Amount..................... 41
Note Distribution Account..................... 35
Note Interest Carryover Shortfall............. 41
Note Interest Distributable Amount............ 41
Note Monthly Interest Distributable Amount.... 41
Note Monthly Principal Distributable Amount... 41
Note Owner.................................... 30
Note Percentage............................... 41
Note Pool Factor.............................. 26
Note Principal Carryover Shortfall............ 41
Note Principal Distributable Amount........... 41
Noteholders................................... 5
Notes......................................... 3
Obligors...................................... 11
OID........................................... 57
Omnibus Proxy................................. 30
Optional Termination.......................... 9
Original Certificate Balance.................. 6
Owner Trustee................................. 3
Parties-in-Interest........................... 60
Payahead Account.............................. 35
Payment Ahead................................. 35
Permitted Investments......................... 30
Plan Asset Regulation......................... 60
Pool Balance.................................. 38
Precomputed Advance........................... 8
Precomputed Receivable........................ 13
Prepayment.................................... 36
Principal Balance............................. 38
Principal Distributable Amount................ 42
PTCE.......................................... 60
Rating Agencies............................... 9
Rebate........................................ 34
Receivables................................... 1,4
Receivables Purchase Agreement................ 4
Record Date................................... 4
Reform Act.................................... 24
Registration Statement........................ 2
<CAPTION>
TERM PAGE
- - ---------------------------------------------- ---------
<S> <C>
Representatives............................... 61
Required Rate................................. 7
Reserve Fund.................................. 7
Reserve Fund Initial Deposit.................. 7
Rule of 78s Receivable........................ 13
Sale and Servicing Agreement.................. 4
Schedule of Receivables....................... 33
Scheduled Payment............................. 13
Securities.................................... 3
Securities Act................................ 2
Securityholders............................... 7
Seller........................................ 3
Servicer...................................... 1, 3
Servicer Defaults............................. 46
Servicer Letter of Credit..................... 36
Servicing Fee................................. 9
Servicing Fee Rate............................ 9
Simple Interest Advance....................... 8
Simple Interest Receivable.................... 13
Specified Reserve Fund Balance................ 7,43
Standard & Poor's............................. 9
Statement to Securityholders.................. 44
Supplemental Servicing Fee.................... 9
Terms and Conditions.......................... 30
Total Servicing Fee........................... 9
Trust......................................... 1,3
Trust Accounts................................ 36
Trust Agreement............................... 3
Trust Fees and Expenses....................... 24
Trustees...................................... 3
UCC........................................... 30
Underwriters.................................. 61
Underwriting Agreement........................ 61
voting interests.............................. 47
Warranty Purchase Payment..................... 33
Warranty Receivable........................... 33
Weighted Average Interest Rate................ 7
Yield Supplement Account...................... 7
Yield Supplement Account Deposit.............. 8
Yield Supplement Amount....................... 8
Yield Supplement Withdrawal Amount............ 8
</TABLE>
65
<PAGE>
ANNEX I
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding through CEDEL or Euroclear
(or through DTC if the holder has an address outside the United States) will be
subject to the 30% United States withholding tax that generally applies to
payments of interest (including original issue discount) on registered debt
issued by U.S. Persons, unless (i) each clearing system, bank or other financial
institution that holds customers' securities in the ordinary course of its trade
or business in the chain of intermediaries between such beneficial owner and the
United States entity required to withhold tax complies with applicable
certification requirements and (ii) such beneficial owner takes one of the
following steps to obtain an exemption or reduced tax rate:
EXEMPTION FOR NON-U.S. PERSONS (FORM W-8). Beneficial owners of Global
Securities that are non-U.S. Persons can obtain a complete exemption from the
withholding tax by filing a signed Form W-8 (Certificate of Foreign Status). If
the information shown on Form W-8 or the Tax Certificate changes, a new Form W-8
or Tax Certificate, as the case may be, must be filed within 30 days of such
change.
EXEMPTION FOR NON-U.S. PERSON WITH EFFECTIVELY CONNECTED INCOME (FORM
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a
United States branch, for which the interest income is effectively connected
with its conduct of a trade or business in the United States, can obtain an
exemption from the withholding tax by filing Form 4224 (Exemption from
Withholding of Tax on Income Effectively Connected with the Conduct of a Trade
or Business in the United States).
EXEMPTION OR REDUCED RATE FOR NON-U.S. PERSONS RESIDENT IN TREATY COUNTRIES
(FORM 1001). Non-U.S. Persons that are beneficial owners of Global Securities
residing in a country that has a tax treaty with the United States can obtain an
exemption or reduced tax rate (depending on the treaty terms) by filing Form
1001 (Ownership, Exemption or Reduced Rate Certificate). If the treaty provides
only for a reduced rate, withholding tax will be imposed at that rate unless the
filer alternatively files Form W-8. Form 1001 may be filed by the Certificate
Owner or his agent.
EXEMPTION FOR U.S. PERSONS (FORM W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
U.S. FEDERAL INCOME TAX REPORTING PROCEDURE. The beneficial owner of a
Global Security or, in the case of a Form 1001 or a Form 4224 filer, his agent,
files by submitting the appropriate form to the person through whom it holds
(the clearing agency, in the case of persons holding directly on the books of
the clearing agency). Form W-8 and form 1001 are effective for three calendar
years and Form 4224 is effective for one calendar year.
The term "U.S. Person" means (i) a citizen or resident of the United States,
(ii) a corporation or partnership organized in or under the laws of the United
States or any political subdivision thereof or (iii) an estate or trust the
income of which is includible in gross income for United States tax purposes,
regardless of its source. This summary does not deal with all aspects of United
States Federal income tax withholding that may be relevant to foreign holders of
the Global Securities. Investors are advised to consult their own tax advisors
for specific tax advice concerning their holding and disposing of the Global
Securities.
A-1
<PAGE>
- - -------------------------------------------
-------------------------------------------
No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained in or
incorporated by reference in this Prospectus and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Seller or any Underwriter. Neither the delivery of this Prospectus nor
any sale made hereunder shall under any circumstance create an implication that
there has been no change in the affairs of the Seller or the Receivables since
the date thereof. This Prospectus does not constitute an offer or solicitation
by anyone in any state in which such offer or solicitation is not authorized or
in which the person making such offer or solicitation is not qualified to do so
or to anyone to whom it is unlawful to make such offer or solicitation.
--------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information..................................................... 2
Incorporation of Certain Documents by Reference........................... 2
Reports to Noteholders.................................................... 2
Summary................................................................... 3
Risk Factors.............................................................. 11
Formation of the Trust.................................................... 12
Property of the Trust..................................................... 13
The Receivables........................................................... 13
Weighted Average Life of the Notes........................................ 18
Use of Proceeds........................................................... 22
The Seller................................................................ 22
American Honda Finance Corporation........................................ 22
Pool Factors and Trading Information...................................... 26
Description of the Notes.................................................. 26
Description of the Certificates........................................... 32
Certain Information Regarding the Securities.............................. 33
Certain Legal Aspects of the Receivables.................................. 51
Material Federal Income Tax Consequences.................................. 57
Certain California Income Tax Consequences................................ 59
ERISA Considerations...................................................... 60
Underwriting.............................................................. 61
Notice to Canadian Residents.............................................. 62
Rating of the Notes....................................................... 63
Legal Matters............................................................. 63
Index of Capitalized Terms................................................ 64
Annex I................................................................... A-1
</TABLE>
--------------
Until , 1999 (90 days after the date of this Prospectus), all
dealers effecting transactions in the Notes, whether or not participating in
this distribution, may be required to 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.
Honda Auto Receivables
1999-1 Owner Trust
$
% Asset Backed Notes,
Class A-1
$
% Asset Backed Notes,
Class A-2
$
% Asset Backed Notes,
Class A-3
$
% Asset Backed Notes,
Class A-4
American Honda
Receivables Corp.
Seller
American Honda
Finance Corporation
Servicer
P R O S P E C T U S
Credit Suisse First Boston
[ ]
[ ]
[ ]
[ ]
[ ]
- - -------------------------------------------
-------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Expenses in connection with the offering of the Securities being registered
hereby are estimated as follows:
<TABLE>
<S> <C>
SEC registration fee.............................................. $ *
Legal fees and expenses........................................... *
Accounting fees and expenses...................................... *
Blue sky fees and expenses........................................ *
Rating agency fees................................................ *
Trustee's fees and expenses....................................... *
Printing and engraving............................................ *
Miscellaneous..................................................... *
-----------
Total........................................................... $ *
-----------
-----------
</TABLE>
- - --------------
* To be completed by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 317(b) of the California Corporations Code (the "Corporations Code")
provides that a corporation may indemnify any person who was or is a party or is
threatened to be made a party to any "proceeding" (as defined in Section 317(a)
of the Corporations Code), other than an action by or in the right of the
corporation to procure a judgment in its favor, by reason of the fact that such
person is or was a director, officer, employee or other agent of the corporation
(collectively, an "Agent"), against expenses, judgments, fines, settlements and
other amounts actually and reasonably incurred in connection with such
proceeding if the Agent acted in good faith and in a manner the Agent reasonably
believed to be in the best interest of the corporation and, in the case of a
criminal proceeding, had no reasonable cause to believe the conduct was
unlawful.
Section 317(c) of the Corporations Code provides that a corporation shall
have power to indemnify any Agent who was or is a party or is threatened to be
made a party to any threatened, pending or completed action by or in the right
of the corporation to procure a judgment in its favor by reason of the fact that
such person is or was an Agent, against expenses actually and reasonably
incurred by the Agent in connection with the defense or settlement of such
action if the Agent acted in good faith and in a manner such Agent believed to
be in the best interest of the corporation and its shareholders.
Section 317(c) further provides that no indemnification may be made
thereunder for any of the following: (i) in respect of any matter as to which an
Agent shall have been adjudged to be liable to the corporation, unless the court
in which such proceeding is or was pending shall determine that such Agent is
fairly and reasonably entitled to indemnity for expenses, (ii) amounts paid in
settling or otherwise disposing of a pending action without court approval and
(iii) expenses incurred in defending a pending action which is settled or
otherwise disposed of without court approval.
Section 317(d) of the Corporations Code requires that an Agent be
indemnified against expenses actually and reasonably incurred to the extent the
Agent has been successful on the merits in the defense of proceedings referred
to in subdivisions (b) or (c) of Section 317.
Except as provided in Section 317(d), and pursuant to Section 317(e),
indemnification under Section 317 shall be made by the corporation only if
authorized in the specific case, upon a determination that indemnification is
proper in the circumstances because the Agent has met the applicable standard of
conduct, by any of the following: (i) a majority vote of a quorum consisting of
directors who are not parties to
II-1
<PAGE>
the proceeding, (ii) if such a quorum of directors is not obtainable, by
independent legal counsel in a written opinion, (iii) approval of the
shareholders, provided that any shares owned by the Agent may not vote thereon,
or (iv) the court in which such proceeding is or was pending.
Pursuant to Section 317(f) of the Corporations Code, the corporation may
advance expenses incurred in defending any proceeding upon receipt of an
undertaking by the Agent to repay such amount if it is ultimately determined
that the Agent is not entitled to be indemnified.
Section 317(h) provides, with certain exceptions, that no indemnification
shall be made under Section 317 where it appears that it would be inconsistent
with a provision of the corporation's articles, bylaws, a shareholder resolution
or an agreement which prohibits or otherwise limits indemnification, or where it
would be inconsistent with any condition expressly imposed by a court in
approving a settlement.
Section 317(i) authorizes a corporation to purchase and maintain insurance
on behalf of an Agent for liabilities arising by reason of the Agent's status,
whether or not the corporation would have the power to indemnify the Agent
against such liability under the provisions of Section 317.
Reference is also made to Section of the Underwriting Agreement among the
underwriters named therein, the Registrant and American Honda Finance
Corporation (see Exhibit 1.1), which provides for indemnification of the
Registrant under certain circumstances.
Article IX of the Articles of Incorporation of the Registrant provides for
the indemnification of the directors of the Registrant to the fullest extent
permissible under California law.
Article IV, Section 4.01 of the Bylaws of the Registrant (see Exhibit 3.2)
requires that the Registrant indemnify, and, in certain instances, advance
expenses to, its agents, with respect to certain costs, expenses, judgments,
fines, settlements and other amounts incurred in connection with any proceeding,
to the full extent permitted by applicable law.
In addition, Article IV, Section 4.03 of the Bylaws of the Registrant
authorizes the Registrant to purchase and maintain insurance to the extent
provided by Section 3.17(i) of the Corporations Code.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
A. EXHIBITS:
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement*
4.1(a) Trust Agreement dated June 16, 1998 between American Honda
Receivables Corp., as depositor, and The Bank of New York
(Delaware), as trustee.
4.1(b) Form of Amended and Restated Trust Agreement between American Honda
Receivables Corp., as depositor, and The Bank of New York
(Delaware), as owner trustee (including form of Certificates)
4.2 Form of Indenture between Honda Auto Receivables 1999-1 Owner
Trust, as issuer and Bankers Trust Company, as indenture trustee
(including forms of Notes)
5.1(a) Opinion of Brown & Wood LLP with respect to legality
5.1(b) Opinion of Richards, Layton & Finger PA with respect to legality
8.1 Opinion of Brown & Wood LLP with respect to tax matters
10.1 Form of Sale and Servicing Agreement between American Honda
Receivables Corp., as seller, American Honda Finance Corporation,
as servicer and The Bank of New York (Delaware), as owner trustee
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
10.2 Form of Administration Agreement among Honda Auto Receivable 1999-1
Owner Trust, as issuer, American Honda Finance Corporation, as
servicer, American Honda Receivables Corp., as seller and Bankers
Trust Company, as indenture trustee
23.1 Consent of Brown & Wood LLP (included as part of Exhibit 5.1 (a))
23.2 Consent of Brown & Wood LLP (included as part of Exhibit 8.1)
23.3 Consent of Richards, Layton & Finger PA (included as part of
Exhibit 5.1(b))
24.1 Power of Attorney of Y. Kohama, John I. Weisickle and S. Ulm**
24.2 Power of Attorney of S. Moriguchi**
24.3 Power of Attorney of S. Nelson**
25.1 Statement of Eligibility and Qualification of Indenture Trustee
</TABLE>
- - --------------
* To be filed by amendment.
** Previously filed.
B. FINANCIAL STATEMENT SCHEDULES:
Not applicable.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes as follows:
(a) For purposes of determining any liability under the Securities Act
of 1933 (the "Act"), each filing of the Registrant's annual report pursuant
to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant
to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in this registration statement shall be deemed to
be a new registration statement relating to the securities offered herein,
and the offering of such securities at the time shall be deemed to be the
intitial BONA FIDE offering thereof.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers
and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is therefore
unenforceable. In the event that a claim for indemnification against such
liabilities (other than payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of such Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
(c) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act will be deemed to be part of this registration
statement as of the time it was declared effective.
(d) For purposes of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus will be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time will be deemed to
be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant and the Trust certify that each party has reasonable grounds to
believe that the Registrant and the Trust meet all of the requirements for
filing on Form S-3 and have duly caused this Amendment No. 3 to the Registration
Statement on Form S-3 to be signed on behalf of each party by the undersigned,
thereunto duly authorized, in the City of Torrance and State of California, on
the 12th day of January 1999.
AMERICAN HONDA RECEIVABLES CORP.,
AS ORIGINATOR OF
HONDA AUTO RECEIVABLES 1999-1 OWNER TRUST
By: /s/ Y. KOHAMA
------------------------------------------
Y. Kohama
President
AMERICAN HONDA RECEIVABLES CORP.
By: /s/ Y. KOHAMA
------------------------------------------
Y. Kohama
President
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 3 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- - --------------------------------------------- --------------------------------------------- -------------------
<C> <C> <S>
/s/ Y. KOHAMA Director and President (Principal Executive January 12, 1999
----------------------------------- Officer)
Y. Kohama
/s/ JOHN I. WEISICKLE* Director and Treasurer (Principal Financial
----------------------------------- and Accounting Officer) January 12, 1999
John I. Weisickle
/s/ S. MORIGUCHI*
----------------------------------- Director and Secretary January 12, 1999
S. Moriguchi
/s/ SCOTT J. NELSON*
----------------------------------- Director January 12, 1999
Scott J. Nelson
/s/ SCOTT J. ULM*
----------------------------------- Director January 12, 1999
Scott J. Ulm
</TABLE>
* By: /s/ Y. KOHAMA
----------------------------------------
Y. Kohama
ATTORNEY-IN-FACT
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- - -----------
<C> <S>
1.1 Form of Underwriting Agreement*
4.1(a) Trust Agreement dated June 16, 1998 between American Honda Receivables Corp., as depositor, and The Bank
of New York (Delaware), as trustee
4.1(b) Form of Amended and Restated Trust Agreement between American Honda Receivables Corp., as seller, and
The Bank of New York (Delaware), as owner trustee (including form of Certificates)
4.2 Form of Indenture between Honda Auto Receivables 1999-1 Owner Trust, as issuer, and Bankers Trust
Company, as indenture trustee (including forms of Notes)
5.1(a) Opinion of Brown & Wood LLP with respect to legality
5.1(b) Opinion of Richards, Layton & Finger PA with respect to legality
8.1 Opinion of Brown & Wood LLP with respect to tax matters
10.1 Form of Sale and Servicing Agreement between American Honda Receivables Corp., as seller, American Honda
Finance Corporation, as servicer and The Bank of New York (Delaware), as owner trustee
10.2 Form of Administration Agreement among Honda Auto Receivable 1999-1 Owner Trust, as issuer, American
Honda Finance Corporation, as servicer, American Honda Receivables Corp., as seller, and Bankers Trust
Company, as indenture trustee
23.1 Consent of Brown & Wood LLP (included as part of Exhibit 5.1(a))
23.2 Consent of Brown & Wood LLP (included as part of Exhibit 8.1)
23.3 Consent of Richards, Layton & Finger PA (included as part of Exhibit 5.1(b))
24.1 Power of Attorney of Y. Kohama, John I. Weisickle and Scott J. Ulm (included on page II-4)**
24.2 Power of Attorney of S. Moriguchi (included on page II-4)**
24.3 Power of Attorney of Scott J. Nelson (included on page II-4)**
25.1 Statement of Eligibility and Qualification of Indenture Trustee
</TABLE>
- - --------------
* To be filed by amendment.
** Previously filed.
<PAGE>
Exhibit 4.1(a)
TRUST AGREEMENT
This Trust Agreement, dated as of June 16, 1998 (the "Agreement"), is
between American Honda Receivables Corp., a California corporation, as depositor
(the "Depositor"), and The Bank of New York (Delaware), as trustee (the "Owner
Trustee").
In consideration of the mutual agreements herein contained, and of other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
1. CREATION. There is hereby formed, in accordance with the Delaware
Business Trust Act (12 Del C. Section 3801 ET SEQ.) (the "Delaware Act"), a
trust to be known as the Honda Auto Receivables 1998-1 Owner Trust (the
"Trust"), in which name the Owner Trustee may engage in the activities of the
Trust, make and execute contracts and other instruments on behalf of the
Trust, and sue and be sued. The parties hereto intend that the Trust be a
business trust under the Delaware Act and that this Agreement and any
amendment or restatement thereof shall constitute the governing instrument of
the Trust. Effective as of the date hereof, the Owner Trustee shall have all
rights, powers and duties set forth herein and in the Delaware Act with
respect to accomplishing the purposes of the Trust. The Owner Trustee shall
file or cause to be filed a certificate of trust in accordance with Section
3810 of the Delaware Act and substantially in the form attached hereto as
Exhibit A.
2. TRUST ASSETS. The Depositor hereby grants, conveys, transfers and
assigns to the Trust, and the Owner Trustee hereby acknowledges receipt of, the
sum of one thousand dollars ($1,000.00) which sum shall be the initial assets of
the Trust.
3. INDEMNIFICATION OF OWNER TRUSTEE. The Owner Trustee shall be
indemnified and held harmless out of and to the extent of the assets of the
Trust with respect to any loss, liability, claim, damage or expense incurred by
the Owner Trustee arising out of or incurred in connection with the acceptance
or performance by the Owner Trustee of the trusts and duties contained in this
Agreement; provided, however, that the Owner Trustee shall not be indemnified or
held harmless as to any such loss, liability, claim, damage or expense incurred
by reason of the Owner Trustee's willful misconduct, bad faith or negligence.
4. RESIGNATION OR REMOVAL OF OWNER TRUSTEE. The Owner Trustee may not at
any time resign without the express written consent of the Depositor.
5. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which so executed and delivered shall be deemed to be an
original, but all of which counterparts shall together constitute but one and
the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to
be duly executed by their respective officers as of the day and year first above
written.
AMERICAN HONDA RECEIVABLES CORP., as Depositor
By: /s/ Y. Kohoma
----------------------------------------
Name: Y. Kohoma
Title: President
THE BANK OF NEW YORK (DELAWARE),
as Owner Trustee
By: /s/ Cheryl L. Laser
----------------------------------------
Cheryl L. Laser
Assistant Vice President
<PAGE>
EXHIBIT A
FORM OF CERTIFICATE OF TRUST
This Certificate of Trust of Honda Auto Receivables 1998-1 Owner Trust
(the "Owner Trust"), dated June__, 199_, is being duly executed and filed by The
Bank of New York (Delaware), a Delaware banking corporation, as trustee, to form
a business under the Delaware Business Trust Act (12 DEL. CODE Section 3801 ET
SEQ.).
1. NAME. The name of the business trust formed hereby is Honda Auto
Receivables 1998-1 Owner Trust.
2. DELAWARE TRUSTEE. The name and business address of the trustee of the
Owner Trust in the State of Delaware is The Bank of New York (Delaware), White
Clay Center, Route 273, Newark, Delaware 19711, Attention: Corporate Trust
Administration Department.
3. EFFECTIVE DATE. This Certificate of Trust shall be effective upon its
filing with the Secretary of State of the State of Delaware.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the Trust,
has executed this Certificate of Trust as of the date first above written.
THE BANK OF NEW YORK (DELAWARE),
not in its individual capacity but solely as
Owner Trustee.
By:
----------------------------------------
Cheryl L. Laser
Assistant Vice President
A-1
<PAGE>
Exhibit 4.1(b)
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
AMERICAN HONDA RECEIVABLES CORP.,
as Depositor,
and
THE BANK OF NEW YORK (DELAWARE),
as Owner Trustee
---------------------------------
AMENDED AND RESTATED
TRUST AGREEMENT
Dated as of January 1, 1999
---------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE ONE
DEFINITIONS
Section 1.01. General Definitions.................................................................................1
Section 1.02. Other Definitional Provisions.......................................................................4
Section 1.03. Interpretive Provisions.............................................................................4
ARTICLE TWO
ORGANIZATION
Section 2.01. Name................................................................................................5
Section 2.02. Office..............................................................................................5
Section 2.03. Purposes and Powers.................................................................................5
Section 2.04. Appointment of Owner Trustee........................................................................6
Section 2.05. Initial Capital Contribution of Owner Trust Estate..................................................6
Section 2.06. Declaration of Trust................................................................................6
Section 2.07. Liability of Owners.................................................................................6
Section 2.08. Title to Trust Property.............................................................................6
Section 2.09. Situs of Issuer.....................................................................................7
Section 2.10. Representations and Warranties of the Depositor.....................................................7
ARTICLE THREE
TRUST CERTIFICATES AND TRANSFER OF INTERESTS
Section 3.01. Initial Ownership...................................................................................9
Section 3.02. The Trust Certificates..............................................................................9
Section 3.03. Authentication and Delivery of Trust Certificates...................................................9
Section 3.04. Registration of Transfer and Exchange of Trust Certificates.........................................9
Section 3.05. Mutilated, Destroyed, Lost or Stolen Trust Certificates............................................11
Section 3.06. Persons Deemed Owners..............................................................................12
Section 3.07. Access to List of Certificateholders' Names and Addresses..........................................12
Section 3.08. Maintenance of Office or Agency....................................................................12
Section 3.09. Appointment of Paying Agent........................................................................12
Section 3.10. Definitive Trust Certificates......................................................................13
Section 3.11. Repayment of Trust Certificates....................................................................13
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
ARTICLE FOUR
ACTIONS BY OWNER TRUSTEE
Section 4.01. Prior Notice to Owners with Respect to Certain Matters.............................................14
Section 4.02. Action by Owners with Respect to Certain Matters...................................................14
Section 4.03. Action by Owners with Respect to Bankruptcy........................................................15
Section 4.04. Restrictions on Owners' Power......................................................................15
Section 4.05. Majority Control...................................................................................15
ARTICLE FIVE
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
Section 5.01. Establishment of Trust Account.....................................................................16
Section 5.02. Application of Trust Funds.........................................................................16
Section 5.03. Method of Payment..................................................................................17
Section 5.04. No Segregation of Monies; No Interest..............................................................17
Section 5.05. Accounting and Reports to Owners, Internal Revenue Service and Others..............................17
ARTICLE SIX
AUTHORITY AND DUTIES OF OWNER TRUSTEE
Section 6.01. General Authority..................................................................................18
Section 6.02. General Duties.....................................................................................18
Section 6.03. Action Upon Instruction............................................................................18
Section 6.04. No Duties Except as Specified in this Agreement or in Instructions.................................19
Section 6.05. No Action Except Under Specified Documents or Instructions.........................................19
Section 6.06. Restrictions.......................................................................................19
ARTICLE SEVEN
CONCERNING THE OWNER TRUSTEE
Section 7.01. Acceptance of Trusts and Duties....................................................................21
Section 7.02. Furnishing of Documents............................................................................22
Section 7.03. Representations and Warranties.....................................................................22
Section 7.04. Reliance; Advice of Counsel........................................................................22
Section 7.05. Not Acting in Individual Capacity..................................................................23
Section 7.06. Owner Trustee Not Liable for Trust Certificates or Receivables.....................................23
Section 7.07. Owner Trustee May Own Trust Certificates and Notes.................................................24
Section 7.08. Pennsylvania Motor Vehicle Sales Finance Act Licenses..............................................24
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
ARTICLE EIGHT
COMPENSATION OF OWNER TRUSTEE
Section 8.01. Owner Trustee's Fees and Expenses..................................................................25
Section 8.02. Indemnification....................................................................................25
Section 8.03. Payments to the Owner Trustee......................................................................25
ARTICLE NINE
TERMINATION OF TRUST AGREEMENT
Section 9.01. Termination of Trust Agreement.....................................................................26
ARTICLE TEN
SUCCESSOR AND ADDITIONAL OWNER TRUSTEES
Section 10.01. Eligibility Requirements for Owner Trustee........................................................28
Section 10.02. Resignation or Removal of Owner Trustee...........................................................28
Section 10.03. Successor Owner Trustee...........................................................................28
Section 10.04. Merger or Consolidation of Owner Trustee..........................................................29
Section 10.05. Appointment of Co-Trustee or Separate Trustee.....................................................29
ARTICLE ELEVEN
MISCELLANEOUS
Section 11.01. Supplements and Amendments........................................................................31
Section 11.02. No Legal Title to Owner Trust Estate in Owners....................................................32
Section 11.03. Limitations on Rights of Others...................................................................32
Section 11.04. Notices...........................................................................................32
Section 11.05. Severability......................................................................................33
Section 11.06. Separate Counterparts.............................................................................33
Section 11.07. Successors and Assigns............................................................................33
Section 11.08. No Petition.......................................................................................33
Section 11.09. No Recourse.......................................................................................33
Section 11.10. Headings..........................................................................................33
Section 11.11. Governing Law.....................................................................................33
Section 11.12. Trust Certificates Nonassessable and Fully Paid...................................................33
Section 11.13. Depositor Payment Obligation......................................................................34
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
EXHIBITS
Exhibit A - Form of Trust Certificate............................................................................A-1
Exhibit B - Form of Transferor Certificate.......................................................................B-1
Exhibit C - Form of Investment Letter............................................................................C-1
Exhibit D - Form of Rule 144A Letter.............................................................................D-1
</TABLE>
iv
<PAGE>
This Amended and Restated Trust Agreement, dated as of January 1, 1999, is
between American Honda Receivables Corp., a California corporation, as depositor
(the "Depositor"), and The Bank of New York (Delaware), a Delaware banking
corporation, as trustee (the "Owner Trustee").
WHEREAS, Honda Auto Receivables 1999-1 Owner Trust has been created
pursuant to a trust agreement, dated as of June 16, 1998, between the Depositor
and the Owner Trustee (the "Initial Trust Agreement"); and
WHEREAS, the parties hereto are entering into this amended and restated
trust agreement pursuant to which, among other things, the Initial Trust
Agreement will be amended and restated and $__________ aggregate principal
amount of Asset Backed Certificates will be issued;
NOW, THEREFORE, in consideration of the mutual agreements herein contained,
and of other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto agree as follows:
ARTICLE ONE
DEFINITIONS
Section 1.01. GENERAL DEFINITIONS. Whenever used herein, unless the context
otherwise requires, the following words and phrases shall have the following
meanings:
"ADMINISTRATION AGREEMENT" means the administration agreement, dated as of
January 1, 1999, among the Issuer, the Indenture Trustee, the Depositor and
AHFC, as amended or supplemented from time to time.
"ADMINISTRATOR" means AHFC, as Administrator under the Administration
Agreement, and its successors in such capacity.
"AGREEMENT" means this Amended and Restated Trust Agreement, as the same
may be amended and supplemented from time to time.
"AHFC" means American Honda Finance Corporation, and its successors.
"AHRC" means American Honda Receivables Corp., and its successors.
"APPLICANTS" shall have the meaning specified in Section 3.07.
"BENEFIT PLAN" means (i) an employee benefit plan (as such term is defined
in Section 3(3) of ERISA) that is subject to the provisions of Title I of ERISA,
(ii) a plan described in Section 4975(e)(1) of the Code or (iii) any entity
whose underlying assets include plan assets by reason of a plan's investment in
the entity.
<PAGE>
"BUSINESS TRUST STATUTE" means Chapter 38 of Title 12 of the Delaware Code,
12 DEL.C. Section 3801 ET SEQ., as the same may be amended from time to time.
"CERTIFICATE DISTRIBUTION ACCOUNT" means the account established and
maintained as such pursuant to Section 5.01.
"CERTIFICATE OF TRUST" means the Certificate of Trust filed for the Issuer
pursuant to Section 3810(a) of the Business Trust Statute, substantially in the
form of Exhibit A to the Initial Trust Agreement.
"CERTIFICATE RATE" means the ___% per annum calculated on the basis of a
360 day year of twelve 30 day months.
"CERTIFICATE REGISTER" and "CERTIFICATE REGISTRAR" means the register
maintained and the registrar (or any successor thereto) appointed pursuant to
Section 3.04.
"CERTIFICATEHOLDER" or "HOLDER" means a Person in whose name a Trust
Certificate is registered.
"CLOSING DATE" means January __, 1999.
"CODE" means the Internal Revenue Code of 1986, as amended, and Treasury
Regulations promulgated thereunder.
"COMMISSION" means the Securities and Exchange Commission, and its
successors.
"CORPORATE TRUST OFFICE" means, with respect to the Owner Trustee, the
principal corporate trust office of the Owner Trustee located at White Clay
Center, Route 273, Newark, Delaware 19711, or at such other address as the Owner
Trustee may designate by notice to the Owners and, the Depositor, or the
principal corporate trust office of any successor Owner Trustee at the address
designated by such successor Owner Trustee by notice to the Owners and the
Depositor.
"DEPOSITOR" means AHRC in its capacity as depositor hereunder.
"DTC" means The Depository Trust Company, and its successors.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXPENSES" means all liabilities, obligations, losses, damages, taxes,
claims, actions and suits, and any and all reasonable costs, expenses and
disbursements (including reasonable legal fees and expenses) of any kind and
nature whatsoever.
"INDEMNIFIED PARTIES" means the Owner Trustee and its successors, assigns,
agents and any co-trustee.
2
<PAGE>
"INVESTMENT LETTER" means a letter delivered in connection with the
transfer of a Trust Certificate pursuant to Section 3.04(a), substantially in
the form of Exhibit C.
"ISSUER" means the Honda Auto Receivables 1999-1 Owner Trust, and its
successors.
"OPINION OF COUNSEL" means one or more written opinions of counsel, who may
be an employee of or counsel to the Transferor, the Depositor or the Servicer,
which counsel shall be acceptable to the Indenture Trustee, the Owner Trustee or
each Rating Agency, as applicable.
"ORIGINAL CERTIFICATE BALANCE" means $__________.
"OWNER" means each Holder of a Trust Certificate.
"OWNER TRUST ESTATE" means all right, title and interest of the Issuer in
and to the property and rights assigned to the Issuer pursuant to Article Two of
the Sale and Servicing Agreement, all funds on deposit from time to time in the
Accounts and the Certificate Distribution Account, all other property of the
Issuer from time to time, including any rights of the Owner Trustee and the
Issuer pursuant to the Sale and Servicing Agreement and the Administration
Agreement and all proceeds of the foregoing.
"OWNER TRUSTEE" means The Bank of New York (Delaware), a Delaware banking
corporation, not in its individual capacity but solely as owner trustee under
this Agreement, and any successor Owner Trustee hereunder.
"PAYING AGENT" means any paying agent or co-paying agent appointed pursuant
to Section 3.09.
"PERCENTAGE INTEREST" means, as to any Trust Certificate, the percentage
interest specified on the face thereof, in the distributions on the Trust
Certificates pursuant to this Agreement.
"RECORD DATE" means, with respect to any Distribution Date, the day
immediately preceding such Distribution Date.
"REQUIRED RATING" means, with respect to any entity, that such entity (or
the parent of such entity) has a ruling of at least BBB- by Standard & Poor's
and at least Baa3 by Moody's.
"RULE 144A LETTER" means a letter delivered in connection with the transfer
of a Trust Certificate pursuant to Section 3.04(a), substantially in the form
attached hereto as Exhibit D.
"SALE AND SERVICING AGREEMENT" means the sale and servicing agreement,
dated as of January 1, 1999, among the Issuer, the Depositor and AHFC, as
servicer, as amended or supplemented from time to time.
"SECRETARY OF STATE" means the Secretary of State of the State of Delaware.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
3
<PAGE>
"TRANSFEROR CERTIFICATE" means a certificate of transfer delivered in
connection with the transfer of a Trust Certificate pursuant to Section 3.04(a),
substantially in the form of Exhibit B.
"TREASURY REGULATIONS" means regulations, including proposed or temporary
regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"TRUST CERTIFICATE" means a certificate evidencing the beneficial interest
of an Owner in the Trust, substantially in the form of Exhibit A.
Section 1.02. OTHER DEFINITIONAL PROVISIONS.
(a) Capitalized terms used herein that are not otherwise defined have the
meanings ascribed thereto in the Sale and Servicing Agreement or the Indenture,
as the case may be.
(b) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
Section 1.03. INTERPRETIVE PROVISIONS.
(a) For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires, (i) terms used herein
include, as appropriate, all genders and the plural as well as the singular,
(ii) references to words such as "herein", "hereof" and the like shall refer to
this Agreement as a whole and not to any particular part, article or section
within this Agreement, (iii) references to a section such as "Section 1.01" and
the like shall refer to the applicable Section of this Agreement, (iv) the term
"include, and all variations thereof shall mean "include without limitation",
(v) the term "or" shall include "and/or" and (vi) the term "proceeds" shall have
the meaning set forth in the applicable UCC.
(b) As used in this Agreement and in any certificate or other document made
or delivered pursuant hereto or thereto, accounting terms not defined in this
Agreement or in any such certificate or other document, and accounting terms
partly defined in this Agreement or in any such certificate or other document to
the extent not defined, shall have the respective meanings given to them under
generally accepted accounting principles. To the extent that the definitions of
accounting terms in this Agreement or in any such certificate or other document
are inconsistent with the meanings of such terms under generally accepted
accounting principles, the definitions contained in this Agreement or in any
such certificate or other document shall control.
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ARTICLE TWO
ORGANIZATION
Section 2.01. NAME. The trust created hereby shall be known as the "Honda
Auto Receivables 1999-1 Owner Trust", in which name the Owner Trustee may
conduct the business of the Issuer, make and execute contracts and other
instruments and sue and be sued, to the extent herein provided.
Section 2.02. OFFICE. The office of the Issuer shall be in care of the
Owner Trustee at the Corporate Trust Office or at such other address in Delaware
as the Owner Trustee may designate by written notice to the Owners and the
Depositor.
Section 2.03. PURPOSES AND POWERS.
(a) The sole purpose of the Issuer is to conserve the Owner Trust Estate
and collect and disburse the periodic income therefrom for the use and benefit
of the Certificateholders, and in furtherance of such purpose to engage in the
following ministerial activities:
(i) to issue the Notes pursuant to the Indenture and the Trust
Certificates pursuant to this Agreement and to sell the Notes and the Trust
Certificates;
(ii) with the proceeds of the sale of the Notes and the Trust
Certificates, to purchase the Receivables, to fund the Reserve Fund, to pay
the organizational, start-up and transactional expenses of the Trust and to
pay the balance to the Depositor pursuant to the Sale and Servicing
Agreement;
(iii) to assign, grant, transfer, pledge, mortgage and convey the
Owner Trust Estate pursuant to the Indenture and to hold, manage and
distribute to the Owners pursuant to the Sale and Servicing Agreement any
portion of the Trust Estate released from the Lien of, and remitted to the
Trust pursuant to, the Indenture;
(iv) to enter into and perform its obligations under the Basic
Documents to which it is to be a party;
(v) to engage in those activities, including entering into agreements,
that are necessary to accomplish the foregoing or are incidental thereto or
connected therewith; and
(vi) subject to compliance with the Basic Documents, to engage in such
other activities as may be required in connection with conservation of the
Owner Trust Estate and the making of distributions to the Owners and the
Noteholders.
(b) The Issuer is hereby authorized to engage in the foregoing activities.
The Issuer shall not engage in any activities other than in connection with the
foregoing or other than as required or authorized by the terms of this Agreement
or the other Basic Documents.
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Section 2.04. APPOINTMENT OF OWNER TRUSTEE. The Depositor hereby appoints
the Owner Trustee as trustee of the Issuer effective as of the date hereof, to
have all the rights, powers and duties set forth herein, and the Owner Trustee
hereby accepts such appointment.
The Owner Trustee may engage, in the name of the Issuer or in its own name
on behalf of the Issuer, in the activities of the Issuer, make and execute
contracts on behalf of the Issuer and sue and be sued.
Section 2.05. INITIAL CAPITAL CONTRIBUTION OF OWNER TRUST ESTATE. The
Depositor hereby sells, assigns, transfers, conveys and sets over to the Owner
Trustee, as of the date hereof, the sum of $1,000.00. The Owner Trustee hereby
acknowledges receipt in trust from the Depositor, as of the date hereof, of the
foregoing contribution, which shall constitute the initial Owner Trust Estate
and shall be deposited in the Certificate Distribution Account. The Depositor
shall pay organizational expenses of the Issuer as they may arise or shall, upon
the request of the Owner Trustee, promptly reimburse the Owner Trustee for any
such expenses paid by the Owner Trustee.
Section 2.06. DECLARATION OF TRUST. The Owner Trustee hereby declares that
it will hold the Owner Trust Estate in trust upon and subject to the conditions
set forth herein for the sole purpose of conserving the Owner Trust Estate and
collecting and disbursing the periodic income therefrom for the use and benefit
of the Owners, subject to the obligations of the Issuer under the Basic
Documents. It is the intention of the parties hereto that the Issuer constitute
a business trust under the Business Trust Statute and that this Agreement
constitute the governing instrument of such business trust. It is the intention
of the parties hereto that, solely for income and franchise tax purposes, (i) so
long as there is a sole Owner, the Issuer shall be treated as a security
arrangement, with the assets of the Issuer being the Receivables and other
assets held by the Issuer, the owner of the Receivables being the sole Owner and
the Notes being non-recourse debt of the sole Owner and (ii) if there is more
than one Owner, the Issuer shall be treated as a partnership for income and
franchise tax purposes, with the assets of the partnership being the Receivables
and other assets held by the Issuer and with the partners of the partnership
being the Owners and the Notes being debt of the partnership. The parties agree
that, unless otherwise required by appropriate tax authorities, the Issuer will
file or cause to be filed annual or other necessary returns, reports and other
forms consistent with the characterization of the Issuer as provided in the
preceding sentence for such tax purposes. Effective as of the date hereof, the
Owner Trustee shall have all rights, powers and duties set forth herein and in
the Business Trust Statute for the sole purpose and to the extent necessary to
accomplish the purpose of the Issuer as set forth in Section 2.03(a).
Section 2.07. LIABILITY OF OWNERS. The Owners shall be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the general corporation law of the State
of Delaware.
Section 2.08. TITLE TO TRUST PROPERTY. Legal title to the Owner Trust
Estate shall be vested at all times in the Issuer as a separate legal entity
except where applicable law in any jurisdiction requires title to any part of
the Owner Trust Estate to be vested in a trustee or trustees, in which case
title shall be deemed to be vested in the Owner Trustee, a co-trustee and/or a
separate trustee, as the case may be.
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Section 2.09. SITUS OF ISSUER. The Issuer will be located and administered
in the State of Delaware. All bank accounts maintained by the Owner Trustee on
behalf of the Issuer shall be located in Delaware, California or New York. The
Issuer shall not have any employees in any state other than Delaware; provided,
however, that nothing herein shall restrict or prohibit the Owner Trustee from
having employees within or without the State of Delaware. Payments will be
received by the Issuer only in, and payments will be made by the Issuer only
from, Delaware, California or New York. The only office of the Issuer will be at
the Corporate Trust Office.
Section 2.10. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR. The
Depositor hereby represents and warrants to the Owner Trustee that:
(a) The Depositor has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of California,
with power and authority to own its properties and to conduct its business
as such properties are currently owned and such business is presently
conducted, and had at all relevant times, and has, power, authority and
legal right to acquire, own and sell the Receivables.
(b) The Depositor is duly qualified to do business as a foreign
corporation in good standing, and has obtained all necessary licenses and
approvals in all jurisdictions in which the ownership or lease of its
property or the conduct of its business shall require such qualifications.
(c) The Depositor has the power and authority to execute and deliver
this Agreement and to carry out its terms; the Depositor has full power and
authority to sell and assign the property to be sold and assigned to and
deposited with the Owner Trustee as part of the Owner Trust Estate and the
Depositor has duly authorized such sale and assignment and deposit to the
Issuer by all necessary corporate action; and the execution, delivery and
performance of this Agreement have been duly authorized by the Depositor by
all necessary corporate action.
(d) This Agreement constitutes a legal, valid and binding obligation
of the Depositor, enforceable in accordance with its terms, except as such
enforceability may be subject to or limited by bankruptcy, insolvency,
reorganization, moratorium, liquidation, fraudulent conveyance or other
similar laws affecting the enforcement of creditors' rights in general and
by general principles of equity, regardless of whether such enforceability
shall be considered in a proceeding in equity or in law.
(e) The execution, delivery and performance by the Depositor of this
Agreement and the consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with,
result in any breach of any of the terms and provisions of, nor constitute
(with or without notice or lapse of time) a default under, the articles of
incorporation or bylaws of the Depositor, or conflict with or violate any
of the material terms or provisions of, or constitute (with or without
notice or lapse of time) a default under, any indenture, agreement or other
instrument to which the Depositor is a party or by which it is bound; nor
result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement or other instrument
(other than pursuant to the Basic Documents); nor violate
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any law or, to the best of the Depositor's knowledge, any order, rule or
regulation applicable to the Depositor of any court or of any federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Depositor or its properties;
which breach, default, conflict, lien or violation would have a material
adverse effect on the earnings, business affairs or business prospects of
the Depositor.
(f) There are no proceedings or investigations pending or, to the
Depositor's knowledge, threatened, before any court, regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Depositor or its properties: (i) asserting the
invalidity of this Agreement, (ii) seeking to prevent the issuance of the
Trust Certificates or the consummation of any of the transactions
contemplated by this Agreement or (iii) seeking any determination or ruling
that might materially and adversely affect the performance by the Depositor
of its obligations under, or the validity or enforceability of, this
Agreement.
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ARTICLE THREE
TRUST CERTIFICATES AND TRANSFER OF INTERESTS
Section 3.01. INITIAL OWNERSHIP. Upon the formation of the Issuer by the
contribution by the Depositor pursuant to Section 2.05 and until the issuance of
the Trust Certificates, the Depositor shall be the sole beneficiary of the
Issuer.
Section 3.02. THE TRUST CERTIFICATES. The Trust Certificates shall be
issued in minimum denominations of $1,000 and integral multiples thereof;
provided, however, that the Trust Certificates issued to AHRC pursuant to
Section ___ may be issued in such denomination as required to include any
residual amount. The Trust Certificates shall be executed by the Owner Trustee
on behalf of the Issuer by manual or facsimile signature of an authorized
officer of the Owner Trustee and attested on behalf of the Owner Trustee by the
manual or facsimile signature of an authorized officer of the Owner Trustee and
shall have deemed to have been validly issued when so executed. Trust
Certificates bearing the manual or facsimile signatures of individuals who were,
at the time when such signatures were affixed, authorized to sign on behalf of
the Owner Trustee, shall be validly issued and binding obligations of the Issuer
and entitled to the benefit of this Agreement, notwithstanding that such
individuals or any of them shall have ceased to be so authorized prior to the
authentication and delivery of such Trust Certificates or did not hold such
offices at the date of authentication and delivery of such Trust Certificates.
A transferee of a Trust Certificate shall become a Certificateholder and
shall be entitled to the rights and subject to the obligations of a
Certificateholder hereunder upon such transferee's acceptance of a Trust
Certificate duly registered in such transferee's name pursuant to Section 3.04.
Section 3.03. AUTHENTICATION AND DELIVERY OF TRUST CERTIFICATES. On the
Closing Date, the Owner Trustee shall cause to be authenticated and delivered
upon the order of the Depositor, in exchange for the Receivables and the other
assets of the Issuer, simultaneously with the sale, assignment and transfer to
the Issuer of the Receivables, and the constructive delivery to the Owner
Trustee of the Receivable Files and the other assets of the Issuer, Trust
Certificates duly authenticated by the Owner Trustee, in authorized
denominations equaling in the aggregate the Original Certificate Balance and
evidencing the entire ownership of the Issuer. No Trust Certificate shall
entitle its Holder to any benefit under this Agreement, or be valid for any
purpose, unless there shall appear on such Trust Certificate a certificate of
authentication substantially in the form set forth in Exhibit A, executed by the
Owner Trustee or its authenticating agent, by manual signature; and such
authentication shall constitute conclusive evidence that such Trust Certificate
shall have been duly authenticated and delivered hereunder. All Trust
Certificates shall be dated the date of their authentication. Upon issuance,
authentication and delivery pursuant to the terms hereof, the Trust Certificates
will be entitled to the benefits of this Agreement.
Section 3.04. REGISTRATION OF TRANSFER AND EXCHANGE OF TRUST CERTIFICATES.
(a) The Certificate Registrar shall keep or cause to be kept, at the office
or agency maintained pursuant to Section 3.08, a Certificate Register in which,
subject to such reasonable
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regulations as it may prescribe, the Owner Trustee shall provide for the
registration of Trust Certificates and of transfers and exchanges of Trust
Certificates as herein provided. _________________________ is hereby appointed
as initial Certificate Registrar. Upon any resignation of the initial
Certificate Registrar, the Owner Trustee shall promptly appoint a successor
thereto.
The Trust Certificates have not been and will not be registered under the
Securities Act and will not be listed on any securities exchange. No transfer of
a Trust Certificate shall be made unless such transfer is made pursuant to an
effective registration statement under the Securities Act and any applicable
state securities laws or is exempt from the registration requirements under the
Securities Act and such state securities laws. In the event that a transfer is
to be made in reliance upon an exemption from the Securities Act and state
securities laws, in order to assure compliance with the Securities Act and such
laws, the Holder desiring to effect such transfer and such Holder's prospective
transferee shall each certify to the Owner Trustee in writing the facts
surrounding the transfer in the form of a Transferor Certificate and Investment
Letter or a Rule 144A Letter. Except in the case of a transfer as to which the
proposed transferee has provided a Rule 144A Letter, there shall also be
delivered to the Owner Trustee an Opinion of Counsel that such transfer may be
made pursuant to an exemption from the Securities Act and an Opinion of Counsel
or memorandum of law that such transfer may be made pursuant to an exemption
from state securities laws, which Opinion(s) of Counsel and memorandum of law
shall not be an expense of the Issuer or the Owner Trustee. The Depositor shall
provide to any Holder of a Trust Certificate and any prospective transferee
designated by any such Holder, information regarding the Trust Certificates and
the Receivables and such other information as shall be necessary to satisfy the
condition to eligibility set forth in Rule 144A(d)(4) for transfer of any such
Trust Certificate without registration thereof under the Securities Act pursuant
to the registration exemption provided by Rule 144A. Each Holder of a Trust
Certificate desiring to effect such a transfer shall, and does hereby agree to,
indemnify the Issuer, the Owner Trustee and the Depositor against any liability
that may result if the transfer is not so exempt or is not made in accordance
with federal and state securities laws. The Owner Trustee shall cause each Trust
Certificate to contain a legend in the form set forth on the form of Trust
Certificate attached hereto as Exhibit A.
(b) Upon surrender for registration of transfer of any Trust Certificate at
the office of the Certificate Registrar and subject to the satisfaction of the
preceding paragraph, the Owner Trustee shall execute, authenticate and deliver
(or shall cause its authenticating agent to authenticate and deliver), in the
name of the designated transferee or transferees, one or more new Trust
Certificates in authorized denominations of a like aggregate Percentage Interest
dated the date of authentication by the Owner Trustee or any authenticating
agent; provided that prior to such execution, authentication and delivery, the
Owner Trustee shall have received an Opinion of Counsel to the effect that the
proposed transfer will not cause the Issuer to be characterized as an
association (or a publicly traded partnership) taxable as a corporation or alter
the tax characterization of the Notes for federal income tax purposes. At the
option of a Holder, Trust Certificates may be exchanged for other Trust
Certificates of authorized denominations of a like aggregate Percentage Interest
upon surrender of the Trust Certificates to be exchanged at the office or agency
maintained pursuant to Section 3.08.
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(c) At the option of a Certificateholder, Trust Certificates may be
exchanged for other Trust Certificates in authorized denominations of a like
aggregate Percentage Interest upon surrender of the Trust Certificates to be
exchanged at the office of the Certificate Registrar. Whenever any Trust
Certificates are so surrendered for exchange, the Owner Trustee on behalf of the
Issuer shall execute, authenticate and deliver (or shall cause its
authenticating agent to authenticate and deliver) the Trust Certificates that
the Certificateholder making the exchange is entitled to receive. Every Trust
Certificate presented or surrendered for registration of transfer or exchange
shall be accompanied by a written instrument of transfer in form satisfactory to
the Owner Trustee and the Certificate Registrar duly executed by the Holder or
such Holder's attorney duly authorized in writing.
(d) No service charge shall be made for any registration of transfer or
exchange of Trust Certificates, but the Owner Trustee may require payment of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Trust Certificates.
(e) The Trust Certificates may not be acquired by or for the account of a
Benefit Plan. By accepting and holding a Trust Certificate, the Holder thereof
shall be deemed to have represented and warranted that it is not a Benefit Plan
nor will it hold such Trust Certificate for the account of a Benefit Plan.
(f) All Trust Certificates surrendered for registration of transfer or
exchange, if surrendered to the Issuer or any agent of the Owner Trustee or the
Issuer under this Agreement, shall be delivered to the Owner Trustee and
promptly cancelled by it, or, if surrendered to the Owner Trustee, shall be
promptly cancelled by it, and no Trust Certificates shall be issued in lieu
thereof except as expressly permitted by any of the provisions of this
Agreement. The Owner Trustee shall dispose of cancelled Trust Certificates in
accordance with the normal industry practice.
(g) The preceding provisions of this Section notwithstanding, the Owner
Trustee shall not make, and the Certificate Registrar shall not register
transfers or exchanges of, Trust Certificates for a period of 15 days preceding
the due date for any payment with respect to the Trust Certificates.
Section 3.05. MUTILATED, DESTROYED, LOST OR STOLEN TRUST CERTIFICATES. If
(i) any mutilated Trust Certificate is surrendered to the Certificate Registrar,
or the Certificate Registrar receives evidence to its satisfaction of the
destruction, loss or theft of any Trust Certificate and (ii) there is delivered
to the Certificate Registrar and the Owner Trustee such security or indemnity as
may be required by them to save each of them harmless, then, in the absence of
notice that such Trust Certificate has been acquired by a bona fide purchaser,
the Owner Trustee on behalf of the Issuer shall execute and the Owner Trustee or
its authenticating agent shall authenticate and deliver, in exchange for or in
lieu of any such mutilated, destroyed, lost or stolen Trust Certificate, a new
Trust Certificate in an authorized denomination and of a like Percentage
Interest. In connection with the issuance of any new Trust Certificate under
this Section, the Owner Trustee may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
therewith. Any duplicate Trust Certificate issued pursuant to this Section
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shall constitute conclusive evidence of ownership in the Trust, as if originally
issued, whether or not the lost, stolen or destroyed Trust Certificate shall be
found at any time.
Section 3.06. PERSONS DEEMED OWNERS. Prior to due presentation of a Trust
Certificate for registration of transfer, the Owner Trustee, the Certificate
Registrar, any Paying Agent and any of their respective agents may treat the
Person in whose name any Trust Certificate is registered as the owner of such
Trust Certificate for the purpose of receiving distributions pursuant to Section
5.02 and for all other purposes whatsoever, and none of the Owner Trustee, the
Certificate Registrar, any Paying Agent or any of their respective agents shall
be affected by any notice to the contrary.
Section 3.07. ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND ADDRESSES.
The Owner Trustee shall furnish or cause to be furnished to the Servicer and the
Depositor, within 15 days after receipt by the Owner Trustee of a written
request therefor from the Servicer or the Depositor, a list, in such form as the
Servicer or the Depositor may reasonably require, of the names and addresses of
the Certificateholders as of the most recent Record Date. If three or more
Certificateholders, or one or more Holders of Trust Certificates evidencing not
less than 51% of the percentage interests of the Trust Certificates (hereinafter
referred to as the "Applicants"), apply in writing to the Owner Trustee, and
such application states that the Applicants desire to communicate with other
Certificateholders with respect to their rights under this Agreement or under
the Trust Certificates, then the Owner Trustee shall, within five Business Days
after the receipt of such application, afford such Applicants access during
normal business hours to the current list of Certificateholders. Each Holder, by
receiving and holding a Trust Certificate, shall be deemed to have agreed not to
hold any of the Depositor, the Certificate Registrar or the Owner Trustee
accountable by reason of the disclosure of its name and address, regardless of
the source from which such information was derived.
Section 3.08. MAINTENANCE OF OFFICE OR AGENCY. The Owner Trustee shall
maintain in the Borough of Manhattan, The City of New York, an office or offices
or agency or agencies where Trust Certificates may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Owner Trustee in respect of the Trust Certificates and the Basic Documents
may be served. The Owner Trustee initially designates _____________________, New
York, New York ______ as its office for such purposes. The Owner Trustee shall
give prompt written notice to the Depositor and to the Certificateholders of any
change in the location of the Certificate Register or any such office or agency.
Section 3.09. APPOINTMENT OF PAYING AGENT. The Paying Agent shall make
distributions to Certificateholders from the Certificate Distribution Account
pursuant to Section 5.02(a) and shall report the amounts of such distributions
to the Owner Trustee. Any Paying Agent shall have the revocable power to
withdraw funds from the Certificate Distribution Account for the purpose of
making the distributions referred to above. The Owner Trustee may revoke such
power and remove the Paying Agent if the Owner Trustee determines in its sole
discretion that the Paying Agent shall have failed to perform its obligations
under this Agreement in any material respect. The Paying Agent initially shall
be __________________, and any co-paying agent chosen by the Paying Agent that
is acceptable to the Owner Trustee. Each Paying Agent shall be permitted to
resign as Paying Agent upon 30 days' written notice to the Owner Trustee. In the
event that ________________________ shall no longer be the Paying Agent, the
Owner
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Trustee shall appoint a successor to act as Paying Agent (which shall be a
bank or trust company). The Owner Trustee shall cause such successor Paying
Agent or any additional Paying Agent appointed by the Owner Trustee to execute
and deliver to the Owner Trustee an instrument in which such successor Paying
Agent or additional Paying Agent shall agree with the Owner Trustee that, as
Paying Agent, such successor Paying Agent or additional Paying Agent will hold
all sums, if any, held by it for payment to the Certificateholders in trust for
the benefit of the Certificateholders entitled thereto until such sums shall be
paid to such Certificateholders. The Paying Agent shall return all unclaimed
funds to the Owner Trustee and upon removal of a Paying Agent such Paying Agent
shall also return all funds in its possession to the Owner Trustee. The
provisions of Sections 7.01, 7.03, 7.04 and 8.01 shall apply to the Owner
Trustee also in its role as Paying Agent, for so long as the Owner Trustee shall
act as Paying Agent and, to the extent applicable, to any other paying agent
appointed hereunder. Any reference in this Agreement to the Paying Agent shall
include any co-paying agent unless the context requires otherwise.
Section 3.10. DEFINITIVE TRUST CERTIFICATES. The Trust Certificates, upon
original issuance, will be issued in definitive, fully registered form.
Section 3.11. REPAYMENT OF TRUST CERTIFICATES. In the event of an optional
Purchase, the Certificates will be prepaid in whole, but not in part, at a
prepayment price equal to the Certificate Balance plus accrued interest thereon
at the Certificate Rate.
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ARTICLE FOUR
ACTIONS BY OWNER TRUSTEE
Section 4.01. PRIOR NOTICE TO OWNERS WITH RESPECT TO CERTAIN MATTERS.
Subject to the provisions and limitations of Section 4.04, with respect to the
following matters, the Owner Trustee shall not take action unless at least 30
days before the taking of such action, the Owner Trustee shall have notified the
Certificateholders in writing of the proposed action and the Owners shall not
have notified the Owner Trustee in writing prior to the 30th day after such
notice is given that such Owners have withheld consent or provided alternative
direction:
(a) the initiation of any claim or lawsuit by the Issuer (except
claims or lawsuits brought in connection with the collection of the
Receivables) and the compromise of any action, claim or lawsuit brought by
or against the Issuer (except with respect to the aforementioned claims or
lawsuits for collection of the Receivables);
(b) the election by the Issuer to file an amendment to the Certificate
of Trust (unless such amendment is required to be filed under the Business
Trust Statute);
(c) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required;
(d) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is not required and such
amendment materially adversely affects the interests of the Owners;
(e) the amendment, change or modification of the Administration
Agreement, except to cure any ambiguity or to amend or supplement any
provision in a manner or add any provision that would not materially
adversely affect the interests of the Owners; or
(f) the appointment pursuant to the Indenture of a successor Note
Registrar, paying agent for the Notes or Indenture Trustee or pursuant to
this Agreement of a successor Certificate Registrar, or the consent to the
assignment by the Note Registrar, Paying Agent, Indenture Trustee or
Certificate Registrar of its obligations under the Indenture or this
Agreement, as applicable.
Section 4.02. ACTION BY OWNERS WITH RESPECT TO CERTAIN MATTERS. Subject to
the provisions and limitations of Section 4.04, the Owner Trustee shall not have
the power, except upon the direction of the Owners, to (i) remove the
Administrator pursuant to Section 1.09 of the Administration Agreement, (ii)
appoint a successor Administrator pursuant to Section 1.09 of the Administration
Agreement, (iii) remove the Servicer pursuant to Section 7.02 of the Sale and
Servicing Agreement, (iv) except as expressly provided in the Basic Documents,
sell the Receivables after the termination of the Indenture, (v) initiate any
claim, suit or proceeding by the Issuer or compromise any claim, suit or
proceeding brought by or against the Issuer, (vi) authorize the merger or
consolidation of the Issuer with or into any other business trust or entity
(other than in accordance with Section 3.10 of the Indenture) or (vii) amend the
Certificate
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of Trust. The Owner Trustee shall take the actions referred to in the preceding
sentence only upon written instructions signed by the Owners.
Section 4.03. ACTION BY OWNERS WITH RESPECT TO BANKRUPTCY. The Owner
Trustee shall not have the power to commence a voluntary proceeding in
bankruptcy relating to the Issuer without the unanimous prior approval of all
Owners (including the Depositor) and the delivery to the Owner Trustee by each
such Owner of a certificate certifying that such Owner reasonably believes that
the Issuer is insolvent.
Section 4.04. RESTRICTIONS ON OWNERS' POWER. The Owners shall not direct
the Owner Trustee to take or to refrain from taking any action if such action or
inaction would be contrary to any obligation of the Issuer or the Owner Trustee
under this Agreement or any of the other Basic Documents or would be contrary to
the purpose of the Issuer as set forth in Section 2.03, nor shall the Owner
Trustee be obligated to follow any such direction, if given.
Section 4.05. MAJORITY CONTROL. Except as expressly provided herein, any
action that may be taken by the Owners under this Agreement may be taken by the
Holders of Trust Certificates evidencing not less than a majority of the
Percentage Interests evidenced by the Trust Certificates. Except as expressly
provided herein, any written notice of the Owners delivered pursuant to this
Agreement shall be effective if signed by Holders of Trust Certificates
evidencing not less than a majority of the Percentage Interests evidenced by the
Trust Certificates at the time of the delivery of such notice.
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ARTICLE FIVE
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
Section 5.01. ESTABLISHMENT OF TRUST ACCOUNT. The Owner Trustee, for the
benefit of the Certificateholders, shall establish and maintain in the name of
the Issuer an Eligible Account (the "Certificate Distribution Account"), bearing
a designation clearly indicating that the funds deposited therein are held for
the benefit of the Certificateholders.
The Owner Trustee shall possess all right, title and interest in funds on
deposit from time to time in the Certificate Distribution Account and in the
proceeds thereof. Except as otherwise expressly provided herein, the Certificate
Distribution Account shall be under the sole dominion and control of the Owner
Trustee for the benefit of the Certificateholders. If, at any time, the
Certificate Distribution Account ceases to be an Eligible Account, the Owner
Trustee (or the Depositor on behalf of the Owner Trustee, if the Certificate
Distribution Account is not then held by the Owner Trustee or an Affiliate
thereof) shall within ten Business Days (or such longer period, not to exceed 30
calendar days, as to which each Rating Agency may consent) establish a new
Certificate Distribution Account as an Eligible Account and shall transfer any
cash and/or any investments to such new Certificate Distribution Account. Monies
on deposit in the Certificate Distribution Account may be invested in Permitted
Investments upon the terms set forth in Section 4.01 of the Sale and Servicing
Agreement, as if the Certificate Distribution Account were an "Account".
Section 5.02. APPLICATION OF TRUST FUNDS.
(a) On each Distribution Date, the Owner Trustee will distribute to
Certificateholders, on the basis of the Percentage Interest evidenced by their
Trust Certificates, amounts deposited in the Certificate Distribution Account
pursuant to Section 4.06 of the Sale and Servicing Agreement with respect to
such Distribution Date.
(b) On each Distribution Date, the Owner Trustee shall send to each
Certificateholder the statement or statements provided to the Owner Trustee by
the Servicer pursuant to Section 4.10 of the Sale and Servicing Agreement with
respect to such Distribution Date.
(c) In the event that any withholding tax is imposed on the Issuer's
payment (or allocations of income) to an Owner, such tax shall reduce the amount
otherwise distributable to the Owner in accordance with this Section. The Owner
Trustee is hereby authorized and directed to retain from amounts otherwise
distributable to the Owners sufficient funds for the payment of any tax that is
legally owed by the Issuer (but such authorization shall not prevent the Owner
Trustee from contesting any such tax in appropriate proceedings and withholding
payment of such tax, if permitted by law, pending the outcome of such
proceedings). The amount of any withholding tax imposed with respect to an Owner
shall be treated as cash distributed to such Owner at the time it is withheld by
the Issuer and remitted to the appropriate taxing authority. If there is a
possibility that withholding tax is payable with respect to a distribution, the
Owner Trustee may in its sole discretion withhold such amounts in accordance
with this paragraph (c).
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Section 5.03. METHOD OF PAYMENT. Subject to Section 9.01(c) respecting the
final payment upon retirement of each Trust Certificate, distributions required
to be made to Certificateholders on any Distribution Date shall be made to each
Certificateholder of record on the related Record Date by wire transfer, in
immediately available funds, to the account of such Holder at a bank or other
entity having appropriate facilities therefor, if such Certificateholder shall
have provided to the Certificate Registrar appropriate written instructions at
least five Business Days prior to such Distribution Date, or, if not, by check
mailed to such Certificateholder at the address of such Holder appearing in the
Certificate Register.
Section 5.04. NO SEGREGATION OF MONIES; NO INTEREST. Subject to Sections
5.01 and 5.02, monies received by the Owner Trustee hereunder need not be
segregated in any manner except to the extent required by law or the Sale and
Servicing Agreement and may be deposited under such general conditions as may be
prescribed by law, and the Owner Trustee shall not be liable for any interest
thereon.
Section 5.05. ACCOUNTING AND REPORTS TO OWNERS, INTERNAL REVENUE SERVICE
AND OTHERS. The Owner Trustee shall maintain (or cause to be maintained) the
books of the Issuer on a fiscal year basis ending March 31 of each year and the
accrual method of accounting. In addition, the Issuer shall deliver to each
Owner such information, reports or statements as may be required by the Code and
applicable Treasury Regulations and as may be required to enable each Owner to
prepare its federal and state income tax returns. Consistent with the Issuer's
characterization for tax purposes, as a security arrangement for the issuance of
non-recourse debt, no federal income tax return shall be filed on behalf of the
Issuer unless either (i) the Owner Trustee shall receive an Opinion of Counsel
that, based on a change in applicable law occurring after the date hereof, the
Code requires such a filing or (ii) the Internal Revenue Service shall determine
that the Issuer is required to file such a return. Notwithstanding the preceding
sentence, the Owner Trustee shall file Internal Revenue Service Form 8832 and
elect for the Issuer to be treated as a domestic eligible entity with a single
owner that is disregarded as a separate entity, which election shall remain in
effect so long as the Depositor or any other party is the sole Owner. In the
event that the Issuer is required to file tax returns, the Owner Trustee shall
prepare or shall cause to be prepared any tax returns required to be filed by
the Issuer and shall remit such returns to the Depositor (or if the Depositor no
longer owns any Certificates, the Owner designated for such purpose by the
Depositor to the Owner Trustee in writing) at least five days before such
returns are due to be filed. The Depositor (or such designee Owner, as
applicable) shall promptly sign such returns and deliver such returns after
signature to the Owner Trustee and such returns shall be filed by the Owner
Trustee with the appropriate tax authorities. In no event shall the Owner
Trustee or the Depositor (or such designee Owner, as applicable) be liable for
any liabilities, costs or expenses of the Issuer or the Noteholders arising out
of the application of any tax law, including federal, state, foreign or local
income or excise taxes or any other tax imposed on or measured by income (or any
interest, penalty or addition with respect thereto or arising from a failure to
comply therewith) except for any such liability, cost or expense attributable to
any act or omission by the Owner Trustee or the Depositor (or such designee
Owner, as applicable), as the case may be, in breach of its obligations under
this Agreement.
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ARTICLE SIX
AUTHORITY AND DUTIES OF OWNER TRUSTEE
Section 6.01. GENERAL AUTHORITY. Subject to the provisions and limitations
of Sections 2.03 and 2.06, the Owner Trustee is authorized and directed to
execute and deliver the Basic Documents to which the Issuer is to be a party and
each certificate or other document attached as an exhibit to or contemplated by
the Basic Documents to which the Issuer is to be a party and any amendment or
other agreement, as evidenced conclusively by the Owner Trustee's execution
thereof. In addition to the foregoing, the Owner Trustee is authorized, but
shall not be obligated, to take all actions required of the Issuer pursuant to
the Basic Documents. The Owner Trustee is further authorized from time to time
to take such action as the Administrator recommends with respect to the Basic
Documents.
Section 6.02. GENERAL DUTIES. Subject to the provisions and limitations of
Sections 2.03 and 2.06, it shall be the duty of the Owner Trustee to discharge
(or cause to be discharged) all of its responsibilities pursuant to the terms of
this Agreement and the other Basic Documents to which the Issuer is a party and
to administer the Issuer in the interest of the Owners, subject to the Basic
Documents and in accordance with the provisions of this Agreement.
Notwithstanding the foregoing, the Owner Trustee shall be deemed to have
discharged its duties and responsibilities hereunder and under the other Basic
Documents to the extent the Administrator has agreed in the Administration
Agreement to perform any act or to discharge any duty of the Owner Trustee
hereunder or under any Basic Document, and the Owner Trustee shall not be held
liable for the default or failure of the Administrator to carry out its
obligations under the Administration Agreement.
Section 6.03. ACTION UPON INSTRUCTION.
(a) Subject to Article Four, in accordance with the terms of the Basic
Documents, the Owners may by written instruction direct the Owner Trustee in the
management of the Issuer. Such direction may be exercised at any time by written
instruction of the Owners pursuant to Article Four.
(b) The Owner Trustee shall not be required to take any action hereunder or
under any other Basic Document if the Owner Trustee shall have reasonably
determined, or shall have been advised by counsel, that such action is likely to
result in liability on the part of the Owner Trustee or is contrary to the terms
hereof or of any other Basic Document or is otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or under
any other Basic Document, the Owner Trustee shall promptly give notice (in such
form as shall be appropriate under the circumstances) to the Owners requesting
instruction as to the course of action to be adopted, and to the extent the
Owner Trustee acts in good faith in accordance with any written instruction of
the Owners received, the Owner Trustee shall not be liable on account of such
action to any Person. If the Owner Trustee shall not have received appropriate
instruction within ten days of such notice (or within such shorter period of
time as reasonably may be specified in such notice
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or may be necessary under the circumstances) it may, but shall be under no duty
to, take or refrain from taking such action not inconsistent with this Agreement
and the other Basic Documents, as it shall deem to be in the best interests of
the Owners, and shall have no liability to any Person for such action or
inaction.
(d) In the event that the Owner Trustee is unsure as to the application of
any provision of this Agreement or any other Basic Document or any such
provision is ambiguous as to its application, or is, or appears to be, in
conflict with any other applicable provision, or in the event that this
Agreement permits any determination by the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required to take
with respect to a particular set of facts, the Owner Trustee may give notice (in
such form as shall be appropriate under the circumstances) to the Owners
requesting instruction and, to the extent that the Owner Trustee acts or
refrains from acting in good faith in accordance with any such instruction
received, the Owner Trustee shall not be liable, on account of such action or
inaction, to any Person. If the Owner Trustee shall not have received
appropriate instruction within ten days of such notice (or within such shorter
period of time as reasonably may be specified in such notice or may be necessary
under the circumstances) it may, but shall be under no duty to, take or refrain
from taking such action not inconsistent with this Agreement or the other Basic
Documents, as it shall deem to be in the best interests of the Owners, and shall
have no liability to any Person for such action or inaction.
Section 6.04. NO DUTIES EXCEPT AS SPECIFIED IN THIS AGREEMENT OR IN
INSTRUCTIONS. The Owner Trustee shall not have any duty or obligation to manage,
make any payment with respect to, register, record, sell, dispose of, or
otherwise deal with the Owner Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Owner Trustee is a party, except as expressly provided by the terms
of this Agreement or in any document or written instruction received by the
Owner Trustee pursuant to Section 6.03; and no implied duties or obligations
shall be read into this Agreement or any other Basic Document against the Owner
Trustee. The Owner Trustee shall have no responsibility for filing any financing
or continuation statement in any public office at any time or to otherwise
perfect or maintain the perfection of any security interest or lien granted to
it hereunder or to prepare or file any Commission filing for the Issuer or to
record this Agreement or any other Basic Document. The Owner Trustee
nevertheless agrees that it will, at its own cost and expense, promptly take all
action as may be necessary to discharge any liens (other than the lien of the
Indenture) on any part of the Owner Trust Estate that result from actions by, or
claims against, the Owner Trustee that are not related to the ownership or the
administration of the Owner Trust Estate.
Section 6.05. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR INSTRUCTIONS.
The Owner Trustee shall not manage, control, use, sell, dispose of or otherwise
deal with any part of the Owner Trust Estate except in accordance with (i) the
powers granted to and the authority conferred upon the Owner Trustee pursuant to
this Agreement, (ii) the Basic Documents and (iii) any document or instruction
delivered to the Owner Trustee pursuant to Section 6.03.
Section 6.06. RESTRICTIONS. The Owner Trustee shall not take any action (i)
that is inconsistent with the purposes of the Issuer set forth in Section 2.03
or (ii) that, to the actual knowledge of the Owner Trustee, would result in the
Issuer's becoming taxable as a corporation
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for federal or state income tax purposes. The Owners shall not direct the Owner
Trustee to take action that would violate the provisions of this Section.
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ARTICLE SEVEN
CONCERNING THE OWNER TRUSTEE
Section 7.01. ACCEPTANCE OF TRUSTS AND DUTIES. The Owner Trustee accepts
the trusts hereby created and agrees to perform its duties hereunder with
respect to such trusts, but only upon the terms of this Agreement. The Owner
Trustee also agrees to disburse all monies actually received by it constituting
part of the Owner Trust Estate upon the terms of this Agreement and the other
Basic Documents. The Owner Trustee shall not be answerable or accountable
hereunder or under any other Basic Document under any circumstances, except (i)
for its own willful misconduct, bad faith or negligence or (ii) in the case of
the inaccuracy of any representation or warranty contained in Section 7.03
expressly made by the Owner Trustee. In particular, but not by way of limitation
(and subject to the exceptions set forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any error of judgment
made in good faith by the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in accordance with the instructions of
the Administrator or any Owner or Owners;
(c) no provision of this Agreement or any other Basic Document shall
require the Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights or powers
hereunder or under any other Basic Document if the Owner Trustee shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured or
provided to it;
(d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any Basic Document, including
the principal of and interest on the Notes or the Trust Certificates;
(e) the Owner Trustee shall not be responsible for or in respect of
the validity or sufficiency of this Agreement or for the due execution
hereof by the Depositor or for the form, character, genuineness,
sufficiency, value or validity of any of the Owner Trust Estate, or for or
in respect of the validity or sufficiency of the Basic Documents, other
than the certificate of authentication on the Trust Certificates, and the
Owner Trustee shall in no event assume or incur any liability, duty or
obligation to any Noteholder or to any Owner, other than as expressly
provided for in the Basic Documents;
(f) the Owner Trustee shall not be liable for the default or
misconduct of the Administrator, the Transferor, the Depositor, the
Indenture Trustee or the Servicer under any Basic Document or otherwise,
and the Owner Trustee shall have no obligation or liability to perform the
obligations of the Issuer under this Agreement or the other Basic Documents
that are required to be performed by the Administrator under the
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Administration Agreement, the Indenture Trustee under the Indenture or the
Servicer or the Transferor under the Sale and Servicing Agreement; and
(g) the Owner Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation under this Agreement or otherwise or in
relation to this Agreement or any other Basic Document, at the request,
order or direction of any of the Owners, unless such Owners have offered to
the Owner Trustee security or indemnity satisfactory to it against the
costs, expenses and liabilities that may be incurred by the Owner Trustee
therein or thereby; the right of the Owner Trustee to perform any
discretionary act enumerated in this Agreement or in any other Basic
Document shall not be construed as a duty, and the Owner Trustee shall not
be answerable for other than its negligence, bad faith or willful
misconduct in the performance of any such act.
Section 7.02. FURNISHING OF DOCUMENTS.
(a) The Owner Trustee shall furnish to the Owners, promptly upon
receipt of a written request therefor, duplicates or copies of all reports,
notices, requests, demands, certificates, financial statements and any
other instruments furnished to the Owner Trustee under the Basic Documents.
(b) Copies of this Trust Agreement (without exhibits) may be obtained
by holders of the Notes who so request in writing.
Section 7.03. REPRESENTATIONS AND WARRANTIES. The Owner Trustee hereby
represents and warrants to the Depositor and the Owners, that:
(a) it is a banking corporation duly organized and validly existing in
good standing under the laws of the State of Delaware; it has all requisite
corporate power and authority to execute, deliver and perform its
obligations under this Agreement;
(b) it has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement will be
executed and delivered by one of its officers who is duly authorized to
execute and deliver this Agreement on its behalf; and
(c) neither the execution nor the delivery by it of this Agreement,
nor the consummation by it of the transactions contemplated hereby, nor
compliance by it with any of the terms or provisions hereof will contravene
any federal or Delaware law, governmental rule or regulation governing the
banking or trust powers of the Owner Trustee or any judgment or order
binding on it, or constitute any default under its charter documents or
bylaws or any indenture, mortgage, contract, agreement or instrument to
which it is a party or by which any of its properties may be bound.
Section 7.04. RELIANCE; ADVICE OF COUNSEL.
(a) The Owner Trustee shall incur no liability to anyone in acting
upon any signature, instrument, notice, resolution, request, consent,
order, certificate, report, opinion, bond or other
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document or paper believed by it to be genuine and believed by it to be
signed by the proper party or parties. The Owner Trustee may accept a
certified copy of a resolution of the board of directors or other governing
body of any corporate party as conclusive evidence that such resolution has
been duly adopted by such body and that the same is in full force and
effect. As to any fact or matter the method of determination of which is
not specifically prescribed herein, the Owner Trustee may for all purposes
hereof rely on a certificate, signed by the president or any vice president
or by the treasurer or other authorized officers of the relevant party, as
to such fact or matter, and such certificate shall constitute full
protection to the Owner Trustee for any action taken or omitted to be taken
by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Agreement and the
other Basic Documents, the Owner Trustee (i) may act directly or through
its agents or attorneys pursuant to agreements entered into with any of
them, and the Owner Trustee shall not be liable for the conduct or
misconduct of such agents or attorneys if such agents or attorneys shall
have been selected by the Owner Trustee with reasonable care, and (ii) may
consult with counsel, accountants and other skilled persons to be selected
with reasonable care and employed by it. The Owner Trustee shall not be
liable for anything done, suffered or omitted in good faith by it in
accordance with the written opinion or advice of any such counsel,
accountants or other such persons and not contrary to this Agreement or any
other Basic Document.
Section 7.05. NOT ACTING IN INDIVIDUAL CAPACITY. Except as otherwise
provided in this Article, in accepting the trusts hereby created The Bank of New
York (Delaware) acts solely as Owner Trustee hereunder and not in its individual
capacity, and all Persons having any claim against the Owner Trustee by reason
of the transactions contemplated by this Agreement or any other Basic Document
shall look only to the Owner Trust Estate for payment or satisfaction thereof.
Section 7.06. OWNER TRUSTEE NOT LIABLE FOR TRUST CERTIFICATES OR
RECEIVABLES. The recitals contained herein and in the Trust Certificates (other
than the signature of the Owner Trustee and the certificate of authentication on
the Trust Certificates) shall be taken as the statements of the Depositor, and
the Owner Trustee assumes no responsibility for the correctness thereof. The
Owner Trustee makes no representations as to the validity or sufficiency of this
Agreement, any other Basic Document or the Trust Certificates (other than the
signature of the Owner Trustee and the certificate of authentication on the
Trust Certificates and the representations and warranties in Section 7.03) or
the Notes, or of any Receivable or related documents. The Owner Trustee shall at
no time have any responsibility or liability for or with respect to the
legality, validity and enforceability of any Receivable, or the perfection and
priority of any security interest created by any Receivable in any Financed
Vehicle or the maintenance of any such perfection and priority, or for or with
respect to the sufficiency of the Owner Trust Estate or its ability to generate
the payments to be distributed to Certificateholders under this Agreement or the
Noteholders under the Indenture, including, without limitation, the existence,
condition and ownership of any Financed Vehicle; the existence and
enforceability of any insurance thereon; the existence and contents of any
Receivable on any computer or other record thereof; the validity of the
assignment of any Receivable to the Issuer or of any intervening assignment; the
completeness of any Receivable; the performance or enforcement of any
Receivable; the compliance by the Depositor or the Servicer with any warranty or
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representation made under any Basic Document or in any related document or the
accuracy of any such warranty or representation, or any action of the
Administrator, the Indenture Trustee or the Servicer or any subservicer taken in
the name of the Owner Trustee.
Section 7.07. OWNER TRUSTEE MAY OWN TRUST CERTIFICATES AND NOTES. The Owner
Trustee in its individual or any other capacity may become the owner or pledgee
of Trust Certificates or Notes and may deal with the Depositor, the
Administrator, the Indenture Trustee and the Servicer in banking transactions
with the same rights as it would have if it were not Owner Trustee.
Section 7.08. PENNSYLVANIA MOTOR VEHICLE SALES FINANCE ACT LICENSES. The
Owner Trustee, in its individual capacity, shall use its best efforts to
maintain, and the Owner Trustee, as Owner Trustee, shall cause the Issuer to use
its best efforts to maintain, the effectiveness of all licenses required under
the Pennsylvania Motor Vehicle Sales Finance Act in connection with this
Agreement and the other Basic Documents and the transactions contemplated hereby
and thereby until such time as the Issuer shall terminate in accordance with the
terms hereof.
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ARTICLE EIGHT
COMPENSATION OF OWNER TRUSTEE
Section 8.01. OWNER TRUSTEE'S FEES AND EXPENSES. The Owner Trustee shall
receive as compensation for its services hereunder such fees as have been
separately agreed upon before the date hereof between the Depositor and the
Owner Trustee, and the Owner Trustee shall be entitled to be reimbursed by the
Depositor for its other reasonable expenses hereunder, including the reasonable
compensation, expenses and disbursements of such agents, representatives,
experts and counsel as the Owner Trustee may employ in connection with the
exercise and performance of its rights and its duties hereunder.
Section 8.02. INDEMNIFICATION. The Depositor shall be liable as primary
obligor for, and shall indemnify the Indemnified Parties from and against, any
and all Expenses which may at any time be imposed on, incurred by, or asserted
against the Owner Trustee or any other Indemnified Party in any way relating to
or arising out of this Agreement, the other Basic Documents, the Owner Trust
Estate, the administration of the Owner Trust Estate or the action or inaction
of the Owner Trustee or any other Indemnified Party hereunder, except only that
the Depositor shall not be liable for or required to indemnify an Indemnified
Party from and against Expenses arising or resulting from any of the matters
described in the third sentence of Section 7.01. The indemnities contained in
this Section shall survive the resignation or termination of the Owner Trustee
or the termination of this Agreement. In the event of any claim, action or
proceeding for which indemnity will be sought pursuant to this Section, the
Owner Trustee's choice of legal counsel shall be subject to the approval of the
Depositor, which approval shall not be unreasonably withheld.
Section 8.03. PAYMENTS TO THE OWNER TRUSTEE. Any amounts paid to the Owner
Trustee pursuant to this Article shall be deemed not to be a part of the Owner
Trust Estate immediately after such payment.
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ARTICLE NINE
TERMINATION OF TRUST AGREEMENT
Section 9.01. TERMINATION OF TRUST AGREEMENT.
(a) This Agreement (other than Article Eight) and the Issuer shall
terminate and be of no further force or effect upon the earlier to occur of (i)
the purchase on any Distribution Date by the Transferor or the Servicer, or any
successor Servicer, at its option, pursuant to Section 8.01(a) of the Sale and
Servicing Agreement, of the Owner Trust Estate other than the Accounts and the
Certificate Distribution Account, (ii) the final distribution by the Owner
Trustee of all monies or other property or proceeds of the Owner Trust Estate in
accordance with the terms of the Indenture, the Sale and Servicing Agreement and
Article Five or (iii) the Distribution Date next succeeding the month which is
one year after the maturity or other liquidation of the last Receivable and the
disposition of any amount received upon liquidation of any property remaining in
the Owner Trust Estate. The bankruptcy, liquidation, dissolution, death or
incapacity of any Owner shall not (i) operate to terminate this Agreement or the
Issuer, (ii) entitle such Owner's legal representatives or heirs to claim an
accounting or to take any action or proceeding in any court for a partition or
winding up of all or any part of the Issuer or Owner Trust Estate or (iii)
otherwise affect the rights, obligations and liabilities of the parties hereto.
(b) Except as provided in Section 9.01(a), neither of the Depositor nor any
Owner shall be entitled to revoke or terminate the Issuer.
(c) The outstanding Trust Certificates are subject to redemption in whole,
but not in part, pursuant to Section 8.01 of the Sale and Servicing Agreement;
provided that the Issuer has available funds sufficient to pay the Certificate
Balance, together with accrued interest at the Certificate Rate to but excluding
the Distribution Date. Notice of any termination of the Issuer, specifying the
Distribution Date upon which Certificateholders shall surrender their Trust
Certificates to the Paying Agent for payment of the final distribution and
cancellation, shall be given by the Owner Trustee by letter to
Certificateholders mailed within five Business Days of receipt of notice of such
termination from the Servicer given pursuant to Section 8.01(b) of the Sale and
Servicing Agreement, stating (i) the Distribution Date upon or with respect to
which final payment of the Trust Certificates shall be made upon presentation
and surrender of the Trust Certificates at the office of the Paying Agent in The
City of New York therein designated, (ii) the amount of any such final payment
and (iii) that the Record Date otherwise applicable to such Distribution Date is
not applicable, payments being made only upon presentation and surrender of the
Trust Certificates at the office of the Paying Agent therein specified. The
Owner Trustee shall give such notice to the Certificate Registrar (if other than
the Owner Trustee) and the Paying Agent at the time such notice is given to
Certificateholders. Upon presentation and surrender of the Trust Certificates,
the Paying Agent shall cause to be distributed to Certificateholders amounts
distributable on such Distribution Date pursuant to Section 5.02. The Owner
Trustee shall promptly notify each Rating Agency upon the final payment of the
Trust Certificates.
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(d) In the event that all of the Certificateholders shall not surrender
their Trust Certificates for cancellation within six months after the date
specified in the above mentioned written notice, the Owner Trustee shall give a
second written notice to the remaining Certificateholders to surrender their
Trust Certificates for cancellation and receive the final distribution with
respect thereto. If within one year after the second notice all the Trust
Certificates shall not have been surrendered for cancellation, the Owner Trustee
may take appropriate steps, or may appoint an agent to take appropriate steps,
to contact the remaining Certificateholders concerning surrender of their Trust
Certificates, and the cost thereof shall be paid out of the funds and other
assets that shall remain subject to this Agreement. Subject to applicable
escheat laws, any funds remaining in the Issuer after exhaustion of such
remedies shall be distributed by the Owner Trustee to the Depositor, in its
capacities as Depositor and as Holder of such Certificate.
(e) Upon the winding up of the Issuer and its termination, the Owner
Trustee shall cause the Certificate of Trust to be cancelled by filing a
certificate of cancellation with the Secretary of State in accordance with
Section 3810 of the Business Trust Statute.
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ARTICLE TEN
SUCCESSOR AND ADDITIONAL OWNER TRUSTEES
Section 10.01. ELIGIBILITY REQUIREMENTS FOR OWNER TRUSTEE. The Owner
Trustee shall at all times (i) be a corporation satisfying the provisions of
Section 3807(a) of the Business Trust Statute, (ii) be authorized to exercise
corporate trust powers, (iii) have a combined capital and surplus of at least
$50,000,000, (iv) be subject to supervision or examination by federal or state
authorities and (v) have the Required Rating. If such corporation shall publish
reports of condition at least annually pursuant to law or to the requirements of
the aforesaid supervising or examining authority, then for the purpose of this
Section, the combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent report of
condition so published. In case at any time the Owner Trustee shall cease to be
eligible in accordance with the provisions of this Section, the Owner Trustee
shall resign immediately in the manner and with the effect specified in Section
10.02.
Section 10.02. RESIGNATION OR REMOVAL OF OWNER TRUSTEE. The Owner Trustee
may at any time resign and be discharged from the trusts hereby created by
giving written notice thereof to the Administrator. Upon receiving such notice
of resignation, the Administrator shall promptly appoint a successor Owner
Trustee by written instrument, in duplicate, one copy of which instrument shall
be delivered to the resigning Owner Trustee and one copy to the successor Owner
Trustee. If no successor Owner Trustee shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Owner Trustee may petition any court of competent
jurisdiction for the appointment of a successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in accordance
with Section 10.01 and shall fail to resign after written request therefor by
the Administrator, or if at any time the Owner Trustee shall be legally unable
to act, or shall be adjudged bankrupt or insolvent, or a receiver of the Owner
Trustee or of its property shall be appointed, or any public officer shall take
charge or control of the Owner Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then the Administrator
may remove the Owner Trustee. If the Administrator shall remove the Owner
Trustee under the authority of the immediately preceding sentence, the
Administrator shall promptly appoint a successor Owner Trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
outgoing Owner Trustee so removed and one copy to the successor Owner Trustee,
and shall pay all fees and expenses owed to the outgoing Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until acceptance of appointment by the successor Owner
Trustee pursuant to Section 10.03 and payment of all fees and expenses owed to
the outgoing Owner Trustee. The Administrator shall provide notice of such
resignation or removal of the Owner Trustee to each Rating Agency.
Section 10.03. SUCCESSOR OWNER TRUSTEE. Any successor Owner Trustee
appointed pursuant to Section 10.02 shall execute, acknowledge and deliver to
the Administrator and to its predecessor Owner Trustee an instrument accepting
such appointment under this Agreement, and
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thereupon the resignation or removal of the predecessor Owner Trustee shall
become effective, and such successor Owner Trustee, without any further act,
deed or conveyance, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor under this Agreement, with like effect
as if originally named as Owner Trustee. The predecessor Owner Trustee shall
upon payment of its fees and expenses deliver to the successor Owner Trustee all
documents and statements and monies held by it under this Agreement and the
Administrator and the predecessor Owner Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for fully and
certainly vesting and confirming in the successor Owner Trustee all such rights,
powers, duties and obligations.
No successor Owner Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Owner Trustee shall
be eligible pursuant to Section 10.01.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section, the Administrator shall mail notice thereof to all
Certificateholders, the Indenture Trustee, the Noteholders and each Rating
Agency. If the Administrator shall fail to mail such notice within ten days
after acceptance of such appointment by the successor Owner Trustee, the
successor Owner Trustee shall cause such notice to be mailed at the expense of
the Administrator.
Section 10.04. MERGER OR CONSOLIDATION OF OWNER TRUSTEE. Any corporation
into which the Owner Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee hereunder, without
the execution or filing of any instrument or any further act on the part of any
of the parties hereto, anything herein to the contrary notwithstanding;
provided, that such corporation shall be eligible pursuant to Section 10.01 and,
provided, further, that the Owner Trustee shall mail notice of such merger or
consolidation to each Rating Agency.
Section 10.05. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Owner Trust Estate or any Financed Vehicle may at the time be located,
the Administrator and the Owner Trustee acting jointly shall have the power and
shall execute and deliver all instruments to appoint one or more Persons
approved by the Administrator and Owner Trustee to act as co-trustee, jointly
with the Owner Trustee, or as separate trustee or separate trustees, of all or
any part of the Owner Trust Estate, and to vest in such Person, in such
capacity, such title to the Trust or any part thereof and, subject to the other
provisions of this Section, such powers, duties, obligations, rights and trusts
as the Administrator and the Owner Trustee may consider necessary or desirable.
If the Administrator shall not have joined in such appointment within 15 days
after the receipt by it of a request so to do, the Owner Trustee alone shall
have the power to make such appointment. No co-trustee or separate trustee under
this Agreement shall be required to meet the terms of eligibility as a successor
Owner Trustee pursuant to Section 10.01, except that such co-trustee or
successor trustee shall have the Required Rating, and no notice of the
appointment of any co-trustee or separate trustee shall be required pursuant to
Section 10.03.
29
<PAGE>
Each separate trustee and co-trustee shall, to the extent permitted by law,
be appointed and act subject to the following provisions and conditions:
(a) all rights, powers, duties and obligations conferred or imposed
upon the Owner Trustee shall be conferred upon and exercised or performed
by the Owner Trustee and such separate trustee or co-trustee jointly (it
being understood that such separate trustee or co-trustee is not authorized
to act separately without the Owner Trustee joining in such act), except to
the extent that under any law of any jurisdiction in which any particular
act or acts are to be performed, the Owner Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding of title to the Owner
Trust Estate or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or co-trustee, but
solely at the direction of the Owner Trustee;
(b) no trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this Agreement;
and
(c) the Administrator and the Owner Trustee acting jointly may at any
time accept the resignation of or remove any separate trustee or
co-trustee.
Any notice, request or other writing given to the Owner Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Owner Trustee or
separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating to
the conduct of, affecting the liability of, or affording protection to, the
Owner Trustee. Each such instrument shall be filed with the Owner Trustee and a
copy thereof given to the Administrator.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee as its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Owner Trustee, to the extent permitted by law, without the appointment of a new
or successor co-trustee or separate trustee.
30
<PAGE>
ARTICLE ELEVEN
MISCELLANEOUS
Section 11.01. SUPPLEMENTS AND AMENDMENTS.
(a) This Agreement may be amended by the parties hereto with prior written
notice to each Rating Agency, without the consent of any Securityholders, to
cure any ambiguity, to correct or supplement any provisions in this Agreement or
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions in this Agreement or of modifying in any
manner the rights of the Noteholders or the Certificateholders; provided,
however, that such action shall not, as evidenced by an Opinion of Counsel,
adversely affect in any material respect the interests of any Noteholder or
Certificateholder.
(b) This Agreement may also be amended from time to time by the parties
hereto, with prior written notice to each Rating Agency, with the consent of the
Holders of Trust Certificates evidencing not less than a majority of the
Percentage Interests evidenced by the Trust Certificates and, if such amendment
materially and adversely affects the interests of the Noteholders, with the
consent of Holders (as such term is defined in the Indenture) of Notes
evidencing not less than a majority of the Outstanding Amount of the Notes, for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Agreement or of modifying in any manner the rights
of the Noteholders or the Certificateholders; provided, however, that no such
amendment shall (i) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments on Receivables or
distributions that shall be required to be made for the benefit of the
Noteholders or the Certificateholders, (ii) increase or reduce any Certificate
Rate or (iii) reduce the aforesaid percentage of the Outstanding Amount of the
Notes or of the Percentage Interests evidenced by the Trust Certificates
required to consent to any such amendment, without the consent of the Holders of
all the outstanding Notes and Trust Certificates.
(c) Prior to the execution of any such amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such amendment or
consent to the Indenture Trustee, the Administrator and each Rating Agency.
(d) Promptly after the execution of any such amendment or consent, the
Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder. It shall not be necessary for
the consent of Certificateholders, Noteholders or the Indenture Trustee pursuant
to this Section to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents (and any other consents of
Certificateholders provided for in this Agreement or in any other Basic
Document) and of evidencing the authorization of the execution thereof by
Certificateholders shall be subject to such reasonable requirements as the Owner
Trustee may prescribe.
(e) Promptly after the execution of any amendment to the Certificate of
Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State.
31
<PAGE>
(f) In connection with the execution of any amendment to this Agreement or
any other Basic Document to which the Issuer is a party and for which amendment
the Owner Trustee's consent is sought, the Owner Trustee shall be entitled to
receive and rely upon an Opinion of Counsel to the effect that the execution of
such amendment is authorized or permitted by this Agreement or such other Basic
Document, as the case may be, and that all conditions precedent in this
Agreement or such other Basic Document, as the case may be, for the execution
and delivery thereof by the Issuer or the Owner Trustee, as the case may be,
have been satisfied. The Owner Trustee may, but shall not be obligated to, enter
into any such amendment that affects the Owner Trustee's own rights, duties or
immunities under this Agreement or otherwise.
Section 11.02. NO LEGAL TITLE TO OWNER TRUST ESTATE IN OWNERS. The Owners
shall not have legal title to any part of the Owner Trust Estate. The Owners
shall be entitled to receive distributions with respect to their undivided
ownership interest therein only in accordance with Articles Five and Nine. No
transfer, by operation of law or otherwise, of any right, title or interest of
the Owners to and in their ownership interest in the Owner Trust Estate shall
operate to terminate this Agreement or the trusts hereunder or entitle any
transferee to an accounting or to the transfer to it of legal title to any part
of the Owner Trust Estate.
Section 11.03. LIMITATIONS ON RIGHTS OF OTHERS. The provisions of this
Agreement are solely for the benefit of the Owner Trustee, the Indemnified
Parties, the Depositor, the Owners, the Administrator and, to the extent
expressly provided herein, the Indenture Trustee and the Noteholders, and
nothing in this Agreement, whether express or implied, shall be construed to
give to any other Person any legal or equitable right, remedy or claim in the
Owner Trust Estate or under or in respect of this Agreement or any covenants,
conditions or provisions contained herein.
Section 11.04. NOTICES.
(a) Unless otherwise expressly specified or permitted by the terms hereof,
all demands, notices and communications under this Agreement shall be in
writing, personally delivered, mailed by certified mail, return receipt
requested, or sent via facsimile transmission (followed by hard copy by
overnight delivery) and shall be deemed to have been duly given upon receipt (i)
in the case of the Owner Trustee, at the Corporate Trust Office, with a copy to:
The Bank of New York, 101 Barclay Street, 12E, New York, NY 10286, Attention:
_____________, (ii) in the case of the Depositor, to American Honda Receivables
Corp., 700 Van Ness Avenue, Building 300, Torrance, California 90501, Attention:
President or (iii) as to either party, at such other address as shall be
designated by such party in a written notice to the other party.
(b) Any notice required or permitted to be given to a Certificateholder
shall be given by first-class mail, postage prepaid, at the address of such
Holder as shown in the Certificate Register. Any notice so mailed within the
time prescribed in this Agreement shall be conclusively presumed to have been
duly given, whether or not the Certificateholder receives such notice.
32
<PAGE>
Section 11.05. SEVERABILITY. If any one or more of the covenants,
agreements, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements, provisions
or terms of this Agreement and shall in no way affect the validity or
enforceability of the other covenants, agreements, provisions or terms of this
Agreement or of the Trust Certificates or the rights of the Holders thereof.
Section 11.06. SEPARATE COUNTERPARTS. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
Section 11.07. SUCCESSORS AND ASSIGNS. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, each of the
Depositor and its permitted assigns, the Owner Trustee and its successors and
each Owner and its successors and permitted assigns, all as herein provided. Any
request, notice, direction, consent, waiver or other instrument or action by an
Owner shall bind the successors and assigns of such Owner.
Section 11.08. NO PETITION. The Owner Trustee, by entering into this
Agreement, each Certificateholder, by accepting a Trust Certificate, and the
Indenture Trustee and each Noteholder, by accepting the benefits of this
Agreement, hereby covenant and agree that they will not at any time institute
against the Depositor or the Issuer, or join in any institution against the
Depositor or the Issuer of, any bankruptcy proceedings under any United States
federal or state bankruptcy or similar law in connection with any obligations
relating to the Trust Certificates, the Notes, this Agreement or any other Basic
Document.
Section 11.09. NO RECOURSE. Each Certificateholder by accepting a Trust
Certificate acknowledges that such Certificateholder's Trust Certificates
represent beneficial interests in the Issuer only and do not represent interests
in or obligations of the Depositor, the Transferor, the Servicer, the
Administrator, the Owner Trustee, the Indenture Trustee or any of their
respective Affiliates and no recourse may be had against such parties or their
assets, except as may be expressly set forth or contemplated in the Trust
Certificates, this Agreement or any other Basic Document.
Section 11.10. HEADINGS. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
Section 11.11. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Delaware, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
Section 11.12. TRUST CERTIFICATES NONASSESSABLE AND FULLY PAID.
Certificateholders shall not be personally liable for obligations of the Issuer.
The interests represented by the Trust Certificates shall be nonassessable for
any losses or expenses of the Issuer or for any reason whatsoever, and, upon the
authentication thereof by the Owner Trustee pursuant to Section 3.03, 3.04 or
3.05, the Trust Certificates are and shall be deemed fully paid.
33
<PAGE>
Section 11.13. DEPOSITOR PAYMENT OBLIGATION. The Depositor shall be
responsible for payment of the Administrator's compensation under the
Administration Agreement and shall reimburse the Administrator for all expenses
and liabilities of the Administrator incurred thereunder. In addition, the
Depositor shall be responsible for the payment of all fees and expenses of the
Issuer and the Trustees paid by any of them in connection with any of their
obligations under the Basic Documents to obtain or maintain any required license
under the Pennsylvania Motor Vehicle Sales Finance Act.
34
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Trust Agreement to be duly executed by their respective officers as of
the day and year first above written.
AMERICAN HONDA RECEIVABLES CORP.,
as Depositor
By:
-----------------------------------------
Name:
Title:
THE BANK OF NEW YORK (DELAWARE),
not in its individual capacity but solely as
Owner Trustee
By:
-----------------------------------------
Name:
Title:
35
<PAGE>
EXHIBIT A
FORM OF TRUST CERTIFICATE
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM. IN ADDITION, THE TRANSFER OF THIS
CERTIFICATE IS SUBJECT TO CERTAIN RESTRICTIONS AND CONDITIONS SET FORTH IN
SECTION 3.04 OF THE TRUST AGREEMENT UNDER WHICH THIS CERTIFICATE IS ISSUED (A
COPY OF WHICH TRUST AGREEMENT IS AVAILABLE FROM THE OWNER TRUSTEE OR UPON
REQUEST), INCLUDING RECEIPT BY THE OWNER TRUSTEE OF AN INVESTMENT LETTER IN
WHICH THE TRANSFEREE MAKES CERTAIN REPRESENTATIONS.
NUMBER R-1 Percentage Interest: 100%
HONDA AUTO RECEIVABLES 1999-1 OWNER TRUST
ASSET BACKED CERTIFICATE
evidencing a fractional undivided interest in the Issuer, as defined below, the
property of which includes a pool of retail installment sale or conditional sale
contracts secured by new and used Honda and Acura motor vehicles.
(This Trust Certificate does not represent an interest in or obligation of
American Honda Receivables Corp., American Honda Finance Corporation or any of
their respective affiliates.)
THIS CERTIFIES THAT AMERICAN HONDA RECEIVABLES CORP. is the registered
owner of a 100 Percent nonassessable, fully-paid, undivided percentage interest
in the Honda Auto Receivables 1999-1 Owner Trust (the "Issuer"), formed by
American Honda Receivables Corp., a California corporation (the "Depositor").
The Issuer was created pursuant to a Trust Agreement dated as of June 16,
1998, as amended and restated by an Amended and Restated Trust Agreement dated
as of ____________, 1999 (as amended or supplemented from time to time, the
"Trust Agreement"), between the Depositor and The Bank of New York (Delaware),
as owner trustee (the "Owner Trustee"), a summary of certain of the pertinent
provisions of which is set forth below. Capitalized terms used herein that are
not otherwise defined shall have the meanings ascribed thereto in the Trust
Agreement.
This Trust Certificate is one of the duly authorized certificates
designated as "Asset Backed Certificates" (the "Trust Certificates"). Issued
under an Indenture dated as of __________, 1999 (the "Indenture"), between the
Issuer and Bankers Trust Company, as indenture trustee, are four classes of
Notes designated as "Class A-1 _____% Asset Backed Notes," "Class A-2 _____%
Asset Backed Notes", "Class A-3 _____% Asset Backed Notes" and "Class A-4 _____%
Asset Backed Notes", (collectively, the "Notes"). This Trust Certificate is
issued under and is subject to the terms, provisions and conditions of the Trust
Agreement, to
A-1
<PAGE>
which Trust Agreement the Holder of this Trust Certificate, by virtue of its
acceptance hereof, assents and by which such Holder is bound. The property of
the Issuer includes, among other things, a pool of retail installment sale or
conditional sale contracts for new and used Honda and Acura motor vehicles
(collectively, the "Receivables"), all monies received on or in respect of the
Receivables on or after __________, 1999, security interests in the vehicles
financed thereby, certain bank accounts and the proceeds thereof, proceeds from
claims on certain insurance policies and certain other rights under the Trust
Agreement and the Sale and Servicing Agreement and all proceeds of the
foregoing.
It is the intent of the Depositor, the Servicer and the Certificateholders
that, for purposes of federal income, state and local income tax and any other
income taxes, the Issuer will be treated as a security arrangement for the
issuance of debt by the sole Certificateholder. The purchaser hereof, by
acceptance of the Trust Certificates, agrees to treat, and to take no action
inconsistent with the above treatment for so long as it is the sole Owner.
Solely in the event the Trust Certificates are held by more than a single
Owner, it is the intent of the Depositor, the Servicer and the
Certificateholders that, for purposes of federal income, state and local income
and single business tax and any other income taxes, the Issuer will be treated
as a partnership and the Certificateholders will be treated as partners in the
partnership. The purchaser hereof and the other Certificateholders, by
acceptance of a Trust Certificate, agree to treat, and to take no action
inconsistent with the treatment of, the Trust Certificates for such tax purposes
as partnership interests in the Issuer.
Each Certificateholder, by its acceptance of a Trust Certificate, covenants
and agrees that such Certificateholder will not at any time institute against
the Depositor, or join in any institution against the Depositor of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Trust
Certificates, the Notes, the Trust Agreement or any other Basic Document.
Distributions on this Trust Certificate will be made as provided in the
Trust Agreement by the Owner Trustee by wire transfer or check mailed to the
Certificateholder of record in the Certificate Register without the presentation
or surrender of this Trust Certificate or the making of any notation hereon.
Except as otherwise provided in the Trust Agreement and notwithstanding the
above, the final distribution on this Trust Certificate will be made after due
notice by the Owner Trustee of the pendency of such distribution and only upon
presentation and surrender of this Trust Certificate at the office or agency
maintained for that purpose by the Owner Trustee in the Borough of Manhattan,
The City of New York.
Reference is hereby made to the further provisions of this Trust
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been executed by
an authorized officer of the Owner Trustee, by manual signature, this Trust
Certificate shall not entitle the Holder hereof to any benefit under the Trust
Agreement or the Sale and Servicing Agreement or be valid for any purpose.
A-2
<PAGE>
THIS TRUST CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND
THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Issuer and not in
its individual capacity, has caused this Trust Certificate to be duly executed.
HONDA AUTO RECEIVABLES 1999-1 OWNER
TRUST
Dated: By: THE BANK OF NEW YORK,
(DELAWARE), not in its individual capacity
but solely as Owner Trustee
By:
------------------------------------------
Authorized Signatory
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Trust Certificates referred to in the within-mentioned
Trust Agreement.
The Bank of New York (Delaware), as Or The Bank of New York (Delaware), as
Owner Trustee Owner Trustee
By: By: , as
---------------------------- ------------------------
Authorized Signatory Authenticating Agent
By:
------------------------------
Authorized Signatory
A-3
<PAGE>
[REVERSE OF TRUST CERTIFICATE]
The Trust Certificates do not represent an obligation of, or an interest
in, the Depositor, the Servicer, the Owner Trustee or any of their respective
affiliates and no recourse may be had against such parties or their assets,
except as expressly set forth or contemplated herein or in the Trust Agreement
or the other Basic Documents. In addition, this Trust Certificate is not
guaranteed by any governmental agency or instrumentality and is limited in right
of payment to certain collections and recoveries with respect to the Receivables
(and certain other amounts), all as more specifically set forth herein and in
the Sale and Servicing Agreement. A copy of each of the Sale and Servicing
Agreement and the Trust Agreement may be examined by any Certificateholder upon
written request during normal business hours at the principal office of the
Depositor and at such other places, if any, designated by the Depositor.
The Trust Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor and the rights of the Certificateholders under the Trust Agreement at
any time by the parties thereto with the consent of the Holders of the Trust
Certificates and the Notes, each voting as a class, evidencing not less than a
majority of the Percentage Interests evidenced by the outstanding Trust
Certificates or a majority of the outstanding principal balance of the Notes of
each such class. Any such consent by the Holder of this Trust Certificate shall
be conclusive and binding on such Holder and on all future Holders of this Trust
Certificate and of any Trust Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof, whether or not notation of such consent is
made upon this Trust Certificate. The Trust Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Trust Certificates.
As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of this Trust Certificate is registerable in the
Certificate Register upon surrender of this Trust Certificate for registration
of transfer at the offices or agencies of the Certificate Registrar maintained
by the Owner Trustee in the Borough of Manhattan, The City of New York,
accompanied by a written instrument of transfer in form satisfactory to the
Owner Trustee and the Certificate Registrar duly executed by the Holder hereof
or such Holder's attorney duly authorized in writing, and thereupon one or more
new Trust Certificates evidencing the same aggregate Percentage Interest in the
Issuer will be issued to the designated transferee. The initial Certificate
Registrar appointed under the Trust Agreement is ________________________, New
York, New York.
Except as provided in the Trust Agreement, the Trust Certificates are
issuable only as registered Trust Certificates. As provided in the Trust
Agreement and subject to certain limitations therein set forth, Trust
Certificates are exchangeable for new Trust Certificates evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Owner Trustee or the Certificate Registrar may require payment
of a sum sufficient to cover any tax or governmental charge payable in
connection therewith.
A-4
<PAGE>
The Owner Trustee, the Certificate Registrar and any agent of the Owner
Trustee or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Owner Trustee, the Certificate Registrar or any such agent shall be affected by
any notice to the contrary.
The obligations and responsibilities created by the Trust Agreement and the
Issuer created thereby shall terminate upon the payment to Certificateholders of
all amounts required to be paid to them pursuant to the Trust Agreement and the
Sale and Servicing Agreement and the disposition of all property held as part of
the Owner Trust Estate. The Servicer of the Receivables may at its option
purchase the Owner Trust Estate at a price specified in the Sale and Servicing
Agreement, and such purchase of the Receivables and other property of the Issuer
will effect early retirement of the Trust Certificates; provided, however, such
right of purchase is exercisable only as of the last day of any Collection
Period as of which the Pool Balance is less than or equal to 10% of the Original
Pool Balance.
The Trust Certificates may not be acquired by a Benefit Plan. By accepting
and holding this Trust Certificate, the Holder hereof shall be deemed to have
represented and warranted that it is not a Benefit Plan.
A-5
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
- - --------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee)
the within Trust Certificate, and all rights thereunder, and hereby irrevocably
constitutes and appoints_________________________, attorney, to transfer said
Trust Certificate on the books of the Certificate Registrar, with full power of
substitution in the premises.
Dated:
*
---------------------------------------
Signature Guaranteed:
*
-------------------------
- - ----------------------------
* NOTICE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Trust
Certificate in every particular, without alteration, enlargement or any
change whatever. Such signature must be guaranteed by an "eligible
guarantor institution" meeting the requirements of the Certificate
Registrar, which requirements include membership or participation in
STAMP or such other "signature guarantee program" as may be determined by
the Certificate Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
A-6
<PAGE>
EXHIBIT B
FORM OF TRANSFEROR CERTIFICATE
------------,----
[Transferor]
- - -------------------------
- - -------------------------
- - -------------------------
THE BANK OF NEW YORK (DELAWARE)
White Clay Center, Route 273
Newark, Delaware 19711
Attention: _________________________
Re: Honda Auto Receivables 1999-1 Owner Trust
ASSET BACKED CERTIFICATES
-----------------------------------------
Dear Sirs:
In connection with our disposition of the above-referenced Asset Backed
Certificates (the "Certificates") we certify that (i) we understand that the
Certificates have not been registered under the Securities Act of 1933, as
amended (the "Act"), and are being transferred by us in a transaction that is
exempt from the registration requirements of the Act and (ii) we have not
offered or sold any Certificates to, or solicited offers to buy any Certificates
from, any person, or otherwise approached or negotiated with any person with
respect thereto, in a manner that would be deemed, or taken any other action
which would result in, a violation of Section 5 of the Act.
Very truly yours,
[NAME OF]
By:
-----------------------------------------
Authorized Officer
B-1
<PAGE>
EXHIBIT C
FORM OF INVESTMENT LETTER
------------, ----
Transferor
- - -------------------------
- - -------------------------
- - -------------------------
THE BANK OF NEW YORK (DELAWARE)
White Clay Center, Route 273
Newark, Delaware 19711
Attention: _________________________
Re: Honda Auto Receivables 1999-1 Owner Trust
ASSET BACKED CERTIFICATES
-----------------------------------------
Dear Sirs:
In connection with our acquisition of the above-referenced Asset Backed
Certificates (the "Certificates") we certify that (a) we understand that the
Certificates are not being registered under the Securities Act of 1933, as
amended (the "Act"), or any state securities laws and are being transferred to
us in a transaction that is exempt from the registration requirements of the Act
and any such laws, (b) we are an "accredited investor," as defined in Regulation
D under the Act, and have such knowledge and experience in financial and
business matters that we are capable of evaluating the merits and risks of
investments in the Certificates, (c) we have had the opportunity to ask
questions of and receive answers from the Transferor concerning the purchase of
the Certificates and all matters relating thereto or any additional information
deemed necessary to our decision to purchase the Certificates, (d) we are
acquiring the Certificates for investment for our own account and not with a
view to any distribution of such Certificates (but without prejudice to our
right at all times to sell or otherwise dispose of the Certificates in
accordance with clause (f) below), (e) we have not offered or sold any
Certificates to, or solicited offers to buy any Certificates from, any person,
or otherwise approached or negotiated with any person with respect thereto, or
taken any other action that would result in a violation of Section 5 of the Act
or any state securities laws and (f) we will not sell, transfer or otherwise
dispose of any Certificates unless (i) such sale, transfer or other disposition
is made pursuant to an effective registration statement under the Act and in
compliance with any relevant state securities laws or is exempt from such
registration requirements and, if requested, we will at our expense provide an
Opinion of Counsel satisfactory to the addressees of this certificate that such
sale, transfer or other disposition may be made pursuant to an exemption from
the Act, (ii) the purchaser or transferee of such Certificate has executed and
delivered to you a certificate to substantially the same effect as this
certificate and (iii) the purchaser or transferee has otherwise complied with
any conditions for transfer set forth in the Amended and Restated Trust
Agreement dated as of __________, 1999, between American Honda Receivables Corp.
and The Bank of New York (Delaware), as Owner Trustee.
C-1
<PAGE>
Very truly yours,
[NAME OF TRANSFEREE]
By:
--------------------------------------
Authorized Officer
C-2
<PAGE>
EXHIBIT D
FORM OF RULE 144A LETTER
------------, ----
[Transferor]
- - -------------------------
- - -------------------------
- - -------------------------
THE BANK OF NEW YORK (DELAWARE)
White Clay Center, Route 273
Newark, Delaware 19711
Attention: _________________________
Re: Honda Auto Receivables 1999-1 Owner Trust
ASSET BACKED CERTIFICATES
-----------------------------------------
Dear Sirs:
In connection with our acquisition of the above-referenced Asset Backed
Certificates (the "Certificates") we certify that (a) we understand that the
Certificates are not being registered under the Securities Act of 1933, as
amended (the "Act"), or any state securities laws and are being transferred to
us in a transaction that is exempt from the registration requirements of the Act
and any such laws, (b) we have such knowledge and experience in financial and
business matters that we are capable of evaluating the merits and risks of
investments in the Certificates, (c) we have had the opportunity to ask
questions of and receive answers from the Transferor concerning the purchase of
the Certificates and all matters relating thereto or any additional information
deemed necessary to our decision to purchase the Certificates, (d) we have not,
nor has anyone acting on our behalf, offered, transferred, pledged, sold or
otherwise disposed of the Certificates or any interest in the Certificates, or
solicited any offer to buy, transfer, pledge or otherwise dispose of the
Certificates or any interest in the Certificates from any person in any manner,
or made any general solicitation by means of general advertising or in any other
manner, or taken any other action that would constitute a distribution of the
Certificates under the Act or that would render the disposition of the
Certificates a violation of Section 5 of the Act or any state securities laws or
require registration pursuant thereto, and we will not act, or authorize any
person to act, in such manner with respect to the Certificates and (e) we are a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Act. We are aware that the sale to us is being made in reliance on Rule 144A. We
are acquiring the Certificates for our own account or for resale pursuant to
Rule 144A and understand that such Certificates may be resold, pledged or
transferred only (i) to a person reasonably believed to be a qualified
institutional buyer that purchases for its own account or for the account of a
qualified institutional buyer to whom notice is given that the resale, pledge or
transfer is being made in reliance on Rule 144A or (ii) pursuant to another
exemption from registration under the Act.
D-1
<PAGE>
Very truly yours,
[NAME OF TRANSFEREE]
By:
--------------------------------------
Authorized Officer
D-2
<PAGE>
Exhibit 4.2
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
HONDA AUTO RECEIVABLES 1999-1 OWNER TRUST,
as Issuer,
and
BANKERS TRUST COMPANY,
as Indenture Trustee
INDENTURE
Dated as of January 1, 1999
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
<PAGE>
CROSS REFERENCE TABLE*
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- - ------- ---------
<S> <C>
310 (a)(1)....................................................... 6.11
(a)(2)....................................................... 6.11
(a)(3)....................................................... 6.10; 6.11
(a)(4)....................................................... N.A.**
(a)(5)....................................................... 6.11
(b).......................................................... 6.08; 6.11
(c).......................................................... N.A.
311 (a).......................................................... 6.12
(b).......................................................... 6.12
(c).......................................................... N.A.
312 (a).......................................................... 7.01
(b).......................................................... 7.02
(c).......................................................... 7.02
313 (a).......................................................... 7.04
(b)(1)....................................................... 7.04
(b)(2)....................................................... 7.04
(c).......................................................... 7.04; 11.05
(d).......................................................... 7.04
314 (a).......................................................... 7.03
(b).......................................................... 11.15
(c)(1)....................................................... 11.01
(c)(2)....................................................... 11.01
(c)(3)....................................................... 11.01
(d).......................................................... 11.01
(e).......................................................... 11.01
(f).......................................................... 11.01
315 (a).......................................................... 6.01
(b).......................................................... 6.05; 11.01
(c).......................................................... 6.01
(d).......................................................... 6.01
(e).......................................................... 5.13
316 (a).......................................................... 1.01
(a)(1)(A).................................................... 5.11
(a)(1)(B).................................................... 5.12
(a)(2)....................................................... N.A.
(b).......................................................... 5.07
(c).......................................................... N.A.
</TABLE>
- - ----------
* This Cross Reference Table shall not, for any purpose, be deemed to be part
of this Indenture.
** N.A. means Not Applicable.
2
<PAGE>
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- - ------- ---------
<S> <C>
317 (a)(1)....................................................... 5.03
(a)(2)....................................................... 5.03
(b).......................................................... 3.03
318 (a).......................................................... 11.07
</TABLE>
3
<PAGE>
TABLE OF CONTENTS
<TABLE>
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ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
<S> <C> <C>
Section 1.01. Definitions.............................................. 2
Section 1.02. Incorporation by Reference of Trust Indenture Act........ 8
Section 1.03. Rules of Construction.................................... 8
ARTICLE TWO
THE NOTES
Section 2.01. Form..................................................... 9
Section 2.02. Execution, Authentication and Delivery................... 9
Section 2.03. Temporary Notes.......................................... 9
Section 2.04. Registration; Registration of Transfer and Exchange...... 10
Section 2.05. Mutilated, Destroyed, Lost or Stolen Notes............... 11
Section 2.06. Persons Deemed Owner..................................... 12
Section 2.07. Payment of Principal and Interest; Defaulted Interest.... 12
Section 2.08. Cancellation............................................. 13
Section 2.09. Book-Entry Notes......................................... 13
Section 2.10. Notices to Clearing Agency............................... 14
Section 2.11. Definitive Notes......................................... 14
Section 2.12. Release of Collateral.................................... 15
Section 2.13. Tax Treatment............................................ 15
Section 2.14. Employee Benefit Plans................................... 15
ARTICLE THREE
COVENANTS
Section 3.01. Payment of Principal and Interest........................ 16
Section 3.02. Maintenance of Office or Agency.......................... 16
Section 3.03. Money for Payments to be Held in Trust................... 16
Section 3.04. Existence................................................ 18
Section 3.05. Protection of Owner Trust Estate......................... 18
Section 3.06. Opinions as to Owner Trust Estate........................ 18
Section 3.07. Performance of Obligations; Servicing of Receivables..... 19
Section 3.08. Negative Covenants....................................... 20
Section 3.09. Annual Statement as to Compliance........................ 21
</TABLE>
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<TABLE>
<CAPTION>
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<S> <C> <C>
Section 3.10. Issuer May Consolidate, etc, Only on Certain Terms....... 21
Section 3.11. Successor or Transferee.................................. 23
Section 3.12. No Other Business........................................ 23
Section 3.13. No Borrowing............................................. 23
Section 3.14. Servicer's Obligations................................... 23
Section 3.15. Guarantees, Loans, Advances and Other Liabilities........ 23
Section 3.16. Capital Expenditures..................................... 23
Section 3.17. Removal of Administrator................................. 24
Section 3.18. Restricted Payments...................................... 24
Section 3.19. Notice of Events of Default.............................. 24
Section 3.20. Further Instruments and Acts............................. 24
Section 3.21. Compliance with Laws..................................... 24
Section 3.22. Amendments of Sale and Servicing Agreement and
Trust Agreement........................................ 24
ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction and Discharge of Indenture.................. 25
Section 4.02. Application of Trust Money............................... 26
Section 4.03. Repayment of Monies Held by Paying Agent................. 26
Section 4.04. Duration of Position of Indenture Trustee for Benefit
of Certificateholders................................... 26
ARTICLE FIVE
REMEDIES
Section 5.01. Events of Default........................................ 27
Section 5.02. Acceleration of Maturity; Rescission and Annulment....... 28
Section 5.03. Collection of Indebtedness and Suits for Enforcement
by Indenture Trustee................................... 28
Section 5.04. Remedies; Priorities..................................... 30
Section 5.05. Optional Preservation of the Receivables................. 32
Section 5.06. Limitation of Suits...................................... 32
Section 5.07. Unconditional Rights of Noteholders to Receive
Principal and Interest................................. 33
Section 5.08. Restoration of Rights and Remedies....................... 33
Section 5.09. Rights and Remedies Cumulative........................... 33
Section 5.10. Delay or Omission Not a Waiver........................... 33
Section 5.11. Control by Noteholders................................... 34
Section 5.12. Waiver of Past Defaults.................................. 34
Section 5.13. Undertaking for Costs.................................... 34
Section 5.14. Waiver of Stay or Extension Laws......................... 35
Section 5.15. Action on Notes.......................................... 35
Section 5.16. Performance and Enforcement of Certain Obligations....... 35
</TABLE>
ii
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<TABLE>
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<S> <C> <C>
ARTICLE SIX
THE INDENTURE TRUSTEE
Section 6.01. Duties of Indenture Trustee.............................. 37
Section 6.02. Rights of Indenture Trustee.............................. 38
Section 6.03. Individual Rights of Indenture Trustee................... 39
Section 6.04. Indenture Trustee's Disclaimer........................... 39
Section 6.05. Notice of Defaults....................................... 39
Section 6.06. Reports by Indenture Trustee to Holders.................. 39
Section 6.07. Compensation and Indemnity............................... 39
Section 6.08. Replacement of Indenture Trustee......................... 40
Section 6.09. Successor Indenture Trustee by Merger.................... 41
Section 6.10. Appointment of Co-Trustee or Separate Trustee............ 41
Section 6.11. Eligibility; Disqualification............................ 43
Section 6.12. Preferential Collection of Claims Against Issuer......... 43
Section 6.13. Representations and Warranties of Indenture Trustee...... 43
Section 6.14. Pennsylvania Motor Vehicle Sales Finance Act Licenses.... 43
ARTICLE SEVEN
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. Issuer to Furnish Indenture Trustee Names and Addresses
of Noteholders......................................... 44
Section 7.02. Preservation of Information; Communications, Reports and
Certain Documents to Noteholders....................... 44
Section 7.03. Reports by Issuer........................................ 44
Section 7.04. Reports by Indenture Trustee............................. 45
ARTICLE EIGHT
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01. Collection of Money...................................... 46
Section 8.02. Accounts................................................. 46
Section 8.03. General Provisions Regarding Accounts.................... 48
Section 8.04. Release of Owner Trust Estate............................ 48
Section 8.05. Opinion of Counsel....................................... 49
</TABLE>
iii
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<TABLE>
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<S> <C> <C>
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without Consent of Noteholders... 50
Section 9.02. Supplemental Indentures With Consent of Noteholders...... 51
Section 9.03. Execution of Supplemental Indentures..................... 52
Section 9.04. Effect of Supplemental Indenture......................... 52
Section 9.05. Conformity with Trust Indenture Act...................... 53
Section 9.06. Reference in Notes to Supplemental Indentures............ 53
ARTICLE TEN
REDEMPTION OF NOTES
Section 10.01. Redemption............................................... 54
Section 10.02. Form of Redemption Notice................................ 54
Section 10.03. Notes Payable on Redemption Date......................... 54
ARTICLE ELEVEN
MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions, etc................ 55
Section 11.02. Form of Documents Delivered to Indenture Trustee......... 56
Section 11.03. Acts of Noteholders...................................... 57
Section 11.04. Notices, etc., to Indenture Trustee, Issuer and
Rating Agencies........................................ 58
Section 11.05. Notices to Noteholders; Waiver........................... 58
Section 11.06. Alternate Payment and Notice Provisions.................. 59
Section 11.07. Conflict with Trust Indenture Act........................ 59
Section 11.08. Effect of Headings and Table of Contents................. 59
Section 11.09. Successors and Assigns................................... 59
Section 11.10. Separability............................................. 59
Section 11.11. Benefits of Indenture.................................... 59
Section 11.12. Legal Holidays........................................... 60
Section 11.13. Governing Law............................................ 60
Section 11.14. Counterparts............................................. 60
Section 11.15. Recording of Indenture................................... 60
Section 11.16. Trust Obligation......................................... 60
Section 11.17. No Petition.............................................. 60
Section 11.18. Inspection............................................... 61
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
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SCHEDULES
<S> <C> <C>
Schedule A - Schedule of Receivables..................................... SA-1
EXHIBITS
Exhibit A-1 - Form of Note............................................... A-1
Exhibit B-1 - Form of Note Depository Agreement.......................... B-1
</TABLE>
v
<PAGE>
This Indenture, dated as of ______, 1999, is between Honda Auto Receivables
1999-1 Owner Trust, a Delaware business trust (the "Issuer"), and Bankers Trust
Company, a Delaware banking corporation, as indenture trustee (the "Indenture
Trustee").
Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the holders of the Issuer's Class A-1 _____% Asset
Backed Notes (the "Class A-1 Notes"), Class A-2 _____% Asset Backed Notes (the
"Class A-2 Notes"), Class A-3 _____% Asset Backed Notes (the "Class A-3 Notes")
and Class A-4 _____% Asset Backed Notes (the "Class A-4 Notes" and, together
with the Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes, the
"Notes"):
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee at the Closing Date, on
behalf of and for the benefit of the Holders of the Notes, without recourse, all
of the Issuer's right, title and interest in, to and under (i) the Receivables
and all monies due thereon and received thereon on and after ______, 1999; (ii)
the security interests in the Financed Vehicles; (iii) proceeds from claims
under certain insurance policies in respect of individual Financed Vehicles or
Obligors; (iv) any proceeds with respect to the Receivables from recourse to
Dealers thereon with respect to which the Servicer has determined in accordance
with its customary servicing procedures that eventual payment in full is
unlikely; (v) all funds on deposit from time to time in the Accounts, including
the Reserve Fund Initial Deposit and the Yield Supplement Account Deposit and
all investment income and proceeds from the Yield Supplement Account, but
excluding all investments from the other Accounts and proceeds; (vi) the rights
of the Transferor under the Receivables Purchase Agreement and of the Issuer
under the Sale and Servicing Agreement; and (vii) all payments on or under and
all proceeds of every kind and nature whatsoever in respect of any or all of the
foregoing, including all proceeds of the conversion thereof, voluntary or
involuntary, into cash or other liquid property, all cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation awards, rights to payment of any and
every kind and other forms of obligations and receivables, instruments and other
property which at any time constitute all or part of or are included in the
proceeds of any of the foregoing as each such term is defined in Section 1.01
(collectively, the "Collateral").
The foregoing Grant is made in trust to secure the payment of principal of
and interest on, and any other amounts owing in respect of, the Notes, equally
and ratably without prejudice, priority or distinction, and to secure compliance
with the provisions of this Indenture, all as provided in this Indenture.
The Indenture Trustee, as Indenture Trustee on behalf of the Holders of the
Notes, acknowledges such Grant, accepts the trusts under this Indenture in
accordance with the provisions of this Indenture and agrees to perform its
duties as required in this Indenture to the best of its ability to the end that
the interests of the Holders of the Notes may be adequately and effectively
protected.
1
<PAGE>
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. DEFINITIONS.
(a) Except as otherwise specified herein or as the context may otherwise
require, the following terms have the respective meanings set forth below for
all purposes of this Indenture.
"ACCRUAL PERIOD" means, with respect to any Distribution Date and any Class
of Notes, the period from and including the immediately preceding Distribution
Date (or, in the case of the first Distribution Date, the Closing Date) to but
excluding such Distribution Date.
"ACT" shall have the meaning specified in Section 11.03(a).
"ADJUSTMENT TIME" means the first time on any Distribution Date that the
principal balance of the Certificates has been reduced to 6% of the principal
balance of all Securities (after giving effect to any distribution of principal
on such Distribution Date).
"ADMINISTRATION AGREEMENT" means the Administration Agreement, dated as of
January 1, 1999, among the Administrator, the Issuer, the Depositor and the
Indenture Trustee.
"ADMINISTRATOR" means AHFC or any successor Administrator under the
Administration Agreement.
"AHFC" means American Honda Finance Corporation, and its successors.
"AUTHORIZED OFFICER" means, with respect to the Issuer, any officer of the
Owner Trustee who is authorized to act for the Owner Trustee in matters relating
to the Issuer and who is identified on the list of Authorized Officers delivered
by the Owner Trustee to the Indenture Trustee on the Closing Date (as such list
may be modified or supplemented from time to time thereafter) and, so long as
the Administration Agreement is in effect, any Vice President or more senior
officer of the Administrator who is authorized to act for the Administrator in
matters relating to the Issuer and to be acted upon by the Administrator
pursuant to the Administration Agreement and who is identified on the list of
Authorized Officers delivered by the Administrator to the Indenture Trustee on
the Closing Date (as such list may be modified or supplemented from time to time
thereafter).
"BOOK-ENTRY NOTES" means a beneficial interest in the Notes, ownership and
transfers of which shall be made through book entries by a Clearing Agency as
described in Section 2.09.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a day on
which banking institutions or trust companies in Los Angeles, California,
Wilmington, Delaware or New York, New York are authorized or obligated by law,
regulation, executive order or governmental decree to remain closed.
"BENEFIT PLAN" means (a) employee benefit plans (as defined in Section 3(3)
of ERISA that are subject to Title I of ERISA, (b) plans described in Section
4975(e)(1) of the Code,
2
<PAGE>
including individual retirement accounts or Keogh Plans, and (c) any entities
whose underlying assets include plan assets by reason of a plan's investment in
such entities.
"CLASS" means all Notes whose form is identical except for variation in
denomination, principal amount or owner.
"CLASS A-1 INTEREST RATE" means _____% per annum (computed on the basis of
the actual number of days in the related Accrual Period divided by 360).
"CLASS A-1 NOTES" means the Class A-1 _____% Asset Backed Notes,
substantially in the form of Exhibit A.
"CLASS A-2 INTEREST RATE" means _____% per annum (computed on the basis of
the actual number of days in the related Accrual Period divided by 360).
"CLASS A-2 NOTES" means the Class A-2 _____% Asset Backed Notes,
substantially in the form of Exhibit A.
"CLASS A-3 INTEREST RATE" means _____% per annum (computed on the basis of
a 360-day year consisting of twelve 30-day months).
"CLASS A-3 NOTES" means the Class A-3 _____% Asset Backed Notes,
substantially in the form of Exhibit A.
"CLASS A-4 INTEREST RATE" means _____% per annum (computed on the basis of
a 360-day year consisting of twelve 30-day months).
"CLASS A-4 NOTES" means the Class A-4 _____% Asset Backed Notes,
substantially in the form of Exhibit A.
"CLEARING AGENCY" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act.
"CLEARING AGENCY PARTICIPANT" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.
"CLOSING DATE" means ________, 1999.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.
"COLLATERAL" has the meaning specified in the Granting Clause of this
Indenture.
"CORPORATE TRUST OFFICE" means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of execution of this Indenture is located
at Four Albany Street, 10th Floor, New York, New York 10006, Attention:
Corporate Trust & Agency Services/Structured Finance Group, or at such
3
<PAGE>
other address as the Indenture Trustee may designate from time to time by notice
to the Noteholders and the Issuer, or the principal corporate trust office of
any successor Indenture Trustee at the address designated by such successor
Indenture Trustee by notice to the Noteholders and the Issuer.
"DEFAULT" means any occurrence that is, or with notice or the lapse of time
or both would become, an Event of Default.
"DEFINITIVE NOTES" shall have the meaning specified in Section 2.11.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EVENT OF DEFAULT" shall have the meaning specified in Section 5.01.
"EXECUTIVE OFFICER" means, with respect to any corporation or depository
institution, the Chief Executive Officer, Chief Operating Officer, Chief
Financial Officer, President, Executive Vice President, any Vice President, the
Secretary or the Treasurer of such corporation or depository institution; and
with respect to any partnership, any general partner thereof.
"GRANT" means mortgage, pledge, bargain, sell, warrant, alienate, remise,
release, convey, assign, transfer, create, and grant a lien upon and a security
interest in and a right of set-off against, deposit, set over and confirm
pursuant to this Indenture. A Grant of the Collateral or of any other agreement
or instrument shall include all rights, powers and options (but none of the
obligations) of the granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of the Collateral and all other monies payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
Proceedings in the name of the granting party or otherwise, and generally to do
and receive anything that the granting party is or may be entitled to do or
receive thereunder or with respect thereto.
"HOLDER" means the Person in whose name a Note is registered on the Note
Register.
"INDENTURE" means this Indenture, as amended or supplemented from time to
time.
"INDENTURE TRUSTEE" means Bankers Trust Company, a New York banking
corporation, as Indenture Trustee under this Indenture, or any successor
Indenture Trustee under this Indenture.
"INDEPENDENT" means, when used with respect to any specified Person, that
the Person (i) is in fact independent of the Issuer, any other obligor on the
Notes, the Seller and any of their respective Affiliates, (ii) does not have any
direct financial interest or any material indirect financial interest in the
Issuer, any such other obligor, the Seller or any of their respective Affiliates
and (iii) is not connected with the Issuer, any such other obligor, the Seller
or any of their respective Affiliates as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar functions.
"INDEPENDENT CERTIFICATE" means a certificate or opinion to be delivered to
the Indenture Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01, made by an
Independent appraiser or other expert appointed by
4
<PAGE>
an Issuer Order and approved by the Indenture Trustee in the exercise of
reasonable care, and such opinion or certificate shall state that the signer has
read the definition of "Independent" in this Indenture and that the signer is
Independent within the meaning thereof.
"INTEREST RATE" means the Class A-1 Interest Rate, the Class A-2 Interest
Rate, the Class A-3 Interest Rate or the Class A-4 Interest Rate, as applicable.
"ISSUER" means Honda Auto Receivables 1999-1 Owner Trust until a successor
replaces it and, thereafter, means the successor and, for purposes of any
provision contained herein and required by the TIA, each other obligor on the
Notes.
"ISSUER ORDER" or "ISSUER REQUEST" means a written order or request signed
in the name of the Issuer by any Authorized Officer and delivered to the
Indenture Trustee.
"NOTE DEPOSITORY AGREEMENT" means the agreement dated __________, 1999,
among the Issuer, the Administrator, the Indenture Trustee and The Depository
Trust Company, as the initial Clearing Agency, relating to the Notes,
substantially in the form of Exhibit B hereto.
"NOTEHOLDER" or "HOLDER" means the Person in whose name a Note is
registered on the Note Register.
"NOTE OWNER" means, with respect to a Book-Entry Note, the Person who is
the beneficial owner of such Book-Entry Note, as reflected on the books of the
Clearing Agency or on the books of a Person maintaining an account with such
Clearing Agency (directly as a Clearing Agency Participant or as an indirect
participant, in each case in accordance with the rules of such Clearing Agency).
"NOTE REGISTER" and "NOTE REGISTRAR" shall have the respective meanings
specified in Section 2.04.
"NOTES" means the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and
the Class A-4 Notes.
"OFFICER'S CERTIFICATE" means a certificate signed by any Authorized
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01, and delivered to
the Indenture Trustee. Unless otherwise specified, any reference in this
Indenture to an Officer's Certificate shall be to an Officer's Certificate of
the Issuer.
"OPINION OF COUNSEL" means one or more written opinions of counsel who may,
except as otherwise expressly provided in this Indenture, be an employee of or
counsel to the Issuer and who shall be satisfactory to the Indenture Trustee,
and which opinion or opinions shall be addressed to the Indenture Trustee as
Indenture Trustee, shall comply with any applicable requirements of Section
11.01 and shall be in form and substance satisfactory to the Indenture Trustee.
"OUTSTANDING" means, as of the date of determination, all Notes theretofore
authenticated and delivered under this Indenture except:
5
<PAGE>
(i) Notes theretofore cancelled by the Note Registrar or delivered to
the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in the
necessary amount has been theretofore deposited with the Indenture Trustee
or any Paying Agent in trust for the Holders of such Notes (provided,
however, that if such Notes are to be redeemed, notice of such redemption
has been duly given pursuant to this Indenture or provision for such notice
has been made, satisfactory to the Indenture Trustee); and
(iii) Notes in exchange for or in lieu of which other Notes have been
authenticated and delivered pursuant to this Indenture unless proof
satisfactory to the Indenture Trustee is presented that any such Notes are
held by a bona fide Protected Purchaser;
provided, that in determining whether the Holders of the requisite Outstanding
Amount have given any request, demand, authorization, direction, notice, consent
or waiver hereunder or under any other Basic Document, Notes owned by the
Issuer, any other obligor upon the Notes, the Seller or any of their respective
Affiliates shall be disregarded and deemed not to be Outstanding, except that,
in determining whether the Indenture Trustee shall be protected in relying upon
any such request, demand, authorization, direction, notice, consent or waiver,
only Notes that the Indenture Trustee knows to be so owned shall be so
disregarded. Notes so owned that have been pledged in good faith may be regarded
as Outstanding if the pledgee establishes to the satisfaction of the Indenture
Trustee the pledgee's right so to act with respect to such Notes and that the
pledgee is not the Issuer, any other obligor upon the Notes, the Seller or any
Affiliate of any of their respective Affiliates.
"OUTSTANDING AMOUNT" means, except as otherwise indicated by the context,
the aggregate principal amount of all Notes of all Classes Outstanding at the
date of determination.
"OWNER TRUSTEE" means The Bank of New York (Delaware), not in its
individual capacity but solely as Owner Trustee under the Trust Agreement, or
any successor Owner Trustee under the Trust Agreement.
"PAYING AGENT" means the Indenture Trustee or any other Person that meets
the eligibility standards for the Indenture Trustee specified in Section 6.11
and is authorized by the Issuer to make payments to and distributions from the
Collection Account and the Note Distribution Account, including payments of
principal of or interest on the Notes on behalf of the Issuer.
"PREDECESSOR NOTE" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.05 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"PROCEEDING" means any suit in equity, action at law or other judicial or
administrative proceeding.
"PROTECTED PURCHASER" shall have the meaning set forth in Article 8 of the
UCC.
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"RATING AGENCY CONDITION" means, with respect to any action, that each
Rating Agency shall have been given ten days (or such shorter period as is
acceptable to each Rating Agency) prior notice thereof and that each Rating
Agency shall have notified the Seller, the Servicer, the Indenture Trustee and
the Owner Trustee in writing that such action will not result in a
qualification, reduction or withdrawal of the then current rating of the Notes.
"RECORD DATE" means, with respect to a Distribution Date or Redemption
Date, the close of business on the day immediately preceding such Distribution
Date or Redemption Date or, if Definitive Notes have been issued, the close of
business on the last day of the month immediately preceding the month in which
such Distribution Date or Redemption Date occurs.
"REDEMPTION DATE" means, in the case of a redemption of the Notes pursuant
to Section 10.01, the Distribution Date specified by the Servicer or the Issuer
pursuant to Section 10.01.
"REDEMPTION PRICE" means, in the case of a redemption of the Notes pursuant
to Section 10.01, an amount equal to the unpaid principal amount of the Notes
redeemed plus accrued and unpaid interest thereon at the weighted average of the
Interest Rates for each Class of Notes being so redeemed to but excluding the
Redemption Date.
"REGISTERED HOLDER" means the Person in whose name a Note is registered on
the Note Register on the applicable Record Date.
"SALE AND SERVICING AGREEMENT" means the Sale and Servicing Agreement,
dated as of January 1, 1999, between the Issuer, the Seller and the Servicer.
"SCHEDULE OF RECEIVABLES" means the list of the Receivables set forth in
Schedule A hereto.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLER" means American Honda Receivables Corp., in its capacity as seller
under the Sale and Servicing Agreement, and its successors.
"SERVICER" means American Honda Finance Corporation, in its capacity as
servicer under the Sale and Servicing Agreement, and any Successor Servicer
thereunder.
"STATE" means any one of the 50 states of the United States or the District
of Columbia.
"OWNER TRUST ESTATE" means the Grant of the Collateral to the Indenture
Trustee under this Indenture, including all proceeds thereof.
"TRUST INDENTURE ACT" or "TIA" means the Trust Indenture Act of 1939 as in
force on the date hereof, unless otherwise specifically provided.
"UCC" means, unless the context otherwise requires, the Uniform Commercial
Code, as in effect in the relevant jurisdiction, as amended from time to time.
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"UNITED STATES" means the United States of America.
"YIELD SUPPLEMENT ACCOUNT DEPOSIT" means $_______________.
(b) Except as otherwise specified herein or as the context may otherwise
require, capitalized terms used herein that are not otherwise defined shall have
the meanings ascribed thereto in the Sale and Servicing Agreement.
Section 1.02. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT. Whenever
this Indenture refers to a provision of the TIA, the provision is incorporated
by reference in and made a part of this Indenture. The following TIA terms used
in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Indenture Trustee.
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule have
the meaning assigned to them by such definitions.
Section 1.03. RULES OF CONSTRUCTION. Unless the context otherwise requires:
(i) a term has the meaning assigned to it; (ii) an accounting term not otherwise
defined has the meaning assigned to it in accordance with generally accepted
accounting principles as in effect from time to time; (iii) "or" is not
exclusive; (iv) "including" means including without limitation; (v) words in the
singular include the plural and words in the plural include the singular; (vi)
any agreement, instrument or statute defined or referred to herein or in any
instrument or certificate delivered in connection herewith means such agreement,
instrument or statute as from time to time amended, modified or supplemented and
includes (in the case of agreements or instruments) references to all
attachments thereto and instruments incorporated therein; (vii) references to a
Person are also to its permitted successors and assigns; (viii) the words
"hereof", "herein" and "hereunder" and words of similar import when used in this
Indenture shall refer to this Indenture as a whole and not to any particular
provision of this Indenture; (ix) the term "proceeds" shall have the meaning set
forth in the applicable UCC; and (x) Section, subsection and Schedule references
contained in this Indenture are references to Sections, subsections and
Schedules in or to this Indenture unless otherwise specified.
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ARTICLE TWO
THE NOTES
Section 2.01. FORM. The Class A-1 Notes, the Class A-2 Notes, the Class A-3
Notes and the Class A-4 Notes, in each case together with the Indenture
Trustee's certificate of authentication, shall be in substantially the form set
forth in Exhibit A, with such appropriate insertions, omissions, substitutions
and other variations as are required or permitted by this Indenture, and may
have such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by the
officers executing such Notes, as evidenced by their execution of the Notes. Any
portion of the text of any Note may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of the Note.
Definitive Notes shall be typewritten, printed, lithographed or engraved or
produced by any combination of these methods (with or without steel engraved
borders), all as determined by the officers executing such Notes, as evidenced
by their execution of such Notes.
Each Note shall be dated the date of its authentication. The terms of the
Notes are part of the terms of this Indenture.
Section 2.02. EXECUTION, AUTHENTICATION AND DELIVERY. The Notes shall be
executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile. Notes bearing the manual or facsimile signature of individuals who
were at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Indenture Trustee shall, upon Issuer Order, authenticate and deliver
for original issue the following aggregate principal amount of Notes: (i)
$________ of Class A-1 Notes, (ii) $________ of Class A-2 Notes, (iii) $________
of Class A-3 Notes; and (iv) $________ of Class A-4 Notes. The aggregate
principal amount of Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and Class
A-4 Notes outstanding at any time may not exceed such respective amounts except
as provided in Section 2.05.
Each Note shall be dated the date of its authentication. The Notes shall be
issuable as registered Notes in the minimum denomination of $1,000 and in
integral multiples of $1,000 in excess thereof.
No Note shall be entitled to any benefit under this Indenture or be valid
or obligatory for any purpose, unless there appears on such Note a certificate
of authentication substantially in the form provided for herein executed by the
Indenture Trustee by the manual signature of one of its authorized signatories,
and such certificate upon any Note shall be conclusive evidence, and the only
evidence, that such Note has been duly authenticated and delivered hereunder.
Section 2.03. TEMPORARY NOTES. Pending the preparation of Definitive Notes,
the Issuer may execute, and upon receipt of an Issuer Order the Indenture
Trustee shall authenticate and
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deliver, temporary Notes that are printed, lithographed, typewritten,
mimeographed or otherwise produced, of the tenor of the Definitive Notes in lieu
of which they are issued and with such variations not inconsistent with the
terms of this Indenture as the officers executing such Notes may determine, as
evidenced by their execution of such Notes.
If temporary Notes are issued, the Issuer shall cause Definitive Notes to
be prepared without unreasonable delay. After the preparation of Definitive
Notes, the temporary Notes shall be exchangeable for Definitive Notes upon
surrender of the temporary Notes at the office or agency of the Issuer to be
maintained as provided in Section 3.02, without charge to the related Holder.
Upon surrender for cancellation of any one or more temporary Notes, the Issuer
shall execute, and the Indenture Trustee shall authenticate and deliver in
exchange therefor, a like tenor and principal amount of Definitive Notes of
authorized denominations. Until so exchanged, the temporary Notes shall in all
respects be entitled to the same benefits under this Indenture as Definitive
Notes.
Section 2.04. REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE. The
Issuer shall cause to be kept a register (the "Note Register") in which, subject
to such reasonable regulations as it may prescribe, the Issuer shall provide for
the registration of Notes and the registration of transfers of Notes. The
Indenture Trustee initially shall be the "Note Registrar" for the purpose of
registering Notes and transfers of Notes as herein provided. Upon any
resignation of any Note Registrar, the Issuer shall promptly appoint a successor
or, if it elects not to make such an appointment, assume the duties of Note
Registrar.
If a Person other than the Indenture Trustee is appointed by the Issuer as
Note Registrar, the Issuer will give the Indenture Trustee prompt written notice
of the appointment of such Note Registrar and of the location, and any change in
the location, of the Note Register, and the Indenture Trustee shall have the
right to inspect the Note Register at all reasonable times and to obtain copies
thereof, and the Indenture Trustee shall have the right to rely upon a
certificate executed on behalf of the Note Registrar by an Executive Officer
thereof as to the names and addresses of the Holders of the Notes and the
principal amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office or
agency of the Issuer to be maintained as provided in Section 3.02, provided that
the requirements of Section 8-401 of the UCC are met, the Issuer shall execute,
and the Indenture Trustee shall authenticate and the Noteholder shall obtain
from the Indenture Trustee, in the name of the designated transferee or
transferees, one or more new Notes of the same Class in any authorized
denominations, of a like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes of the
same Class in any authorized denominations, of a like aggregate principal
amount, upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, provided that the
requirements of Section 8-401 of the UCC are met, the Issuer shall execute, and
the Indenture Trustee shall authenticate and the Noteholder shall obtain from
the Indenture Trustee, the Notes which the Noteholder making the exchange is
entitled to receive.
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All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument of
transfer in form satisfactory to the Indenture Trustee duly executed by, the
Holder thereof or such Holder's attorney duly authorized in writing, with such
signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in the Securities Transfer Agent's Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Note
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Exchange Act.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer or the Indenture Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Notes, other than exchanges pursuant to Section 2.03 or 9.06 not
involving any transfer.
The preceding provisions of this Section notwithstanding, the Issuer shall
not be required to make and the Note Registrar need not register transfers or
exchanges of Notes selected for redemption or of any Note for a period of 15
days preceding the due date for any payment with respect to the Note.
Section 2.05. MUTILATED, DESTROYED, LOST OR STOLEN NOTES. If (i) any
mutilated Note is surrendered to the Indenture Trustee, or the Indenture Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Note, (ii) there is delivered to the Indenture Trustee such security or
indemnity as may be required by it to hold the Issuer and the Indenture Trustee
harmless and (iii) the requirements of Section 8-405 of UCC are met, then, in
the absence of notice to the Issuer, the Note Registrar or the Indenture Trustee
that such Note has been acquired by a Protected Purchaser, the Issuer shall
execute, and upon its request the Indenture Trustee shall authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Note, a replacement Note of the same Class; provided, however, that if
any such destroyed, lost or stolen Note, but not a mutilated Note, shall have
become or within seven days shall be due and payable, or shall have been called
for redemption, instead of issuing a replacement Note, the Issuer may pay such
destroyed, lost or stolen Note when so due or payable or upon the Redemption
Date without surrender thereof. If, after the delivery of such replacement Note
or payment of a destroyed, lost or stolen Note pursuant to the proviso to the
preceding sentence, a Protected Purchaser of the original Note in lieu of which
such replacement Note was issued presents for payment such original Note, the
Issuer and the Indenture Trustee shall be entitled to recover such replacement
Note (or such payment) from the Person to whom it was delivered or any Person
taking such replacement Note from such Person to whom such replacement Note was
delivered or any assignee of such Person, except a protected purchaser, and
shall be entitled to recover upon the security or indemnity provided therefor to
the extent of any loss, damage, cost or expense incurred by the Issuer or the
Indenture Trustee in connection therewith.
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Upon the issuance of any replacement Note under this Section, the Issuer or
the Indenture Trustee may require the payment by the Holder of such Note of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other reasonable expenses (including the fees and
expenses of the Indenture Trustee or the Note Registrar) connected therewith.
Every replacement Note issued pursuant to this Section in replacement of
any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
Section 2.06. PERSONS DEEMED OWNER. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Indenture Trustee and any
of their respective agents may treat the Person in whose name any Note is
registered (as of the day of determination) as the owner of such Note for the
purpose of receiving payments of principal of and interest, if any, on such Note
and for all other purposes whatsoever, whether or not such Note be overdue, and
none of the Issuer, the Indenture Trustee or any of their respective agents
shall be affected by notice to the contrary.
Section 2.07. PAYMENT OF PRINCIPAL AND INTEREST; DEFAULTED INTEREST.
(a) Each Class of Notes shall accrue interest at the related Interest Rate,
and such interest shall be payable on each Distribution Date as specified
therein, subject to Section 3.01. Any installment of interest or principal, if
any, payable on any Note that is punctually paid or duly provided for by the
Issuer on the applicable Distribution Date shall be paid to the Person in whose
name such Note (or one or more Predecessor Notes) is registered on the Record
Date by check mailed first-class postage prepaid to such Person's address as it
appears on the Note Register on such Record Date, except that, unless Definitive
Notes have been issued pursuant to Section 2.12, with respect to Notes
registered on the Record Date in the name of the nominee of the Clearing Agency
(initially, such nominee to be Cede & Co.), payment will be made by wire
transfer in immediately available funds to the account designated by such
nominee and except for the final installment of principal payable with respect
to such Note on a Distribution Date, a Redemption Date or on the related Final
Scheduled Distribution Date, as the case may be (and except for the Redemption
Price for any Note called for redemption pursuant to Section 10.01), which shall
be payable as provided below. The funds represented by any such checks returned
undelivered shall be held in accordance with Section 3.03.
(b) The principal of each Note shall be payable in installments on each
Distribution Date as provided in the form of the related Note set forth in
Exhibit A. Notwithstanding the foregoing, the entire unpaid principal amount of
the Notes shall be due and payable, if not previously paid, on the related Final
Scheduled Distribution Date or the date on which an Event of Default shall have
occurred and be continuing, if the Indenture Trustee or Holders of the
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Notes representing not less than a majority of the Outstanding Amount have
declared the Notes to be immediately due and payable in the manner provided in
Section 5.02. All principal payments on each Class of Notes shall be made pro
rata to the Noteholders of such Class entitled thereto. The Indenture Trustee
shall notify the Person in whose name a Note is registered at the close of
business on the Record Date preceding the Distribution Date on which the Issuer
expects that the final installment of principal of and interest on such Note
will be paid. Such notice shall be mailed or transmitted by facsimile prior to
such final Distribution Date and shall specify that such final installment will
be payable only upon presentation and surrender of such Note and shall specify
the place where such Note may be presented and surrendered for payment of such
installment. Notices in connection with redemptions of Notes shall be mailed to
Noteholders as provided in Section 10.02. In addition, the Administrator shall
notify each Rating Agency upon the final payment of interest and principal of
each Class of Notes, and upon the termination of the Trust, in each case
pursuant to Section 1.02(a)(iii) of the Administration Agreement.
(c) If the Issuer defaults in a payment of interest on the Notes, the
Issuer shall pay defaulted interest (plus interest on such defaulted interest to
the extent lawful) at the applicable Interest Rate in any lawful manner. The
Issuer may pay such defaulted interest to the Persons who are Noteholders on a
subsequent special record date, which date shall be at least five Business Days
prior to the payment date. The Issuer shall fix or cause to be fixed any such
special record date and related payment date, and, at least 15 days before any
such special record date, the Issuer shall mail to each Noteholder a notice that
states the special record date, the payment date and the amount of defaulted
interest to be paid.
Section 2.08. CANCELLATION. All Notes surrendered for payment, registration
of transfer, exchange or redemption shall, if surrendered to any Person other
than the Indenture Trustee, be delivered to the Indenture Trustee and shall be
promptly cancelled by the Indenture Trustee. The Issuer may at any time deliver
to the Indenture Trustee for cancellation any Notes previously authenticated and
delivered hereunder which the Issuer may have acquired in any manner whatsoever,
and all Notes so delivered shall be promptly cancelled by the Indenture Trustee.
No Notes shall be authenticated in lieu of or in exchange for any Notes
cancelled as provided in this Section, except as expressly permitted by this
Indenture. All cancelled Notes may be held or disposed of by the Indenture
Trustee in accordance with its standard retention or disposal policy as in
effect at the time unless the Issuer shall direct by an Issuer Order that they
be destroyed or returned to it; provided, that such Issuer Order is timely and
the Notes have not been previously disposed of by the Indenture Trustee.
Section 2.09. BOOK-ENTRY NOTES. The Notes, upon original issuance, will be
issued in the form of a typewritten Note or Notes representing the Book-Entry
Notes, to be delivered to The Depository Trust Company, the initial Clearing
Agency, by, or on behalf of, the Issuer. The Book-Entry Notes shall be
registered initially on the Note Register in the name of Cede & Co., the nominee
of the initial Clearing Agency, and no Note Owner will receive a definitive Note
representing such Note Owner's interest in such Note, except as provided in
Section 2.11. Unless and until definitive, fully registered Notes (the
"Definitive Notes") have been issued to such Note Owners pursuant to Section
2.11:
(i) the provisions of this Section shall be in full force and effect;
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(ii) the Note Registrar and the Indenture Trustee shall be entitled to
deal with the Clearing Agency for all purposes of this Indenture (including
the payment of principal of and interest on the Notes and the giving of
instructions or directions hereunder) as the sole holder of the Notes, and
shall have no obligation to the Note Owners;
(iii) to the extent that the provisions of this Section conflict with
any other provisions of this Indenture, the provisions of this Section
shall control;
(iv) the rights of Note Owners shall be exercised only through the
Clearing Agency and shall be limited to those established by law and
agreements between such Note Owners and the Clearing Agency and/or the
Clearing Agency Participants. Pursuant to the Note Depository Agreement,
unless and until Definitive Notes are issued pursuant to Section 2.11, the
Clearing Agency will make book-entry transfers among the Clearing Agency
Participants and receive and transmit payments of principal of and interest
on the Notes to such Clearing Agency Participants; and
(v) whenever this Indenture requires or permits actions to be taken
based upon instructions or directions of Holders of Notes evidencing a
specified percentage of the Outstanding Amount, the Clearing Agency shall
be deemed to represent such percentage only to the extent that it has
received instructions to such effect from Note Owners and/or Clearing
Agency Participants owning or representing, respectively, such required
percentage of the beneficial interest in the Notes and has delivered such
instructions to the Indenture Trustee.
Section 2.10. NOTICES TO CLEARING AGENCY. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to such Note Owners pursuant to
Section 2.11, the Indenture Trustee shall give all such notices and
communications specified herein to be given to Holders of the Notes to the
Clearing Agency, and shall have no obligation to such Note Owners.
Section 2.11. DEFINITIVE NOTES. If (i)(A) the Administrator advises the
Indenture Trustee in writing that the Clearing Agency is no longer willing or
able to properly discharge its responsibilities with respect to the Book-Entry
Notes and (B) neither the Indenture Trustee nor the Administrator is unable to
locate a qualified successor, (ii) the Administrator at its option advises the
Indenture Trustee in writing that it elects to terminate the book-entry system
through the Clearing Agency or (iii) after the occurrence of an Event of Default
or a Servicer Default, Owners of Book-Entry Notes representing beneficial
interests aggregating at least a majority of the Outstanding Amount of such
Notes advise the Indenture Trustee and the Clearing Agency through the Clearing
Agency Participants, in writing that the continuation of a book-entry system
through the Clearing Agency is no longer in the best interests of such Note
Owners, then, in each case, the Indenture Trustee shall notify all Note Owners
of the related Class of Notes, through the Clearing Agency of the occurrence of
any such event and of the availability of Definitive Notes of the related Class
of Notes to Note Owners requesting the same. Upon surrender to the Indenture
Trustee of the Note or Notes representing the Book-Entry Notes by the Clearing
Agency, accompanied by registration instructions, the Issuer shall execute and
the Indenture Trustee shall authenticate the Definitive Notes in accordance with
the instructions of the Clearing Agency. None of the Issuer, the Note Registrar
or the Indenture Trustee shall be liable
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for any delay in delivery of such instructions and may conclusively rely on, and
shall be protected in relying on, such instructions. Upon the issuance of
Definitive Notes of a Class, the Indenture Trustee shall recognize the Holders
of the Definitive Notes as Noteholders hereunder.
Section 2.12. RELEASE OF COLLATERAL. Subject to Section 11.01 and the terms
of the other Basic Documents, the Indenture Trustee shall release property from
the lien of this Indenture only upon receipt of an Issuer Request accompanied by
an Officer's Certificate, an Opinion of Counsel and Independent Certificates in
accordance with TIA Sections 314(c) and 314(d)(1) or an Opinion of Counsel in
lieu of such Independent Certificates to the effect that the TIA does not
require any such Independent Certificates.
Section 2.13. TAX TREATMENT. The Issuer has entered into this Indenture,
and the Notes will be issued, with the intention that, for all purposes
including federal, state and local income, single business and franchise tax
purposes, the Notes will qualify as indebtedness of the Issuer secured by the
Owner Trust Estate. The Issuer, by entering into this Indenture, and each
Noteholder, by its acceptance of a Note (and each Note Owner by its acceptance
of an interest in the applicable Book-Entry Note), agree to treat the Notes for
all purposes including federal, state and local income, single business and
franchise tax purposes as indebtedness of the Issuer.
Section 2.14. EMPLOYEE BENEFIT PLANS. A fiduciary of a Benefit Plan
purchasing the Notes with the assets of a Benefit Plan is deemed to represent
that the purchase of one or more Notes is consistent with its fiduciary duties
under ERISA and does not result in a nonexempt prohibited transaction as defined
in Section 406 of ERISA or Section 4975 of the Code. If the Transferor, the
Servicer, the Indenture Trustee, the Owner Trustee or any of their Affiliates
(i) has investment or administrative discretion with respect to the assets of a
Benefit Plan; (ii) has authority or responsibility to give, or regularly gives,
investment advice with respect to such Benefit Plan assets, for a fee and
pursuant to an agreement or understanding that such advice (a) will serve as a
primary basis for investment decisions with respect to such Benefit Plan assets
and (b) will be based on the particular investment needs for such Benefit Plan;
or (iii) is an employer maintaining or contributing to such Benefit Plan, then a
purchase of the Notes by such a Benefit Plan may represent a conflict of
interest or act of self-dealing by the fiduciary.
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ARTICLE THREE
COVENANTS
Section 3.01. PAYMENT OF PRINCIPAL AND INTEREST. The Issuer will duly and
punctually pay the principal of and interest, if any, on the Notes in accordance
with the terms of the Notes and this Indenture. Without limiting the foregoing,
subject to Section 8.02(c), the Issuer will cause to be distributed all amounts
on deposit in the Note Distribution Account on a Distribution Date deposited
therein in accordance with Section 8.02(d). Amounts properly withheld under the
Code by any Person from a payment to any Noteholder of interest and/or principal
shall be considered as having been paid by the Issuer to such Noteholder for all
purposes of this Indenture.
Section 3.02. MAINTENANCE OF OFFICE OR AGENCY. The Issuer will maintain in
the Borough of Manhattan, The City of New York, an office or agency where Notes
may be surrendered for registration of transfer or exchange, and where notices
and demands to or upon the Issuer in respect of the Notes and this Indenture may
be served. The Issuer hereby initially appoints the Indenture Trustee to serve
as its agent for the foregoing purposes. The Issuer will give prompt written
notice to the Indenture Trustee of the location, and of any change in the
location, of any such office or agency. If at any time the Issuer shall fail to
maintain any such office or agency or shall fail to furnish the Indenture
Trustee with the address thereof, such surrenders, notices and demands may be
made or served at the Corporate Trust Office, and the Issuer hereby appoints the
Indenture Trustee as its agent to receive all such surrenders, notices and
demands, provided that the Indenture Trustee shall not serve as an agent or
office for the purpose of service of process on behalf of the Issuer.
Section 3.03. MONEY FOR PAYMENTS TO BE HELD IN TRUST. As provided in
Sections 5.04 and 8.02, all payments of amounts due and payable with respect to
any Notes that are to be made from amounts withdrawn from the Collection Account
and the Note Distribution Account pursuant to Section 8.02(c) shall be made on
behalf of the Issuer by the Indenture Trustee or by another Paying Agent, and no
amounts so withdrawn from the Collection Account and the Note Distribution
Account for payments of Notes shall be paid over to the Issuer except as
provided in this Section.
On or before the Business Day immediately preceding each Distribution Date
and Redemption Date, the Issuer shall deposit or cause to be deposited in the
Note Distribution Account an aggregate sum sufficient to pay the amounts then
becoming due under the Notes, such sum to be held in trust for the benefit of
the Persons entitled thereto, and (unless the Paying Agent is the Indenture
Trustee) shall promptly notify the Indenture Trustee of its action or failure so
to act.
The Issuer will cause each Paying Agent other than the Indenture Trustee to
execute and deliver to the Indenture Trustee an instrument in which such Paying
Agent shall agree with the Indenture Trustee (and if the Indenture Trustee acts
as Paying Agent, it hereby so agrees), subject to the provisions of this
Section, that such Paying Agent will:
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(i) hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed
of as herein provided and pay such sums to such Persons as herein provided;
(ii) give the Indenture Trustee notice of any default by the Issuer
(or any other obligor upon the Notes) of which it has actual knowledge in
the making of any payment required to be made with respect to the Notes;
(iii) at any time during the continuance of any such default, upon the
written request of the Indenture Trustee, forthwith pay to the Indenture
Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to the
Indenture Trustee all sums held by it in trust for the payment of Notes if
at any time it ceases to meet the standards required to be met by a Paying
Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any applicable
withholding taxes imposed thereon and with respect to any applicable
reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, by Issuer Order direct
any Paying Agent to pay to the Indenture Trustee all sums held in trust by such
Paying Agent, such sums to be held by the Indenture Trustee upon the same trusts
as those upon which the sums were held by such Paying Agent; and upon such
payment by any Paying Agent to the Indenture Trustee, such Paying Agent shall be
released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any money held
by the Indenture Trustee or any Paying Agent in trust for the payment of any
amount due with respect to any Note and remaining unclaimed for two years after
such amount has become due and payable shall be discharged from such trust and
be paid to the Issuer on Issuer Request; and the Holder of such Note shall
thereafter, as an unsecured general creditor, look only to the Issuer for
payment thereof (but only to the extent of the amounts so paid to the Issuer),
and all liability of the Indenture Trustee or such Paying Agent with respect to
such trust money shall thereupon cease; provided, however, that the Indenture
Trustee or such Paying Agent, before being required to make any such repayment,
shall at the expense and direction of the Issuer cause to be published once, in
a newspaper published in the English language, customarily published on each
Business Day and of general circulation in The City of New York, notice that
such money remains unclaimed and that, after a date specified therein, which
shall not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to or for the account of the
Issuer. The Indenture Trustee shall also adopt and employ, at the expense and
direction of the Issuer, any other reasonable means of notification of such
repayment (including, but not limited to, mailing notice of such repayment to
Holders whose Notes have been called but have not been surrendered for
redemption or whose right to or
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interest in monies due and payable but not claimed is determinable from the
records of the Indenture Trustee or of any Paying Agent, at the last address of
record for each such Holder).
Section 3.04. EXISTENCE. The Issuer will keep in full effect its existence,
rights and franchises as a business trust under the laws of the State of
Delaware (unless it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other State or of the United States, in which
case the Issuer will keep in full effect its existence, rights and franchises
under the laws of such other jurisdiction) and will obtain and preserve its
qualification to do business in each jurisdiction in which such qualification is
or shall be necessary to protect the validity and enforceability of this
Indenture, the Notes, the Collateral and each other instrument or agreement
included in the Owner Trust Estate.
Section 3.05. PROTECTION OF OWNER TRUST ESTATE. The Issuer intends the
security interest Granted pursuant to this Indenture in favor of the Indenture
Trustee on behalf of the Noteholders to be prior to all other liens in respect
of the Owner Trust Estate, and the Issuer shall take all actions necessary to
obtain and maintain, for the benefit of the Indenture Trustee on behalf of the
Noteholders, a first lien on and a first priority, perfected security interest
in the Owner Trust Estate. The Issuer will from time to time execute and deliver
all such supplements and amendments hereto and all such financing statements,
continuation statements, instruments of further assurance and other instruments,
all as prepared by the Servicer and delivered to the Issuer, and will take such
other action necessary or advisable to:
(i) Grant more effectively any portion of the Owner Trust Estate;
(ii) maintain or preserve the lien and security interest (and the
priority thereof) created by this Indenture or carry out more effectively
the purposes hereof;
(iii) perfect, publish notice of or protect the validity of any Grant
made or to be made by this Indenture;
(iv) enforce any of the Collateral;
(v) preserve and defend title to the Owner Trust Estate and the
rights of the Indenture Trustee and the Noteholders in such Owner
Trust Estate against the claims of all persons and parties; or
(vi) pay all taxes or assessments levied or assessed upon the
Owner Trust Estate when due.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required to be executed pursuant to this Section.
Section 3.06. OPINIONS AS TO OWNER TRUST ESTATE.
(a) Promptly after the execution and delivery of this Indenture, the Issuer
shall furnish to the Indenture Trustee an Opinion of Counsel to the effect that,
in the opinion of such counsel, either (i) all financing statements and
continuation statements have been executed and
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filed that are necessary to create and continue the Indenture Trustee's first
priority perfected security interest in the collateral for the benefit of the
Noteholders, and reciting the details of such filings or referring to prior
Opinions of Counsel in which such details are given, or (ii) no such action
shall be necessary to perfect such security interest.
(b) Within 90 days after the beginning of each calendar year beginning with
the first fiscal year beginning more than three months after the Cutoff Date,
the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel, dated
as of a date during such 90-day period, to the effect that, in the opinion of
such counsel, either (i) all financing statements and continuation statements
have been executed and filed that are necessary to create and continue the
Indenture Trustee's first priority perfected security interest in the collateral
for the benefit of the Noteholders, and reciting the details of such filings or
referring to prior Opinions of Counsel in which such details are given, or (ii)
no such action shall be necessary to perfect such security interest.
Section 3.07. PERFORMANCE OF OBLIGATIONS; SERVICING OF RECEIVABLES.
(a) The Issuer will not take any action and will use its best efforts not
to permit any action to be taken by others that would release any Person from
any of such Person's material covenants or obligations under any instrument or
agreement included in the Owner Trust Estate or that would result in the
amendment, hypothecation, subordination, termination or discharge of, or impair
the validity or effectiveness of, any such instrument or agreement, except as
expressly provided in this Indenture, the other Basic Documents or such other
instrument or agreement.
(b) The Issuer may contract with other Persons to assist it in performing
its duties under this Indenture, and any performance of such duties by a Person
identified to the Indenture Trustee in an Officer's Certificate of the Issuer
shall be deemed to be action taken by the Issuer. Initially, the Issuer has
contracted with the Servicer and the Administrator to assist the Issuer in
performing its duties under this Indenture.
(c) The Issuer will and will cause the Administrator to, punctually perform
and observe all of its obligations and agreements contained in this Indenture,
the other Basic Documents and in the instruments and agreements included in the
Owner Trust Estate, including but not limited to filing or causing to be filed
all UCC financing statements and continuation statements required to be filed by
the terms of this Indenture and the other Basic Documents in accordance with and
within the time periods provided for herein and therein. Except as otherwise
expressly provided therein, the Issuer shall not waive, amend, modify,
supplement or terminate any Basic Document or any provision thereof without the
consent of the Indenture Trustee or the Holders of at least a majority of the
Outstanding Amount or such greater percentage as may be specified in the
particular provision.
(d) If the Issuer shall have knowledge of the occurrence of a Servicer
Default, the Issuer shall promptly provide written notice to a Responsible
Officer of the Indenture Trustee and to each Rating Agency thereof, and shall
specify in such notice the action, if any, the Issuer is taking with respect of
such default. If a Servicer Default shall arise from the failure of the Servicer
to perform any of its duties or obligations under the Sale and Servicing
Agreement with respect to the Receivables, the Issuer shall take all reasonable
steps available to it to remedy such failure.
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(e) As promptly as possible after the giving of notice of termination to
the Servicer of the Servicer's rights and powers pursuant to Section 7.01 of the
Sale and Servicing Agreement, the Indenture Trustee shall appoint a Successor
Servicer, and such Successor Servicer shall accept its appointment by a written
assumption in a form acceptable to the Indenture Trustee. In the event that a
Successor Servicer has not been appointed and accepted its appointment at the
time when the Servicer ceases to act as Servicer, the Indenture Trustee without
further action shall automatically be appointed the Successor Servicer. The
Indenture Trustee may resign as the Servicer by giving written notice of such
resignation to the Issuer and in such event will be released from such duties
and obligations, such release not to be effective until the date a new servicer
enters into a servicing agreement as provided below. Upon delivery of any such
notice to the Issuer, the Issuer shall obtain a new servicer as the Successor
Servicer under the Sale and Servicing Agreement. Any Successor Servicer other
than the Indenture Trustee shall (i) be an established financial institution
having a net worth of not less than $50,000,000 and whose regular business
includes the servicing of motor vehicle receivables and (ii) enter into a
servicing agreement with the Issuer and the Seller having substantially the same
provisions as the provisions of the Sale and Servicing Agreement applicable to
the Servicer. If within 30 days after the delivery of the notice referred to
above, the Indenture Trustee shall not have obtained such a new servicer, the
Indenture Trustee may appoint, or may petition a court of competent jurisdiction
to appoint, a Successor Servicer. In connection with any such appointment, the
Issuer may make such arrangements for the compensation of such successor as it
and such successor shall agree, subject to the limitations set forth below and
in the Sale and Servicing Agreement, and in accordance with Section 7.02 of the
Sale and Servicing Agreement, the Issuer and the Seller shall enter into an
agreement with such successor for the servicing of the Receivables (such
agreement to be in form and substance satisfactory to the Indenture Trustee). If
the Indenture Trustee shall succeed to the Servicer's duties as servicer of the
Receivables as provided herein, it shall do so in its individual capacity and
not in its capacity as Indenture Trustee and, accordingly, the provisions of
Article Six shall be inapplicable to the Indenture Trustee in its duties as the
successor to the Servicer and the servicing of the Receivables. In case the
Indenture Trustee shall become successor to the Servicer under the Sale and
Servicing Agreement, the Indenture Trustee shall be entitled to appoint as
Servicer any one of its Affiliates, provided that it shall be fully liable for
the actions and omissions of such Affiliate in such capacity as Successor
Servicer.
(f) Upon any termination of the Servicer's rights and powers pursuant to
the Sale and Servicing Agreement, the Issuer shall promptly notify the Indenture
Trustee. As soon as a Successor Servicer is appointed, the Issuer shall notify
the Indenture Trustee of such appointment, specifying in such notice the name
and address of such Successor Servicer.
Section 3.08. NEGATIVE COVENANTS. So long as any Notes are Outstanding, the
Issuer shall not:
(i) except as expressly permitted by the Basic Documents, sell,
transfer, exchange or otherwise dispose of any of the properties or
assets of the Issuer, including those included in the Owner Trust
Estate, unless directed to do so by the Indenture Trustee;
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(ii) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes (other than
amounts properly withheld from such payments under the Code or
applicable state law) or assert any claim against any present or
former Noteholder by reason of the payment of the taxes levied or
assessed upon any part of the Owner Trust Estate;
(iii) (A) permit the validity or effectiveness of this Indenture
to be impaired, or permit the lien created by this Indenture to be
amended, hypothecated, subordinated, terminated or discharged, or
permit any Person to be released from any covenants or obligations
with respect to the Notes under this Indenture except as may be
expressly permitted hereby, (B) permit any lien, charge, excise,
claim, security interest, mortgage or other encumbrance (other than
the lien of this Indenture) to be created on or extend to or otherwise
arise upon or burden the Owner Trust Estate or any part thereof or any
interest therein or the proceeds thereof (other than tax liens,
mechanics' liens and other liens that arise by operation of law, in
each case on any of the Financed Vehicles and arising solely as a
result of an action or omission of the related Obligor) or (C) permit
the lien created by this Indenture not to constitute a valid first
priority (other than with respect to any such tax, mechanics' or other
lien) security interest in the Owner Trust Estate; or
(iv) dissolve or liquidate in whole or in part.
Section 3.09. ANNUAL STATEMENT AS TO COMPLIANCE. The Issuer will deliver to
the Indenture Trustee, within 120 days after the end of each fiscal year of the
Issuer (commencing with the fiscal year 1999), an Officer's Certificate stating,
as to the Authorized Officer signing such Officer's Certificate, that:
(i) a review of the activities of the Issuer during such year and
of its performance under this Indenture has been made under such
Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based on
such review, the Issuer has complied with all conditions and covenants
under this Indenture throughout such year or, if there has been a
default in its compliance with any such condition or covenant,
specifying each such default known to such Authorized Officer and the
nature and status thereof.
Section 3.10. ISSUER MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
(a) The Issuer shall not consolidate or merge with or into any other
Person, unless:
(i) the Person (if other than the Issuer) formed by or surviving
such consolidation or merger shall be a Person organized and existing
under the laws of the United States or any State and shall expressly
assume, by an indenture supplemental hereto, executed and delivered to
the Indenture Trustee, in form satisfactory to the Indenture Trustee,
the due and punctual payment of the principal of and interest on all
Notes and the performance or observance of every agreement and
covenant of this
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Indenture, and each other Basic Document, on the part of the Issuer to
be performed or observed;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to the Indenture Trustee) to the
effect that such transaction will not have any material adverse tax
consequence to the Issuer, any Noteholder or any Certificateholder;
(v) any action that is necessary to maintain the lien and
security interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel (which shall describe
the actions taken as required by clause (v) above or that no actions
will be taken) each stating that such consolidation or merger comply
with this Article and that all conditions precedent herein provided
for relating to such transaction have been complied with (including
any filing required by the Exchange Act).
(b) The Issuer shall not convey or transfer all or substantially all of its
properties or assets, including those included in the Owner Trust Estate, to any
Person (except as expressly permitted by the Basic Documents), unless:
(i) the Person that acquires by conveyance or transfer the
properties or assets of the Issuer shall (A) be a United States
citizen or a Person organized and existing under the laws of the
United States or any State, (B) expressly assume, by an indenture
supplemental hereto, executed and delivered to the Indenture Trustee,
in form satisfactory to the Indenture Trustee, the due and punctual
payment of the principal of and interest on all Notes and the
performance or observance of every agreement and covenant of this
Indenture and each other Basic Document on the part of the Issuer to
be performed or observed, all as provided herein, (C) expressly agree
by means of such supplemental indenture that all right, title and
interest so conveyed or transferred shall be subject and subordinate
to the rights of Holders of the Notes, (D) unless otherwise provided
in such supplemental indenture, expressly agree to indemnify, defend
and hold harmless the Issuer against and from any loss, liability or
expense arising under or related to this Indenture and the Notes and
(E) expressly agree by means of such supplemental indenture that such
Person (or if a group of Persons, then one specified Person) shall
make all filings with the Commission (and any other appropriate
Person) required by the Exchange Act in connection with the Notes;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
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(iii) the Rating Agency Condition shall have been satisfied with
respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to the Indenture Trustee) to the
effect that such transaction will not have any material adverse
federal tax consequence to the Issuer, any Noteholder or any
Certificateholder;
(v) any action that is necessary to maintain the lien and
security interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel (which shall describe
the actions taken as required by clause (v) above or that no actions
will be taken) each stating that such conveyance or transfer and such
supplemental indenture comply with this Article and that all
conditions precedent herein provided for relating to such transaction
have been complied with (including any filing required by the Exchange
Act).
Section 3.11. SUCCESSOR OR TRANSFEREE.
(a) Upon any consolidation or merger of the Issuer in accordance with
Section 3.10(a), the Person formed by or surviving such consolidation or merger
(if other than the Issuer) shall succeed to, and be substituted for, and may
exercise every right and power of, the Issuer under this Indenture with the same
effect as if such Person had been named as the Issuer herein.
(b) Upon a conveyance or transfer of all of the properties or assets of the
Issuer pursuant to Section 3.10(b), the Issuer will be released from every
covenant and agreement of this Indenture to be observed or performed on the part
of the Issuer with respect to the Notes immediately upon the delivery of written
notice to the Indenture Trustee stating that the Issuer is to be so released.
Section 3.12. NO OTHER BUSINESS. The Issuer shall not engage in any
business other than financing, purchasing, owning, selling and managing the
Receivables in the manner contemplated by this Indenture and the other Basic
Documents and activities incidental thereto.
Section 3.13. NO BORROWING. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for (i) the Notes and (ii) any other indebtedness permitted
by or arising under the other Basic Documents.
Section 3.14. SERVICER'S OBLIGATIONS. The Issuer shall cause the Servicer
to comply with Sections 3.10, 3.11, 3.12, 4.10 and Article Eight of the Sale and
Servicing Agreement.
Section 3.15. GUARANTEES, LOANS, ADVANCES AND OTHER LIABILITIES. Except as
contemplated by the Basic Documents, the Issuer shall not make any loan or
advance or credit to, or guarantee (directly or indirectly or by an instrument
having the effect of assuring another's payment or performance on any obligation
or capability of so doing or otherwise), endorse or otherwise become
contingently liable, directly or indirectly, in connection with the obligations,
stocks or dividends of, or own, purchase, repurchase or acquire (or agree
contingently to do so)
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any stock, obligations, assets or securities of, or any other interest in, or
make any capital contribution to, any other Person.
Section 3.16. CAPITAL EXPENDITURES. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
Section 3.17. REMOVAL OF ADMINISTRATOR. So long as any Notes are
Outstanding, the Issuer shall not remove the Administrator without cause unless
the Rating Agency Condition shall have been satisfied in connection with such
removal.
Section 3.18. RESTRICTED PAYMENTS. Except as expressly permitted by the
Basic Documents, the Issuer shall not, directly or indirectly, (i) pay any
dividend or make any distribution (by reduction of capital or otherwise),
whether in cash, property, securities or a combination thereof, to the Owner
Trustee or any owner of a beneficial interest in the Issuer or otherwise with
respect to any ownership or equity interest or security in or of the Issuer or
to the Servicer, (ii) redeem, purchase, retire or otherwise acquire for value
any such ownership or equity interest or security or (iii) set aside or
otherwise segregate any amounts for any such purpose; provided, however, that
the Issuer may make, or cause to be made, (a) distributions as contemplated by,
and to the extent funds are available for such purpose under, the Sale and
Servicing Agreement or the Trust Agreement and (b) payments to the Indenture
Trustee pursuant to Section 1.02(b)(ii) of the Administration Agreement. The
Issuer will not, directly or indirectly, make payments to or distributions from
the Collection Account except in accordance with this Indenture and the Basic
Documents.
Section 3.19. NOTICE OF EVENTS OF DEFAULT. The Issuer shall give a
Responsible Officer of the Indenture Trustee and each Rating Agency prompt
written notice of each Event of Default hereunder and each default on the part
of the Servicer or the Seller of its obligations under the Sale and Servicing
Agreement.
Section 3.20. FURTHER INSTRUMENTS AND ACTS. Upon request of the Indenture
Trustee, the Issuer will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
Section 3.21. COMPLIANCE WITH LAWS. The Issuer shall comply with the
requirements of all applicable laws, the non-compliance with which would,
individually or in the aggregate, materially and adversely affect the ability of
the Issuer to perform its obligations under the Notes, this Indenture or any
Basic Document.
Section 3.22. AMENDMENTS OF SALE AND SERVICING AGREEMENT AND TRUST
AGREEMENT. The Issuer shall not agree to any amendment to Section 11.01 of the
Sale and Servicing Agreement or Section 11.01 of the Trust Agreement to
eliminate the requirements thereunder that the Indenture Trustee or the Holders
of the Notes consent to amendments thereto as provided therein.
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ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 4.01. SATISFACTION AND DISCHARGE OF INDENTURE. This Indenture shall
cease to be of further effect with respect to the Notes except as to (i) rights
of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal thereof and interest thereon, (iv) Sections 3.03, 3.04, 3.05, 3.08,
3.10, 3.12, 3.13, 3.20 and 3.22, (v) the rights, obligations and immunities of
the Indenture Trustee hereunder (including the rights of the Indenture Trustee
under Section 6.07 and the obligations of the Indenture Trustee under Section
4.02) and (vi) the rights of Noteholders as beneficiaries hereof with respect to
the property so deposited with the Indenture Trustee payable to all or any of
them, and the Indenture Trustee, on demand of and at the expense of the Issuer,
shall execute proper instruments acknowledging satisfaction and discharge of
this Indenture with respect to the Notes, when
(i) either
(A) all Notes theretofore authenticated and delivered (other
than (i) Notes that have been destroyed, lost or stolen and that
have been replaced or paid as provided in Section 2.05 and (ii)
Notes for whose payment money has theretofore been deposited in
trust or segregated and held in trust by the Issuer and
thereafter repaid to the Issuer or discharged from such trust, as
provided in Section 3.03) have been delivered to the Indenture
Trustee for cancellation; or
(B) all Notes not theretofore delivered to the Indenture
Trustee for cancellation
(1) have become due and payable,
(2) will become due and payable at the Class A-4 Final
Scheduled Distribution Date within one year, or
(3) are to be called for redemption within one year
under arrangements satisfactory to the Indenture Trustee for
the giving of notice of redemption by the Indenture Trustee
in the name, and at the expense, of the Issuer,
and the Issuer, in the case of clauses (1), (2) or (3) above, has
irrevocably deposited or caused to be irrevocably deposited with
the Indenture Trustee cash or direct obligations of or
obligations guaranteed by the United States (which will mature
prior to the date such amounts are payable), in trust for such
purpose, in an amount sufficient to pay and discharge the entire
indebtedness on such Notes not theretofore delivered to the
Indenture Trustee for cancellation when due to the related Final
Scheduled Distribution Date or Redemption Date (if Notes shall
have been called for redemption pursuant to Section 10.01), as
the case may be;
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(ii) the Issuer has paid or performed or caused to be paid or
performed all amounts and obligations which the Issuer may owe to or
on behalf of the Indenture Trustee for the benefit of the Noteholders
under this Indenture or the Notes; and
(iii) the Issuer has delivered to the Indenture Trustee an
Officer's Certificate, an Opinion of Counsel and (if required by the
TIA or the Indenture Trustee) an Independent Certificate from a firm
of certified public accountants, each meeting the applicable
requirements of Section 11.01(a) and, subject to Section 11.02, each
stating that all conditions precedent herein provided for relating to
the satisfaction and discharge of this Indenture have been complied
with.
Section 4.02. APPLICATION OF TRUST MONEY. All monies deposited with the
Indenture Trustee pursuant to Section 4.01 shall be held in trust in a
segregated non-interest bearing account and applied by it, in accordance with
the provisions of the Notes and this Indenture, to the payment, either directly
or through any Paying Agent, as the Indenture Trustee may determine, to the
Holders of the particular Notes for the payment or redemption of which such
monies have been deposited with the Indenture Trustee, of all sums due and to
become due thereon for principal and interest; but such monies need not be
segregated from other funds except to the extent required herein or in the Sale
and Servicing Agreement or required by law.
Section 4.03. REPAYMENT OF MONIES HELD BY PAYING AGENT. In connection with
the satisfaction and discharge of this Indenture with respect to the Notes, all
monies then held by any Paying Agent other than the Indenture Trustee under the
provisions of this Indenture with respect to such Notes shall, upon demand of
the Issuer, be paid to the Indenture Trustee to be held and applied according to
Section 3.03 and thereupon such Paying Agent shall be released from all further
liability with respect to such monies.
Section 4.04. DURATION OF POSITION OF INDENTURE TRUSTEE FOR BENEFIT OF
CERTIFICATEHOLDERS. Notwithstanding (i) the earlier payment in full of all
principal and interest due to the Noteholders under the terms of Notes of each
class, (ii) the cancellation of such Notes pursuant to Section 2.08 and (iii)
the discharge of the Indenture Trustee's duties hereunder with respect to such
Notes, the Indenture Trustee shall continue to act in the capacity as Indenture
Trustee hereunder for the benefit of the Certificateholders and the Indenture
Trustee, for the benefit of the Certificateholders, shall comply with its
obligations under Sections 4.01, 7.01 and 7.02 of the Sale and Servicing
Agreement, as appropriate, until such time as all distributions in respect of
the Certificates have been paid in full.
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ARTICLE FIVE
REMEDIES
Section 5.01. EVENTS OF DEFAULT. "Event of Default", wherever used herein,
means any one of the following events (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) default by the Issuer in the payment of any interest on any Note
when the same becomes due and payable, and such default shall continue for
a period of five days;
(ii) default by the Issuer in the payment of the principal of or any
installment of the principal of any Note when the same becomes due and
payable;
(iii) default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture (other than a covenant or
agreement, a default in the observance or performance of which is elsewhere
in this Section specifically dealt with), or any representation or warranty
of the Issuer made in this Indenture or in any certificate or other writing
delivered pursuant hereto or in connection herewith proving to have been
incorrect in any material respect as of the time when the same shall have
been made, and such default shall continue or not be cured, or the
circumstance or condition in respect of which such misrepresentation or
warranty was incorrect shall not have been eliminated or otherwise cured,
for a period of 30 days after there shall have been given, by registered or
certified mail, to the Issuer by the Indenture Trustee or to the Issuer and
the Indenture Trustee by the Holders of at least 25% of the Outstanding
Amount, a written notice specifying such default or incorrect
representation or warranty and requiring it to be remedied and stating that
such notice is a "Notice of Default" hereunder;
(iv) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer or any substantial
part of the Owner Trust Estate in an involuntary case under any applicable
federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Issuer or for
any substantial part of the Owner Trust Estate, or ordering the winding-up
or liquidation of the Issuer's affairs, and such decree or order shall
remain unstayed and in effect for a period of 60 consecutive days;
(v) the commencement by the Issuer of a voluntary case under any
applicable federal or state bankruptcy, insolvency or other similar law now
or hereafter in effect, or the consent by the Issuer to the entry of an
order for relief in an involuntary case under any such law, or the consent
by the Issuer to the appointment or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official
of the Issuer or for any substantial part of the Owner Trust Estate, or the
making by the Issuer of any general assignment for the benefit of
creditors, or the failure by the Issuer generally
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to pay its debts as such debts become due, or the taking of any action by
the Issuer in furtherance of any of the foregoing.
The Issuer shall deliver to a Responsible Officer of the Indenture Trustee,
within five days after the occurrence thereof, written notice in the form of an
Officer's Certificate of any event which with the giving of notice and the lapse
of time would become an Event of Default under clause (iii) above, its status
and what action the Issuer is taking or proposes to take with respect thereto.
Section 5.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
(a) If an Event of Default should occur and be continuing, then and in
every such case the Indenture Trustee or the Holders of Notes representing not
less than a majority of the Outstanding Amount may declare all the Notes to be
immediately due and payable, by a notice in writing to the Issuer (and to the
Indenture Trustee if given by Noteholders), and upon any such declaration the
unpaid principal amount of such Notes, together with accrued and unpaid interest
thereon through the date of acceleration, shall become immediately due and
payable.
(b) At any time after such declaration of acceleration of maturity has been
made and before a judgment or decree for payment of the money due has been
obtained by the Indenture Trustee as hereinafter in this Article provided, the
Holders of Notes representing a majority of the Outstanding Amount, by written
notice to the Issuer and the Indenture Trustee, may rescind and annul such
declaration and its consequences if:
(i) the Issuer has paid or deposited with the Indenture Trustee a sum
sufficient to pay:
(A) all payments of principal of and interest on all Notes and
all other amounts that would then be due hereunder or upon such Notes
if the Event of Default giving rise to such acceleration had not
occurred; and
(B) all sums paid or advanced by the Indenture Trustee hereunder
and the reasonable compensation, expenses, disbursements and advances
of the Indenture Trustee and its agents and counsel; and
(ii) all Events of Default, other than the nonpayment of the principal
of the Notes that has become due solely by such acceleration, have been
cured or waived as provided in Section 5.12.
No such rescission shall affect any subsequent default or impair any right
consequent thereto.
Section 5.03. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
INDENTURE TRUSTEE.
(a) The Issuer covenants that if the Notes are accelerated following the
occurrence of an Event of Default, the Issuer will, upon demand of the Indenture
Trustee, pay to it, for the benefit of the Holders of the Notes, the whole
amount then due and payable on such Notes for principal and interest, with
interest on the overdue principal and, to the extent payment at such rate of
interest shall be legally enforceable, on overdue installments of interest at
the related
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Interest Rate and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Indenture
Trustee and its agents and counsel.
(b) In case the Issuer shall fail forthwith to pay such amounts upon such
demand, the Indenture Trustee, in its own name and as trustee of an express
trust, may institute a Proceeding for the collection of the sums so due and
unpaid, and may prosecute such Proceeding to judgment or final decree, and may
enforce the same against the Issuer or other obligor upon such Notes and collect
in the manner provided by law out of the property of the Issuer or other obligor
upon such Notes, wherever situated, the monies adjudged or decreed to be
payable.
(c) If an Event of Default occurs and is continuing, the Indenture Trustee
may, as more particularly provided in Section 5.04, in its discretion, proceed
to protect and enforce its rights and the rights of the Noteholders, by such
appropriate Proceedings as the Indenture Trustee shall deem most effective to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy or legal or equitable
right vested in the Indenture Trustee by this Indenture or by law.
(d) In case there shall be pending, relative to the Issuer or any other
obligor upon the Notes or any Person having or claiming an ownership interest in
the Owner Trust Estate, Proceedings under Title 11 of the United States Code or
any other applicable federal or state bankruptcy, insolvency or other similar
law, or in case a receiver, assignee or trustee in bankruptcy or reorganization,
or liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial Proceedings relative to the Issuer
or other obligor upon the Notes, or to the creditors or property of the Issuer
or such other obligor, the Indenture Trustee, irrespective of whether the
principal of any Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Indenture Trustee shall
have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, by intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the entire amount of
principal and interest owing and unpaid in respect of the Notes and to file
such other papers or documents as may be necessary or advisable in order to
have the claims of the Indenture Trustee (including any claim for
reasonable compensation to the Indenture Trustee and each predecessor
Indenture Trustee, and their respective agents, attorneys and counsel, and
for reimbursement of all expenses and liabilities incurred, and all
advances made, by the Indenture Trustee and each predecessor Indenture
Trustee, except as a result of negligence or bad faith) and of the
Noteholders allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to vote on
behalf of the Holders of Notes in any election of a trustee, a standby
trustee or Person performing similar functions in any such Proceedings;
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(iii) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute all amounts received with
respect to the claims of the Noteholders and of the Indenture Trustee on
their behalf; and
(iv) to file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Indenture
Trustee or the Holders of Notes allowed in any Proceedings relative to the
Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders to make
payments to the Indenture Trustee and, in the event that the Indenture Trustee
shall consent to the making of payments directly to such Noteholders, to pay to
the Indenture Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee except as a result of negligence or bad faith.
(e) Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this Indenture, or
under any of the Notes, may be enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any trial or other
Proceedings relative thereto, and any such action or Proceedings instituted by
the Indenture Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment, subject to the payment of the expenses,
disbursements and compensation of the Indenture Trustee, each predecessor
Indenture Trustee and their respective agents and attorneys, shall be for the
ratable benefit of the Holders of the Notes.
(g) In any Proceedings brought by the Indenture Trustee (including any
Proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Holders of the Notes, and it shall not be necessary to
make any Noteholder a party to any such Proceedings.
Section 5.04. REMEDIES; PRIORITIES.
(a) If an Event of Default shall have occurred and be continuing, the
Indenture Trustee may do one or more of the following (subject to Sections 5.02
and 5.05):
(i) institute Proceedings in its own name and as trustee of an express
trust for the collection of all amounts then payable on the Notes or under
this Indenture with respect thereto, whether by declaration or otherwise,
enforce any judgment obtained and collect from the Issuer and any other
obligor upon such Notes monies adjudged due;
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(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Owner Trust
Estate;
(iii) exercise any remedies of a secured party under the UCC and any
other remedy available to the Indenture Trustee and take any other
appropriate action to protect and enforce the rights and remedies of the
Indenture Trustee on behalf of the Noteholders under this Indenture; and
(iv) sell the Owner Trust Estate or any portion thereof or rights or
interest therein, at one or more public or private sales called and
conducted in any manner permitted by law;
provided, however, that the Indenture Trustee may not sell or otherwise
liquidate the Owner Trust Estate following an Event of Default, other than an
Event of Default described in Section 5.01(i) or (ii), unless (A) the Holders of
100% of the Outstanding Amount consent thereto, (B) the proceeds of such sale or
liquidation distributable to the Noteholders are sufficient to discharge in full
all amounts then due and unpaid upon such Notes for principal and interest or
(C) the Indenture Trustee determines that the Owner Trust Estate will not
continue to provide sufficient funds for the payment of principal of and
interest on the Notes as would have become due if the Notes had not been
declared due and payable, and the Indenture Trustee obtains the consent of
Holders of 66 2/3% of the Outstanding Amount. In determining such sufficiency or
insufficiency with respect to clause (B) and (C) above, the Indenture Trustee
may, but need not, obtain and rely upon an opinion of an Independent investment
banking or accounting firm of national reputation as to the feasibility of such
proposed action and as to the sufficiency of the Owner Trust Estate for such
purpose.
(b) If the Indenture Trustee collects any money or property pursuant to
this Article, it shall pay out the money or property in the following order and
priority:
(i) to the Indenture Trustee and the Owner Trustee, any amounts due
under the Trust Agreement or Section 6.07 hereof;
(ii) to the Servicer, for amounts due and unpaid in respect of
Nonrecoverable Advances under the Sale and Servicing Agreement;
(iii) to the Servicer, for amounts due and unpaid in respect of the
Total Servicing Fee under the Sale and Servicing Agreement;
(iv) to Holders of the Notes of each Class, the Note Interest
Distributable Amount ratably in proportion to the Note Interest
Distributable Amount for each Class at their respective Interest Rates;
(v) to the Noteholders:
(A) to Holders of the Class A-1 Notes for amounts due and unpaid
on the Class A-1 Notes for principal, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Class A-1 Notes for principal, until the Outstanding Amount of the
Class A-1 Notes is reduced to zero;
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(B) to Holders of the Class A-2 Notes for amounts due and unpaid
on the Class A-2 Notes for principal, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Class A-2 Notes for principal, until the Outstanding Amount of the
Class A-2 Notes is reduced to zero;
(C) to Holders of the Class A-3 Notes for amounts due and unpaid
on the Class A-3 Notes for principal, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Class A-3 Notes for principal, until the Outstanding Amount of the
Class A-3 Notes is reduced to zero; and
(D) to Holders of the Class A-4 Notes for amounts due and unpaid
on the Class A-4 Notes for principal, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Class A-4 Notes for principal, until the Outstanding Amount of the
Class A-4 Notes is reduced to zero; and
(vi) to the Issuer for distribution pursuant to the Trust Agreement.
The Indenture Trustee may fix a record date and payment date for any payment to
Noteholders pursuant to this Section. At least 15 days before such record date,
the Issuer shall mail to each Noteholder and the Indenture Trustee a notice that
states the record date, the payment date and the amount to be paid.
Section 5.05. OPTIONAL PRESERVATION OF THE RECEIVABLES. If the Notes have
been declared to be due and payable under Section 5.02 following an Event of
Default and such declaration and its consequences have not been rescinded and
annulled, the Indenture Trustee may, but need not, elect to maintain possession
of the Owner Trust Estate. It is the desire of the parties hereto and the
Noteholders that there be at all times sufficient funds for the payment of
principal of and interest on the Notes, and the Indenture Trustee shall take
such desire into account when determining whether or not to maintain possession
of the Owner Trust Estate. In determining whether to maintain possession of the
Owner Trust Estate, the Indenture Trustee may, but need not, obtain and rely
upon an opinion of an Independent investment banking or accounting firm of
national reputation as to the feasibility of such proposed action and as to the
sufficiency of the Owner Trust Estate for such purpose.
Section 5.06. LIMITATION OF SUITS. No Holder of any Note shall have any
right to institute any Proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(i) such Holder has previously given written notice to the Indenture
Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the Outstanding Amount have
made written request to the Indenture Trustee to institute such Proceeding
in respect of such Event of Default in its own name as Indenture Trustee
hereunder;
(iii) such Holder or Holders have offered to the Indenture Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in complying with such request;
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(iv) the Indenture Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute such
Proceedings; and
(v) no direction inconsistent with such written request has been given
to the Indenture Trustee during such 60-day period by the Holders of a
majority of the Outstanding Amount.
It is understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Notes,
each representing less than a majority of the Outstanding Amount, the Indenture
Trustee in its sole discretion may determine what action, if any, shall be
taken, notwithstanding any other provisions of this Indenture.
Section 5.07. UNCONDITIONAL RIGHTS OF NOTEHOLDERS TO RECEIVE PRINCIPAL AND
INTEREST. Notwithstanding any other provisions in this Indenture, the Holder of
any Note shall have the right, which is absolute and unconditional, to receive
payment of the principal of and interest, if any, on such Note on or after the
respective due dates thereof expressed in such Note or in this Indenture (or, in
the case of redemption, on or after the Redemption Date) and to institute suit
for the enforcement of any such payment, and such right shall not be impaired
without the consent of such Holder.
Section 5.08. RESTORATION OF RIGHTS AND REMEDIES. If the Indenture Trustee
or any Noteholder has instituted any Proceeding to enforce any right or remedy
under this Indenture and such Proceeding has been discontinued or abandoned for
any reason or has been determined adversely to the Indenture Trustee or to such
Noteholder, then and in every such case the Issuer, the Indenture Trustee and
the Noteholders shall, subject to any determination in such Proceeding, be
restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Indenture Trustee and the Noteholders
shall continue as though no such Proceeding had been instituted.
Section 5.09. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein
conferred upon or reserved to the Indenture Trustee or to the Noteholders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 5.10. DELAY OR OMISSION NOT A WAIVER. No delay or omission of the
Indenture Trustee or any Holder of any Note to exercise any right or remedy
accruing upon any Default or Event of Default shall impair any such right or
remedy or constitute a waiver of any such Default or Event of Default or an
acquiescence therein. Every right and remedy given by this Article or
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by law to the Indenture Trustee or to the Noteholders may be exercised from time
to time, and as often as may be deemed expedient, by the Indenture Trustee or by
the Noteholders, as the case may be.
Section 5.11. CONTROL BY NOTEHOLDERS. The Holders of Notes representing
a majority of the Outstanding Amount shall have the right to direct the time,
method and place of conducting any Proceeding for any remedy available to the
Indenture Trustee with respect to the Notes or exercising any trust or power
conferred on the Indenture Trustee; provided that:
(i) such direction shall not be in conflict with any rule of law or
with this Indenture;
(ii) subject to the terms of Section 5.04, any direction to the
Indenture Trustee to sell or liquidate the Owner Trust Estate shall be by
the Holders of Notes representing not less than 100% of the Outstanding
Amount;
(iii) if the conditions set forth in Section 5.05 have been satisfied
and the Indenture Trustee elects to retain the Owner Trust Estate pursuant
to such Section, then any direction to the Indenture Trustee by the Holders
of Notes representing less than 100% of the Outstanding Amount to sell or
liquidate the Owner Trust Estate shall be of no force and effect; and
(iv) the Indenture Trustee may take any other action deemed proper by
the Indenture Trustee that is not inconsistent with such direction.
Notwithstanding the rights of Noteholders set forth in this Section, subject to
Section 6.01, the Indenture Trustee need not take any action for which it will
not be adequately indemnified or might materially adversely affect the rights of
any Noteholders not consenting to such action.
Section 5.12. WAIVER OF PAST DEFAULTS. Prior to the declaration of the
acceleration of the maturity of the Notes as provided in Section 5.02, the
Holders of Notes of not less than a majority of the Outstanding Amount may waive
any past Default or Event of Default and its consequences except a Default (i)
in payment of principal of or interest on any of the Notes or (ii) in respect of
a covenant or provision hereof which cannot be modified or amended without the
consent of the Holder of each Note. In the case of any such waiver, the Issuer,
the Indenture Trustee and the Holders of the Notes shall respectively be
restored to their former positions and rights hereunder; but no such waiver
shall extend to any subsequent or other Default or Event of Default or impair
any right consequent thereto. Upon any such waiver, such Default shall cease to
exist and be deemed to have been cured and not to have occurred, and any Event
of Default arising therefrom shall be deemed to have been cured and not to have
occurred, for every purpose of this Indenture.
Section 5.13. UNDERTAKING FOR COSTS. All parties to this Indenture agree,
and each Holder of any Note by such Holder's acceptance thereof shall be deemed
to have agreed, that any court may in its discretion require, in any suit for
the enforcement of any right or remedy under this Indenture, or in any suit
against the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including
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reasonable attorneys' fees, against any party litigant in such suit, having due
regard to the merits and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section shall not apply to (i) any suit
instituted by the Indenture Trustee, (ii) any suit instituted by any Noteholder,
or group of Noteholders, in each case holding in the aggregate more than 10% of
the Outstanding Amount or (iii) any suit instituted by any Noteholder for the
enforcement of the payment of principal of or interest on any Note on or after
the respective due dates expressed in such Note and in this Indenture (or, in
the case of redemption, on or after the Redemption Date).
Section 5.14. WAIVER OF STAY OR EXTENSION LAWS. The Issuer covenants (to
the extent that it may lawfully do so) that it will not at any time insist upon,
or plead or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, that may affect the covenants or the performance of this Indenture; and
the Issuer (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Indenture
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
Section 5.15. ACTION ON NOTES. The Indenture Trustee's right to seek and
recover judgment on the Notes or under this Indenture shall not be affected by
the seeking, obtaining or application of any other relief under or with respect
to this Indenture. Neither the lien of this Indenture nor any rights or remedies
of the Indenture Trustee or the Noteholders shall be impaired by the recovery of
any judgment by the Indenture Trustee against the Issuer or by the levy of any
execution under such judgment upon any portion of the Owner Trust Estate or upon
any of the assets of the Issuer. Any money or property collected by the
Indenture Trustee shall be applied in accordance with Section 5.04(b).
Section 5.16. PERFORMANCE AND ENFORCEMENT OF CERTAIN OBLIGATIONS.
(a) Promptly following a request from the Indenture Trustee to do so and at
the Administrator's expense, the Issuer shall take all such lawful action as the
Indenture Trustee may request to compel or secure the performance and observance
by the Seller or the Servicer, as applicable, of each of their obligations to
the Issuer under or in connection with the Sale and Servicing Agreement in
accordance with the terms thereof, and to exercise any and all rights, remedies,
powers and privileges lawfully available to the Issuer under or in connection
with the Sale and Servicing Agreement to the extent and in the manner directed
by the Indenture Trustee, including the transmission of notices of default on
the part of the Seller or the Servicer thereunder and the institution of legal
or administrative actions or proceedings to compel or secure performance by the
Seller or the Servicer of each of their obligations under the Sale and Servicing
Agreement.
(b) If an Event of Default has occurred and is continuing, the Indenture
Trustee may, and at the direction (which direction shall be in writing or by
telephone (confirmed in writing promptly thereafter)) of the Holders of 66 2/3%
of the Outstanding Amount shall, exercise all rights, remedies, powers,
privileges and claims of the Issuer against the Seller or the Servicer under or
in connection with the Sale and Servicing Agreement, including the right or
power to take any action to compel or secure performance or observance by the
Seller or the Servicer, of
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each of their obligations to the Issuer thereunder and to give any consent,
request, notice, direction, approval, extension or waiver under the Sale and
Servicing Agreement, and any right of the Issuer to take such action shall be
suspended.
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ARTICLE SIX
THE INDENTURE TRUSTEE
Section 6.01. DUTIES OF INDENTURE TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Indenture
Trustee shall exercise the rights and powers vested in it by this Indenture and
use the same degree of care and skill in their exercise as a prudent person
would exercise or use under the circumstances in the conduct of such person's
own affairs; provided, however, that if the Indenture Trustee shall assume the
duties of the Servicer pursuant to Section 3.07(e), the Indenture Trustee in
performing such duties shall use the degree of care and skill customarily
exercised by a prudent institutional servicer with respect to installment sale
contracts that it services for itself or others.
(b) Except during the continuance of an Event of Default:
(i) the Indenture Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Indenture Trustee and conforming to the
requirements of this Indenture; however, the Indenture Trustee shall
examine the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.
(c) The Indenture Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of Section 6.01(b);
(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer unless it is proved
that the Indenture Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Indenture Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 5.11.
(d) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Indenture Trustee shall not be liable for interest on any money
received by it except as the Indenture Trustee may agree in writing with the
Issuer.
(f) The Indenture Trustee acknowledges that it has reviewed the Sale and
Servicing Agreement and agrees to perform all acts required thereunder. The
Indenture Trustee shall be
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entitled to the benefits of this Section 6.01 and references herein to the
Indenture shall be read as references to the Indenture and the Sale and
Servicing Agreement.
(g) Money held in trust by the Indenture Trustee need not be segregated
from other funds except to the extent required by law or the terms of this
Indenture or the Sale and Servicing Agreement.
(h) No provision of this Indenture shall require the Indenture Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(i) Every provision of this Indenture relating to the conduct or affecting
the liability of or affording protection to the Indenture Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
(j) The Indenture Trustee shall not be charged with knowledge of any Event
of Default unless either (i) a Responsible Officer shall have actual knowledge
of such Event of Default or (ii) written notice of such Event of Default shall
have been given to the Indenture Trustee in accordance with the provisions of
this Indenture.
Section 6.02. RIGHTS OF INDENTURE TRUSTEE.
(a) Except as otherwise provided in the second succeeding sentence, the
Indenture Trustee may rely on any document believed by it to be genuine and to
have been signed or presented by the proper person. The Indenture Trustee need
not investigate any fact or matter stated in the document. Notwithstanding the
foregoing, the Indenture Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Indenture Trustee that shall be specifically required to be furnished
pursuant to any provision of this Indenture, shall examine them to determine
whether they comply as to form to the requirements of this Indenture.
(b) Before the Indenture Trustee acts or refrains from acting, it may
require an Officer's Certificate or an Opinion of Counsel. The Indenture Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on an Officer's Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys or a custodian or nominee, and the Indenture Trustee shall not be
responsible for any misconduct or negligence on the part of, or for the
supervision of, any such agent, attorney, custodian or nominee appointed with
due care by it hereunder.
(d) The Indenture Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, that the Indenture Trustee's conduct does not
constitute willful misconduct, negligence or bad faith.
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(e) The Indenture Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Notes shall be full and complete authorization and protection from liability
in respect to any action taken, omitted or suffered by it hereunder in good
faith and in accordance with the advice or opinion of such counsel.
Section 6.03. INDIVIDUAL RIGHTS OF INDENTURE TRUSTEE. The Indenture Trustee
in its individual or any other capacity may become the owner or pledgee of Notes
and may otherwise deal with the Issuer or its Affiliates with the same rights it
would have if it were not Indenture Trustee. Any Paying Agent, Note Registrar,
co-registrar or co-paying agent may do the same with like rights. However, the
Indenture Trustee must comply with Sections 6.11 and 6.12.
Section 6.04. INDENTURE TRUSTEE'S DISCLAIMER. The Indenture Trustee shall
not be responsible for and makes no representation as to the validity or
adequacy of this Indenture, the Owner Trust Estate or the Notes, it shall not be
accountable for the Issuer's use of the proceeds from the Notes, and it shall
not be responsible for any statement of the Issuer in this Indenture or in any
document issued in connection with the sale of the Notes or in the Notes other
than the Indenture Trustee's certificate of authentication.
Section 6.05. NOTICE OF DEFAULTS. If a Default occurs and is continuing and
if it is known to a Responsible Officer of the Indenture Trustee, the Indenture
Trustee shall mail to each Noteholder notice of the Default within 90 days after
it occurs. Except in the case of a Default in payment of principal of or
interest on any Note (including payments pursuant to the mandatory redemption
provisions of such Note), the Indenture Trustee may withhold the notice if and
so long as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of Noteholders.
Section 6.06. REPORTS BY INDENTURE TRUSTEE TO HOLDERS. The Indenture
Trustee shall deliver to each Noteholder such information as may be required to
enable such holder to prepare its federal and state income tax returns.
Section 6.07. COMPENSATION AND INDEMNITY. The Issuer shall, or shall cause
the Administrator to, (i) pay to the Indenture Trustee from time to time
reasonable compensation for its services, which compensation shall not be
limited by any law on compensation of a trustee of an express trust, (ii)
reimburse the Indenture Trustee for all reasonable out-of-pocket expenses
incurred or made by it, including without limitation, costs of collection, in
addition to the compensation for its services, which expenses shall include the
reasonable compensation and expenses, disbursements and advances of the
Indenture Trustee's agents, counsel, accountants and experts and (iii) indemnify
the Indenture Trustee and its officers, directors, employees and agents against
any and all loss, liability or expense (including reasonable attorneys' fees and
expenses) incurred by it in connection with the administration of this trust and
the performance of its duties hereunder not resulting from its own willful
misconduct, negligence or bad faith. The Indenture Trustee shall notify the
Issuer and the Administrator promptly of any claim for which it may seek
indemnity. Failure by the Indenture Trustee to so notify the Issuer and the
Administrator shall not relieve the Issuer or the Administrator of its
obligations hereunder. The Issuer shall, or shall cause the Administrator to,
defend any such claim, and the Indenture Trustee may have separate counsel and
the Issuer shall, or shall cause the Administrator to, pay
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the fees and expenses of such counsel. Neither the Issuer nor the Administrator
need reimburse any expense or indemnify against any loss, liability or expense
incurred by the Indenture Trustee through the Indenture Trustee's own willful
misconduct, negligence or bad faith.
The Issuer's payment obligations to the Indenture Trustee pursuant to this
Section shall survive the discharge of this Indenture or the earlier resignation
or discharge of the Indenture Trustee. When the Indenture Trustee incurs
expenses after the occurrence of a Default specified in Section 5.01(iv) or (v)
with respect to the Issuer, the expenses are intended to constitute expenses of
administration under Title 11 of the United States Code or any other applicable
federal or state bankruptcy, insolvency or similar law.
Section 6.08. REPLACEMENT OF INDENTURE TRUSTEE. No resignation or removal
of the Indenture Trustee and no appointment of a successor Indenture Trustee
shall become effective until the acceptance of appointment by the successor
Indenture Trustee pursuant to this Section. The Indenture Trustee may resign at
any time by so notifying the Issuer. Noteholders representing a majority of the
Outstanding Amount may remove the Indenture Trustee at any time and appoint a
successor Indenture Trustee by so notifying the Indenture Trustee. The Issuer
shall remove the Indenture Trustee if:
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) a court having jurisdiction in the premises in respect of the
Indenture Trustee in an involuntary case or proceeding under federal or
state banking or bankruptcy laws, as now or hereafter constituted, or any
other applicable federal or state bankruptcy, insolvency or other similar
law, shall have entered a decree or order granting relief or appointing a
receiver, liquidator, assignee, custodian, trustee, conservator,
sequestrator (or similar official) for the Indenture Trustee or for any
substantial part of the Indenture Trustee's property, or ordering the
winding-up or liquidation of the Indenture Trustee's affairs, provided any
such decree or order shall have continued unstayed and in effect for a
period of 30 consecutive days;
(iii) the Indenture Trustee commences a voluntary case under any
federal or state banking or bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, or consents to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
conservator, sequestrator or other similar official for the Indenture
Trustee or for any substantial part of the Indenture Trustee's property, or
makes any assignment for the benefit of creditors or fails generally to pay
its debts as such debts become due or takes any corporate action in
furtherance of any of the foregoing; or
(iv) the Indenture Trustee otherwise becomes incapable of acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists in
the office of Indenture Trustee for any reason (the Indenture Trustee in such
event being referred to herein as the retiring Indenture Trustee), the Issuer
shall promptly appoint a successor Indenture Trustee.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee and to the Issuer. Thereupon
the resignation or removal of the retiring
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Indenture Trustee shall become effective, and the successor Indenture Trustee
shall have all the rights, powers and duties of the Indenture Trustee under
this Indenture. The successor Indenture Trustee shall mail a notice of its
succession to the Noteholders. The retiring Indenture Trustee shall promptly
transfer all property held by it as Indenture Trustee to the successor
Indenture Trustee.
If a successor Indenture Trustee does not take office within 60 days after
the retiring Indenture Trustee resigns or is removed, the retiring Indenture
Trustee, the Issuer or the Holders of a majority in Outstanding Amount may
petition any court of competent jurisdiction for the appointment of a successor
Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11, any Noteholder
may petition any court of competent jurisdiction for the removal of the
Indenture Trustee and the appointment of a successor Indenture Trustee.
Any resignation or removal of the Indenture Trustee and appointment of a
successor Indenture Trustee pursuant to the provisions of this Section shall not
become effective until acceptance of appointment by the successor Indenture
Trustee pursuant to this Section and payment of all fees and expenses owed to
the outgoing Indenture Trustee. Notwithstanding the replacement of the Indenture
Trustee pursuant to this Section, the Issuer's and the Administrator's
obligations under Section 6.07 shall continue for the benefit of the retiring
Indenture Trustee.
Section 6.09. SUCCESSOR INDENTURE TRUSTEE BY MERGER. If the Indenture
Trustee consolidates or merges with, converts or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation shall, without
any further act, be the successor Indenture Trustee; provided, that such
corporation or banking association shall be otherwise qualified and eligible
under Section 6.11. The Indenture Trustee shall provide each Rating Agency prior
written notice of any such transaction.
In case at the time such successor or successors by merger, conversion or
consolidation to the Indenture Trustee shall succeed to the trusts created by
this Indenture any of the Notes shall have been authenticated but not delivered,
any such successor to the Indenture Trustee may adopt the certificate of
authentication of any predecessor trustee and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee; and in all such cases such certificates
shall have the full force as is provided anywhere in the Notes or in this
Indenture that the certificate of the Indenture Trustee shall have.
Section 6.10. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
(a) Notwithstanding any other provision of this Indenture, at any time, for
the purpose of meeting any legal requirement of any jurisdiction in which any
part of the Owner Trust Estate may at the time be located, the Indenture Trustee
and the Administrator, acting jointly, shall have the power and may execute and
deliver all instruments to appoint one or more Persons to act as a co-trustee or
co-trustees, or separate trustee or separate trustees, of all or any
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part of the Trust, and to vest in such Person or Persons, in such capacity and
for the benefit of the Noteholders, such title to the Owner Trust Estate or any
part thereof, and, subject to the other provisions of this Section, such powers,
duties, obligations, rights and trusts as the Indenture Trustee may consider
necessary or desirable. If the Administrator shall not have joined in such
appointment within 15 days after its receipt of a request to do so, the
Indenture Trustee alone shall have the power to make such appointment. No
co-trustee or separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 6.11 and no notice to
Noteholders of the appointment of any co-trustee or separate trustee shall be
required under Section 6.08.
(b) Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Indenture Trustee shall be conferred or imposed upon and exercised
or performed by the Indenture Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Indenture
Trustee joining in such act), except to the extent that under any law of
any jurisdiction in which any particular act or acts are to be performed
the Indenture Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Owner Trust Estate or any portion
thereof in any such jurisdiction) shall be exercised and performed singly
by such separate trustee or co-trustee, but solely at the direction of the
Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder; and
(iii) the Indenture Trustee and the Administrator may at any time
accept the resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Indenture
Trustee or separately, as may be provided therein, subject to all the provisions
of this Indenture, specifically including every provision of this Indenture
relating to the conduct of, affecting the liability of, or affording protection
to, the Indenture Trustee. Every such instrument shall be filed with the
Indenture Trustee and a copy thereof given to the Administrator.
(d) Any separate trustee or co-trustee may at any time constitute the
Indenture Trustee, its agent or attorney-in-fact with full power and authority,
to the extent not prohibited by law, to do any lawful act under or in respect of
this Indenture on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the
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Indenture Trustee, to the extent permitted by law, without the appointment of a
new or successor trustee.
Section 6.11. ELIGIBILITY; DISQUALIFICATION. The Indenture Trustee shall at
all times satisfy the requirements of TIA Section 310(a). The Indenture Trustee
shall have a combined capital and surplus of at least $50,000,000 as set forth
in its most recent published annual report of condition, and the time deposits
of the Indenture Trustee shall be rated at least A-1 by Standard & Poor's and
Prime-1 by Moody's. The Indenture Trustee shall comply with TIA Section 310(b);
provided, however, that there shall be excluded from the operation of TIA
Section 310(b)(1) any indenture or indentures under which other securities of
the Issuer are outstanding if the requirements for such exclusion set forth in
TIA Section 310(b)(1) are met.
Section 6.12. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER. The
Indenture Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). An Indenture Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated.
Section 6.13. REPRESENTATIONS AND WARRANTIES OF INDENTURE TRUSTEE. The
Indenture Trustee hereby makes the following representations and warranties on
which the Issuer and Noteholders shall rely:
(i) it is a corporation duly organized, validly existing and in good
standing under the laws of its place of incorporation; and
(ii) it has full power, authority and legal right to execute, deliver,
and perform this Indenture and shall have taken all necessary action to
authorize the execution, delivery and performance by it of this Indenture.
Section 6.14. PENNSYLVANIA MOTOR VEHICLE SALES FINANCE ACT LICENSES. The
Indenture Trustee shall use its best efforts to maintain the effectiveness of
all licenses required under the Pennsylvania Motor Vehicle Sales Finance Act in
connection with this Indenture and the transactions contemplated hereby until
the lien and security interest of this Indenture shall no longer be in effect in
accordance with the terms hereof.
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ARTICLE SEVEN
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. ISSUER TO FURNISH INDENTURE TRUSTEE NAMES AND ADDRESSES OF
NOTEHOLDERS. If Definitive Notes are issued, the Issuer will furnish or cause to
be furnished to the Indenture Trustee (i) not more than five days after the
earlier of (a) each Record Date and (b) three months after the last Record Date,
a list, in such form as the Indenture Trustee may reasonably require, of the
names and addresses of the Holders of Notes as of such Record Date, and (ii) at
such other times as the Indenture Trustee may request in writing, within 30 days
after receipt by the Issuer of any such request, a list of similar form and
content as of a date not more than ten days prior to the time such list is
furnished; provided, however, that so long as the Indenture Trustee is the Note
Registrar, no such list shall be required to be furnished.
Section 7.02. PRESERVATION OF INFORMATION; COMMUNICATIONS, REPORTS AND
CERTAIN DOCUMENTS TO NOTEHOLDERS.
(a) The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders of Notes
contained in the most recent list furnished to the Indenture Trustee as provided
in Section 7.01 and the names and addresses of Holders of Notes received by the
Indenture Trustee in its capacity as Note Registrar. The Indenture Trustee may
destroy any list furnished to it as provided in such Section 7.01 upon receipt
of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b) with other
Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall have the
protection of TIA Section 312(c).
(d) The Indenture Trustee will provide to Securityholders the reports,
certificates, opinions and documents specified in Section 3.15 of the Sale and
Servicing Agreement, upon written request to the Indenture Trustee.
Section 7.03. REPORTS BY ISSUER.
(a) The Issuer shall:
(i) file with the Indenture Trustee, within 15 days after the Issuer
is required to file the same with the Commission, copies of the annual
reports and the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) that the Issuer may be required to file
with the Commission pursuant to Section 13 or 15(d) of the Exchange Act;
(ii) file with the Indenture Trustee and the Commission in accordance
with rules and regulations prescribed from time to time by the Commission
such additional information, documents and reports with respect to
compliance by the Issuer with the
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conditions and covenants of this Indenture as may be required from time to
time by such rules and regulations; and
(iii) supply to the Indenture Trustee (and the Indenture Trustee shall
transmit by mail to all Noteholders described in TIA Section 313(c)) such
summaries of any information, documents and reports required to be filed by
the Issuer pursuant to clauses (i) and (ii) of this Section 7.03(a) and by
rules and regulations prescribed from time to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the Issuer
shall end on March 31 of each year.
Section 7.04. REPORTS BY INDENTURE TRUSTEE. If required by TIA Section
313(a), within 60 days after each December 15 beginning with December 15, 1999,
the Indenture Trustee shall mail to each Noteholder as required by TIA Section
313(c) a brief report dated as of such date that complies with TIA Section
313(a). The Indenture Trustee also shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to Noteholders shall be
filed by the Indenture Trustee with the Commission and each stock exchange, if
any, on which the Notes are listed. The Issuer shall notify the Indenture
Trustee if and when the Notes are listed on any stock exchange.
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ARTICLE EIGHT
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01. COLLECTION OF MONEY. Except as otherwise expressly provided
herein, the Indenture Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or
receivable by the Indenture Trustee pursuant to this Indenture. The Indenture
Trustee shall apply all such money received by it as provided in this Indenture.
Except as otherwise expressly provided in this Indenture, if any default occurs
in the making of any payment or performance under any agreement or instrument
that is part of the Owner Trust Estate, the Indenture Trustee may take such
action as may be appropriate to enforce such payment or performance, including
the institution and prosecution of appropriate Proceedings. Any such action
shall be without prejudice to any right to claim a Default or Event of Default
under this Indenture and any right to proceed thereafter as provided in Article
Five.
Section 8.02. ACCOUNTS.
(a) Pursuant to Section 4.01 of the Sale and Servicing Agreement, there has
been established and there shall be maintained an Eligible Account (initially at
Bankers Trust Company) in the name, and under the sole dominion and control, of
the Indenture Trustee until the Outstanding Amount has been reduced to zero, and
thereafter, in the name, and under the sole dominion and control, of the Owner
Trustee, which is designated as the Yield Supplement Account.
(b) On or prior to the Closing Date, the Issuer shall cause the Servicer to
establish and maintain, in the name of the Indenture Trustee, Eligible Accounts
for the benefit of the (i) Securityholders, the Collection Account and the
Payahead Account, and (ii) Noteholders, the Note Distribution Account and the
Reserve Fund as provided in Section 4.01 of the Sale and Servicing Agreement.
(c) On or before each Distribution Date, with respect to the preceding
Collection Period, all amounts required to be deposited in the Collection
Account will be deposited as provided in Sections 4.02 and 4.05 of the Sale and
Servicing Agreement. On or before each Distribution Date, all amounts required
to be deposited in the Note Distribution Account with respect to the preceding
Collection Period pursuant to Sections 4.06 and 4.07 of the Sale and Servicing
Agreement will be transferred from the Collection Account, the Reserve Fund, the
Payahead Account and/or the Yield Supplement Account to the Note Distribution
Account.
(d) On each Distribution Date and Redemption Date, the Indenture Trustee
shall distribute all amounts on deposit in the Note Distribution Account to
Noteholders in respect of the Notes to the extent of amounts due and unpaid on
the Notes for principal and interest (including any premium) in the following
amounts and in the following order of priority (except as otherwise provided in
Section 5.04(b)):
(i) the Note Interest Distributable Amount; provided, that if there
are not sufficient funds in the Note Distribution Account to pay the
allocable portion of the Note
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Interest Distribution Amount with respect to each Class of Notes, the
amount in the Note Distribution Account shall be applied to the payment of
such amount pro rata on the basis of the total Note Interest Distributable
Amount due on the Notes;
(ii) Unless otherwise provided in clause (iii) below, the Principal
Payment Amount shall be applied on each Distribution Date, in the following
order of priority:
(A) on each Distribution Date until the Class A-1 Notes are paid
in full, 100% of the Principal Payment Amount to the Class A-1 Notes;
(B) on each Distribution Date on or after the Distribution Date
on which the Class A-1 Notes have been paid in full (provided that the
amount on deposit in the Reserve Fund equals or exceeds the Specified
Reserve Fund Balance and, on such Distribution Date, there is no Note
Principal Carryover Shortfall) and until the Adjustment Time, after
application pursuant to clause (A) (and any deposit into the Reserve
Fund), 100% of the Principal Payment Amount to the Certificates, which
amount has been deposited into the Certificate Distribution Account
pursuant to Sections 4.06(c)(vii) and (viii) of the Sale and Servicing
Agreement or, if the amount on deposit in the Reserve Fund is less
than the Specified Reserve Fund Balance or if a Note Principal
Carryover Shortfall exists, 100% of the Principal Payment Amount to
the Notes;
(C) on the Distribution Date on which the Adjustment Time occurs,
the remaining Principal Payment Amount to the Notes (all of which
shall be paid to principal of the Class A-2 Notes until paid in full,
then to principal of the Class A-3 Notes until paid in full, and then
to principal of the Class A-4 Notes until paid in full); and
(D) on each Distribution Date after the Distribution Date on
which the Adjustment Time occurs until the Class A-4 Notes have been
paid in full, 94% of the remaining Principal Payment Amount after
application pursuant to clauses (A), (B) and (C), to the Notes and 6%
of the remaining Principal Payment Amount of the Certificates, which
amount has been deposited into the Certificate Distribution Account
pursuant to Sections 4.06(c)(vii) and (viii) of the Sale and Servicing
Agreement.
(iii) If the amount on deposit in the Reserve Fund on any Distribution
Date would be, after giving effect to distribution of the Principal Payment
Amount on such Distribution Date, less than the Specified Reserve Fund
Balance, then the Notes will receive 100% of the Principal Payment Amount
until either the Notes are paid in full or the amount on deposit in the
Reserve Fund equals or exceeds the Specified Reserve Fund Balance.
(iv) Notwithstanding the foregoing, on each Distribution Date after
the Notes have been accelerated as provided in Section 5.02(a) following
the occurrence of an Event of Default, until such time as the Notes have
been paid in full and this Indenture
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has been discharged with respect to the Notes, the Certificates will not
receive any of the Available Amount.
(v) In the event that there are insufficient funds in the Note
Distribution Account, an amount will be withdrawn from the Reserve Fund
pursuant to Section 4.07(b) of the Sale and Servicing Agreement.
Section 8.03. GENERAL PROVISIONS REGARDING ACCOUNTS.
(a) So long as no Default or Event of Default shall have occurred and be
continuing, all or a portion of the funds in the Accounts shall be invested in
Permitted Investments and reinvested by the Indenture Trustee upon the written
direction of the Servicer, subject to the provisions of Section 4.01(b) of the
Sale and Servicing Agreement. Except as otherwise provided in Section 4.01(b) of
the Sale and Servicing Agreement, all income or other gain from investments of
monies deposited in the Accounts shall be paid to the Servicer, and any loss
resulting from such investments shall be charged to the related Account.
(b) Subject to Section 6.01(c), the Indenture Trustee shall not in any way
be held liable by reason of any insufficiency in any of the Accounts resulting
from any loss on any Permitted Investment included therein except for losses
attributable to the Indenture Trustee's failure to make payments on such
Permitted Investments issued by the Indenture Trustee, in its commercial
capacity as principal obligor and not as trustee, in accordance with their
terms.
(c) If (i) the Servicer shall have failed to give investment directions for
any funds on deposit in the Accounts to the Indenture Trustee by 8:00 A.M., Los
Angeles Time (or such other time as may be agreed by the Issuer and the
Indenture Trustee) on any Business Day or (ii) to the knowledge of a Responsible
Officer of the Indenture Trustee a Default or Event of Default shall have
occurred and be continuing with respect to the Notes but the Notes shall not
have been declared due and payable pursuant to Section 5.02 or (iii) if such
Notes shall have been declared due and payable following an Event of Default but
amounts collected or receivable from the Owner Trust Estate are being applied in
accordance with Section 5.05 as if there had not been such a declaration, then
the Indenture Trustee shall, to the fullest extent practicable, invest and
reinvest funds in the Accounts in one or more Permitted Investments.
Section 8.04. RELEASE OF OWNER TRUST ESTATE.
(a) Subject to the payment of its fees and expenses pursuant to Section
6.07, the Indenture Trustee may, and when required by the provisions of this
Indenture shall, execute instruments to release property from the lien of this
Indenture, or convey the Indenture Trustee's interest in the same, in a manner
and under circumstances that are not inconsistent with the provisions of this
Indenture. No party relying upon an instrument executed by the Indenture Trustee
as provided in this Article shall be bound to ascertain the Indenture Trustee's
authority, inquire into the satisfaction of any conditions precedent or see to
the application of any monies.
(b) The Indenture Trustee shall, at such time as there are no Notes
Outstanding and all sums due the Indenture Trustee pursuant to Section 6.07 have
been paid, release any remaining portion of the Owner Trust Estate that secured
the Notes from the lien of this Indenture and release to the Issuer or any other
Person entitled thereto any funds then on deposit
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in the Accounts. The Indenture Trustee shall release property from the lien of
this Indenture pursuant to this Section 8.04(b) only upon receipt of an Issuer
Request accompanied by an Officer's Certificate, an Opinion of Counsel and (if
required by the TIA) Independent Certificates in accordance with TIA Sections
314(c) and 314(d)(1) meeting the applicable requirements of Section 11.01.
Section 8.05. OPINION OF COUNSEL. The Indenture Trustee shall receive at
least seven days notice when requested by the Issuer to take any action pursuant
to Section 8.04(a), accompanied by copies of any instruments involved, and the
Indenture Trustee shall also require, as a condition to such action, an Opinion
of Counsel, in form and substance satisfactory to the Indenture Trustee, stating
the legal effect of any such action, outlining the steps required to complete
the same, and concluding that all conditions precedent to the taking of such
action have been complied with and such action will not materially and adversely
impair the security for the Notes or the rights of the Noteholders in
contravention of the provisions of this Indenture; provided, however, that such
Opinion of Counsel shall not be required to express an opinion as to the fair
value of the Owner Trust Estate. Counsel rendering any such opinion may rely,
without independent investigation, on the accuracy and validity of any
certificate or other instrument delivered to the Indenture Trustee in connection
with any such action.
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ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 9.01. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF NOTEHOLDERS.
(a) Without the consent of the Holders of any Notes but with prior notice
to each Rating Agency, the Issuer and the Indenture Trustee, when authorized by
an Issuer Order, at any time and from time to time, may enter into one or more
indentures supplemental hereto (which shall conform to the provisions of the TIA
as in force at the date of the execution thereof), in form satisfactory to the
Indenture Trustee, for any of the following purposes:
(i) to correct or amplify the description of any property at any time
subject to the lien of this Indenture, or better to assure, convey and
confirm unto the Indenture Trustee any property subject or required to be
subjected to the lien of this Indenture, or to subject additional property
to the lien of this Indenture;
(ii) to evidence the succession, in compliance with the applicable
provisions hereof, of another Person to the Issuer, and the assumption by
any such successor of the covenants of the Issuer herein and in the Notes
contained;
(iii) to add to the covenants of the Issuer, for the benefit of the
Holders of the Notes, or to surrender any right or power herein conferred
upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property to
or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any provision
herein or in any supplemental indenture that may be inconsistent with any
other provision herein or in any supplemental indenture or the other Basic
Documents or to make any other provisions with respect to matters or
questions arising under this Indenture or in any supplemental indenture;
provided, that such action shall not adversely affect the interests of the
Holders of the Notes;
(vi) to evidence and provide for the acceptance of the appointment
hereunder by a successor trustee with respect to the Notes and to add to or
change any of the provisions of this Indenture as shall be necessary to
facilitate the administration of the trusts hereunder by more than one
trustee, pursuant to the requirements of Article Six; or
(vii) to modify, eliminate or add to the provisions of this Indenture
to such extent as shall be necessary to effect the qualification of this
Indenture under the TIA or under any similar federal statute hereafter
enacted and to add to this Indenture such other provisions as may be
expressly required by the TIA.
The Indenture Trustee is hereby authorized to join in the execution of any
such supplemental indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
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(b) The Issuer and the Indenture Trustee, when authorized by an Issuer
Order, may, also without the consent of any of the Holders of the Notes but with
prior notice to each Rating Agency, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, or changing in
any manner or eliminating any of the provisions of, this Indenture or of
modifying in any manner the rights of the Holders of the Notes under this
Indenture; provided, however, that such action shall not, as evidenced by an
Opinion of Counsel, adversely affect in any material respect the interests of
any Noteholder.
Section 9.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF NOTEHOLDERS. The
Issuer and the Indenture Trustee, when authorized by an Issuer Order, also may,
with prior notice to each Rating Agency and with the consent of the Holders of
not less than a majority of the Outstanding Amount, by Act of such Holders
delivered to the Issuer and the Indenture Trustee, enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to, or
changing in any manner or eliminating any of the provisions of, this Indenture
or of modifying in any manner the rights of the Holders of the Notes under this
Indenture; provided, however, that no such supplemental indenture shall, without
the consent of the Holder of each Outstanding Note affected thereby:
(i) change the date of payment of any installment of principal of or
interest on any Note, or reduce the principal amount thereof, the Interest
Rate thereon or the Redemption Price with respect thereto, change the
provisions of this Indenture relating to the application of collections on,
or the proceeds of the sale of, the Owner Trust Estate to payment of
principal of or interest on the Notes, or change any place of payment
where, or the coin or currency in which, any Note or the interest thereon
is payable, or impair the right to institute suit for the enforcement of
the provisions of this Indenture requiring the application of funds
available therefor, as provided in Article Five, to the payment of any such
amount due on the Notes on or after the respective due dates thereof (or,
in the case of redemption, on or after the Redemption Date);
(ii) reduce the percentage of the Outstanding Amount, the consent of
the Holders of which is required for any such supplemental indenture, or
the consent of the Holders of which is required for any waiver of
compliance with certain provisions of this Indenture or certain defaults
hereunder and their consequences provided for in this Indenture;
(iii) modify or alter the provisions of the proviso to the definition
of the term "Outstanding";
(iv) reduce the percentage of the Outstanding Amount required to
direct the Indenture Trustee to direct the Issuer to sell or liquidate the
Owner Trust Estate pursuant to Section 5.04 or amend the provisions of this
Article which specify the percentage of the Outstanding Amount required to
amend this Indenture or the other Basic Documents;
(v) modify any provision of this Section except to increase any
percentage specified herein or provide that certain additional provisions
of this Indenture or the Basic Documents cannot be modified or waived
without the consent of the Holder of each Outstanding Note affected
thereby;
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(vi) modify any of the provisions of this Indenture in such manner as
to affect the calculation of the amount of any payment of interest or
principal due on any Note on any Distribution Date (including the
calculation of any of the individual components of such calculation) or
affect the rights of the Holders of Notes to the benefit of any provisions
for the mandatory redemption of the Notes contained herein; or
(vii) permit the creation of any lien ranking prior to or on a parity
with the lien of this Indenture with respect to any part of the Owner Trust
Estate or, except as otherwise permitted or contemplated herein, terminate
the lien of this Indenture on any property at any time subject hereto or
deprive the Holder of any Note of the security provided by the lien of this
Indenture.
The Indenture Trustee may in its discretion determine whether or not any
Notes would be affected by any supplemental indenture and any such determination
shall be conclusive upon the Holders of all Notes, whether theretofore or
thereafter authenticated and delivered hereunder. The Indenture Trustee shall
not be liable for any such determination made in good faith.
It shall not be necessary for any Act of Noteholders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Issuer and the Indenture Trustee of any
supplemental indenture pursuant to this Section, the Indenture Trustee shall
mail to the Holders of the Notes to which such amendment or supplemental
indenture relates a notice setting forth in general terms the substance of such
supplemental indenture. Any failure of the Indenture Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
Section 9.03. EXECUTION OF SUPPLEMENTAL INDENTURES. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article or the modification thereby of the trusts created by
this Indenture, the Indenture Trustee shall be entitled to receive, and subject
to Sections 6.01 and 6.02, shall be fully protected in relying upon, an Opinion
of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Indenture Trustee may, but shall
not be obligated to, enter into any such supplemental indenture that affects the
Indenture Trustee's own rights, duties, liabilities or immunities under this
Indenture or otherwise.
Section 9.04. EFFECT OF SUPPLEMENTAL INDENTURE. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and shall be deemed to be modified and amended in accordance therewith with
respect to the Notes affected thereby, and the respective rights, limitations of
rights, obligations, duties, liabilities and immunities under this Indenture of
the Indenture Trustee, the Issuer and the Holders of the Notes shall thereafter
be determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
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Section 9.05. CONFORMITY WITH TRUST INDENTURE ACT. Every amendment of this
Indenture and every supplemental indenture executed pursuant to this Article
shall conform to the requirements of the TIA as then in effect so long as this
Indenture shall then be qualified under the TIA.
Section 9.06. REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article may, and if required by the Indenture Trustee shall,
bear a notation in form approved by the Indenture Trustee as to any matter
provided for in such supplemental indenture. If the Issuer or the Indenture
Trustee shall so determine, new Notes so modified as to conform, in the opinion
of the Indenture Trustee and the Issuer, to any such supplemental indenture may
be prepared and executed by the Issuer and authenticated and delivered by the
Indenture Trustee in exchange for Outstanding Notes.
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ARTICLE TEN
REDEMPTION OF NOTES
Section 10.01. REDEMPTION. The Outstanding Notes are subject to redemption
in whole, but not in part, pursuant to Section 8.01 of the Sale and Servicing
Agreement, on any Distribution Date on which the Servicer exercises its option
to purchase the Owner Trust Estate pursuant to said Section, for a purchase
price equal to the Redemption Price; provided that the Issuer has available
funds sufficient to pay the Redemption Price. The Servicer or the Issuer shall
furnish each Rating Agency notice of such redemption. If the outstanding Notes
are to be redeemed pursuant to this Section, the Servicer or the Issuer shall
furnish notice of such election to the Indenture Trustee not later than 20 days
prior to the Redemption Date and the Issuer shall deposit by 8:00 A.M., Los
Angeles time, on the Redemption Date with the Indenture Trustee in the Note
Distribution Account the Redemption Price of the Notes to be redeemed, whereupon
all such Notes shall be due and payable on the Redemption Date upon the
furnishing of a notice complying with Section 10.02 to each Holder of the Notes.
Section 10.02. FORM OF REDEMPTION NOTICE. Notice of redemption under
Section 10.01 shall be given by the Indenture Trustee by first-class mail,
postage prepaid, or by facsimile mailed or transmitted not later than ten days
prior to the applicable Redemption Date to each Holder of Notes, as of the close
of business on the Record Date preceding the applicable Redemption Date, at such
Holder's address or facsimile number appearing in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the place where such Notes are to be surrendered for payment of
the Redemption Price (which shall be the office or agency of the Issuer to
be maintained as provided in Section 3.02); and
(iv) that on the Redemption Date, the Redemption Price will become due
and payable upon each Note and that interest thereon shall cease to accrue
from and after the Redemption Date.
Notice of redemption of the Notes shall be given by the Indenture Trustee in the
name and at the expense of the Issuer. Failure to give notice of redemption, or
any defect therein, to any Holder of any Note shall not impair or affect the
validity of the redemption of any other Note.
Section 10.03. NOTES PAYABLE ON REDEMPTION DATE. The Notes or portions
thereof to be redeemed shall, following notice of redemption as required by
Section 10.02, on the Redemption Date become due and payable at the Redemption
Price and (unless the Issuer shall default in the payment of the Redemption
Price) no interest shall accrue on the Redemption Price for any period after the
date to which accrued interest is calculated for purposes of calculating the
Redemption Price.
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ARTICLE ELEVEN
MISCELLANEOUS
Section 11.01. COMPLIANCE CERTIFICATES AND OPINIONS, ETC.
(a) Upon any application or request by the Issuer to the Indenture Trustee
to take any action under any provision of this Indenture, the Issuer shall
furnish to the Indenture Trustee (i) an Officer's Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, (ii) an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with and (iii) (if required by the TIA) an Independent Certificate from
a firm of certified public accountants meeting the applicable requirements of
this Section, except that, in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or opinion has
read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory, such
signatory has made such examination or investigation as is necessary to
enable such signatory to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such signatory,
such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any Collateral or other property or
securities with the Indenture Trustee that is to be made the basis for the
release of any property or securities subject to the lien of this Indenture, the
Issuer shall, in addition to any obligation imposed in Section 11.01(a) or
elsewhere in this Indenture, furnish to the Indenture Trustee an Officer's
Certificate certifying or stating the opinion of each person signing such
certificate as to the fair value (within 90 days of such deposit) to the Issuer
of the Collateral or other property or securities to be so deposited.
(ii) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of any
signer thereof as to the matters described in clause (i) above, the Issuer
shall also deliver to the Indenture Trustee an Independent Certificate as
to the same matters, if the fair value to the Issuer of the securities to
be so deposited and of all other such securities made the basis of any such
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withdrawal or release since the commencement of the then-current fiscal
year of the Issuer, as set forth in the certificates delivered pursuant to
clause (i) above and this clause (ii), is 10% or more of the Outstanding
Amount, but such a certificate need not be furnished with respect to any
securities so deposited, if the fair value thereof to the Issuer as set
forth in the related Officer's Certificate is less than $25,000 or less
than one percent of the Outstanding Amount of the Notes.
(iii) Other than with respect to any release described in clause (A)
or (B) of Section 11.01(b)(v), whenever any property or securities are to
be released from the lien of this Indenture, the Issuer shall also furnish
to the Indenture Trustee an Officer's Certificate certifying or stating the
opinion of each person signing such certificate as to the fair value
(within 90 days of such release) of the property or securities proposed to
be released and stating that in the opinion of such person the proposed
release will not impair the security under this Indenture in contravention
of the provisions hereof.
(iv) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of any
signer thereof as to the matters described in clause (iii) above, the
Issuer shall also furnish to the Indenture Trustee an Independent
Certificate as to the same matters if the fair value of the property or
securities and of all other property (other than property described in
clauses (A) or (B) of Section 11.01(b)(v)) released from the lien of this
Indenture since the commencement of the then-current calendar year, as set
forth in the certificates required by clause (iii) above and this clause
(iv), equals 10% or more of the Outstanding Amount, but such certificate
need not be furnished in the case of any release of property or securities
if the fair value thereof as set forth in the related Officer's Certificate
is less than $25,000 or less than one percent of the then Outstanding
Amount.
(v) Notwithstanding Section 2.10 or any other provision of this
Section, the Issuer may, without compliance with the requirements of the
other provisions of this Section, (A) collect, liquidate, sell or otherwise
dispose of Receivables and Financed Vehicles as and to the extent permitted
or required by the Basic Documents and (B) make cash payments out of the
Accounts as and to the extent permitted or required by the Basic Documents,
so long as the Issuer shall deliver to the Indenture Trustee every six
months, commencing ___________, 1999, an Officer's Certificate of the
Issuer stating that all the dispositions of Collateral described in clauses
(A) and (B) above that occurred during the preceding six calendar months
were in the ordinary course of the Issuer's business and that the proceeds
thereof were applied in accordance with the Basic Documents.
Section 11.02. FORM OF DOCUMENTS DELIVERED TO INDENTURE TRUSTEE. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
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Any certificate or opinion of an Authorized Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which such officer's certificate or opinion is
based are erroneous. Any such certificate of an Authorized Officer or Opinion of
Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of the
Servicer, the Transferor, the Issuer or the Administrator, stating that the
information with respect to such factual matters is in the possession of the
Servicer, the Transferor, the Issuer or the Administrator, unless such counsel
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article Six.
Section 11.03. ACTS OF NOTEHOLDERS.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Noteholders
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Noteholders in person or by agents duly appointed
in writing; and except as herein otherwise expressly provided such action shall
become effective when such instrument or instruments are delivered to the
Indenture Trustee and, where it is hereby expressly required, to the Issuer.
Such instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Noteholders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 6.01) conclusive in favor of
the Indenture Trustee and the Issuer, if made in the manner provided in this
Section.
(b) The fact and date of the execution by any person of any such instrument
or writing may be proved in any manner that the Indenture Trustee deems
sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Notes shall bind the Holder of every Note
issued upon the
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registration thereof or in exchange therefor or in lieu thereof, in respect of
anything done, omitted or suffered to be done by the Indenture Trustee or the
Issuer in reliance thereon, whether or not notation of such action is made upon
such Note.
Section 11.04. NOTICES, ETC., TO INDENTURE TRUSTEE, ISSUER AND RATING
AGENCIES. Any request, demand, authorization, direction, notice, consent, waiver
or Act of Noteholders or other documents provided or permitted by this Indenture
shall be in writing and if such request, demand, authorization, direction,
notice, consent, waiver or Act of Noteholders is to be made upon, given or
furnished to or filed with:
(i) the Indenture Trustee by any Noteholder or by the Issuer shall be
sufficient for every purpose hereunder if made, given, furnished or filed
in writing and mailed first-class, postage prepaid, overnight courier or
facsimile (followed by original) to or with the Indenture Trustee at its
Corporate Trust Office, or
(ii) the Issuer by the Indenture Trustee or by any Noteholder shall be
sufficient for every purpose hereunder if in writing and mailed
first-class, postage prepaid, overnight courier or facsimile (followed by
original) to the Issuer addressed to: Honda Auto Receivables 1999-1 Owner
Trust, in care of The Bank of New York (Delaware), White Clay Center, Route
273, Newark, Delaware 19711, Attention: Corporate Trust Administration
Department, or at any other address previously furnished in writing to the
Indenture Trustee by the Issuer or the Administrator. The Issuer shall
promptly transmit any notice received by it from the Noteholders to the
Indenture Trustee.
Notices required to be given to each Rating Agency by the Issuer, the
Indenture Trustee or the Owner Trustee shall be in writing, personally
delivered, couriered or mailed by certified mail, return receipt requested, to
(i) in the case of Fitch, at the following address: ___________________________,
(ii) in the case of Moody's, at the following address: Moody's Investors
Service, Inc., ABS Monitoring Department, 99 Church Street, New York, New York
10007 or (iii) in the case of Standard & Poor's, at the following address:
Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies,
Inc., 25 Broadway (15th Floor), New York, New York 10004, Attention of Asset
Backed Surveillance Department; or at such other address as shall be designated
by written notice to the other parties.
Section 11.05. NOTICES TO NOTEHOLDERS; WAIVER. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at such Holder's address as it appears on the Note Register, not later
than the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by any Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Noteholders shall be filed
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with the Indenture Trustee but such filing shall not be a condition precedent to
the validity of any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result of
a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Noteholders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Indenture provides for notice to each Rating Agency, failure to
give such notice shall not affect any other rights or obligations created
hereunder, and shall not under any circumstance constitute a Default or Event of
Default.
Section 11.06. ALTERNATE PAYMENT AND NOTICE PROVISIONS. Notwithstanding any
provision of this Indenture or any of the Notes to the contrary, the Issuer may
enter into any agreement with any Holder of a Note providing for a method of
payment, or notice by the Indenture Trustee or any Paying Agent to such Holder,
that is different from the methods provided for in this Indenture for such
payments or notices. The Issuer will furnish to the Indenture Trustee a copy of
each such agreement and the Indenture Trustee will cause payments to be made and
notices to be given in accordance with such agreements.
Section 11.07. CONFLICT WITH TRUST INDENTURE ACT. If any provision hereof
limits, qualifies or conflicts with another provision hereof that is required to
be included in this Indenture by any of the provisions of the Trust Indenture
Act, such required provision shall control.
The provisions of TIA Sections 310 through 317 that impose duties on any
person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
Section 11.08. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 11.09. SUCCESSORS AND ASSIGNS. All covenants and agreements in this
Indenture and the Notes by the Issuer shall bind its successors and assigns,
whether so expressed or not. All agreements of the Indenture Trustee in this
Indenture shall bind its successors, co-trustees and agents.
Section 11.10. SEPARABILITY. In case any provision in this Indenture or in
the Notes shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions of this Indenture and the Notes shall
not in any way be affected or impaired thereby.
Section 11.11. BENEFITS OF INDENTURE. Nothing in this Indenture or in the
Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, and the Noteholders, and any other party
secured hereunder, and any other Person with an
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ownership interest in any part of the Owner Trust Estate, any benefit or any
legal or equitable right, remedy or claim under this Indenture.
Section 11.12. LEGAL HOLIDAYS. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
Section 11.13. GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS, EXCEPT THAT
THE DUTIES OF THE INDENTURE TRUSTEE SHALL BE GOVERNED BY THE LAWS OF THE STATE
OF NEW YORK.
Section 11.14. COUNTERPARTS. This Indenture may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.
Section 11.15. RECORDING OF INDENTURE. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at its expense accompanied by an Opinion of Counsel
(which may be counsel to the Indenture Trustee or any other counsel reasonably
acceptable to the Indenture Trustee) to the effect that such recording is
necessary either for the protection of the Noteholders or any other Person
secured hereunder or for the enforcement of any right or remedy granted to the
Indenture Trustee under this Indenture.
Section 11.16. TRUST OBLIGATION. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee or
the Indenture Trustee on the Notes or under this Indenture or any certificate or
other writing delivered in connection herewith or therewith, against (i) the
Indenture Trustee or the Owner Trustee in its individual capacity, (ii) any
owner of a beneficial interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director, employee or agent of the Indenture
Trustee or the Owner Trustee in its individual capacity, any holder of a
beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee or
of any successor or assign of the Indenture Trustee or the Owner Trustee in its
individual capacity, except as any such Person may have expressly agreed (it
being understood that the Indenture Trustee and the Owner Trustee have no such
obligations in their individual capacity) and except that any such partner,
owner or beneficiary shall be fully liable, to the extent provided by applicable
law, for any unpaid consideration for stock, unpaid capital contribution or
failure to pay any installment or call owing to such entity. For all purposes of
this Indenture, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Articles Six, Seven and Eight of the Trust
Agreement.
Section 11.17. NO PETITION. The Indenture Trustee, by entering into this
Indenture, and each Noteholder, by accepting a Note, hereby covenant and agree
that they will not at any time
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institute against the Issuer, or join in any institution against the Issuer of,
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any United States federal or state
bankruptcy or similar law in connection with any obligations relating to the
Notes, this Indenture or any of the other Basic Documents.
Section 11.18. INSPECTION. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Indenture Trustee, during the
Issuer's normal business hours, to examine all the books of account, records,
reports and other papers of the Issuer, to make copies and extracts therefrom,
to cause such books to be audited by Independent certified public accountants,
and to discuss the Issuer's affairs, finances and accounts with the Issuer's
officers, employees and Independent certified public accountants, all at such
reasonable times and as often as may be reasonably requested. The Indenture
Trustee shall, and shall cause its representatives to, hold in confidence all
such information except to the extent disclosure may be required by law (and all
reasonable applications for confidential treatment are unavailing) and except to
the extent that the Indenture Trustee may reasonably determine that such
disclosure is consistent with its obligations hereunder.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed by their respective officers, thereunto duly authorized and duly
attested, all as of the day and year first above written.
HONDA AUTO RECEIVABLES 1999-1 OWNER
TRUST,
By: THE BANK OF NEW YORK (DELAWARE),
not in its individual capacity but solely as
Owner Trustee,
By:
------------------------------------------------
Name:
Title:
BANKERS TRUST COMPANY,
not in its individual capacity but solely as
Indenture Trustee,
By:
------------------------------------------------
Name:
Title:
<PAGE>
SCHEDULE A
SCHEDULE OF RECEIVABLES
Provided to the Owner Trustee at Closing
SA-1
<PAGE>
EXHIBIT A
FORM OF CLASS A NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
REGISTERED $___________
No. R-__ CUSIP NO. ___________
HONDA AUTO RECEIVABLES 1999-1 OWNER TRUST
_____% ASSET BACKED NOTES, CLASS [A-1] [A-2] [A-3] [A-4]
Honda Auto Receivables 1999-1 Owner Trust, a business trust organized and
existing under the laws of the State of Delaware (the "Issuer"), for value
received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of ___________________ Dollars ($___________), payable to the
extent described in the Indenture referred to on the reverse hereof on each
Distribution Date; provided, however, that the entire unpaid principal amount of
this Note shall be payable on the earlier of _______________ ___, 199__ (the
"Class A-1 [A-2] [A-3] [A-4] Final Distribution Date") and the Redemption Date,
if any, selected pursuant to the Indenture.
The Issuer will pay interest on this Note at the rate per annum shown above
on each Distribution Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Distribution Date (after giving effect to all payments of principal
made on the preceding Distribution Date), or on the Closing Date in the case of
the first Distribution Date or if no interest has yet been paid, subject to
certain limitations contained in the Indenture. Interest on this Note will
accrue for each Distribution Date from and including the most recent
Distribution Date on which interest has been paid (or, in the case of the first
Distribution Date or if no interest has yet been paid, from the Closing Date),
to but excluding such current Distribution Date. Interest will be computed on
the basis of [the actual number of days in the Class A-1 [Class A-2] Interest
Accrual Period divided by 360] [a
A-1
<PAGE>
360-day year consisting of twelve 30-day months]. Such principal of and
interest on this Note shall be paid in the manner specified on the reverse
hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee whose name appears below by manual signature, this Note shall
not be entitled to any benefit under the Indenture, or be valid or obligatory
for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer, as of the date set forth
below.
Date: HONDA AUTO RECEIVABLES 1999-1 OWNER TRUST,
By:
---------------------------,
not in its individual capacity but solely as
Owner Trustee under the Trust Agreement,
By:
-----------------------------------------------
Authorized Signatory
A-2
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date: ____________________, not in its individual capacity but
solely as Indenture Trustee,
By:
------------------------------------------------
Authorized Signatory
A-3
<PAGE>
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its _____% Asset Backed Notes, Class [A-1] [A-2] [A-3] [A-4] (the
"Class [A-1] [A-2] [A-3] [A-4] Notes"), all issued under the Indenture, to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights and obligations thereunder of the Issuer, the
Indenture Trustee and the Holders of the Notes. The Notes are subject to all
terms of the Indenture. Capitalized terms used herein that are not otherwise
defined shall have the meanings ascribed thereto in the Indenture.
The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the Class
A-4 Notes (collectively, the "Notes") are and will be equally and ratably
secured by the collateral pledged as security therefor as provided in the
Indenture.
Principal payable on the Notes will be paid on each Distribution Date in
the amount specified in the Indenture and in the Sale and Servicing Agreement.
As described above, the entire unpaid principal amount of this Note will be
payable on the earlier of the Class [A-1] [A-2] [A-3] [A-4] Final Distribution
Date and the Redemption Date, if any, selected pursuant to the Indenture.
Notwithstanding the foregoing, under certain circumstances, the entire unpaid
principal amount of the Class [A-1] [A-2] [A-3] [A-4] Notes shall be due and
payable following the occurrence and continuance of an Event of Default, as
described in the Indenture. All principal payments on the Class [A-1] [A-2]
[A-3] [A-4] Notes shall be made pro rata to the Class [A-1] [A-2] [A-3] [A-4]
Noteholders entitled thereto.
Payments of principal and interest on this Note due and payable on each
Distribution Date or Redemption Date shall be made by check mailed to the Person
whose name appears as the registered Holder of this Note (or one or more
Predecessor Notes) on the Note Register as of the close of business on the
related Record Date, except that with respect to Notes registered on the Record
Date in the name of the nominee of the Depository (initially, such nominee to be
Cede & Co.), payments will be made by wire transfer in immediately available
funds to the account designated by such nominee. Such checks shall be mailed to
the Person entitled thereto at the address of such Person as it appears on the
Note Register as of the applicable Record Date without requiring that this Note
be submitted for notation of payment. Any reduction in the principal amount of
this Note (or any one or more Predecessor Notes) affected by any payments made
on any Distribution Date or Redemption Date shall be binding upon all future
Holders of this Note and of any Note issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof, whether or not noted hereon. If
funds are expected to be available, as provided in the Indenture, for payment in
full of the remaining unpaid principal amount of this Note on a Distribution
Date or Redemption Date, then the Indenture Trustee, in the name of and on
behalf of the Issuer, will notify the Person who was the registered Holder
hereof as of the Record Date preceding such Distribution Date or Redemption Date
by notice mailed within five days of such Distribution Date or Redemption Date
and the amount then due and payable shall be payable only upon presentation and
surrender of this Note at the Corporate Trust Office of the Indenture Trustee or
at the office of the Indenture Trustee's agent appointed for such purposes
located in The City of New York.
As provided in the Indenture and subject to the limitations set forth
therein and on the face hereof, the transfer of this Note may be registered on
the Note Register upon surrender of this Note for registration of transfer at
the office or agency designated by the Issuer pursuant to
A-4
<PAGE>
the Indenture, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Indenture Trustee duly executed by, the
Holder hereof or such Holder's attorney duly authorized in writing, with such
signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in the Securities Transfer Agent's Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Note
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended, and thereupon one or more new
Notes of authorized denominations and in the same aggregate principal amount
will be issued to the designated transferee or transferees. No service charge
will be charged for any registration of transfer or exchange of this Note, but
the transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such registration
of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a
Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under
the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Indenture Trustee or the Owner Trustee in its
individual capacity, (ii) any owner of a beneficial interest in the Issuer or
(iii) any partner, owner, beneficiary, agent, officer, director or employee of
the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary shall be
fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a
Note Owner, a beneficial interest in a Note, covenants and agrees by accepting
the benefits of the Indenture that such Noteholder or Note Owner will not at any
time institute against the Seller, the Purchaser or the Issuer, or join in any
institution against the Seller or the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under any United States
federal or state bankruptcy or similar law in connection with any obligations
relating to the Notes, the Indenture or the other Basic Documents.
A fiduciary of a Benefit Plan purchasing the Notes with the assets of a
Benefit Plan is deemed to represent that the purchase of one or more Notes is
consistent with its fiduciary duties under ERISA and does not result in a
nonexempt prohibited transaction as defined in Section 406 of ERISA or Section
4975 of the Code.
The Issuer has entered into the Indenture and this Note is issued with the
intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness secured by the
Owner Trust Estate. Each Noteholder, by acceptance of a Note (and each Note
Owner by acceptance of a beneficial interest in a Note), agrees to treat the
Notes for federal, state and local income, single business and franchise tax
purposes as indebtedness of the Issuer.
A-5
<PAGE>
Prior to the due presentment for registration of transfer of this Note, the
Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee or any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing a
majority of the Outstanding Amount of all Notes at the time Outstanding. The
Indenture also contains provisions permitting the Holders of Notes representing
specified percentages of the Outstanding Amount of the Notes, on behalf of the
Holders of all the Notes, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Note (or
any one or more Predecessor Notes) shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note. The Indenture
also permits the Indenture Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder.
The Notes are issuable only in registered form in denominations as provided
in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the laws
of the State of California, without reference to its conflict of law provisions,
and the obligations, rights and remedies of the parties hereunder and thereunder
shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
A-6
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
- - --------------------------------------------------------------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto:
- - --------------------------------------------------------------------------------
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints
- - --------------------------------------------------------------------------------
attorney, to transfer said Note on the books kept for registration thereof, with
full power of substitution in the premises.
Dated: *
--------------------------------- ----------------------------------
Signature Guaranteed:
*
----------------------------------
- - ----------
* NOTICE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting
the requirements of the Note Registrar, which requirements include
membership or participation in STAMP or such other "signature guarantee
program" as may be determined by the Note Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities Exchange Act
of 1934, as amended.
A-7
<PAGE>
EXHIBIT B
[Form of Note Depository Agreement]
Letter of Representations
[To be Completed by Issuer and Indenture Trustee]
----------------------------------------------
[Name of Issuer]
----------------------------------------------
[Name of Indenture Trustee]
------------------------
[Date]
Attention: General Counsel's Office
THE DEPOSITORY TRUST COMPANY
55 Water Street; 49th Floor
New York, NY 10041-0099
Re:
-------------------------------------------------------------
-------------------------------------------------------------
-------------------------------------------------------------
[Issue Description]
Ladies and Gentlemen:
This letter sets forth our understanding with respect to certain matters
relating to the above-referenced issue (the "Securities"). Indenture Trustee
will act as trustee with respect to the Securities pursuant to a trust indenture
dated ____________________, 199_____ (the "Document").
_____________________________________________________ (the "Underwriter") is
distributing the Securities through The Depository Trust Company ("DTC").
To induce DTC to accept the Securities as eligible for deposit at DTC, and
to act in accordance with its Rules with respect to the Securities, Issuer and
Indenture Trustee make the following representations to DTC:
B-1
<PAGE>
1. Prior to closing on the Securities on _____________________, 199_, there
shall be deposited with DTC one Security certificate registered in the name of
DTC's nominee, Cede & Co., for each stated maturity of the Securities in the
face amounts set forth on Schedule A hereto, the total of which represents 100%
of the principal amount of such Securities. If, however, the aggregate principal
amount of any maturity exceeds $200 million, one certificate will be issued with
respect to each $200 million of principal amount and an additional certificate
will be issued with respect to any remaining principal amount. Each Security
certificate shall bear the following legend:
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to Issuer
or its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other
name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as
the registered owner hereof, Cede & Co., has an interest herein.
2. In the event of any solicitation of consents from or voting by holders
of the Securities, Issuer or Indenture Trustee shall establish a record date for
such purposes (with no provision for revocation of consents or votes by
subsequent holders) and shall, to the extent possible, send notice of such
record date to DTC not less than 15 calendar days in advance of such record
date. Notices to DTC pursuant to this Paragraph by telecopy shall be sent to
DTC's Reorganization Department at (212) 709-6896 or (212) 709-6897, and receipt
of such notices shall be confirmed by telephoning (212) 709-6870. Notices to DTC
pursuant to this Paragraph by mail or by any other means shall be sent to DTC's
Reorganization Department as indicated in Paragraph 4.
3. In the event of a full or partial redemption, Issuer or Indenture
Trustee shall send a notice to DTC specifying: (a) the amount of the redemption
or refunding; (b) in the case of a refunding, the maturity date(s) established
under the refunding; and (c) the date such notice is to be mailed to Security
holders or published (the "Publication Date"). Such notice shall be sent to DTC
by a secure means (e.g., legible telecopy, registered or certified mail,
overnight delivery) in a timely manner designed to assure that such notice is in
DTC's possession no later than the close of business on the business day before
or, if possible, two business days before the Publication Date. Issuer or
Indenture Trustee shall forward such notice either in a separate secure
transmission for each CUSIP number or in a secure transmission for multiple
CUSIP numbers (if applicable) which includes a manifest or list of each CUSIP
number submitted in that transmission. (The party sending such notice shall have
a method to verify subsequently the use of such means and the timeliness of such
notice.) The Publication Date shall be not less than 30 days nor more than 60
days prior to the redemption date or, in the case of an advance refunding, the
date that the proceeds are deposited in escrow. Notices to DTC pursuant to this
Paragraph by telecopy shall be sent to DTC's Call Notification Department at
(516) 227-4039 or (516) 227-4190. If the party sending the notice does not
receive a telecopy receipt from DTC confirming that the notice has been
received, such party shall telephone (516) 227-4070. Notices to DTC pursuant to
this Paragraph by mail or by any other means shall be sent to:
B-2
<PAGE>
Manager; Call Notification Department
The Depository Trust Company
711 Stewart Avenue
Garden City, NY 11530-4719
4. In the event of an invitation to tender the Securities (including
mandatory tenders, exchanges, and capital changes), notice by Issuer or
Indenture Trustee to Security holders specifying the terms of the tender and the
Publication Date of such notice shall be sent to DTC by a secure means in the
manner set forth in the preceding Paragraph. Notices to DTC pursuant to this
Paragraph and notices of other corporate actions by telecopy shall be sent to
DTC's Reorganization Department at (212) 709-1093 or (212) 709-1094, and receipt
of such notices shall be confirmed by telephoning (212) 709-6884. Notices to DTC
pursuant to the above by mail or by any other means shall be sent to:
Manager; Reorganization Department
Reorganization Window
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, NY 10004-2695
5. All notices and payment advices sent to DTC shall contain the CUSIP
number of the Securities.
6. Indenture Trustee shall send DTC written notice with respect to the
dollar amount per $1,000 original face value (or other minimum authorized
denomination if less than $1,000 face value) payable on each payment date
allocated as to the interest and principal portions thereof preferably 5, but
not less than 2, business days prior to such payment date. Such notices, which
shall also contain the current pool factor, and special adjustments to
principal/interest rates (e.g., adjustments due to deferred interest or
shortfall), and Indenture Trustee contact's name and telephone number, shall be
sent by telecopy to DTC's Dividend Department at (212) 709-1723, or if by mail
or by any other means to:
Manager; Announcements
Dividend Department
The Depository Trust Company
7 Hanover Square, 22nd Floor
New York, NY 10004-2695
7. [NOTE: Issuer must represent one of the following, and CROSS OUT the
other:] [The interest accrual period is record date to record date.] [The
interest accrual period is payment date to payment date.]
8. Indenture Trustee must provide DTC, no later than noon (Eastern Time) on
the payment date, CUSIP numbers for each issue for which payment is being sent,
as well as the dollar amount of the payment for each issue. Notification of
payment details should be sent using automated communications.
B-3
<PAGE>
9. Interest payments and principal payments that are part of periodic
principal-and-interest payments shall be received by Cede & Co., as nominee of
DTC, or its registered assigns in same-day funds, no later than 2:30 p.m.
(Eastern Time) on each payment date (in accordance with existing arrangements
between Issuer or Indenture Trustee and DTC). Absent any other arrangements
between Issuer or Indenture Trustee and DTC, such funds shall be wired as
follows:
The Chase Manhattan Bank
ABA 021000021
For credit to A/C The Depository Trust Company
Dividend Deposit Account 066-026776
Issuer or Indenture Trustee shall provide interest payment information to a
standard announcement service subscribed to by DTC. In the unlikely event that
no such service exists, Issuer or Indenture Trustee shall provide interest
payment information directly to DTC in advance of the interest payment date as
soon as the information is available. This information should be conveyed
directly to DTC electronically. If electronic transmission is not available,
absent any other arrangements between Indenture Trustee and DTC, such
information should be sent by telecopy to DTC's Dividend Department at (212)
709-1723 or (212) 709-1686, and receipt of such notices shall be confirmed by
telephoning (212) 709-1270. Notices to DTC pursuant to the above by mail or by
any other means shall be sent to:
Manager, Announcements
Dividend Department
The Depository Trust Company
7 Hanover Square; 22nd Floor
New York, NY 10004-2695
10. DTC shall receive maturity and redemption payments allocated with
respect to each CUSIP number on the payable date in same-day funds by 2:30 p.m.
(Eastern Time). Absent any other arrangements between Indenture Trustee and DTC,
such payments shall be wired as follows:
The Chase Manhattan Bank
ABA 021000021
For credit to A/C The Depository Trust Company
Redemption Account 066-027306
in accordance with existing SDFS payment procedures in the manner set forth in
DTC's SDFS Paying Agent Operating Procedures, a copy of which has previously
been furnished to Indenture Trustee.
11. DTC shall receive all reorganization payments and CUSIP-level detail
resulting from corporate actions (such as tender offers, remarketings, or
mergers) on the first payable date in same-day funds by 2:30 p.m. (Eastern
Time). Absent any other arrangements between Indenture Trustee and DTC, such
payments shall be wired as follows:
B-4
<PAGE>
The Chase Manhattan Bank
ABA 021000021
For credit to A/C The Depository Trust Company
Reorganization Account 066-027608
12. DTC may direct Issuer or Indenture Trustee to use any other number or
address as the number or address to which notices or payments of interest or
principal may be sent.
13. In the event of a redemption, acceleration, or any other similar
transaction (e.g., tender made and accepted in response to Issuer's or Indenture
Trustee's invitation) necessitating a reduction in the aggregate principal
amount of Securities outstanding or an advance refunding of part of the
Securities outstanding, DTC, in its discretion: (a) may request Issuer or
Indenture Trustee to issue and authenticate a new Security certificate; or (b)
may make an appropriate notation on the Security certificate indicating the date
and amount of such reduction in principal except in the case of final maturity,
in which case the certificate will be presented to Issuer or Indenture Trustee
prior to payment, if required.
14. In the event that Issuer determines that beneficial owners of
Securities shall be able to obtain certificated Securities, Issuer or Indenture
Trustee shall notify DTC of the availability of certificates. In such event,
Issuer or Indenture Trustee shall issue, transfer, and exchange certificates in
appropriate amounts, as required by DTC and others.
15. DTC may discontinue providing its services as securities depository
with respect to the Securities at any time by giving reasonable notice to Issuer
or Indenture Trustee (at which time DTC will confirm with Issuer or Indenture
Trustee the aggregate principal amount of Securities outstanding). Under such
circumstances, at DTC's request Issuer and Indenture Trustee shall cooperate
fully with DTC by taking appropriate action to make available one or more
separate certificates evidencing Securities to any DTC Participant having
Securities credited to its DTC accounts.
16. Issuer: (a) understands that DTC has no obligation to, and will not,
communicate to its Participants or to any person having an interest in the
Securities any information contained in the Security certificate(s); and (b)
acknowledges that neither DTC's Participants nor any person having an interest
in the Securities shall be deemed to have notice of the provisions of the
Security certificates by virtue of submission of such certificate(s) to DTC.
B-5
<PAGE>
17. Nothing herein shall be deemed to require Indenture Trustee to advance
funds on behalf of Issuer.
NOTES:
A. If there is a Indenture Trustee (as defined in this
Letter of Representations), Indenture Trustee as well as
Issuer must sign this Letter. If there is no Indenture
Trustee, in signing this Letter Issuer itself undertakes to
perform all of the obligations set forth herein.
B. Schedule B contains statements that DTC believes
accurately describe DTC, the method of effecting book-entry
transfers of securities distributed through DTC, and certain
related matters.
Very truly yours,
- - ---------------------------------------
(Issuer)
By:
-----------------------------------
(Authorized Officer's Signature)
- - ---------------------------------------
(Indenture Trustee)
By:
-----------------------------------
(Authorized Officer's Signature)
Received and Accepted:
THE DEPOSITORY TRUST COMPANY
By:
-----------------------------------
cc: Underwriter
Underwriter's Counsel
B-6
<PAGE>
SCHEDULE A
- - --------------------------------------------------------------------------
- - --------------------------------------------------------------------------
(Describe Issue)
<TABLE>
<CAPTION>
CUSIP Principal Amount Maturity Date Interest Rate
- - ----- ---------------- ------------- -------------
<S> <C> <C> <C>
</TABLE>
B-7
<PAGE>
SCHEDULE B
SAMPLE OFFICIAL STATEMENT LANGUAGE
DESCRIBING BOOK-ENTRY-ONLY ISSUANCE
(Prepared by DTC--bracketed material may be applicable only to certain issues)
1. The Depository Trust Company ("DTC"), New York, NY, will act as
securities depository for the securities (the "Securities"). The Securities will
be issued as fully-registered securities registered in the name of Cede & Co.
(DTC's partnership nominee). One fully-registered Security certificate will be
issued for [each issue of the Securities, [each] in the aggregate principal
amount of such issue, and will be deposited with DTC. [If, however, the
aggregate principal amount of [any] issue exceeds $200 million, one certificate
will be issued with respect to each $200 million of principal amount and an
additional certificate will be issued with respect to any remaining principal
amount of such issue.]
2. DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. DTC holds securities that its participants ("Participants") deposit
with DTC. DTC also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates. Direct
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations, and certain other organizations. DTC is owned by a number
of its Direct Participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc., and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others such as
securities brokers and dealers, banks, and trust companies that clear through or
maintain a custodial relationship with a Direct Participant, either directly or
indirectly ("Indirect Participants"). The Rules applicable to DTC and its
Participants are on file with the Securities and Exchange Commission.
3. Purchases of Securities under the DTC system must be made by or through
Direct Participants, which will receive a credit for the Securities on DTC's
records. The ownership interest of each actual purchaser of each Security
("Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation
from DTC of their purchase, but Beneficial Owners are expected to receive
written confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the Direct or Indirect Participant through
which the Beneficial Owner entered into the transaction. Transfers of ownership
interests in the Securities are to be accomplished by entries made on the books
of Participants acting on behalf of Beneficial Owners. Beneficial Owners will
not receive certificates representing their ownership interests in Securities,
except in the event that use of the book-entry system for the Securities is
discontinued.
4. To facilitate subsequent transfers, all Securities deposited by
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of Securities with DTC and their registration in the name
of Cede & Co. effect no change in
B-8
<PAGE>
beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of
the Securities; DTC's records reflect only the identity of the Direct
Participants to whose accounts such Securities are credited, which may or may
not be the Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
5. Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
[6. Redemption notices shall be sent to Cede & Co. If less than all of the
Securities within an issue are being redeemed, DTC's practice is to determine by
lot the amount of the interest of each Direct Participant in such issue to be
redeemed.]
7. Neither DTC nor Cede & Co. will consent or vote with respect to
Securities. Under its usual procedures, DTC mails an Omnibus Proxy to the Issuer
as soon as possible after the record date. The Omnibus Proxy assigns Cede &
Co.'s consenting or voting rights to those Direct Participants to whose accounts
the Securities are credited on the record date (identified in a listing attached
to the Omnibus Proxy).
8. Principal and interest payments on the Securities will be made to DTC.
DTC's practice is to credit Direct Participants' accounts on payable date in
accordance with their respective holdings shown on DTC's records unless DTC has
reason to believe that it will not receive payment on payable date. Payments by
Participants to Beneficial Owners will be governed by standing instructions and
customary practices, as is the case with securities held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of such Participant and not of DTC, Indenture Trustee, or Issuer,
subject to any statutory or regulatory requirements as may be in effect from
time to time. Payment of principal and interest to DTC is the responsibility of
the Issuer or Indenture Trustee, disbursement of such payments to Direct
Participants shall be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners shall be the responsibility of Direct and
Indirect Participants.
[9. A Beneficial Owner shall give notice to elect to have its Securities
purchased or tendered, through its Participant, to Indenture Trustee [or
Tender/Remarketing Agent], and shall effect delivery of such Securities by
causing the Direct Participant to transfer the Participant's interest in the
Securities, on DTC's records, to Indenture Trustee [or Tender/Remarketing
Agent]. The requirement for physical delivery of Securities in connection with
an optional tender or a mandatory purchase will be deemed satisfied when the
ownership rights in the Securities are transferred by Direct Participants on
DTC's records and followed by a book-entry credit of tendered Securities to
Indenture Trustee [or Tender/Remarketing Agent's] DTC account.]
10. DTC may discontinue providing its services as securities depository
with respect to the Securities at any time by giving reasonable notice to Issuer
or Agent. Under such circumstances, in the event that a successor securities
depository is not obtained, Security certificates are required to be printed and
delivered.
B-9
<PAGE>
11. The Issuer may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depository). In that event,
Security certificates will be printed and delivered.
12. The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that Issuer believes to be reliable, but
Issuer takes no responsibility for the accuracy thereof.
B-10
<PAGE>
Exhibit 5.1(a)(includes Exhibit 23.1)
[LETTERHEAD OF BROWN & WOOD LLP]
January 12, 1999
American Honda Receivables Corp.
700 Van Ness Avenue
Torrance, CA 90501
Re: American Honda Receivables Corp.
Registration Statement on Form S-3
-----------------------------------
Ladies and Gentlemen:
We have acted as special counsel for American Honda Receivables Corp.,
a California corporation (the "Seller"), in connection with the filing by
Seller of a registration statement on Form S-3 (such registration statement,
together with the exhibits and amendments thereto, the "Registration
Statement") with the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the "Act"), for the
registration under the Act of the Asset-Backed Notes (the "Notes") of the
Honda Auto Receivables 1999-1 Owner Trust (the "Trust") formed under the
Delaware Business Trust Act (the "Delaware Act"). The Notes will be issued by
the Trust pursuant to an Indenture (the "Indenture") between the Trust and an
Indenture Trustee. The Notes will be sold pursuant to an underwriting
agreement (the "Underwriting Agreement") to be entered into by the Seller and
American Honda Finance Corporation with the several underwriters or their
representative to be named therein (the "Underwriters").
We have examined and relied upon the Registration Statement, including
all documents incorporated therein by reference. We have also examined and
considered executed originals or counterparts, or certified or other copies
of such certificates, instruments, documents and other corporate records of
the Seller and matters of fact and law as we have deemed necessary for the
purposes of the opinion expressed below.
In our examination we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as
certified or photostatic copies and the authenticity of the originals of such
documents. As to any facts material to the opinions expressed herein which
were not independently established or verified, we have relied upon
statements and representations of officers and other representatives of the
Seller and others.
Based on and subject to the foregoing, we are of the opinion that when
the Notes have been duly executed, authenticated and delivered in accordance
with the Indenture and sold by the Seller and paid for by the Underwriters in
accordance with the Underwriting Agreement and in
<PAGE>
American Honda Receivables Corp.
January 12, 1999
Page 2
the manner described in the Registration Statement, the Notes will be legally
issued, fully paid and nonassessable and will be valid and legally binding
obligations of the Trust, subject to bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally and to general
principles of equity (regardless of whether enforceability is sought in a
proceeding in equity or at law).
In rendering the foregoing opinions, we express no opinion as to the
laws of any jurisdiction other than the laws of the States of New York and
California (excluding choice of law principles therein) and the federal laws
of the United States of America. As to matters relating to the Trust under
Delaware law, we have relied on the opinion of Richards, Layton & Finger,
P.A., addressed to you of even date herewith.
We hereby consent to the filing of this letter as an exhibit to the
Registration Statement and to a reference to this firm under the heading
"Legal Matters" in the Prospectus forming a part of the Registration
Statement, without implying or admitting that we are "experts" within the
meaning of the Act or the Rules and Regulations of the Commission issued
thereunder, with respect to any part of the Registration Statement, including
this exhibit.
Very truly yours,
/s/ Brown & Wood LLP
2
<PAGE>
Exhibit 5.1(b)
(includes Exhibit 23.2)
[LETTERHEAD OF RICHARDS, LAYTON & FINGER, A PROFESSIONAL ASSOCIATION]
January 12, 1999
American Honda Receivables Corp.
700 Van Ness Avenue, Building 300
Torrance, California 90501
Re: Honda Auto Receivables 1999-1 Owner Trust
Registration Statement on Form S-3 (File No. 333-30037)
Ladies and Gentlemen:
We have acted as special Delaware counsel for American Honda Receivables
Corp. (the "Registrant") in connection with the Registration Statement on
Form S-3 (File No. 333-30037) (the "Registration Statement"), filed with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "Act"), for the registration under the Act of Asset-Backed Notes
(the "Notes") to be issued by Honda Auto Receivables 1999-1 Owner Trust, a
Delaware business trust (the "Trust"). This opinion is being delivered to
you at your request.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Trust Agreement, dated as of June 16, 1998, between The Bank of
New York (Delaware), a Delaware banking corporation, and the Registrant;
(b) the Certificate of Trust of the Trust, as filed on June 26, 1998 in
the office of the Secretary of State of the State of Delaware (the "Secretary
of State");
(c) the Restated Certificate of Trust of the Trust, as filed on January
11, 1999 in the office of the Secretary of State;
<PAGE>
(d) the form of Amended and Restated Trust Agreement (the "Trust
Agreement") attached as Exhibit 4.1(b) to the Registration Statement;
(e) the Registration Statement; and
(f) a Good Standing Certificate, dated January 12, 1999, obtained from
the Secretary of State with respect to the Trust.
Initially capitalized terms used herein and not otherwise defined are
used as defined in the Trust Agreement.
For purposes of this opinion, we have reviewed such documents which we
have deemed necessary to give the opinions expressed herein (which documents
are listed in paragraphs (a) through (f) above). We have not reviewed any
documents other than the documents listed above, and we have assumed that
there exists no provision in any document that we have not reviewed that
bears upon or is inconsistent with the opinions stated herein. We have
conducted no independent factual investigation of our own but rather have
relied solely upon the foregoing documents, the statements and information
set forth therein and the additional matters recited or assumed herein, all
of which we have assumed to be true, complete and accurate in all material
respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii)
the conformity with the originals of all documents submitted to us as copies
or forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Trust
Agreement will constitute the entire agreement among the parties thereto with
respect to the subject matter thereof, including with respect to the
creation, operation and termination of the Trust, (ii) the due creation or
due organization or due formation, as the case may be, and valid existence in
good standing of each party to the documents examined by us under the laws of
the jurisdiction governing its creation, organization or formation (other
than the Trust), (iii) the legal capacity of natural persons who are parties
to the documents examined by us, (iv) that each of the parties to the
documents examined by us has the power and authority to execute and deliver,
and to perform its obligations under, such documents (other than the Trust),
and (v) the each of the parties to the documents examined by us has duly
authorized, executed and delivered such documents (other than the Trust). We
have not participated in the preparation of the Registration Statement and
assume no responsibility for its contents.
This opinion is limited to the laws of the State of Delaware (excluding
the securities laws of the State of Delaware), and we have not considered and
express no opinion on the laws of any other jurisdiction, including federal
laws and rules and regulations relating thereto. Our opinions are rendered
only with respect to Delaware laws and rules, regulations and orders
thereunder which are currently in effect.
<PAGE>
Based upon the foregoing, and upon our examination of such questions of
law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly formed and is validly existing in good
standing as a business trust under the Delaware Business Trust Act; and
2. The Trust Agreement will constitute a valid and binding obligation
of the Registrant enforceable against the Registrant in accordance with its
terms.
The foregoing opinion regarding enforceability is subject to (i)
applicable bankruptcy, insolvency, moratorium, reorganization, receivership,
fraudulent transfer and similar laws relating to or affecting the rights and
remedies of creditors generally, (ii) principles of equity (regardless of
whether considered and applied in a proceeding in equity or at law) and (iii)
the effect of applicable public policy on the enforceability of provisions
relating to indemnification or contribution.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the heading
"Legal Matters" in the Prospectus forming a part of the Registration
Statement. In giving the foregoing consents, we do not thereby admit that we
come within the category of Persons whose consent is required under Section 7
of the Act, or the rules and regulations of the Securities and Exchange
Commission thereunder with respect to any part of the Registration Statement,
including this exhibit.
Very truly yours,
/s/ Richards, Layton & Finger,
a Professional Association
<PAGE>
Exhibit 8.1 (includes Exhibit 23.2)
[LETTERHEAD OF BROWN & WOOD LLP]
January 12, 1999
American Honda Receivables Corp.
700 Van Ness Avenue
Torrance, CA 90501
Re: American Honda Receivables Corp.
Registration Statement on Form S-3
-----------------------------------
Ladies and Gentlemen:
We have acted as special federal tax counsel for American Honda
Receivables Corp., a California corporation (the "Registrant"), in connection
with the filing by registrant of a registration statement on Form S-3 (such
registration statement, together with the exhibits and amendments thereto,
the "Registration Statement") with the Securities and Exchange Commission
(the "Commission") under the Securities Act of 1933, as amended (the "Act")
for the registration under the Act of the Asset-Backed Notes (the "Notes") of
the Honda Auto Receivables 1999-1 Owner Trust (the "Trust"). As further
described in the Registration Statement, the Trust will be formed by the
Registrant pursuant to a Trust Agreement between the Registrant and an Owner
Trustee. The Notes will be issued by the Trust pursuant to an Indenture
between the Trust and an Indenture Trustee.
We have advised the Registrant with respect to certain federal income
tax consequences of the proposed issuance of the Notes. This advice is
summarized under the headings "Summary - Tax Status" and "Material Federal
Income Tax Consequences" in the Prospectus forming a part of the Registration
Statement. Such description does not purport to discuss all possible federal
income tax ramifications of the proposed issuance, but with respect to those
federal consequences that are discussed, in our opinion, the description is
accurate in all material respects. We confirm and adopt the opinions set
forth in the Prospectus as well as those opinions deemed to be incorporated
therein, and each such confirmed and adopted opinion represents our opinion
regarding the material federal income tax consequences of the purchase,
ownership and disposition of the securities of the applicable series.
We hereby consent to the filing of this letter as an exhibit to the
Registration Statement and to a reference to this firm (as special federal
tax counsel to the Registrant) under the heading
<PAGE>
American Honda Receivables Corp.
January 12, 1999
Page 2
"Material Federal Income Tax Consequences" in the Prospectus, without
implying or admitting that we are "experts" within the meaning of the Act or
the Rules and Regulations of the Commission issued thereunder, with respect
to any part of the Registration Statement, including this exhibit.
Very truly yours,
/s/ Brown & Wood LLP
<PAGE>
Exhibit 10.1
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
HONDA AUTO RECEIVABLES 1999-1 OWNER TRUST,
as Issuer,
AMERICAN HONDA RECEIVABLES CORP.,
as Transferor,
and
AMERICAN HONDA FINANCE CORPORATION,
as Servicer
-------------------------------------
SALE AND SERVICING AGREEMENT
Dated as of January 1, 1999
-------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
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<S> <C>
ARTICLE ONE
DEFINITIONS
Section 1.01. General Definitions......................................................................... 1
Section 1.02. Other Definitional Provisions............................................................... 18
Section 1.03. Interpretive Provisions..................................................................... 18
ARTICLE TWO
CONVEYANCE OF RECEIVABLES; CUSTODY OF RECEIVABLES FILES
Section 2.01. Conveyance of Receivables................................................................... 19
Section 2.02. Custody of Receivable Files................................................................. 20
Section 2.03. Representations and Warranties of Transferor as to the Receivables.......................... 20
Section 2.04. Repurchase of Receivables Upon Breach....................................................... 23
Section 2.05. Duties of Servicer as Custodian............................................................. 24
Section 2.06. Instructions; Authority to Act.............................................................. 25
Section 2.07. Indemnification by Custodian................................................................ 25
Section 2.08. Effective Period and Termination............................................................ 25
ARTICLE THREE
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 3.01. Duties of Servicer.......................................................................... 27
Section 3.02. Collection of Receivable Payments........................................................... 27
Section 3.03. Rebates on Full Prepayments................................................................. 28
Section 3.04. Realization Upon Receivables................................................................ 28
Section 3.05. Maintenance of Physical Damage Insurance Policies........................................... 29
Section 3.06. Maintenance of Security Interests in Financed Vehicles...................................... 29
Section 3.07. Covenants of Servicer....................................................................... 29
Section 3.08. Purchase of Receivables Upon Breach......................................................... 29
Section 3.09. Total Servicing Fee; Payment of Certain Expenses by Servicer................................ 30
Section 3.10. Servicer's Certificate...................................................................... 30
Section 3.11. Annual Statement as to Compliance; Notice of Default........................................ 30
Section 3.12. Annual Accountants' Report.................................................................. 31
Section 3.13. Access to Certain Documentation and Information Regarding Receivables....................... 31
Section 3.14. Amendments to Schedule of Receivables....................................................... 31
Section 3.15. Reports to Securityholders and Rating Agencies.............................................. 31
</TABLE>
<PAGE>
<TABLE>
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<S> <C>
ARTICLE FOUR
DISTRIBUTIONS; RESERVE FUND; STATEMENTS TO SECURITYHOLDERS
Section 4.01. Establishment of Accounts................................................................... 33
Section 4.02. Collections................................................................................. 34
Section 4.03. Application of Collections.................................................................. 35
Section 4.04. Advances.................................................................................... 36
Section 4.05. Additional Deposits......................................................................... 37
Section 4.06. Distributions............................................................................... 37
Section 4.07. Reserve Fund................................................................................ 39
Section 4.08. Yield Supplement Account.................................................................... 39
Section 4.09. Net Deposits................................................................................ 39
Section 4.10. Statements to Securityholders............................................................... 39
ARTICLE FIVE
THE TRANSFEROR
Section 5.01. Representations of Transferor............................................................... 42
Section 5.02. Liability of Transferor; Indemnities........................................................ 43
Section 5.03. Merger, Consolidation or Assumption of the Obligations of Transferor; Certain Limitations... 44
Section 5.04. Limitation on Liability of Transferor and Others............................................ 46
Section 5.05. Transferor May Own Notes.................................................................... 46
ARTICLE SIX
THE SERVICER
Section 6.01. Representations of Servicer................................................................. 47
Section 6.02. Indemnities of Servicer..................................................................... 48
Section 6.03. Merger, Consolidation or Assumption of the Obligations of Servicer.......................... 48
Section 6.04. Limitation on Liability of Servicer and Others.............................................. 49
Section 6.05. AHFC Not to Resign as Servicer.............................................................. 49
ARTICLE SEVEN
SERVICER DEFAULTS
Section 7.01. Servicer Defaults........................................................................... 50
Section 7.02. Appointment of Successor Servicer........................................................... 51
</TABLE>
ii
<PAGE>
<TABLE>
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<S> <C>
Section 7.03. Notification of Servicer Termination........................................................ 51
Section 7.04. Waiver of Past Defaults..................................................................... 52
Section 7.05. Repayment of Advances....................................................................... 52
ARTICLE EIGHT
TERMINATION
Section 8.01. Optional Purchase of All Receivables........................................................ 53
ARTICLE NINE
MISCELLANEOUS
Section 9.01. Amendment................................................................................... 54
Section 9.02. Protection of Title to Trust................................................................ 55
Section 9.03. Notices..................................................................................... 56
Section 9.04. Assignment.................................................................................. 57
Section 9.05. Limitations on Rights of Others............................................................. 57
Section 9.06. Severability. .............................................................................. 57
Section 9.07. Separate Counterparts. ..................................................................... 57
Section 9.08. Headings. .................................................................................. 58
Section 9.09. Governing Law. ............................................................................. 58
Section 9.10. Nonpetition Covenants....................................................................... 58
Section 9.11. Limitation of Liability of Owner Trustee and Indenture Trustee.............................. 58
SCHEDULES
Schedule A - Schedule of Receivables...................................................................... SA-1
Schedule B - Location of Receivable Files................................................................. SB-1
EXHIBITS
Exhibit A - Form of Distribution Statement to Securityholders............................................. A-1
Exhibit B - Form of Servicer's Certificate................................................................ B-1
</TABLE>
iii
<PAGE>
This Sale and Servicing Agreement, dated as of January 1, 1999, is among
American Honda Receivables Corp., a California corporation ("AHRC" or, in its
capacity as Transferor, the "Transferor"), American Honda Finance Corporation, a
California corporation ("AHFC" or, in its capacity as Servicer, the "Servicer"),
and Honda Auto Receivables 1999-1 Owner Trust, a Delaware business trust, as
issuer (the "Issuer").
WHEREAS the Issuer desires to purchase from the Transferor a portfolio of
receivables arising in connection with retail installment sale or conditional
sale contracts (the "Receivables") generated by AHFC in the ordinary course of
its business, which Receivables have been sold by AHFC to AHRC;
WHEREAS, AHRC is willing to sell the Receivables to the Issuer pursuant to
the terms hereof; and
WHEREAS, AHFC is willing to service the Receivables pursuant to the terms
hereof;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE ONE
DEFINITIONS
Section 1.01. GENERAL DEFINITIONS. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
"ACCOUNTS" means the Collection Account, the Note Distribution Account, the
Payahead Account, the Yield Supplement Account and the Reserve Fund.
"ACCOUNT PROPERTY" means, with respect to each Account, such Account,
together with all cash, securities, financial assets and investments and other
property from time to time deposited or credited to such Account and all
proceeds thereof, including, with respect to the (i) Reserve Fund, the Reserve
Fund Initial Deposit and (ii) Yield Supplement Account, the Yield Supplement
Account Deposit.
"ACTUAL PAYMENT" means, with respect to a Receivable and a Collection
Period, all payments received by the Servicer from or for the account of the
related Obligor on such Receivable during such Collection Period, net of any
Supplemental Servicing Fees attributable to such Receivable. Actual Payments do
not include Applied Payments Ahead.
"ACTUARIAL RECEIVABLE" means any Receivable which provides for the
allocation of payments according to the "actuarial" method.
"ADMINISTRATIVE PURCHASE PAYMENT" means, with respect to a Distribution
Date and to an Administrative Receivable purchased by the Transferor or the
Servicer as of the end of the related Collection Period, which Receivable is (i)
a Precomputed Receivable, (a) the sum of (1) all Scheduled Payments on such
Receivable due after the last day of such Collection Period,
<PAGE>
(2) an amount equal to any reimbursement of Outstanding Advances made pursuant
to the first sentence of Section 4.04(c) with respect to such Receivable (plus
all Outstanding Advances made in respect of such Receivable, in the case of an
Administrative Purchase Payment made by the Transferor) and (3) all past due
Scheduled Payments for which an Advance has not been made, minus (b) the sum of
(1) all Payments Ahead in respect of such Administrative Receivable held by the
Servicer or on deposit in the Payahead Account, (2) any Rebate and (3) any
proceeds of the liquidation of such Receivable previously received (to the
extent applied to reduce the Principal Balance of such Receivable) or (ii) a
Simple Interest Receivable, the sum of (a) the unpaid principal balance owed by
the related Obligor in respect of such Receivable and (b) interest on such
unpaid principal balance at a rate equal to the Required Rate to the last day of
such Collection Period.
"ADMINISTRATIVE RECEIVABLE" means a Receivable which the Transferor or the
Servicer is required to purchase pursuant to Section 2.04 or 3.08 or which the
Transferor or the Servicer, or any successor to the Servicer, has elected to
purchase pursuant to Section 8.01
"ADVANCE" means a Precomputed Advance or a Simple Interest Advance.
"AFFILIATE" means, with respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purpose of this definition, "control", when used with respect to any
specified Person, means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"AGGREGATE NET LOSSES" means, with respect to a Collection Period, an
amount equal to the aggregate Principal Balance of all Receivables that became
Defaulted Receivables during such Collection Period minus all Net Liquidation
Proceeds collected during such Collection Period with respect to all Defaulted
Receivables.
"AGREEMENT" means this Sale and Servicing Agreement, and all amendments
hereof and supplements hereto.
"AHFC" means American Honda Finance Corporation, and its successors.
"AHRC" means American Honda Receivables Corp., and its successors.
"AMOUNT FINANCED" in respect of a Receivable means the aggregate amount
advanced under such Receivable toward the purchase price of the related Financed
Vehicle and any related costs, including but not limited to accessories,
insurance premiums, service and warranty contracts and other items customarily
financed as part of motor vehicle retail installment sale contracts.
"ANNUAL PERCENTAGE RATE" or "APR" of a Receivable means the annual rate of
finance charges stated in such Receivable.
"APPLIED PAYMENT AHEAD" means, with respect to a Precomputed Receivable and
a Collection Period as to which (i) the Actual Payment is less than the
Scheduled Payment and
2
<PAGE>
(ii) a Deferred Prepayment is on deposit in the Payahead Account or otherwise
retained by the Servicer pursuant to Section 4.02(c), an amount equal to the
lesser of (a) such Deferred Prepayment and (b) the amount by which the Scheduled
Payment exceeds the Actual Payment.
"AVAILABLE AMOUNT" means, with respect to any Distribution Date, the sum of
Available Interest and Available Principal.
"AVAILABLE INTEREST" means, with respect to any Distribution Date, the
total of the following amounts allocable to interest received by the Servicer on
or in respect of the Receivables during the related Collection Period (computed,
in the case of Precomputed Receivables, by the actuarial method and, in the case
of Simple Interest Receivables, by the simple interest method): (i) the sum of
the interest component of all (a) collections on or in respect of all
Receivables other than Defaulted Receivables (including the interest portion of
Applied Payments Ahead, but excluding Payments Ahead to be applied in one or
more future Collections Periods), (b) Net Liquidation Proceeds, (c) Advances
made by the Servicer, (d) Warranty Purchase Payments, (e) Administrative
Purchase Payments and (f) the Yield Supplement Withdrawal Amount, if any, for
the related Distribution Date, less (ii) the sum of all (a) amounts received on
or in respect of a particular Receivable (other than a Defaulted Receivable) to
the extent of the aggregate Outstanding Interest Advances in respect of such
Receivable and (b) Net Liquidation Proceeds with respect to a particular
Receivable to the extent of the aggregate Outstanding Interest Advances in
respect of such Receivable.
"AVAILABLE PRINCIPAL" means, with respect to any Distribution Date, the
total of the following amounts allocable to principal received by the Servicer
on or in respect of the Receivables during the related Collection Period
(computed, in the case of Precomputed Receivables, by the actuarial method and,
in the case of Simple Interest Receivables, by the simple interest method): (i)
the sum of the principal component of all (a) collections on or in respect of
all Receivables other than Defaulted Receivables (including the principal
portion of Applied Payments Ahead but excluding Payments Ahead), (b) Net
Liquidation Proceeds, (c) Advances made by the Servicer, (d) Warranty Purchase
Payments and (e) Administrative Purchase Payments, less (ii) an amount equal to
all (a) amounts received on or in respect of a particular Receivable (other than
a Defaulted Receivable) to the extent of the aggregate Outstanding Principal
Advances in respect of such Receivable and (b) Net Liquidation Proceeds with
respect to a particular Receivable to the extent of the aggregate Outstanding
Principal Advances in respect of such Receivable.
"BASIC DOCUMENTS" means this Agreement, the Administration Agreement, the
Indenture, the Note Depository Agreement, the Receivables Purchase Agreement,
the Amended and Restated Trust Agreement and the Control Agreement and any other
documents or certificates delivered in connection therewith as the same may be
amended, supplemented or otherwise modified and in effect.
"BASIC SERVICING FEE" means the fee payable pursuant to Section 3.09 to the
Servicer on each Distribution Date for services rendered during the related
Collection Period, which shall be equal to one-twelfth of the Servicing Fee Rate
multiplied by the Pool Balance as of the first day of the related Collection
Period or, with respect to the first Distribution Date, the Original Pool
Balance.
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"CERTIFICATE BALANCE" means, on any Distribution Date, the Original
Certificate Balance reduced by all distributions of principal previously made in
respect of the Certificates.
"CERTIFICATE DISTRIBUTABLE AMOUNT" means, with respect to any Distribution
Date, the sum of the Certificate Interest Distributable Amount and the
Certificate Principal Distributable Amount for such Distribution Date.
"CERTIFICATE DISTRIBUTION ACCOUNT" has the meaning specified in the Trust
Agreement.
"CERTIFICATE INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, interest accrued for the related Accrual Period at the
Certificate Rate on the Certificate Balance on the immediately preceding
Distribution Date after giving effect to all payments of principal to
Certificateholders on or prior to such Distribution Date (or, in the case of the
first Distribution Date, on the Original Certificate Balance).
"CERTIFICATE POOL FACTOR" means, with respect to the Certificates on any
Distribution Date, a seven-digit decimal figure equal to the outstanding
principal balance of the Certificates on such Distribution Date (after giving
effect to any reductions thereof to be made on such Distribution Date) divided
by the Original Certificate Balance.
"CERTIFICATE PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, (i) the component of the Available Amount attributable to the
Principal Distributable Amount less (ii) the sum of (a) the Note Principal
Distributable Amount, (b) any amount that has been deposited into the Reserve
Fund as described in clause (vi) of Section 4.06(c) and (c) the Certificate
Interest Distributable Amount.
"CERTIFICATE RATE" means __% per annum (computed on the basis of a 360 day
year consisting of twelve 30-day months).
"CERTIFICATEHOLDERS" has the meaning specified in the Trust Agreement.
"CHARGE-OFF RATE" with respect to a Collection Period will equal the
Aggregate Net Losses with respect to the Receivables expressed, on an annualized
basis, as a percentage of the average of the (i) Pool Balance on the last day of
the immediately preceding Collection Period and (ii) Pool Balance on the last
day of such current Collection Period.
"CLASS" means all Securities whose form is identical except for variation
in denomination, principal amount or owner.
"CLASS A-1 FINAL DISTRIBUTION DATE" means the __________ ____ Distribution
Date.
"CLASS A-1 NOTEHOLDER" means a Person in whose name a Class A-1 Note is
registered in the Note Register.
"CLASS A-2 FINAL DISTRIBUTION DATE" means the __________ ____ Distribution
Date.
"CLASS A-2 NOTEHOLDER" means a Person in whose name a Class A-2 Note is
registered in the Note Register.
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"CLASS A-3 FINAL DISTRIBUTION DATE" means the __________ ____ Distribution
Date.
"CLASS A-3 NOTEHOLDER" means a Person in whose name a Class A-3 Note is
registered in the Note Register.
"CLASS A-4 FINAL DISTRIBUTION DATE" means the __________ ____ Distribution
Date.
"CLASS A-4 NOTEHOLDER" means the Person in whose name a Class A-4 Note is
registered in the Note Register.
"COLLECTION ACCOUNT" means the account designated as such, and established
and maintained pursuant to Section 4.01.
"COLLECTION PERIOD" means each calendar month during the term of this
Agreement (or, in the case of the first Collection Period, the period of time
since the Cutoff Date through the last day of the calendar month immediately
preceding the month in which the first Distribution Date occurs).
"COMMISSION" means the Securities and Exchange Commission, and its
successors.
"CONTROL" shall have the meaning specified in Section 8-106 of the UCC.
"CORPORATE TRUST OFFICE" means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of the execution of this Agreement is
located at Four Albany Street, 10th Floor, New York, New York 10006, Attention:
Structured Finance Group; or at such other address as the Indenture Trustee may
designate from time to time by notice to the Noteholders and the Transferor, or
the principal corporate trust office of any successor Indenture Trustee (of
which address such successor Indenture Trustee will notify the Noteholders and
the Transferor).
"CURRENT RECEIVABLE" means each Receivable that is not a Defaulted
Receivable or a Liquidated Receivable.
"CUTOFF DATE" means ____________, 1999.
"CUTOFF DATE POOL BALANCE" means $________________, the aggregate unpaid
principal balance of the Receivables as of the Cutoff Date.
"DEALER" means the dealer of motor vehicles who sold a Financed Vehicle and
who originated and assigned the Receivable relating to such Financed Vehicle to
AHFC under an existing agreement between such dealer and AHFC.
"DEALER RECOURSE" means, with respect to a Receivable, all recourse rights
against the Dealer which originated the Receivable, and any successor to such
Dealer.
"DEFAULTED RECEIVABLE" means a Receivable (other than an Administrative
Receivable or a Warranty Receivable) as to which (i) all or any part of a
Scheduled Payment is 120 or more days past due and the Servicer has not
repossessed the related Financed Vehicle or (ii) the
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Servicer has, in accordance with its customary servicing procedures, determined
that eventual payment in full is unlikely and either repossessed and liquidated
the related Financed Vehicle or repossessed and held the related Financed
Vehicle in its repossession inventory for 90 days, whichever occurs first.
"DEFERRED PREPAYMENT" means, with respect to a Receivable and a Collection
Period, the aggregate amount, if any, of Payments Ahead remitted to the Servicer
in respect of such Receivable during one or more prior Collection Periods and
currently held by the Servicer or in the Payahead Account.
"DELINQUENCY PERCENTAGE" means, with respect to a Collection Period, the
percentage equivalent of a fraction, the numerator of which is the number of (i)
outstanding Receivables 61 days or more delinquent (after taking into account
permitted extensions) as of the last day of such Collection Period, determined
in accordance with the Servicer's normal practices, plus (ii) all Receivables
the related Financed Vehicles of which have been repossessed but have not been
liquidated (to the extent the related Receivable is not otherwise reflected in
clause (i) above or is not a Defaulted Receivable), and the denominator of which
is the aggregate number of Current Receivables on the last day of such
Collection Period.
"DEPOSIT DATE" means, with respect to any Collection Period and
Distribution Date, the Business Day immediately preceding such Distribution
Date.
"DEPOSITOR" means the Transferor in its capacity as Depositor under the
Trust Agreement.
"DETERMINATION DATE" means, with respect to any Distribution Date, the
tenth calendar day of the month in which such Distribution Date occurs or, if
such day is not a Business Day, the immediately succeeding Business Day.
"DISCOUNT RECEIVABLE" means any Receivable that has an APR which is less
than the Required Rate.
"DISTRIBUTION DATE" means, with respect to a Collection Period, the
fifteenth calendar day of the next succeeding calendar month or, if such day is
not a Business Day, the next succeeding Business Day, commencing _________,
1999.
"ELIGIBLE ACCOUNT" means either (A) a segregated deposit account over which
the applicable Trustee has sole signature authority, maintained with an Eligible
Institution meeting the requirements of clause (i) thereof or (B) a segregated
trust account maintained with an Eligible Institution meeting the requirements
of clause (ii) thereof, in each case bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the
Securityholders, the Noteholders or the Certificateholders, as the case may be.
"ELIGIBLE INSTITUTION" means a depository institution or trust company, (i)
the commercial paper or other short-term unsecured debt obligations of which
have the Required Deposit Rating or (ii) having corporate trust powers and
organized under the laws of the United States, any state thereof, the District
of Columbia or the Commonwealth of Puerto Rico which has a long-term deposit
rating from (A) Moody's of at least Baa3 or (B) Standard and Poor's of at least
AA- (or such lower rating as either Rating Agency shall approve in writing).
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"ENTITLEMENT HOLDER" shall have the meaning specified in Section 8-102 of
the UCC.
"ENTITLEMENT ORDER" shall have the meaning specified in Section 8-102 of
the UCC.
"EXCESS PAYMENT" means, with respect to a Receivable and a Collection
Period, the amount, if any, by which the Actual Payment exceeds the sum of (i)
the Scheduled Payment and (ii) any Overdue Payment.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FDIC" means the Federal Deposit Insurance Corporation.
"FHLMC" means the Federal Home Loan Mortgage Corporation, and its
successors.
"FNMA" means the Federal National Mortgage Association, and its successors.
"FINAL SCHEDULED DISTRIBUTION DATE" means, with respect to any Class of
Notes, the Final Scheduled Distribution Date for such Class of Notes.
"FINAL SCHEDULED MATURITY DATE" means __________ ____.
"FINANCED VEHICLE" means, with respect to any retail installment sale or
conditional sale contract, the related new or used Honda or Acura motor vehicle,
together with all accessions thereto, securing the related Obligor's
indebtedness under such retail installment sale or conditional sale contract.
"FINANCIAL ASSET" shall have the meaning specified in Section 8-102(a)(9)
of the UCC.
"FITCH" means Fitch Investors Service, Inc., or its successors.
"INDENTURE" means the indenture, dated as of ______ __, 1999 between the
Issuer and the Indenture Trustee.
"INDENTURE TRUSTEE" means the Person acting as Indenture Trustee under the
Indenture, its successors in interest and any successor trustee under the
Indenture.
"INDEPENDENT DIRECTOR" means a director of the Transferor who is not (i) a
director, officer or employee of any Affiliate of the Transferor, (ii) a natural
person related to any director or officer of any Affiliate of the Transferor,
(iii) a holder (directly or indirectly) of more than 10% of any voting
securities of any Affiliate of the Transferor or (iv) a natural person related
to a holder (directly or indirectly) of more than 10% of any voting securities
of any Affiliate of the Transferor.
"INSOLVENCY EVENT" means, with respect to a specified Person, (i) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for any
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substantial part of its property, or ordering the winding-up or liquidation of
such Person's affairs, and such decree or order shall remain unstayed and in
effect for a period of 90 consecutive days; or (ii) the commencement by such
Person of a voluntary case under any applicable federal or state bankruptcy,
insolvency or other similar law now or hereafter in effect, or the consent by
such Person to the entry of an order for relief in an involuntary case under any
such law, or the consent by such Person to the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official for such Person or for any substantial part of its property,
or the making by such Person of any general assignment for the benefit of
creditors, or the failure by such Person generally to pay its debts as such
debts become due, or the taking of action by such Person in furtherance of any
of the foregoing.
"INSURANCE POLICY" means, with respect to a Receivable, an insurance policy
covering physical damage, credit life, credit disability, theft, mechanical
breakdown or any similar event relating to the related Financed Vehicle or
Obligor.
"LETTER OF CREDIT BANK" means any Person who has provided a Servicer Letter
of Credit pursuant to Section 4.02(b).
"LIEN" means any security interest, lien, charge, pledge, equity or
encumbrance of any kind other than tax liens, mechanics' liens and any liens
that attach to a Receivable or any property, as the context may require, by
operation of law.
"LIQUIDATED RECEIVABLE" means a Receivable that (i) has been the subject of
a Prepayment in full or (ii) has been paid in full or the final amounts in
respect of such payment have been paid with respect to a Defaulted Receivable,
regardless of whether all or any part of such payment has been made by the
Obligor under such Receivable, the Transferor pursuant to this Agreement, AHFC
pursuant to the Receivables Purchase Agreement, the Servicer pursuant hereto, an
insurer pursuant to an Insurance Policy or otherwise.
"LIQUIDATION EXPENSES" means, with respect to a Defaulted Receivable, the
amount charged by the Servicer, in accordance with its customary servicing
procedures, to or for its account for repossessing, refurbishing and disposing
of the related Financed Vehicle and other out-of-pocket costs related to such
liquidation.
"LIQUIDATION PROCEEDS" means, with respect to a Defaulted Receivable, all
amounts realized with respect to such Receivable from whatever sources
(including, without limitation, proceeds of any Insurance Policy), net of
amounts that are required by law or such Receivable to be refunded to the
related Obligor.
"MONTHLY PAYMENT" means, with respect to any Receivable, the amount of each
fixed monthly payment payable to the obligee under such Receivable in accordance
with the terms thereof, net of any portion of such monthly payment that
represents late payment charges, extension fees or collections allocable to
payments to be made by Obligors for payment of insurance premiums, extended
service contracts or similar items.
"MOODY'S" means Moody's Investors Service, Inc., or its successor.
"MOTOR VEHICLE RECEIVABLES" shall have the meaning specified in Section
5.03(b)(ii)(A).
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"NET LIQUIDATION PROCEEDS" means, with respect to a Defaulted Receivable,
Liquidation Proceeds less Liquidation Expenses.
"NONRECOVERABLE ADVANCE" shall have the meaning specified in Section
4.04(c).
"NOTE AMOUNT" means, with respect to any Distribution Date, the aggregate
outstanding principal amount of the Notes after giving effect to payments of
principal made on the Notes on such Distribution Date.
"NOTE DISTRIBUTABLE AMOUNT" means, with respect to any Distribution Date,
the sum of the Note Interest Distributable Amount and the Note Principal
Distributable Amount for such Distribution Date.
"NOTE DISTRIBUTION ACCOUNT" means the account designated as such, and
established and maintained pursuant to Section 4.01.
"NOTE INTEREST CARRYOVER SHORTFALL" means, with respect to any Distribution
Date and a Class of Notes, the excess, if any, of the sum of the Note Monthly
Interest Distributable Amount for such class for the preceding Distribution Date
over the amount in respect of interest that is actually paid on the Notes on
such preceding Distribution Date, plus interest on the Note Interest Carryover
Shortfall, to the extent permitted by law, at the respective Interest Rates
borne by each Class of Notes for the related Accrual Period.
"NOTE INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of the Note Monthly Interest Distributable Amount for
such Distribution Date and the Note Interest Carryover Shortfall for such
Distribution Date. For all purposes of this Agreement and the other Basic
Documents, interest with respect to the Class A-3 and Class A-4 Notes shall be
computed on the basis of a 360-day year consisting of twelve 30-day months; and
interest with respect to the Class A-1 and the Class A-2 Notes shall be computed
on the basis of the actual number of days in each applicable Accrual Period,
divided by 360.
"NOTE MONTHLY INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, interest accrued for the related Accrual Period at the
related Interest Rate for each Class of Notes on the Outstanding Amount of the
Notes of each such Class on the immediately preceding Distribution Date (or, in
the case of the first Distribution Date, the original principal amount of each
such Class of Notes), after giving effect to all distributions of principal to
the Noteholders of each such Class on or prior to such Distribution Date.
"NOTE POOL FACTOR" means, with respect to each Class of Notes as of any
Distribution Date, a seven-digit decimal figure equal to the Outstanding Amount
of such Class of Notes as of such Distribution Date (after giving effect to any
reductions thereof to be made on such Distribution Date) divided by the original
outstanding principal balance of such Class of Notes.
"NOTE PRINCIPAL CARRYOVER SHORTFALL" means, with respect to any
Distribution Date, the excess, if any, of the sum of the Note Monthly Principal
Distributable Amount and any outstanding Note Principal Carryover Shortfall as
of the close of the immediately preceding Distribution Date, over the amount in
respect of principal that is actually paid as principal of the Notes on such
Distribution Date.
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"NOTE PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of the Principal Distributable Amount for such
Distribution Date, any Note Principal Carryover Shortfall as of the close of the
immediately preceding Distribution Date and, on the Final Scheduled Distribution
Date for a Class of Notes or the Distribution Date as of which all of the
Receivables are to be purchased pursuant to Section 8.01, the amount necessary
(after giving effect to all amounts allocable to principal required to be
deposited in the Note Distribution Account on such Distribution Date) to reduce
the Outstanding Amount of each related Class of Notes to zero; provided,
however, that the Note Principal Distributable Amount with respect to a Class of
Notes shall not exceed the Outstanding Amount of such Class of Notes.
"NOTES" means the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes
and the Class A-4 Notes.
"OBLIGOR" on a Receivable means the purchaser or co-purchasers of the
related Financed Vehicle purchased in part or in whole by the execution and
delivery of a retail installment contract or any other Person who owes or may be
liable for payments under such retail installment contract.
"OFFERED SECURITIES" shall have the meaning specified in Section
5.03(b)(ii)(B).
"OFFICERS' CERTIFICATE" means a certificate signed by the president, any
Vice President, the treasurer or the secretary of the Transferor or the
Servicer, as the case may be, and delivered to the Trustee.
"OPINION OF COUNSEL" means a written opinion of counsel (who, in the case
of counsel to the Transferor or the Servicer, may be an employee of or outside
counsel to the Transferor or the Servicer), which counsel shall be acceptable to
the Trustee.
"ORIGINAL CERTIFICATE BALANCE" means $___________________________________.
"ORIGINAL POOL BALANCE" means $__________.
"OUTSTANDING ADVANCES" means, with respect to a Receivable and the last day
of a Collection Period, the sum of all Advances made as of or prior to such
date, minus all payments or collections as of or prior to such date which are
specified in Section 4.04(b) as applied to reimburse all unpaid Advances with
respect to such Receivable.
"OUTSTANDING INTEREST ADVANCES" means, as of the last day of a Collection
Period with respect to a Receivable, the portion of Outstanding Advances
allocable to interest.
"OUTSTANDING PRINCIPAL ADVANCES" means, as of the last day of a Collection
Period with respect to a Receivable, the portion of Outstanding Advances
allocable to principal.
"OVERDUE PAYMENT" shall have the meaning specified in Section 4.03(a).
"OWNER TRUST ESTATE" shall have the meaning specified in the Trust
Agreement.
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"OWNER TRUSTEE" means the Person acting as Owner Trustee under the Trust
Agreement, its successors in interest and any successor owner trustee under the
Trust Agreement.
"PAYAHEAD ACCOUNT" means the account designated as such and established and
maintained pursuant to Section 4.01.
"PAYMENT AHEAD" means, with respect to a Precomputed Receivable and a
Collection Period, any Excess Payment (not representing prepayment in full of
such Precomputed Receivable) which the Servicer, in accordance with its
customary servicing practices, will apply towards the payment of Scheduled
Payments due in one or more future Collection Periods.
"PERCENTAGE INTERESTS" shall have the meaning specified in the Trust
Agreement.
"PERMITTED INVESTMENTS" means, at any time, any one or more of the
following obligations and securities:
(i) obligations of, and obligations fully guaranteed as to timely
payment of principal and interest by, the United States or any agency
thereof, provided such obligations are backed by the full faith and credit
of the United States;
(ii) general obligations of or obligations guaranteed by FNMA, any
state of the United States, the District of Columbia or the Commonwealth of
Puerto Rico then rated the highest available credit rating of each Rating
Agency for such obligations;
(iii) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States or any state
thereof, the District of Columbia or the Commonwealth of Puerto Rico, so
long as at the time of such investment or contractual commitment providing
for such investment either the long-term unsecured debt of such corporation
has the highest available credit rating from each Rating Agency for such
obligations or the commercial paper or other short-term debt which is then
rated has the highest available credit rating of each Rating Agency for such
obligations;
(iv) certificates of deposit issued by any depository institution or
trust company (including the Trustee) incorporated under the laws of the
United States or any state thereof, the District of Columbia or the
Commonwealth of Puerto Rico and subject to supervision and examination by
banking authorities of one or more of such jurisdictions, provided that the
short-term unsecured debt obligations of such depository institution or
trust company has the highest available credit rating of each Rating Agency
for such obligations;
(v) certificates of deposit issued by any bank, trust company, savings
bank or other savings institution and fully insured by the FDIC;
(vi) repurchase obligations held by the Trustee that are acceptable to
the Trustee with respect to any security described in clauses (i) or (ii)
hereof or any other security issued or guaranteed by any other agency or
instrumentality of the United States, in either case entered into with a
federal agency or a depository institution or trust company (acting as
principal) described in clause (iv) above;
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(vii) any mutual fund, money market fund, common trust fund or other
pooled investment vehicle, the assets of which are limited to instruments
that otherwise would constitute Permitted Investments hereunder and which
has the highest applicable credit rating by each Rating Agency;
(viii) such other investments acceptable to each Rating Agency in
writing as will not result in the qualification, downgrading or withdrawal
of the rating then assigned to any Rated Securities by such Rating Agency;
provided that each of the foregoing investments shall mature no later than the
Deposit Date immediately following the date of purchase (other than in the case
of the investment of monies in instruments of which the entity at which the
related Account or the Certificate Distribution Account, as the case may be, is
located is the obligor, which may mature on the related Distribution Date), and
shall be required to be held to such maturity.
Notwithstanding anything to the contrary contained in this definition, (a)
no Permitted Investment may be purchased at a premium, and (b) no obligation or
security is a "Permitted Investment" unless (i) the Trustee has Control over
such obligation or security and (ii) at the time such obligation or security was
delivered to the Trustee or the Trustee became the related Entitlement Holder,
the Trustee did not have notice of any adverse claim with respect thereto within
the meaning of Section 8-105 of the UCC.
For purposes of this definition, any reference to the highest available
credit rating of an obligation shall mean the highest available credit rating
for such obligation, or such lower credit rating (as approved in writing by each
Rating Agency) as will not result in the qualification, downgrading or
withdrawal of the rating then assigned to any Rated Securities by such Rating
Agency.
"PERSON" means any legal person, including any individual, corporation,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"POOL BALANCE" means, as of any date, the aggregate Principal Balance of the
Receivables (exclusive of all Administrative Receivables for which the Servicer
has paid the Administrative Purchase Payment, Warranty Receivables for which the
Transferor has paid the Warranty Purchase Payment and Defaulted Receivables) as
of the close of business on such date.
"PRECOMPUTED ADVANCE" shall have the meaning specified in Section 4.04(a).
"PRECOMPUTED RECEIVABLE" means any Actuarial Receivable or Rule of 78s
Receivable.
"PREPAYMENT" means (i) with respect to any Precomputed Receivable, any
Excess Payment other than a Payment Ahead or (ii) with respect to any Simple
Interest Receivable, any prepayment, whether in part or in full, in respect of
such Simple Interest Receivable.
"PREPAYMENT SURPLUS" means, with respect to any Distribution Date on which a
Prepayment is to be applied with respect to a Precomputed Receivable, that
portion of such Prepayment, net of any Rebate, which is not attributable to
principal in accordance with the
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actuarial method, net of one month's interest at the Weighted Average Interest
Rate on the Principal Balance of such Receivable as of the first day of the
related Collection Period.
"PRINCIPAL BALANCE" means, with respect to any Receivable as of any date,
the Amount Financed minus the sum of the following amounts: (i) in the case of a
Precomputed Receivable, that portion of all Scheduled Payments due on or prior
to such date allocable to principal, computed in accordance with the actuarial
method, (ii) in the case of a Simple Interest Receivable, that portion of all
Scheduled Payments actually received on or prior to such date allocable to
principal, computed in accordance with the simple interest method, (iii) any
Warranty Purchase Payment or Administrative Purchase Payment with respect to
such Receivable allocable to principal and (iv) any Prepayments or other
payments applied to reduce the unpaid principal balance of such Receivable.
"PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any Distribution
Date, the sum of the following amounts (i) in the case of (a) Precomputed
Receivables, the principal portion of all Scheduled Payments due during the
related Collection Period, computed in accordance with the actuarial method and
(b) Simple Interest Receivables, the principal portion of all Scheduled Payments
actually received during the related Collection Period, computed in accordance
with the simple interest method, (ii) the principal portion of all Prepayments
received during such Collection Period (to the extent such amounts are not
included in clause (i) above) and (iii) the Principal Balance of each Receivable
that became an Administrative Receivable, a Warranty Receivable or a Defaulted
Receivable during such Collection Period (to the extent such amounts are not
included in clauses (i) or (ii) above).
"PRINCIPAL PAYMENT AMOUNT" means, with respect to any Distribution Date, the
lesser of (i) the Note Principal Distributable Amount and (ii) the Available
Amount remaining after all Trust Fees and Expenses have been paid and after
Noteholders have been paid the Note Interest Distributable Amount.
"RATED SECURITIES" means each Class of Securities that has been rated by a
Rating Agency at the request of the Transferor.
"RATING AGENCY" means Fitch, Moody's and Standard & Poor's.
"RATING AGENCY CONDITION" means, with respect to any action, that each
Rating Agency shall have been given ten days' (or such shorter period as shall
be acceptable to each Rating Agency) prior notice thereof and that each Rating
Agency shall have notified the Transferor, the Servicer and the Trustees in
writing that such action will not result in a reduction or withdrawal of the
then current rating of the Rated Securities.
"REBATE" means, with respect to a Precomputed Receivable and any date, the
rebate, calculated in accordance with the actuarial method, under such
Receivable that is or would be payable to the related Obligor for unearned
finance charges or any other charges rebatable to the Obligor if such Obligor
were to prepay such Receivable in full on such date.
"RECEIVABLE" means any retail installment contract executed by an Obligor in
respect of a Financed Vehicle, and all proceeds thereof and payments thereunder,
which Receivable shall be identified in a Schedule of Receivables.
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"RECEIVABLE FILES" means the documents specified in Section 2.02.
"RECEIVABLES PURCHASE AGREEMENT" means the receivables purchase agreement,
dated as of January __, 1999, between AHFC and the Transferor, as amended or
supplemented from time to time.
"RELEASED ADMINISTRATIVE AMOUNT" means, with respect to a Distribution Date
and to an Administrative Receivable, the Deferred Prepayment, if any, for such
Administrative Receivable.
"RELEASED WARRANTY AMOUNT" means, with respect to a Distribution Date and to
a Warranty Receivable, the Deferred Prepayment, if any, for such Warranty
Receivable.
"REQUIRED RATE" means the sum of the Weighted Average Interest Rate and the
Servicing Fee Rate.
"REQUIRED DEPOSIT RATING" means the short-term credit rating of the related
entity is at least equal to Prime-1 by Moody's and A-1+ by Standard & Poor's.
"REQUIRED SERVICER RATING" means, with respect to the Servicer, that the
then short-term unsecured debt obligations of the Servicer are rated at least
equal to Prime-1 by Moody's and A-1 by Standard & Poor's.
"RESERVE FUND" means the account designated as such, and established and
maintained pursuant to Section 4.01.
"RESERVE FUND INITIAL DEPOSIT" means the initial deposit of cash in the
amount of $__________ made by the Transferor into the Reserve Fund on the
Closing Date.
"RESERVE FUND PROPERTY" means, the Reserve Fund Initial Deposit and all
proceeds thereof and all other amounts deposited in or credited to the Reserve
Fund from time to time under this Agreement, all Permitted Investments made with
amounts on deposit therein, all earnings and distributions thereon and proceeds
thereof (other than proceeds constituting net investment earnings attributable
to the Reserve Fund Property).
"RESPONSIBLE OFFICER" means, in the case of the Indenture Trustee, any
officer within the Corporate Trust Office of the Indenture Trustee, including
any Principal, Managing Director, Vice President, assistant Vice President,
assistant treasurer, assistant secretary or any other officer of the Indenture
Trustee customarily performing functions similar to those performed by any of
the above designated officers and also, with respect to a particular matter, any
other officer to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject and, with respect to
the Owner Trustee, any officer in the Corporate Trust Administration Department
of the Owner Trustee with direct responsibility for the administration of the
Trust Agreement and the Basic Documents on behalf of the Owner Trustee.
"RETAIL INSTALLMENT CONTRACT" means a retail installment sale contract
and/or a conditional sale agreement.
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"RULE OF 78S RECEIVABLE" means any Receivable which provides for the
allocation of payments according to the "sum of periodic balances" or "sum of
monthly payments" method.
"SCHEDULE OF RECEIVABLES" means the schedule of Receivables attached as
Schedule A to this Agreement, as it may be amended from time to time.
"SCHEDULED PAYMENT" means, with respect to any Distribution Date and to a
Receivable, the payment set forth in such Receivable as due from the Obligor in
the related Collection Period; provided, however, that in the case of the first
Collection Period, the Scheduled Payment shall include all such payments due
from the Obligor on or after the Cutoff Date.
"SCHEDULED SURPLUS" means, with respect to any Distribution Date for any
Receivable having an APR which exceeds the Required Rate, the product of (i) the
interest portion of the related Scheduled Payment (determined in accordance with
the actuarial method if such Receivable is a Precomputed Receivable) and (ii)
the remainder of (a) one minus (b) a fraction, the numerator of which equals the
Required Rate and the denominator of which equals such APR.
"SECURED OBLIGATIONS" means collectively, the payments to Securityholders
pursuant to Section 8.02 of the Indenture and Section 5.02 of the Trust
Agreement.
"SECURITIES" means the Notes and the Trust Certificates.
"SECURITY ENTITLEMENT" shall have the meaning specified in Section
8-102(a)(17) of the UCC.
"SECURITYHOLDERS" means the Noteholders and the Certificateholders.
"SERVICER" means AHFC, in its capacity as servicer of the Receivables
pursuant to this Agreement, and each successor thereto (in the same capacity)
pursuant to Section 6.03.
"SERVICER DEFAULT" shall have the meaning specified in Section 7.01.
"SERVICER LETTER OF CREDIT" means, if the Servicer desires to remit
collections on or in respect of the Receivables to the Collection Account on a
monthly basis upon satisfaction of the conditions described in Section
4.02(b)(ii), (i) an irrevocable letter of credit, issued by a Letter of Credit
Bank and naming the Indenture Trustee a beneficiary or (ii) a surety bond,
insurance policy or deposit of cash or securities satisfactory to the Indenture
Trustee, in each case, which is satisfactory to each Rating Agency.
"SERVICER'S CERTIFICATE" means an Officers' Certificate of the Servicer
delivered pursuant to Section 3.10, substantially in the form of Exhibit B.
"SERVICING FEE RATE" means 1.00% per annum.
"SIMPLE INTEREST ADVANCE" shall have the meaning specified in Section
4.04(a).
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"SIMPLE INTEREST RECEIVABLE" means any Receivable which provides for the
allocation of payments according to the "simple interest" method.
"SPECIFIED RESERVE FUND BALANCE" means, with respect to any Distribution
Date $_____________, except that, if on any Distribution Date (i) the average of
the Charge-off Rates for the three preceding Collection Periods exceeds ____% or
(ii) the average of the Delinquency Percentages for the three preceding
Collection Periods exceeds ____%, then the Specified Reserve Fund Balance will
be an amount equal to a specified percentage of the Pool Balance as of the last
day of the immediately preceding Collection Period. Such percentage shall be
determined by deducting from ____% the following fraction, expressed as a
percentage: (a) one minus (b) a fraction, the numerator of which is the
outstanding principal amount of the Notes with respect to such Distribution Date
and the denominator of which is such Pool Balance. Notwithstanding the
foregoing, in no event will the Specified Reserve Fund Balance be more than
$_____________ or more than the outstanding principal amount of the Notes or
less than $_____________. As of any Distribution Date, the amount of funds
actually on deposit in the Reserve Fund may, in certain circumstances, be less
than the Specific Reserve Fund Balance.
"STANDARD & POOR'S" means Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc., or its successor.
"SUCCESSOR SERVICER" means any entity appointed as a successor to the
Servicer pursuant to Section 7.02.
"SUPPLEMENTAL SERVICING FEE" means any interest earned on investment of the
monies on deposit in the Accounts (other than the Yield Supplement Account and
the Reserve Fund) during a Collection Period, net of any investment expenses and
losses from such investments, plus all late fees, prepayment charges and other
administrative fees and expenses or similar charges allowed by applicable law
with respect to the Receivables, including, in the case of a Rule of 78s
Receivable and that is prepaid in full, the difference between the Principal
Balance of a Rule of 78s Receivable, minus the Principal Balance of such
Receivable computed according to the actuarial method (plus accrued interest to
the date of prepayment), received by the Servicer during such Collection Period.
"TOTAL SERVICING FEE" means the sum of the Basic Servicing Fee and the
Supplemental Servicing Fee.
"TRANSFEROR" means AHRC, in its capacity as Transferor of the Receivables
under this Agreement, and each successor thereto (in the same capacity) pursuant
to Section 5.03.
"TRUST" means the Issuer.
"TRUST AGREEMENT" means the trust agreement, dated as of June 16, 1998, as
amended and restated, dated as of ________, 199_, between the Depositor and the
Owner Trustee.
"TRUST FEES AND EXPENSES" means all accrued and unpaid Trustees' fees and
other administrative fees of the Trust.
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"TRUSTEE" means either the Owner Trustee or the Indenture Trustee, as the
context requires.
"TRUSTEES" means the Owner Trustee and the Indenture Trustee.
"UCC" means the Uniform Commercial Code as in effect in the respective
jurisdiction.
"UNITED STATES" means the United States of America.
"VICE PRESIDENT" of any Person means any vice president of such Person,
whether or not designated by a number or words before or after the title "Vice
President", who is a duly elected officer of such Person.
"WARRANTY PURCHASE PAYMENT" means, with respect to a Distribution Date and
to a Warranty Receivable repurchased by the Transferor as of the end of the
related Collection Period, which Receivable is (i) a Precomputed Receivable, (a)
the sum of (1) all Scheduled Payments on such Receivable due after the last day
of such Collection Period, (2) all past due Scheduled Payments for which an
Advance has not been made, (3) all Outstanding Advances made in respect of such
Receivable and (4) an amount equal to any reimbursement of Outstanding Advances
made pursuant to the first sentence of Section 4.04(c) with respect to such
Receivable minus (b) the sum of (1) all Payments Ahead in respect of such
Warranty Receivable held by the Servicer or on deposit in the Payahead Account,
(2) any Rebate and (3) any proceeds of the liquidation of such Receivable
previously received (to the extent applied to reduce the Principal Balance of
such Receivable) or (ii) a Simple Interest Receivable, the sum of (a) the unpaid
principal balance owed by the related Obligor in respect of such Receivable and
(b) interest on such unpaid principal balance at a rate equal to the sum of the
Required Rate to the last day of such Collection Period.
"WARRANTY RECEIVABLE" means a Receivable which the Transferor is required to
repurchase pursuant to Section 2.04.
"WEIGHTED AVERAGE INTEREST RATE" means, with respect to any Collection
Period and the related Distribution Date, a per annum rate equal to (i) the sum
of (a) the product of the Interest Rate for each outstanding Class of Notes and
the aggregate principal amount of such Class of Notes as of the immediately
preceding Distribution Date (or, in the case of the first Distribution Date, the
aggregate initial principal amount of the Notes) and (b) the product of the
Certificate Rate and the Certificate Balance as of the immediately preceding
Distribution Date (or, in the case of the first Distribution Date, the Original
Certificate Balance) divided by (ii) the sum of the aggregate principal amount
of the Notes and the Certificate Balance as of the immediately preceding
Distribution Date (or, in the case of the first Distribution Date, the aggregate
initial principal amount of the Notes and the Original Certificate Balance), in
each case after giving effect to any principal payment made on such preceding
Distribution Date.
"YIELD SUPPLEMENT ACCOUNT" means the account designated as such, and
established and maintained pursuant to Section 4.01.
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"YIELD SUPPLEMENT ACCOUNT DEPOSIT" means the initial deposit of cash in the
amount of $____________________ made by the Transferor into the Yield Supplement
Account on the Closing Date.
"YIELD SUPPLEMENT AMOUNT" means, with respect to any Collection Period and
the related Deposit Date, the aggregate amount by which one month's interest on
the Principal Balance as of the first day of such Collection Period of each
Discount Receivable (other than a Discount Receivable that is a Defaulted
Receivable) at a rate equal to the Required Rate, exceeds one month's interest
on such Principal Balance at the APR of each such Receivable.
"YIELD SUPPLEMENT WITHDRAWAL AMOUNT" means, with respect to any Collection
Period and the related Deposit Date, the sum of (i) the Yield Supplement Amount
and (ii) after giving effect to the withdrawal of the Yield Supplement Amount,
the amount by which the amount on deposit in the Yield Supplement Account
exceeds the maximum amount required to be on deposit in the Yield Supplement
Account on the immediately succeeding Distribution Date.
Section 1.02. OTHER DEFINITIONAL PROVISIONS.
(a) Capitalized terms used herein that are not otherwise defined herein
shall have the meanings ascribed thereto in the Indenture.
(b) All terms defined in this Agreement shall have the defined meanings when
used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
Section 1.03. INTERPRETIVE PROVISIONS.
(a) For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires, (i) terms used herein
include, as appropriate, all genders and the plural as well as the singular,
(ii) references to words such as "herein", "hereof" and the like shall refer to
this Agreement as a whole and not to any particular part, article or section
within this Agreement, (iii) references to a section such as "Section 1.01" and
the like shall refer to the applicable section of this Agreement, (iv) the term
"include" and all variations thereof shall mean "include without limitation",
(v) the term "or" shall include "and/or", and (vi) the term "proceeds" shall
have the meaning set forth in the applicable UCC.
(b) As used in this Agreement and in any certificate or other document made
or delivered pursuant hereto or thereto, accounting terms not defined in this
Agreement or in any such certificate or other document, and accounting terms
partly defined in this Agreement or in any such certificate or other document to
the extent not defined, shall have the respective meanings given to them under
generally accepted accounting principles. To the extent that the definitions of
accounting terms in this Agreement or in any such certificate or other document
are inconsistent with the meanings of such terms under generally accepted
accounting principles, the definitions contained in this Agreement or in any
such certificate or other document shall control.
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ARTICLE TWO
CONVEYANCE OF RECEIVABLES; CUSTODY OF RECEIVABLES FILES
Section 2.01. CONVEYANCE OF RECEIVABLES.
(a) In consideration of the Issuer's delivery to or upon the order of the
Transferor of the Certificates and $__________, less an amount equal to the
Reserve Fund Initial Deposit to be deposited to the Reserve Fund and the Yield
Supplement Account Deposit to be deposited to the Yield Supplement Account, each
on the Closing Date, the Transferor does hereby sell, transfer, assign, set over
and otherwise convey to the Issuer, without recourse (subject to the obligations
of the Transferor set forth herein), all right, title and interest of the
Transferor in and to:
(i) the Receivables and all monies due thereon or paid thereunder or in
respect thereof (including proceeds of the repurchase of Receivables by the
Transferor pursuant to Section 2.04 or 8.01 or the purchase of Receivables
by the Servicer pursuant to Section 3.08 or 8.01) on or after the Cutoff
Date;
(ii) the security interests in the Financed Vehicles;
(iii) any proceeds of any physical damage insurance policies covering
the Financed Vehicles and in any proceeds of any credit life or credit
disability insurance policies relating to the Receivables or the Obligors;
(iv) any proceeds of Dealer Recourse;
(v) the Receivables Purchase Agreement, but not the obligations of the
Transferor thereunder;
(vi) the right to realize upon any property (including the right to
receive future Liquidation Proceeds) that shall have secured a Receivable
and have been repossessed by or on behalf of the Trustee;
(vii) all funds on deposit from time to time in the Accounts, including
the Reserve Fund Initial Deposit and the Yield Supplement Account Deposit,
and in all investments and proceeds thereof (including all income thereon);
(viii) any Servicer Letter of Credit; and
(ix) the proceeds of any and all of the foregoing.
(b) The parties hereto intend that the conveyance hereunder be a sale. In
the event that the conveyance hereunder is not for any reason considered a sale,
the Transferor hereby grants to the Issuer a first priority perfected security
interest in all of its right, title and interest in, to and under the
Receivables, and all other property conveyed hereunder and all proceeds of any
of the foregoing. The parties hereto intend that this Agreement constitute a
security agreement under applicable law. Such grant is made to secure the
payment of all amounts payable hereunder.
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Section 2.02. CUSTODY OF RECEIVABLE FILES. To assure uniform quality in
servicing the Receivables and to reduce administrative costs, the Issuer hereby
revocably appoints the Servicer, and the Servicer accepts such appointment, to
act for the benefit of the Issuer and the Indenture Trustee as custodian of the
following documents or instruments which are hereby constructively delivered to
the Indenture Trustee, as pledgee of the Issuer, as of the Closing Date with
respect to each Receivable:
(a) the fully executed original of the Receivable;
(b) documents evidencing or related to any Insurance Policy;
(c) the original credit application of each Obligor, fully executed by
such Obligor on AHFC's customary form, or on a form approved by AHFC for
such application;
(d) the original certificate of title (or evidence that such
certificate of title has been applied for) or such documents that the
Servicer shall keep on file, in accordance with its customary procedures,
evidencing the security interest in the related Financed Vehicle; and
(e) any and all other documents that the Transferor or the Servicer, as
the case may be, shall keep on file, in accordance with its customary
procedures, relating to such Receivable or the related Obligor or Financed
Vehicle.
Section 2.03. REPRESENTATIONS AND WARRANTIES OF TRANSFEROR AS TO THE
RECEIVABLES. The Transferor makes the following representations and warranties
as to the Receivables on which the Issuer shall rely in acquiring the
Receivables. Such representations and warranties speak as of the execution and
delivery of this Agreement and as of the Closing Date, but shall survive the
sale, transfer and assignment of the Receivables to the Issuer and the pledge
thereof to the Indenture Trustee.
(a) CHARACTERISTICS OF RECEIVABLES. Each Receivable (i) shall have been
originated in the United States by a Dealer for the retail sale of the
related Financed Vehicle in the ordinary course of such Dealer's business,
shall have been fully and properly executed by the parties thereto, shall
have been purchased by AHFC from such Dealer under an existing agreement
with AHFC, shall have been validly assigned by such Dealer to AHFC in
accordance with the terms of such agreement and shall have been subsequently
sold by AHFC to the Transferor pursuant to the Receivables Purchase
Agreement, (ii) shall have created or shall create a valid, subsisting and
enforceable first priority security interest in favor of AHFC in the related
Financed Vehicle, which security interest has been assigned by AHFC to the
Transferor and shall be assignable, and shall be so assigned, by the
Transferor to the Owner Trustee, (iii) shall contain customary and
enforceable provisions such that the rights and remedies of the holder
thereof shall be adequate for realization against the collateral of the
benefits of the security, (iv) shall, except as otherwise provided in this
Agreement, provide for level Monthly Payments (provided that the payment in
the first or last month in the life of the Receivable may be minimally
different from the level payment) that fully amortize the
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Amount Financed over its original term and shall provide for a finance
charge or shall yield interest at its APR, (v) shall provide for, in the
event that such Receivable is prepaid, a prepayment that fully pays the
Principal Balance and includes accrued but unpaid interest at least through
the date of prepayment in an amount calculated by using an interest rate at
least equal to its APR, (vi) shall have an Obligor that is not a federal,
state or local governmental entity and (vii) is a retail installment
contract.
(b) SCHEDULE OF RECEIVABLES. The information set forth in the Schedule
of Receivables shall be true and correct in all material respects as of the
opening of business on the Cutoff Date, and no selection procedures believed
to be adverse to the Securityholders were utilized in selecting the
Receivables from those motor vehicle receivables of AHFC which met the
selection criteria set forth in this Agreement.
(c) COMPLIANCE WITH LAW. Each Receivable and each sale of the related
Financed Vehicle shall have complied at the time it was originated or made,
and shall comply at the time of execution of this Agreement, in all material
respects with all requirements of applicable federal, state and local laws,
and regulations thereunder, including usury laws, the Federal
Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit
Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection
Practices Act, the Federal Trade Commission Act, the Magnuson-Moss Warranty
Act, Federal Reserve Board Regulations B and Z, state adaptations of the
National Consumer Act and of the Uniform Consumer Credit Code and other
consumer credit, equal credit opportunity and disclosure laws.
(d) BINDING OBLIGATION. Each Receivable shall constitute the genuine,
legal, valid and binding payment obligation in writing of the related
Obligor, enforceable by the holder thereof in accordance with its terms,
except as enforceability may be subject to or limited by bankruptcy,
insolvency, reorganization, moratorium, liquidation or other similar laws
affecting the enforcement of creditors' rights in general and by general
principles of equity, regardless of whether such enforceability shall be
considered in a proceeding in equity or at law.
(e) NO BANKRUPT OBLIGORS. According to the records of the Transferor,
as of the Cutoff Date, no Obligor is the subject of a bankruptcy proceeding.
(f) SECURITY INTEREST IN FINANCED VEHICLES. According to the records of
the Transferor, as of the Cutoff Date, no Financed Vehicle has been
repossessed and not reinstated and immediately prior to the sale, assignment
and transfer thereof, each Receivable shall be secured by a validly
perfected first priority security interest in the related Financed Vehicle
in favor of AHFC as secured party or all necessary and appropriate action
with respect to such Receivable shall have been taken to perfect a first
priority security interest in such Financed Vehicle in favor of AHFC as
secured party.
(g) RECEIVABLES IN FORCE. No Receivable shall have been satisfied,
subordinated or rescinded, nor shall any Financed Vehicle have been released
in whole or in part from the lien granted by the related Receivable.
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(h) NO WAIVERS. No provision of a Receivable shall have been waived in
such a manner that such Receivable fails to meet all of the other
representations and warranties made by the Transferor herein with respect
thereto.
(i) NO AMENDMENTS. No Receivable shall have been amended or modified in
such a manner that the total number of Scheduled Payments has been increased
or that the related Amount Financed has been increased or that such
Receivable fails to meet all of the other representations and warranties
made by the Transferor herein with respect thereto.
(j) NO DEFENSES. No facts shall be known to the Transferor which would
give rise to any right of rescission, setoff, counterclaim or defense, nor
shall the same have been asserted or threatened, with respect to any
Receivable.
(k) NO LIENS. To the knowledge of the Transferor, no liens or claims
shall have been filed, including liens for work, labor or materials relating
to a Financed Vehicle, that shall be liens prior to, or equal or coordinate
with, the security interest in such Financed Vehicle granted by the related
Receivable.
(l) NO DEFAULTS. Except for payment defaults that, as of the Cutoff
Date, have been continuing for a period of not more than 30 days, no
default, breach, violation or event permitting acceleration under the terms
of any Receivable shall have occurred as of the Cutoff Date and no
continuing condition that with notice or the lapse of time would constitute
a default, breach, violation or event permitting acceleration under the
terms of any Receivable shall have arisen; and the Transferor shall not have
waived any of the foregoing except as otherwise permitted hereunder.
(m) INSURANCE. Pursuant to the Receivables, each Obligor has been
required to obtain physical damage insurance covering the related Financed
Vehicle and the Obligor is required under the terms of the related
Receivable to maintain such insurance.
(n) TITLE. It is the intention of the Transferor that the transfer and
assignment herein contemplated, taken as a whole, constitute a sale of the
Receivables from the Transferor to the Issuer and that the beneficial
interest in and title to the Receivables not be part of the debtor's estate
in the event of the filing of a bankruptcy petition by or against the
Transferor under any bankruptcy law. No Receivable has been sold,
transferred, assigned or pledged by the Transferor to any Person other than
the Issuer, and no provision of a Receivable shall have been waived, except
as provided in clause (h) above; immediately prior to the transfer and
assignment herein contemplated, the Transferor had good and marketable title
to each Receivable free and clear of all Liens and rights of others;
immediately upon the transfer and assignment thereof, the Issuer shall have
good and marketable title to each Receivable, free and clear of all Liens
and rights of others; and the transfer and assignment herein contemplated
has been perfected under the UCC.
(o) LAWFUL ASSIGNMENT. No Receivable shall have been originated in, or
shall be subject to the laws of, any jurisdiction under which the sale,
transfer and assignment
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of such Receivable under this Agreement or pursuant to a transfer of the
Securities shall be unlawful, void or voidable.
(p) ALL FILINGS MADE. All filings (including UCC filings) necessary in
any jurisdiction to give the Issuer a first priority perfected security
interest in the Receivables, and to give the Indenture Trustee a first
priority perfected security interest therein, shall have been made.
(q) ONE ORIGINAL. There shall be only one original executed copy of
each Receivable.
(r) CHATTEL PAPER. Each Receivable constitutes "chattel paper" as
defined in the UCC.
(s) MATURITY OF RECEIVABLES. Each Receivable shall have an original
maturity of not less than __ months nor greater than __ months and, as of
the Cutoff Date, a remaining maturity of not less than __ months nor greater
than __ months.
(t) FINANCE CHARGE. Each Receivable provides for the payment of a
finance charge calculated on the basis of an APR ranging from ____% to
_____%.
(u) PRINCIPAL BALANCE. Each Receivable had an original principal
balance of not less than $________ nor more than $________ and an average
unpaid principal balance, as of the Cutoff Date, of $____________.
(v) ORIGINATION. Each Receivable was originated on or before June 30,
1998.
(w) NO OVERDUE PAYMENTS. No Receivable shall have a Scheduled Payment
that is more than 30 days past due as of the Cutoff Date.
(x) LOCATION OF RECEIVABLE FILES. Each Receivable File shall be kept at
one of the locations listed in Schedule B hereto.
(y) FINANCED VEHICLES. Each Financed Vehicle shall be a new or used
Honda or Acura motor vehicle.
(z) ADDRESSES OF OBLIGORS. The Obligor under each Receivable had a
current billing address in the United States as of the Cutoff Date.
Section 2.04. REPURCHASE OF RECEIVABLES UPON BREACH. Upon discovery by
the Transferor, the Servicer, the Owner Trustee or the Indenture Trustee of a
breach of any of the representations and warranties of the Transferor set forth
in Section 2.03 that materially and adversely affects the interests of the
Issuer, the Trustees or the Securityholders in any Receivable, the party
discovering such breach shall give prompt written notice to the others. As of
the last day of the second Collection Period following the Collection Period in
which it discovers or receives notice of such breach (or, at the Transferor's
election, the last day of the first Collection Period following the Collection
Period in which it discovers or receives notice of such breach), the Transferor
shall, unless such breach shall have been cured in all material
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respects, repurchase such Receivable, and, if necessary, the Transferor shall
enforce the obligation of AHFC under the Receivables Purchase Agreement to
repurchase such Receivable from the Transferor. This repurchase obligation shall
apply to all representations and warranties of the Transferor contained in
Section 2.03 whether or not the Transferor has knowledge of the breach at the
time of the breach or at the time the representations and warranties were made.
In consideration of the repurchase of any such Receivable, on the related
Deposit Date, the Transferor shall remit the Warranty Purchase Payment in
respect of such Receivable to the Collection Account in the manner specified in
Section 4.05 and shall be entitled to receive the Released Warranty Amount. In
the event that, as of the date of execution and delivery of this Agreement, any
Liens or claims shall have been filed, including Liens for work, labor or
materials relating to a Financed Vehicle, that shall be prior to, or equal or
coordinate with, the lien granted by the related Receivable, which Liens or
claims shall not have been satisfied or otherwise released in full as of the
Closing Date, and such breach materially and adversely affects the interests of
the Issuer, the Trustees or the Securityholders in such Receivable, the
Transferor shall repurchase such Receivable on the terms and in the manner
specified above. Upon any such repurchase, the Issuer shall, without further
action, be deemed to transfer, assign, set-over and otherwise convey to the
Transferor, all right, title and interest of the Issuer in, to and under such
repurchased Receivable, all monies due or to become due with respect thereto and
all proceeds thereof. The Issuer and the Trustees shall execute such documents
and instruments of transfer and assignment and take such other actions as shall
be reasonably requested by the Transferor to effect the conveyance of such
Receivable pursuant to this Section. The sole remedy of the Issuer, the Trustees
and the Securityholders with respect to a breach of the Transferor's
representations and warranties pursuant to Section 2.03 or with respect to the
existence of any such Liens or claims shall be to require the Transferor to
repurchase the related Receivable pursuant to this Section and to enforce AHFC's
obligation to repurchase such Receivables from the Transferor pursuant to the
Receivables Purchase Agreement. Neither the Owner Trustee nor the Indenture
Trustee shall have any duty to conduct an affirmative investigation as to the
occurrence of any condition requiring the repurchase of any Receivable pursuant
to Section 2.04 or the eligibility of any Receivables for purposes of this
Agreement.
Section 2.05. DUTIES OF SERVICER AS CUSTODIAN.
(a) SAFEKEEPING. The Servicer, in its capacity as custodian, shall hold
the Receivable Files for the benefit of the Issuer and maintain such
accurate and complete accounts, records and computer systems pertaining to
each Receivable File as shall enable the Issuer to comply with this
Agreement. In performing its duties as custodian, the Servicer shall act
with reasonable care, using that degree of skill and attention that it
exercises with respect to the receivable files of comparable motor vehicle
receivables that the Servicer services for itself or others. The Servicer
shall conduct, or cause to be conducted, periodic examinations of the files
of all receivables owned or serviced by it which shall include the
Receivable Files held by it under this Agreement, and of the related
accounts, records and computer systems, in such a manner as shall enable the
Issuer or the Indenture Trustee to verify the accuracy of the Servicer's
record keeping. The Servicer shall promptly report to the Issuer and the
Indenture Trustee any failure on its part to hold the Receivable Files and
maintain its accounts, records and computer systems as herein provided and
promptly take appropriate action to remedy any such failure. Nothing herein
shall be deemed to require an initial review or any periodic review of the
Receivable Files by the Issuer or the Indenture Trustee.
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(b) MAINTENANCE OF AND ACCESS TO RECORDS. The Servicer shall maintain
each Receivable File solely in its capacity as Servicer at one of its
offices specified in Schedule B hereto or at such other office as shall be
specified to the Issuer and the Indenture Trustee by 30 days' prior written
notice. The Servicer shall make available to the Issuer and the Indenture
Trustee or its duly authorized representatives, attorneys or auditors the
Receivable Files and the related accounts, records and computer systems
maintained by the Servicer at such times as the Issuer and the Indenture
Trustee shall reasonably instruct.
(c) RELEASE OF DOCUMENTS. Upon instruction from the Indenture Trustee,
the Servicer shall release any document in the Receivable Files to the
Indenture Trustee or its agent or designee, as the case may be, at such
place or places as the Indenture Trustee may designate, as soon as
practicable. The Servicer shall not be responsible for any loss occasioned
by the failure of the Indenture Trustee to return any document or any delay
in doing so.
Section 2.06. INSTRUCTIONS; AUTHORITY TO ACT. The Servicer shall be deemed
to have received proper instructions with respect to the Receivable Files upon
its receipt of written instructions signed by a Responsible Officer of the
Indenture Trustee. A certified copy of a bylaw or of a resolution of the board
of directors of the Indenture Trustee shall constitute conclusive evidence of
the authority of any such Responsible Officer to act and shall be considered in
full force and effect until receipt by the Servicer of written notice to the
contrary given by the Indenture Trustee.
Section 2.07. INDEMNIFICATION BY CUSTODIAN. The Servicer, as custodian of
the Receivable Files, shall fully indemnify and hold harmless the Issuer and the
Trustees for any and all liabilities, obligations, losses, compensatory damages,
payments, costs or expenses of any kind whatsoever that may be imposed on,
incurred or asserted against the Issuer and the Trustees as the result of any
improper act or omission in any way relating to the maintenance and custody of
the Receivable Files by the Servicer, as custodian; provided, however, that the
Servicer shall not be liable for any portion of any such amount resulting from
the willful misfeasance, bad faith or negligence of the Owner Trustee or the
Indenture Trustee.
Section 2.08. EFFECTIVE PERIOD AND TERMINATION. The Servicer's
appointment as custodian of the Receivable Files shall become effective as of
the Cutoff Date and shall continue in full force and effect until terminated
pursuant to this Section. If the Servicer shall resign as Servicer pursuant to
Section 6.05 or if all of the rights and obligations of the Servicer have been
terminated pursuant to Section 7.02, the appointment of the Servicer as
custodian of the Receivable Files shall be terminated by the Indenture Trustee
or by the Holders of Notes evidencing not less than 25% of the Outstanding
Amount of the Notes or, with the consent of Holders of the Notes evidencing not
less than 25% of the Outstanding Amount of the Notes, by the Owner Trustee, in
the same manner as the Indenture Trustee or such Holders may terminate the
rights and obligations of the Servicer under Section 7.01. The Indenture Trustee
or, with the consent of the Indenture Trustee, the Owner Trustee may terminate
the Servicer's appointment as custodian of the Receivable Files with cause at
any time immediately upon written notification to the Servicer and, without
cause, upon 30 days' prior written notification by the Servicer. As soon as
practicable after any termination of such appointment, the Servicer shall
deliver the Receivable Files to the Indenture Trustee or its agent at such place
or places as the Indenture Trustee may reasonably designate. Notwithstanding the
termination of the Servicer as custodian
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of the Receivable Files, the Indenture Trustee agrees that upon any such
termination, the Indenture Trustee shall provide, or cause its agent to provide,
access to the Receivable Files to the Servicer for the purpose of carrying out
its duties and responsibilities with respect to the servicing of the Receivables
pursuant to this Agreement.
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ARTICLE THREE
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 3.01. DUTIES OF SERVICER. The Servicer, for the benefit of the
Issuer (to the extent provided herein), shall manage, service, administer and
make collections on the Receivables (other than Administrative Receivables and
Warranty Receivables) with reasonable care, using that degree of skill and
attention that the Servicer exercises with respect to all comparable motor
vehicle receivables that it services for itself or others. The Servicer's duties
shall include collection and posting of all payments, responding to inquiries of
Obligors or by federal, state or local government authorities with respect to
the Receivables, investigating delinquencies, sending payment coupons to
Obligors, reporting tax information to Obligors in accordance with its customary
practices, policing the collateral, accounting for collections and furnishing
monthly and annual statements to the Trustees with respect to distributions,
generating federal income tax information, making Advances and performing the
other duties specified herein. The Servicer shall follow its customary
standards, policies and procedures and shall have full power and authority,
acting alone, to do any and all things in connection with such managing,
servicing, administration and collection that it may deem necessary or
desirable. Without limiting the generality of the foregoing, the Servicer shall
be authorized and empowered to execute and deliver, on behalf of itself, the
Issuer, the Trustees, the Securityholders or any of them, any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge and all other comparable instruments, with respect to the Receivables
and the Financed Vehicles. The Servicer is hereby authorized to commence, in its
own name or in the name of the Issuer, a legal proceeding to enforce a Defaulted
Receivable pursuant to Section 3.04 or to commence or participate in a legal
proceeding (including without limitation a bankruptcy proceeding) relating to or
involving a Receivable, including a Defaulted Receivable. If the Servicer
commences or participates in such a legal proceeding in its own name, the Issuer
shall thereupon be deemed to have automatically assigned, solely for the purpose
of collection on behalf of the party retaining an interest in such Receivable,
such Receivable and the other property conveyed to the Issuer pursuant to
Section 2.01 with respect to such Receivable to the Servicer for purposes of
commencing or participating in any such proceeding as a party or claimant, and
the Servicer is authorized and empowered by the Issuer to execute and deliver in
the Servicer's name any notices, demands, claims, complaints, responses,
affidavits or other documents or instruments in connection with any such
proceeding. If in any enforcement suit or legal proceeding it shall be held that
the Servicer may not enforce a Receivable on the grounds that it shall not be a
real party in interest or a holder entitled to enforce such Receivable, the
Owner Trustee shall, at the Servicer's expense and written direction, take steps
to enforce such Receivable, including bring suit in its name or the name of the
Owner Trustee, the Indenture Trustee, the Noteholders or the Certificateholders.
The Owner Trustee shall furnish the Servicer with any powers of attorney and
other documents and take any other steps which the Servicer may deem necessary
or appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder.
Section 3.02. COLLECTION OF RECEIVABLE PAYMENTS. The Servicer shall make
reasonable efforts to collect all payments called for under the terms and
provisions of the Receivables as and when the same shall become due, and shall
follow such collection procedures as it follows with respect to all comparable
motor vehicle receivables that it services for itself or others. The Servicer
shall be authorized to grant extensions, rebates or adjustments on a Receivable
without
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the prior consent of the Owner Trustee. If, as a result of the extending of
payments in accordance with the customary servicing standards of the Servicer,
any Receivable will be outstanding later than the Final Scheduled Maturity Date
occurs, the Servicer shall be obligated to repurchase such Receivable pursuant
to Section 3.08. In addition, in the event that any such rescheduling or
extension of a Receivable modifies the terms of such Receivable in such a manner
as to constitute a cancellation of such Receivable and the creation of a new
motor vehicle receivable that results in a deemed exchange thereof within the
meaning of Section 1001 of the Code, the Servicer shall purchase such Receivable
pursuant to Section 3.08, and the receivable created shall not be included in
the Issuer. Notwithstanding the foregoing, extensions or modifications of the
payment schedule of a Receivable can be made only in accordance with the
customary servicing procedures of the Servicer, provided that the amount of any
extension fee charged in connection with the extension of a Receivable is
deposited into the Collection Account by the Servicer in accordance with Section
4.05(a). The Servicer may, in accordance with its customary servicing
procedures, waive any prepayment charge, late payment charge or any other fees
that may be collected in the ordinary course of servicing the Receivables.
Section 3.03. REBATES ON FULL PREPAYMENTS. In the event that the amount
of a full Prepayment by an Obligor under a Precomputed Receivable, after
adjustment for the applicable Rebate, is less than the amount that would be
payable under the actuarial method if a full Prepayment were made at the end of
the billing month under such Precomputed Receivable, either because the Rebate
calculated under the terms of such Precomputed Receivable is greater than the
amount calculable under the actuarial method or because the Servicer's customary
servicing procedure is to credit a greater Rebate, the Servicer, as part of its
servicing duties, shall remit such difference to the Trust by deposit into the
Collection Account pursuant to Section 4.05(a).
Section 3.04. REALIZATION UPON RECEIVABLES. On behalf of the Issuer, the
Servicer shall use its best efforts, consistent with its customary servicing
procedures, to repossess or otherwise comparably convert the ownership of any
Financed Vehicle that it has reasonably determined should be repossessed or
otherwise converted following a default under the Receivable secured by the
Financed Vehicle (and shall specify such Receivables to the Trustees no later
than the Determination Date following the end of the Collection Period in which
the Servicer shall have made such determination). The Servicer shall follow such
practices and procedures as it shall deem necessary or advisable and as shall be
customary and usual in its servicing of motor vehicle receivables, which
practices and procedures may include reasonable efforts to realize upon any
Dealer Recourse, selling the related Financed Vehicle at public or private sale
and other actions by the Servicer in order to realize upon such a Receivable.
The Servicer shall be entitled to recover its reasonable Liquidation Expenses
with respect to each Defaulted Receivable. All Net Liquidation Proceeds realized
in connection with any such action with respect to a Receivable shall be
deposited by the Servicer in the Collection Account in the manner specified in
Section 4.02(a). The foregoing is subject to the proviso that, in any case in
which the Financed Vehicle shall have suffered damage, the Servicer shall not
expend funds in connection with any repair or towards the repossession of such
Financed Vehicle unless it shall determine in its discretion that such repair
and/or repossession shall increase the Liquidation Proceeds of the related
Receivable by an amount greater than the amount of such expenses.
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Section 3.05. MAINTENANCE OF PHYSICAL DAMAGE INSURANCE POLICIES. The
Servicer shall, in accordance with its customary servicing procedures and
underwriting standards, require that each Obligor shall have obtained physical
damage insurance covering each Financed Vehicle as of the origination of the
related Receivable.
Section 3.06. MAINTENANCE OF SECURITY INTERESTS IN FINANCED VEHICLES. The
Servicer shall, in accordance with its customary servicing procedures and at its
own expense, take such steps as are necessary to maintain perfection of the
security interest created by each Receivable in the related Financed Vehicle.
The Servicer is hereby authorized to take such steps as are necessary to
reperfect such security interest on behalf of the Issuer in the event of the
relocation of a Financed Vehicle or for any other reason. In the event that the
assignment of a Receivable to the Issuer is insufficient, without a notation on
the related Financed Vehicle's certificate of title, to grant to the Issuer a
first priority perfected security interest in the related Financed Vehicle, the
Servicer hereby agrees to serve as the agent of the Issuer for the purpose of
perfecting the security interest of the Issuer in such Financed Vehicle and
agrees that the Servicer's listing as the secured party on the certificate of
title is solely in its capacity as agent of the Issuer.
Section 3.07. COVENANTS OF SERVICER. The Servicer makes the following
covenants on which the Issuer shall rely in accepting the Receivables in trust
pursuant to Section 2.01:
(a) LIENS IN FORCE. Except as otherwise contemplated by this Agreement,
the Servicer shall not release in whole or in part any Financed Vehicle from
the security interest securing the related Receivable.
(b) NO IMPAIRMENT. The Servicer shall do nothing to impair the rights
of the Issuer in the Receivables.
(c) NO AMENDMENTS. Subject to Section 3.02, the Servicer shall not
amend or otherwise modify any Receivable such that the total number of
Scheduled Payments is extended beyond the Final Scheduled Maturity Date, or
either the Amount Financed or the APR is altered.
Section 3.08. PURCHASE OF RECEIVABLES UPON BREACH. Upon discovery by the
Transferor, the Servicer, the Owner Trustee or the Indenture Trustee of a breach
of any of the covenants of the Servicer set forth in Section 3.07 that
materially and adversely affects the interests of the Issuer, the Trustees or
the Securityholders in any Receivable, or if an improper extension, rescheduling
or modification of a Receivable is made by the Servicer as described in Section
3.02, the party discovering such breach shall give prompt written notice to the
others. As of the last day of the second Collection Period following the
Collection Period in which it discovers or receives notice of such breach (or,
at the Servicer's election, the last day of the first Collection Period
following the Collection Period in which it discovers or receives notice of such
breach), the Servicer shall, unless such breach or impropriety shall have been
cured in all material respects, purchase from the Issuer such Receivable. In
consideration of the purchase of any such Receivable, on the related Deposit
Date the Servicer shall remit the Administrative Purchase Payment to the
Collection Account in the manner specified in Section 4.05, and shall be
entitled to receive the Released Administrative Amount. Upon such deposit of the
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Administrative Purchase Payment, the Servicer shall for all purposes of this
Agreement be deemed to have released all claims for reimbursement of Outstanding
Advances made in respect of such Receivable. The sole remedy of the Issuer, the
Trustees or the Securityholders against the Servicer with respect to a breach
pursuant to Section 3.02 or 3.07 shall be to require the Servicer to purchase
the related Receivables pursuant to this Section, except as otherwise provided
in Section 6.02. Neither the Owner Trustee nor the Indenture Trustee shall have
any duty to conduct any affirmative investigation as to the occurrence of any
condition requiring the repurchase of any Receivable pursuant to this Section.
Section 3.09. TOTAL SERVICING FEE; PAYMENT OF CERTAIN EXPENSES BY
SERVICER. As compensation for the performance of its obligations hereunder, the
Servicer shall be entitled to receive on each Distribution Date the Total
Servicing Fee. The Basic Servicing Fee in respect of a Collection Period shall
be calculated based on a 360 day year comprised of twelve 30-day months. Except
to the extent otherwise provided herein, the Servicer shall be required to pay
all expenses incurred by it in connection with its activities under this
Agreement (including fees and disbursements of the Trustees and independent
accountants, taxes imposed on the Servicer, expenses incurred in connection with
distributions and reports to Securityholders and all other fees and expenses not
expressly stated under this Agreement to be for the account of the
Securityholders).
Section 3.10. SERVICER'S CERTIFICATE. On or before each Determination
Date, the Servicer shall deliver to the Trustees and each Rating Agency a
Servicer's Certificate containing all information necessary to make the
distributions required by Sections 4.06 and 4.07 in respect of the related
Collection Period and all information necessary for the Trustees to send
statements to Securityholders pursuant to Section 4.10. The Servicer shall also
specify to the Trustees, no later than the Determination Date following the last
day of a Collection Period as of which the Transferor shall be required to
repurchase or the Servicer shall be required to purchase a Receivable, the
identity of any such Receivable and the identity of any Receivable which the
Servicer shall have determined to be a Defaulted Receivable during such
Collection Period. Receivables purchased or to be purchased by the Servicer or
the Transferor and Receivables as to which the Servicer has determined during
such Collection Period to be Defaulted Receivables and with respect to which
payment of the Administrative Purchase Payment or Warranty Purchase Payment has
been provided from whatever source as of last day of such Collection Period
shall be identified by the Transferor's account number with respect to such
Receivable (as specified in the Schedule of Receivables).
Section 3.11. ANNUAL STATEMENT AS TO COMPLIANCE; NOTICE OF DEFAULT.
(a) The Servicer shall deliver to the Trustees and each Rating Agency,
on or before June 30 of each year, beginning June 30, 1999, an Officer's
Certificate of the Servicer, stating that (i) a review of the activities of
the Servicer during the preceding 12-month period ended March 31 (or, if
applicable, such shorter period in the case of the first such Officer's
Certificate) and of its performance under this Agreement has been made under
such officer's supervision, and (ii) to such officer's knowledge, based on
such review, the Servicer has fulfilled all its obligations under this
Agreement throughout such period, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to
such officer and the nature and status thereof.
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(b) The Servicer shall deliver to the Trustees and each Rating Agency,
promptly after having obtained knowledge thereof, but in no event later than
five Business Days thereafter, an Officer's Certificate specifying the
nature and status of any event which with the giving of notice or lapse of
time, or both, would become a Servicer Default.
Section 3.12. ANNUAL ACCOUNTANTS' REPORT. The Servicer shall cause a firm
of independent accountants (who may also render other services to the Servicer
or to the Transferor) to deliver to the Trustees on or before June 30 of each
year, beginning with the June 30 that is at least six months after the Closing
Date, a report with respect to the preceding 12-month period ended March 31 (or,
if applicable, such shorter period in the case of the first such report) to the
effect that such accountants have examined certain records and documents
relating to the servicing of the Receivables under this Agreement (using
procedures specified in such report, which procedures shall be substantially in
compliance with generally accepted auditing standards) and that nothing has come
to their attention indicating that such servicing has not been conducted in
compliance with the customary servicing procedures of the Servicer, including
but not limited to the procedures set forth in this Agreement, except for (i)
such exceptions as such firm shall believe to be immaterial and (ii) such other
exceptions as shall be set forth in such report. Such report shall also indicate
that the firm is independent with respect to the Transferor and the Servicer
within the meaning of the Code of Professional Ethics of the American Institute
of Certified Public Accountants.
Section 3.13. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
RECEIVABLES. The Servicer shall provide to the Trustees reasonable access to the
documentation regarding the Receivables. The Servicer shall provide such access
to any Securityholder only in such cases where a Securityholder is required by
applicable statutes or regulations to review such documentation. In each case,
such access shall be afforded without charge but only upon reasonable request
and during normal business hours at the respective offices of the Servicer.
Nothing in this Section shall derogate from the obligation of the Servicer to
observe any applicable law prohibiting disclosure of information regarding the
Obligors, and the failure of the Servicer to provide access as provided in this
Section as a result of such obligation shall not constitute a breach of this
Section.
Section 3.14. AMENDMENTS TO SCHEDULE OF RECEIVABLES. If the Servicer,
during a Collection Period, assigns to a Receivable an account number that
differs from the original account number identifying such Receivable on the
Schedule of Receivables, the Servicer shall deliver to the Transferor and the
Trustees on or before the Distribution Date relating to such Collection Period
an amendment to the Schedule of Receivables reporting the newly assigned account
number, together with the old account number of each such Receivable. The first
such delivery of amendments to the Schedule of Receivables shall include monthly
amendments reporting account numbers appearing on the Schedule of Receivables
with the new account numbers assigned to such Receivables during any prior
Collection Period.
Section 3.15. REPORTS TO SECURITYHOLDERS AND RATING AGENCIES.
(a) At the expense of the Issuer, the Indenture Trustee shall provide
to any Note Owner and the Owner Trustee shall provide to any
Certificateholder who so requests in writing a copy of (i) any Servicer's
Certificate, (ii) any annual statement as to compliance described in
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Section 3.11(a), (iii) any annual accountants' report described in Section
3.12, (iv) any statement to Securityholder pursuant to Section 4.10, (v) the
Trust Agreement, (vi) the Indenture or (vii) this Agreement (without
Exhibits). The Indenture Trustee or the Owner Trustee, as applicable, may
require such Securityholder or Note Owner to pay a reasonable sum to cover
the cost of the Trustee's complying with such request.
(b) The Servicer shall forward to each Rating Agency a copy of each (i)
Servicer's Certificate, (ii) annual statement as to compliance described in
Section 3.11(a), (iii) Officer's Certificate of the Servicer described in
Section 3.11(b), (iv) annual accountants' report pursuant to Section 3.12,
(v) statement to Securityholders pursuant to Section 4.10 and (vi) other
report it may receive pursuant to this Agreement, the Trust Agreement or the
Indenture.
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ARTICLE FOUR
DISTRIBUTIONS; RESERVE FUND;
STATEMENTS TO SECURITYHOLDERS
Section 4.01. ESTABLISHMENT OF ACCOUNTS.
(a) The Servicer shall establish and maintain an Eligible Account with
and in the name of the Indenture Trustee for the benefit of (i) the
Securityholders (the "Collection Account"), (ii) the Noteholders (the "Note
Distribution Account"), (iii) the Noteholders (the "Reserve Fund"), (iv) the
Securityholders (the "Yield Supplement Account") and (v) the Securityholders
(the "Payahead Account"), in each case, bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
related Securityholders. Except as otherwise provided in this Agreement, in
the event that the Indenture Trustee is no longer an Eligible Institution,
the Servicer shall, with the assistance of the Indenture Trustee as
necessary, cause the Accounts to be moved to an Eligible Institution.
(b) To the extent permitted by applicable laws, rules and regulations,
all amounts held in (i) the Collection Account, the Note Distribution
Account, the Reserve Fund and the Yield Supplement Account shall be either
invested by the Indenture Trustee in Permitted Investments selected in
writing by the Servicer or maintained in cash and (ii) the Payahead Account
shall be either invested by the Indenture Trustee in investments defined in
clause (vii) of the definition of the term "Permitted Investments" selected
in writing by the Servicer or maintained in cash. Earnings on investment of
funds in the Accounts (other than the Yield Supplement Account and the
Reserve Fund) (net of losses and investment expenses) shall be paid to the
Servicer as part of the Supplemental Servicing Fee and any losses and
investment expenses shall be charged against the funds on deposit in the
related Account.
(i) Except as otherwise provided in Section 4.01(b), the Indenture
Trustee shall possess all right, title and interest in all funds on
deposit from time to time in the Accounts and in all proceeds thereof
(including all income thereon) and all such funds, investments,
proceeds and income shall be part of the Owner Trust Estate. The
Accounts shall be under the sole dominion and control of the Indenture
Trustee for the benefit of the Noteholders or the Securityholders, as
the case may be.
(ii) Notwithstanding anything else contained herein, the Servicer
agrees that each Account and the Certificate Distribution Account will
be established only with an Eligible Institution which agrees
substantially as follows: (A) it will comply with Entitlement Orders
related to such account issued by the Indenture Trustee without further
consent by the Servicer; (B) until termination of this Agreement, it
will not enter into any other agreement related to such account
pursuant to which it agrees to comply with Entitlement Orders of any
Person other than the Indenture Trustee; (C) all Account Property
delivered or credited to it in connection with such account and all
proceeds thereof will be promptly credited to such account; (D) it will
treat all Account Property as Financial Assets; and (E) all Account
Property will be physically delivered (accompanied by any required
endorsements) to, or credited to an account in the name of, the
Eligible Institution maintaining the related Account in accordance with
such Eligible Institution's
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customary procedures such that such Eligible Institution establishes a
Security Entitlement in favor of the Indenture Trustee with respect
thereto over which the Indenture Trustee (or such other Eligible
Institution) has Control.
(iii) The Servicer shall have the power, revocable by the
Indenture Trustee or by the Owner Trustee with the consent of the
Indenture Trustee, to instruct the Indenture Trustee to make
withdrawals and payments from the Accounts for the purpose of
permitting the Servicer or the Owner Trustee to carry out its
respective duties hereunder or permitting the Indenture Trustee to
carry out its duties under the Indenture.
Section 4.02. COLLECTIONS.
(a) The Servicer shall remit daily to the Collection Account all
payments received from or on behalf of the Obligors on or in respect of the
Receivables (other than, in the case of Precomputed Receivables, payments
constituting Payments Ahead) and all Net Liquidation Proceeds within two
Business Days after receipt thereof.
(b) Notwithstanding the provisions of Section 4.02(a), so long as AHFC
is acting as the Servicer, and subject to the conditions set forth below,
the Servicer may be permitted to make remittances of collections on a less
frequent basis than that specified in Section 4.02(a) upon compliance with
the specific terms and conditions set forth below in this Section and for so
long as such terms and conditions are fulfilled. Accordingly,
notwithstanding the provisions of Section 4.02(a), the Servicer will be
permitted to remit such collections to the Collection Account in immediately
available funds no later than 9:00 A.M., Los Angeles time, on each Deposit
Date but only for so long as (i)(A) the Servicer shall be AHFC, (B) except
as provided in clause (ii) below, the short-term credit rating of the
Servicer is at least equal to the Required Servicer Rating by each Rating
Agency and (C) no Servicer Default shall have occurred and be continuing,
provided, however, that immediately following the non-compliance with clause
(B) above or in the event that an event of the nature specified in Section
7.01(c) has occurred (notwithstanding any period of grace contained in such
clause), the Servicer shall remit such collections to the Collection Account
on a daily basis within two Business Days of receipt thereof, or (ii)(A) if
the conditions specified in clause (i)(A) and (C) above are satisfied, and
(B) the Servicer shall have obtained (1) a Servicer Letter of Credit issued
by a depository institution or insurance company, as the case may be, having
a short-term credit rating at least equal to the Required Servicer Rating
and providing that the Indenture Trustee may draw thereon in the event that
the Servicer fails to deposit collections into the Collection Account on a
monthly basis or (2) a surety bond, insurance policy or other deposit of
cash or securities satisfactory to the Indenture Trustee and each Rating
Agency; provided that in connection with clause (ii) above, the Servicer
provides to the Indenture Trustee, from each Rating Agency for which the
Servicer's then-current short-term credit rating is not at least equal to
the Required Servicer Rating for such Rating Agency, a letter to the effect
that the satisfaction of the conditions in clause (ii) above and allowing
the Servicer to make monthly deposits will not result in a qualification,
reduction or withdrawal of its then-current rating of any Class of Notes
and, if applicable, an Officer's Certificate from the Servicer to the effect
that the Servicer's then-current short-term credit rating is at least equal
to the Required Servicer Rating from each other Rating Agency, if any; and,
provided further, that if the Servicer shall have obtained a Servicer Letter
of Credit in accordance with clause (ii) above, the Servicer shall be
required to remit collections to
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the Collection Account on each Business Day to the extent that the aggregate
amount of collections described in Section 4.02(a) and received during such
Collection Period exceeds the Servicer Letter of Credit Amount. The
Indenture Trustee shall not be deemed to have knowledge of any event or
circumstance under clause (i)(C) above that would require daily remittance
by the Servicer to the Collection Account unless a Responsible Officer has
received notice of such event or circumstance from the Transferor or the
Servicer in an Officer's Certificate, from Securityholders as provided in
Section 7.01 or from the Letter of Credit Bank. For purposes of this Article
the phrase "payments made on behalf of Obligors" shall mean payments made by
Persons other than the Transferor, the Servicer or the Letter of Credit
Bank, if any.
Any funds held by the Servicer which it determines are to be remitted (or
any of its own funds which the Transferor or the Servicer determines to pay
to the Letter of Credit Bank) in respect of a failure previously to remit
collections which failure resulted in a payment under the Servicer Letter of
Credit, if any, shall not be remitted to the Collection Account, but shall
instead be paid immediately and directly to the Letter of Credit Bank. Any
such payment to the Letter of Credit Bank shall be accompanied by a copy of
the Servicer's Certificate related to the previous failure to remit funds
and an Officer's Certificate which includes a statement identifying, by
reference to the items in such related Servicer's Certificate, each
shortfall in Servicer remittances to which such payment relates. The
Servicer will also provide the Indenture Trustee with copies of each such
Servicer's Certificate and Officer's Certificate delivered with any such
payment to the Letter of Credit Bank.
(c) The Servicer shall deposit all Payments Ahead in the Payahead
Account within two Business Days after receipt thereof, which Payments Ahead
shall be transferred to the Collection Account pursuant to Section
4.06(a)(i). Notwithstanding the foregoing, so long as the Servicer is
permitted to remit collections to the Collection Account on a monthly basis
pursuant to Section 4.02(b), the Servicer will not be required to deposit
Payments Ahead in the Payahead Account within two Business Days after
receipt thereof but shall be entitled to retain such Payments Ahead, without
segregation from its other funds, until such time as the Servicer shall be
required to remit Applied Payments Ahead to the Collection Account pursuant
to Section 4.06(a)(ii). Commencing with the first day of the first
Collection Period that begins at least two Business Days after the day on
which the Servicer is no longer permitted to remit collections to the
Collection Account on a monthly basis pursuant to Section 4.02(b), and until
such time as the Servicer is once again permitted by Section 4.02(b) to
remit collections to the Collection Account on a monthly basis, all Payments
Ahead then held by the Servicer shall be immediately deposited into the
Payahead Account and all future Payments Ahead shall be remitted by the
Servicer to the Payahead Account within two Business Days after receipt
thereof.
Section 4.03. APPLICATION OF COLLECTIONS. On each Distribution Date, all
collections for the related Collection Period shall be applied by the Servicer
as follows:
(a) With respect to each Receivable (other than an Administrative
Receivable or a Warranty Receivable), payments made by or on behalf of the
Obligor which are not Supplemental Servicing Fees shall be applied first to
reimburse the Servicer for Outstanding Advances made with respect to such
Receivable (each such payment, an "Overdue Payment"). Next, the amount of
any payment in excess of Supplemental Servicing Fees and Outstanding
Advances with respect to such Receivable shall be applied to the Scheduled
Payment with
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respect to such Receivable. If the amount of such payment remaining after
the applications described in the two preceding sentences (i) equals
(together with any Deferred Prepayment) the unpaid principal balance of such
Receivable, it shall be applied to prepay the principal balance of such
Receivable, or (ii) is less than the unpaid principal balance of such
Receivable, it shall constitute an Excess Payment with respect to such
Receivable.
(b) With respect to each Administrative Receivable and Warranty
Receivable, payments made by or on behalf of the Obligor shall be applied in
the same manner, except that any Released Administrative Amount or Released
Warranty Amount shall be remitted to the Servicer or the Transferor, as
applicable. A Warranty Purchase Payment or an Administrative Purchase
Payment shall be applied to reduce Outstanding Advances and such Warranty
Purchase Payment or Administrative Purchase Payment, as applicable, shall be
applied to the Scheduled Payment, in each case to the extent that the
payments by the Obligor shall be insufficient, and then to prepay the unpaid
principal balance of such Receivable in full.
Section 4.04. ADVANCES.
(a) As of the last day of a Collection Period, if the payments during
such Collection Period by or on behalf of the Obligor on or in respect of a
Receivable (other than an Administrative Receivable or a Warranty
Receivable) after application under Section 4.03(a) shall be less than the
Scheduled Payment, whether as a result of any extension granted to the
Obligor or otherwise, then (i) in the case of a Precomputed Receivable, the
Deferred Prepayment, if any, with respect to such Precomputed Receivable
shall be applied by the Servicer to the extent of the shortfall, and such
Deferred Prepayment shall be reduced accordingly and the Servicer shall
advance to the Trust an amount equal to such shortfall (each, a "Precomputed
Advance") and (ii) in the case of a Simple Interest Receivable, the Servicer
shall advance to the Trust an amount equal to the product of the principal
balance of such Receivable as of the first day of such Collection Period and
one-twelfth of its APR minus the amount of interest actually received on
such Receivable during such Collection Period (each, a "Simple Interest
Advance"). If the calculation in clause (ii) above in respect of a Simple
Interest Receivable results in a negative number, an amount equal to such
negative amount shall be paid to the Servicer in reimbursement of any
Outstanding Advances in respect of Simple Interest Receivables. In addition,
in the event that a Simple Interest Receivable becomes a Liquidated
Receivable, the amount of accrued and unpaid interest thereon (but not
including interest for the current Collection Period) shall, up to the
amount of Outstanding Advances in respect of Simple Interest Receivables in
respect thereof, be withdrawn from the Collection Account and paid to the
Servicer in reimbursement of such Outstanding Advances. No Advances will be
made with respect to the Principal Balance of Simple Interest Receivables.
Notwithstanding the foregoing, the Servicer shall not be required to make
any Advance (other than a Simple Interest Advance in respect of an interest
shortfall arising from the Prepayment of a Simple Interest Receivable) to
the extent that the Servicer, in its sole discretion, shall determine that
such Advance is unlikely to be recovered from subsequent payments made by or
on behalf of the related Obligor, Liquidation Proceeds, by the
Administrative Purchase Payment or by the Warranty Purchase Payment, in each
case, with respect to such Receivable or otherwise. On each Deposit Date,
the Servicer will deposit into the Collection Account an amount equal to all
Advances to be made in respect of the related Collection Period.
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(b) The Servicer shall be entitled to reimbursement for Outstanding
Advances, without interest, with respect to a Receivable from the following
sources with respect to such Receivable: (i) subsequent payments made by or
on behalf of the related Obligor, (ii) Liquidation Proceeds, (iii) the
Administrative Purchase Payment and (iv) the Warranty Purchase Payment.
(c) To the extent that during any Collection Period any funds described
above in Section 4.04(b) with respect to a Receivable as to which the
Servicer previously has made an unreimbursed Advance are received by the
Issuer or the Servicer, and the Servicer determines that any Outstanding
Advances with respect to such Receivable are unlikely to be recovered from
payments made on or with respect to such Receivable (each, a "Nonrecoverable
Advance"), then, on the related Distribution Date, upon the Servicer
providing the Transferor and the Trustees with an Officer's Certificate
setting forth the basis for its determination of any such Nonrecoverable
Advance, the Indenture Trustee shall promptly remit to the Servicer from the
Collection Account, (i) from Available Interest an amount equal to the
portion of such Nonrecoverable Advance allocable to interest and (ii) from
Available Principal an amount equal to the portion of such Nonrecoverable
Advance allocable to principal, in each case without interest, in accordance
with Section 4.06(c)(i). In lieu of causing the Indenture Trustee to remit
any such amounts or the amounts described in clauses (i) through (iv) in
Section 4.04(b), the Servicer may deduct such amounts from deposits
otherwise to be made into the Collection Account in accordance with Section
4.09.
Section 4.05. ADDITIONAL DEPOSITS.
(a) The following additional deposits shall be made to the Collection
Account: (i) the Transferor shall remit the aggregate Warranty Purchase
Payments with respect to Warranty Receivables pursuant to Section 2.04 or
the amount required upon the optional purchase of all Receivables by the
Transferor pursuant to Section 8.01 and (ii) the Servicer shall remit (A)
any extension fee charged in connection with the extension of a Receivable
pursuant to Section 3.02, (B) the amount required to be remitted in respect
of certain full Prepayments pursuant to Section 3.03, (C) the aggregate
Advances pursuant to Section 4.04(a), (D) the aggregate Administrative
Purchase Payments with respect to Administrative Receivables pursuant to
Section 3.08 and (E) the amount required upon the optional purchase of all
Receivables by the Servicer or any successor to the Servicer pursuant to
Section 8.01.
(b) All deposits required to be made in respect of a Collection Period
pursuant to this Section by the Transferor or the Servicer, as the case may
be, may be made in the form of a single deposit and shall be made in
immediately available funds, no later than 2:00 P.M., Los Angeles time, on
the related Deposit Date.
Section 4.06. DISTRIBUTIONS.
(a) On each Deposit Date, the Indenture Trustee shall cause to be made
the following transfers and distributions in immediately available funds in
the amounts set forth in the Servicer's Certificate for such Distribution
Date:
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(i) from the Payahead Account (or directly from the Servicer in
the case of Payments Ahead held by the Servicer pursuant to Section
4.02(b) or (c)) to the Collection Account, the aggregate Applied
Payments Ahead;
(ii) if the Servicer is not permitted to hold Payments Ahead
pursuant to Section 4.02(b) or (c), from the Collection Account to the
Payahead Account, the aggregate Payments Ahead for the related
Collection Period; and
(iii) from the Yield Supplement Account to the Collection Account,
an amount equal to the Yield Supplement Withdrawal Amount, if any, for
such Distribution Date.
(b) On each Determination Date, the Servicer shall calculate all
amounts required to be deposited in the Note Distribution Account and the
Certificate Distribution Account and to make all distributions on the
related Distribution Date.
(c) On each Distribution Date, the Servicer shall instruct the
Indenture Trustee in writing (based on the information contained in the
Servicer's Certificate delivered on the related Determination Date pursuant
to Section 3.10) to make the following deposits and distributions for
receipt by the Servicer or deposit in the applicable account by 8:00 A.M.,
Los Angeles time, to the extent of the Available Amount, in the following
order of priority:
(i) to the Servicer, Nonrecoverable Advances;
(ii) to the Servicer, the Total Servicing Fee (including any
unpaid Total Servicing Fees from one or more prior Collection Periods);
(iii) to the Indenture Trustee and the Owner Trustee, any accrued
and unpaid Trust Fees and Expenses, in each case to the extent such
fees and expenses have not been previously paid by the Servicer;
(iv) to the Note Distribution Account, the Note Interest
Distributable Amount to be distributed to the holders of the Notes at
their respective Interest Rates;
(v) to the Note Distribution Account, the portion of the Principal
Payment Amount payable to the Noteholders as described in Section
8.02(d)(ii) of the Indenture;
(vi) to the Reserve Fund, from the Principal Payment Amount, the
amount, if any, necessary to reinstate the balance in the Reserve Fund
up to the Specified Reserve Fund Balance; and
(vii) to the Certificate Distribution Account, the Certificate
Interest Distributable Amount to be distributed to Certificateholders;
(viii) to the Certificate Distribution Account, the portion of the
Principal Payment Amount payable to Certificateholders as described in
Section 8.02(d)(ii) of the Indenture; and
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(ix) to the Transferor, any Available Amount remaining (after
giving effect to the reduction in the Available Amount described in
clauses (i) through (viii) above.
Notwithstanding that the Notes have been paid in full, the Indenture
Trustee shall continue to maintain the Collection Account hereunder until the
Pool Balance has been reduced to zero.
Section 4.07. RESERVE FUND.
(a) On the Closing Date, the Owner Trustee will deposit, on behalf of
the Transferor, the Reserve Fund Initial Deposit into the Reserve Fund from
the net proceeds of the sale of the Notes. The Reserve Fund shall be the
property of the Issuer subject to the rights of the Indenture Trustee in the
Reserve Fund Property.
(b) In the event that the Note Distributable Amount exceeds the sum of
the amounts deposited into the Note Distribution Account pursuant to
Sections 4.06(c)(iv) and (v) on each Distribution Date, (or, if the Reserve
Fund is not maintained by the Indenture Trustee, on the related Deposit
Date), the Indenture Trustee shall cause an amount equal to the lesser of
(A) the amount on deposit in the Reserve Fund and (B) such excess, and
deposit such amount into the Note Distribution Account in immediately
available funds in the amounts set forth in the Servicer's Certificate for
such Distribution Date; provided that such amount shall be applied first, to
the payment of interest due on the Notes to the extent, if any, that the
amount deposited pursuant to Section 4.06(c)(iv) is not sufficient to cover
such payment of interest and, second, to the payment of principal of the
Notes.
(c) All interest and other income (net of losses and investment
expenses) on funds on deposit in the Reserve Fund shall upon the written
direction of the Servicer, be paid to the Transferor to the extent that the
funds therein exceed the Specified Reserve Fund Balance. Upon any
distribution to the Transferor of amounts in excess of the Specified Reserve
Fund Balance, the Noteholders will not have any rights in, or claims to,
such amounts.
Section 4.08. YIELD SUPPLEMENT ACCOUNT. On the Closing Date, the
Transferor will deposit the Yield Supplement Account Deposit to the Yield
Supplement Account from the net proceeds of sale of the Notes. The Yield
Supplement Account shall be the property of the Issuer subject to the rights of
the Indenture Trustee for the benefit of the Securityholders.
Section 4.09. NET DEPOSITS. For so long as AHFC shall be the Servicer,
the Transferor, the Servicer and the Indenture Trustee may make any remittances
pursuant to this Article net of amounts to be distributed by the applicable
recipient to such remitting party. Nonetheless, each such party shall account
for all of the above described remittances and distributions as if the amounts
were deposited and/or transferred separately.
Section 4.10. STATEMENTS TO SECURITYHOLDERS.
(a) On each Distribution Date, the Servicer shall provide to the Owner
Trustee to forward to each Certificateholder of record and to the Indenture
Trustee to forward to each Noteholder of record a statement, based on the
Servicer's Certificate furnished pursuant to
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Section 3.10, setting forth at least the following information as to the
Securities, to the extent applicable:
(i) the amount of such distribution allocable to principal, as
allocated to each Class of Notes and to the Certificates (stated
separately for each Class of Notes and the Certificates);
(ii) the amount of such distribution allocable to interest, as
allocated to each Class of Notes and to the Certificates (stated
separately for each Class of Notes and the Certificates);
(iii) the Yield Supplement Amount, the Yield Supplement Withdrawal
Amount and the amount on deposit in the Yield Supplement Account after
giving effect to the distributions made on such Distribution Date;
(iv) the Pool Balance as of the close of business on the last day
of the related Collection Period, after giving effect to payments
allocated to principal reported under clause (i) above;
(v) the Total Servicing Fee paid to the Servicer with respect to
the related Collection Period;
(vi) the amount of non-recoverable Advances;
(vii) total Payments Ahead and the Applied Payments Ahead;
(viii) the amount of Trust Fees and Expenses;
(ix) the amount of any Note Interest Carryover Shortfall and Note
Principal Carryover Shortfall on such Distribution Date and the change
in such amounts from those with respect to the immediately preceding
Distribution Date;
(x) the Note Pool Factor for each Class of Notes and the
Certificate Pool Factor, in each case as of such Distribution Date;
(xi) the balance on deposit in the Reserve Fund on such
Distribution Date, after giving effect to distributions made on the
Distribution Date, if any, and the change in such balance from the
immediately preceding Distribution Date; and
(xii) the amount available under the Servicer Letter of Credit, if
any, and such amount as a percentage of the Pool Balance as of the last
day of such Collection Period.
Each amount set forth on the Distribution Date statement under clauses (i),
(ii) (iv) and (x) above shall be expressed as a dollar amount per $1,000 of
original principal balance of a Note or the Original Certificate Balance of a
Certificate, as the case may be.
(b) Within the prescribed period of time for tax reporting purposes
after the end of each calendar year during the term of the Issuer, but not
later than the latest date permitted by
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law, the related Trustee shall mail to each Person who at any time during
such calendar year shall have been a Securityholder, a statement, prepared
by the Servicer, containing the sum of the amounts set forth in clauses (i),
(ii), (iv) and (x) above for such calendar year or, in the event such Person
shall have been a Securityholder during a portion of such calendar year, for
the applicable portion of such year, for the purposes of such
Securityholder's preparation of federal income tax returns. In addition, the
Servicer shall furnish to the Trustees for distribution to such Person at
such time any other information necessary under applicable law for the
preparation of such income tax returns.
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ARTICLE FIVE
THE TRANSFEROR
Section 5.01. REPRESENTATIONS OF TRANSFEROR. The Transferor makes the
following representations on which the Issuer is deemed to have relied in
acquiring the Receivables. The representations speak as of the execution and
delivery of this Agreement and as of the Closing Date, and shall survive the
sale of the Receivables to the Issuer and the pledge thereof to the Indenture
Trustee pursuant to the Indenture.
(a) ORGANIZATION AND GOOD STANDING. The Transferor has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of California, with power and authority to own its
properties and to conduct its business as such properties are currently
owned and such business is presently conducted, and had at all relevant
times, and has, power, authority and legal right to acquire, own and sell
the Receivables.
(b) DUE QUALIFICATION. The Transferor is duly qualified to do business
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or lease
of property or the conduct of its business shall require such
qualifications.
(c) POWER AND AUTHORITY. The Transferor has the power and authority to
execute and deliver this Agreement and to carry out its terms, the
Transferor has full power and authority to sell and assign the property to
be sold and assigned to and deposited with the Issuer and has duly
authorized such sale and assignment by all necessary corporate action; and
the execution, delivery and performance of this Agreement has been duly
authorized by the Transferor by all necessary corporate action.
(d) VALID SALE; BINDING OBLIGATION. This Agreement evidences a valid
sale, transfer and assignment of the Receivables, enforceable against
creditors of and purchasers from the Transferor, and constitutes a legal,
valid and binding obligation of the Transferor enforceable in accordance
with its terms, except as enforceability may be subject to or limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights in general and by general
principles of equity, regardless of whether such enforceability shall be
considered in a proceeding in equity or at law.
(e) NO VIOLATION. The execution, delivery and performance by the
Transferor of this Agreement and the consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms of this
Agreement does not conflict with, result in any breach of any of the terms
and provisions of, nor constitute (with or without notice or lapse of time)
a default under, the articles of incorporation or bylaws of the Transferor,
or conflict with or violate any of the material terms or provisions of, or
constitute (with or without notice or lapse of time) a default under, any
indenture, agreement or other instrument to which the Transferor is a party
or by which it shall be bound; nor result in the creation or imposition of
any Lien upon any of its properties
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pursuant to the terms of any such indenture, agreement or other instrument
(other than this Agreement); nor violate any law or, to the Transferor's
knowledge, any order, rule or regulation applicable to the Transferor of any
court or of any federal or state regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over the Transferor
or its properties, which breach, default, conflict, lien or violation would
have a material adverse effect on the earnings, business affairs or business
prospects of the Transferor.
(f) NO PROCEEDINGS. There are no proceedings or investigations pending,
or to the Transferor's knowledge, threatened, before any court, regulatory
body, administrative agency or other governmental instrumentality having
jurisdiction over the Transferor or its properties: (i) asserting the
invalidity of this Agreement or any other Basic Document, (ii) seeking to
prevent the issuance of the Securities or the consummation of any of the
transactions contemplated by the Basic Documents, (iii) seeking any
determination or ruling that might materially and adversely affect the
performance by the Transferor of its obligations under, or the validity or
enforceability of, the Basic Documents or the Securities or (iv) relating to
the Transferor and which might adversely affect the federal income tax
attributes of the Securities.
Section 5.02. LIABILITY OF TRANSFEROR; INDEMNITIES. The Transferor shall
be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Transferor under this Agreement, such obligations
shall include the following:
(a) The Transferor shall indemnify, defend and hold harmless the
Issuer, the Trustees and the Servicer and any of the officers, directors,
employees and agents of the Issuer, the Owner Trustee and the Indenture
Trustee from and against any taxes that may at any time be asserted against
any such Person with respect to the transactions contemplated herein and in
the other Basic Documents, including any sales, gross receipts, general
corporation, tangible personal property, privilege or license taxes (but, in
the case of the Issuer, not including any taxes asserted with respect to,
and as of the date of, the sale of the Receivables to the Issuer or the
issuance and original sale of the Securities, or asserted with respect to
ownership of the Receivables, or federal or other income taxes arising out
of distributions on the Securities) and costs and expenses in defending
against the same.
(b) The Transferor shall indemnify, defend and hold harmless the
Issuer, the Trustees and the Securityholders and any of the officers,
directors, employees and agents of the Issuer, the Owner Trustee and the
Indenture Trustee from and against any loss, liability or expense incurred
by reason of (i) the Transferor's willful misfeasance, bad faith or
negligence in the performance of its duties under this Agreement, or by
reason of reckless disregard of its obligations and duties under this
Agreement and (ii) the Transferor's or the Issuer's violation of federal or
state securities laws in connection with the offering and sale of the
Securities.
(c) The Transferor shall indemnify, defend and hold harmless the
Trustees and their respective officers, directors, employees and agents from
and against all costs, expenses, losses, claims, damages and liabilities
arising out of or incurred in connection
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with the acceptance or performance of the trusts and duties herein and
contained in the Trust Agreement, in the case of the Owner Trustee, and
contained in the Indenture, in the case of the Indenture Trustee, except to
the extent that such cost, expense, loss, claim, damage or liability: (i) in
the case of the Owner Trustee, shall be due to the willful misfeasance, bad
faith or negligence (except for errors in judgment) of the Owner Trustee or
shall arise from the breach by the Owner Trustee of any of its
representations or warranties set forth in Section 7.03 of the Trust
Agreement, or (ii) in the case of the Indenture Trustee, shall be due to the
willful misfeasance, bad faith or negligence (except for errors in judgment)
of the Indenture Trustee.
(d) The Transferor shall pay any and all taxes levied or assessed upon
all or any part of the Owner Trust Estate.
Indemnification under this Section shall survive the resignation or removal
of the Owner Trustee or the Indenture Trustee, as the case may be, and the
termination of this Agreement and shall include reasonable fees and expenses of
counsel and expenses of litigation. If the Transferor shall have made any
indemnity payments pursuant to this Section and the Person to or on behalf of
whom such payments are made thereafter shall collect any of such amounts from
others, such Person shall promptly repay such amounts to the Transferor, without
interest.
Section 5.03. MERGER, CONSOLIDATION OR ASSUMPTION OF THE OBLIGATIONS OF
TRANSFEROR; CERTAIN LIMITATIONS.
(a) Any corporation (i) into which the Transferor may be merged or
consolidated, (ii) which may result from any merger, conversion or
consolidation to which the Transferor shall be a party or (iii) which may
succeed to all or substantially all of the business of the Transferor, which
corporation in any of the foregoing cases executes an agreement of
assumption to perform every obligation of the Transferor under this
Agreement, shall be the successor to the Transferor under this Agreement
without the execution or filing of any document or any further act on the
part of any of the parties to this Agreement, except that if the Transferor
in any of the foregoing cases is not the surviving entity, then the
surviving entity shall execute an agreement of assumption to perform every
obligation of the Transferor hereunder. The Transferor shall provide notice
of any merger, consolidation or succession pursuant to this Section to each
Rating Agency and shall receive from each Rating Agency a letter to the
effect that such merger, consolidation or succession will not result in a
qualification, downgrading or withdrawal of its then-current rating of any
Class of Notes.
(b) (i)Subject to paragraph (ii) below, the purpose of the Transferor
shall be to engage in any lawful activity for which a corporation may be
organized under the general corporation law of California other than the
banking business, the trust company business or the practice of a profession
permitted to be incorporated by the California Corporations Code.
(ii) Notwithstanding paragraph (b)(i) above, the purpose of the
Transferor shall be limited to the following purposes, and activities
incident to and necessary or convenient to accomplish the following
purposes: (A) to acquire, own, hold,
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sell, transfer, assign, pledge, finance, refinance and otherwise deal
with, retail installment contracts or wholesale loans secured by, new
and used Honda and Acura motor vehicles (the "Motor Vehicle
Receivables"); (B) to authorize, issue, sell and deliver one or more
series of obligations, consisting of one or more classes of
certificates and/or notes or other evidence of indebtedness (the
"Offered Securities") that are collateralized by or evidence an
interest in Motor Vehicle Receivables; and (C) to negotiate, authorize,
execute, deliver and assume the obligations or any agreement relating
to the activities set forth in clauses (A) and (B) above, including but
not limited to any pooling and servicing agreement, sale and servicing
agreement, indenture, reimbursement agreement, credit support
agreement, receivables purchase agreement or underwriting agreement and
to engage in any lawful activity which is incidental to the activities
contemplated by any such agreement. So long as any outstanding debt of
the Transferor or Offered Securities are rated by any nationally
recognized statistical rating organization, the Transferor shall not
issue notes or otherwise borrow money unless (1) the Transferor has
made a written request to the related nationally recognized statistical
rating organization to issue notes or incur borrowings, which notes or
borrowings are rated by the related nationally recognized statistical
rating organization the same as or higher than the rating afforded any
outstanding rated debt or Offered Securities, or (2) such notes or
borrowings (X) are fully subordinated (and which shall provide for
payment only after payment in respect of all outstanding rated debt
and/or Offered Securities) or are nonrecourse against any assets of the
Transferor other than the assets pledged to secure such notes or
borrowings, (Y) do not constitute a claim against the Transferor in the
event such assets are insufficient to pay such notes or borrowings and
(Z) where such notes or borrowings are secured by the rated debt or
Offered Securities, are fully subordinated (and which shall provide for
payment only after payment in respect of all outstanding rated debt
and/or Offered Securities) to such rated debt or Offered Securities.
(c) Notwithstanding any other provision of this Section and any
provision of law, the Transferor shall not do any of the following:
(i) engage in any business or activity other than as set forth in
clause (b) above;
(ii) without the affirmative vote of a majority of the members of
the Board of Directors of the Transferor (which must include the
affirmative vote of all duly appointed Independent Directors, as
required by the articles of incorporation and bylaws of the
Transferor), (A) dissolve or liquidate, in whole or in part, or
institute proceedings to be adjudicated bankrupt or insolvent, (B)
consent to the institution of bankruptcy or insolvency proceedings
against it, (C) file a petition seeking or consent to reorganization or
relief under any applicable federal or state law relating to
bankruptcy, (D) consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the
corporation or a substantial part of its property, (E) make a general
assignment for the benefit of creditors, (F) admit in writing its
inability to pay its debts generally as they become due or (G) take any
corporate action in furtherance of the actions set forth in clauses (A)
through (F) above; provided, however, that no director may be required
by any shareholder of the Transferor to consent to the institution
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of bankruptcy or insolvency proceedings against the Transferor so long
as it is solvent; or
(iii) merge or consolidate with any other corporation, company or
entity or sell all or substantially all of its assets or acquire all or
substantially all of the assets or capital stock or other ownership
interest of any other corporation, company or entity (except for the
acquisition of Motor Vehicle Receivables of AHFC and the sale of Motor
Vehicle Receivables to one or more trusts in accordance with the terms
of clause (b)(ii) above, which shall not be otherwise restricted by
this Section).
Section 5.04. LIMITATION ON LIABILITY OF TRANSFEROR AND OTHERS. The
Transferor and any director, officer, employee or agent of the Transferor may
rely in good faith on the advice of counsel or on any document of any kind,
prima facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Transferor shall not be under any obligation to appear
in, prosecute or defend any legal action that shall not be incidental to its
obligations under this Agreement, and that in its opinion may involve it in any
expense or liability.
Section 5.05. TRANSFEROR MAY OWN NOTES. The Transferor and any Affiliate
thereof may in its individual or any other capacity become the owner or pledgee
of Securities with the same rights as it would have if it were not the
Transferor or an Affiliate thereof, except as expressly provided herein or in
any other Basic Document.
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ARTICLE SIX
THE SERVICER
Section 6.01. REPRESENTATIONS OF SERVICER. The Servicer makes the following
representations on which the Issuer is deemed to have relied in acquiring the
Receivables. The representations speak as of the execution and delivery of this
Agreement and as of the Closing Date, and shall survive the sale of the
Receivables to the Issuer and the pledge thereof to the Indenture Trustee
pursuant to the Indenture:
(a) ORGANIZATION AND GOOD STANDING. The Servicer has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of California, with power and authority to own its
properties and to conduct its business as such properties are currently
owned and such business is presently conducted, and had at all relevant
times, and has, power, authority and legal right to acquire, own, sell and
service the Receivables and to hold the Receivable Files as custodian on
behalf of the Issuer.
(b) DUE QUALIFICATION. The Servicer is duly qualified to do business as
a foreign corporation in good standing, and has obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or lease
of property or the conduct of its business (including the servicing of the
Receivables as required by this Agreement) shall require such
qualifications.
(c) POWER AND AUTHORITY. The Servicer has the power and authority to
execute and deliver this Agreement and to carry out its terms; and the
execution, delivery and performance of this Agreement has been duly
authorized by the Servicer by all necessary corporate action.
(d) BINDING OBLIGATION. This Agreement constitutes a legal, valid and
binding obligation of the Servicer enforceable in accordance with its terms,
except as enforceability may be subject to or limited by bankruptcy,
insolvency, reorganization, moratorium, liquidation or other similar laws
affecting the enforcement of creditors' rights in general and by general
principles of equity, regardless of whether such enforceability shall be
considered in a proceeding in equity or in law.
(e) NO VIOLATION. The execution, delivery and performance by the
Servicer of this Agreement and the execution, delivery and performance by
the Transferor of this Agreement and the consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms of this
Agreement shall not conflict with, result in any breach of any of the terms
and provisions of, nor constitute (with or without notice or lapse of time)
a default under, the articles of incorporation or bylaws of the Servicer, or
conflict with or breach any of the material terms or provisions of, or
constitute (with or without notice or lapse of time) a default under, any
indenture, agreement or other instrument to which the Servicer is a party or
by which it shall be bound; nor result in the creation or imposition of any
Lien upon any of its properties pursuant to the terms of any such indenture,
agreement or other instrument (other than this Agreement); nor violate
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any law or, to the Servicer's knowledge, any order, rule or regulation
applicable to the Servicer of any court or of any federal or state
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Servicer or its properties, which breach,
default, conflict, lien or violation would have a material adverse effect on
the earnings, business affairs or business prospects of the Servicer.
(f) NO PROCEEDINGS. There are no proceedings or investigations pending,
or to the Servicer's best knowledge, threatened, before any court,
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Servicer or its properties: (i) asserting the
invalidity of this Agreement or any other Basic Document, (ii) seeking to
prevent the issuance of the Securities or the consummation of any of the
transactions contemplated by the Basic Documents, (iii) seeking any
determination or ruling that might materially and adversely affect the
performance by the Servicer of its obligations under, or the validity or
enforceability of, the Basic Documents or the Securities or (iv) relating to
the Servicer and which might adversely affect the federal income tax
attributes of the Securities.
Section 6.02. INDEMNITIES OF SERVICER.
(a) The Servicer shall be liable in accordance herewith only to the
extent of the obligations specifically undertaken by the Servicer under this
Agreement. In this regard, the Servicer shall indemnify, defend and hold
harmless the Issuer, the Trustees, the Securityholders and the Transferor
and any of the officers, directors, employees and agents of the Issuer, the
Owner Trustee and the Indenture Trustee from and against any and all costs,
expenses, losses, damages, claims and liabilities (i) arising out of or
resulting from the use, ownership or operation by the Servicer or any
Affiliate thereof of a Financed Vehicle, and (ii) to the extent that such
cost, expense, loss, claim, damage or liability arose out of, or was imposed
upon any such Person through, the negligence, willful misfeasance or bad
faith of the Servicer in the performance of its duties under this Agreement
or by reason of reckless disregard of its obligations and duties under this
Agreement.
For purposes of this Section, in the event of the termination of the rights
and obligations of AHFC (or any successor thereto pursuant to Section 6.03) as
Servicer pursuant to Section 7.01, or a resignation by such Servicer pursuant to
this Agreement, such Servicer shall be deemed to be the Servicer pending
appointment of a Successor Servicer (other than the Indenture Trustee) pursuant
to Section 7.02.
(b) Indemnification under this Section shall survive the resignation or
removal of the Owner Trustee or the Indenture Trustee, as the case may be,
or the termination of this Agreement and shall include reasonable fees and
expenses of counsel and expenses of litigation. If the Servicer shall have
made any indemnity payments pursuant to this Section and the Person to or on
behalf of whom such payments are made thereafter collects any of such
amounts from others, such Person shall promptly repay such amounts to the
Servicer, without interest.
Section 6.03. MERGER, CONSOLIDATION OR ASSUMPTION OF THE OBLIGATIONS OF
SERVICER. Any corporation (i) into which the Servicer may be merged or
consolidated, (ii) which may result from any merger, conversion or consolidation
to which the Servicer shall be a party or (iii) which
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may succeed to all or substantially all of the business of the Servicer, which
corporation in any of the foregoing cases executes an agreement of assumption to
perform every obligation of the Servicer under this Agreement, shall be the
successor to the Servicer under this Agreement without the execution or filing
of any paper or any further act on the part of any of the parties to this
Agreement. The Servicer shall provide notice of any merger, consolidation or
succession pursuant to this Section to the Trustees and each Rating Agency.
Section 6.04. LIMITATION ON LIABILITY OF SERVICER AND OTHERS. Neither the
Servicer nor any of the directors, officers, employees or agents of the Servicer
shall be under any liability to the Issuer or any Securityholder, except as
provided under this Agreement, for any action taken or for refraining from the
taking of any action pursuant to this Agreement or for errors in judgment;
provided, however, that this provision shall not protect the Servicer or any
such person against any liability that would otherwise be imposed by reason of
willful misfeasance, bad faith or negligence in the performance of duties or by
reason of reckless disregard of obligations and duties under this Agreement. The
Servicer and any director, officer, employee or agent of the Servicer may rely
in good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising under this Agreement.
Except as otherwise provided in this Agreement, the Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action that
shall not be incidental to its duties to service the Receivables in accordance
with this Agreement and that in its opinion may involve it in any expense or
liability; provided, however, that the Servicer may undertake any reasonable
action that it may deem necessary or desirable in respect of this Agreement and
the other Basic Documents and the rights and duties of the parties to this
Agreement and the other Basic Documents and the interests of the
Certificateholders under this Agreement and the Noteholders under the Indenture.
The legal expenses and costs of such action and any liability resulting
therefrom will be expenses, costs and liabilities of the Issuer.
Section 6.05. AHFC NOT TO RESIGN AS SERVICER. Subject to the provisions of
Section 6.03, AHFC shall not resign from the obligations and duties hereby
imposed on it as Servicer under this Agreement except upon a determination that
the performance of its duties under this Agreement shall no longer be
permissible under applicable law. Notice of any such determination permitting
the resignation of AHFC shall be communicated to the Trustees at the earliest
practicable time (and, if such communication is not in writing, shall be
confirmed in writing at the earliest practicable time) and any such
determination shall be evidenced by an Opinion of Counsel to such effect
delivered to the Trustees concurrently with or promptly after such notice. No
such resignation shall become effective until the Indenture Trustee or a
Successor Servicer shall have (i) assumed the responsibilities and obligations
of AHFC in accordance with Section 7.02 and (ii) become the Administrator
pursuant to Section 1.09 of the Administration Agreement.
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ARTICLE SEVEN
SERVICER DEFAULTS
Section 7.01. SERVICER DEFAULTS. If any one of the following events (each,
a "Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer to deliver to the related Trustee for
deposit in any of the Accounts or the Certificate Distribution Account any
required payment or to direct the Indenture Trustee to make any required
distributions therefrom, which failure continues unremedied for a period of
three Business Days after discovery of such failure by an officer of the
Servicer or after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given (i) to the Servicer
by the related Trustee or (ii) to the Servicer and to the Trustees by the
Holders of Notes or Certificates, as the case may be, evidencing not less
than 25% of the Outstanding Amount of the Notes or Percentage Interests
aggregating at least 25%;
(b) failure by the Servicer (or so long as the Servicer is AHFC, the
Transferor) duly to observe or to perform in any material respect any other
covenants or agreements of the Servicer (or so long as the Servicer is AHFC,
the Transferor) set forth in this Agreement or any other Basic Document,
which failure shall (i) materially and adversely affect the rights of
Certificateholders or Noteholders and (ii) continue unremedied for a period
of 90 days after the date on which written notice of such failure, requiring
the same to be remedied, shall have been given (A) to the Servicer or the
Transferor (as the case may be) by the related Trustee or (B) to the
Servicer or the Transferor (as the case may be), and to the Trustees by the
Holders of Notes or Certificates, as the case may be, evidencing not less
than 25% of the Outstanding Amount of the Notes or Percentage Interests
aggregating at least 25%; or
(c) the occurrence of an Insolvency Event with respect to the
Transferor or the Servicer;
then, and in each and every case, so long as the Servicer Default shall not have
been remedied, either the Indenture Trustee or the Holders of Notes evidencing
not less than 25% of the Outstanding Amount of the Notes (or, if the Notes have
been paid in full and the Indenture has been discharged in accordance with its
terms, by holders of Certificates evidencing not less than 25% of the Percentage
Interests) by notice then given in writing to the Servicer (and to the Indenture
Trustee and the Owner Trustee if given by the Noteholders) may terminate all the
rights and obligations (other than the obligations set forth in Section 6.02) of
the Servicer under this Agreement. On or after the receipt by the Servicer of
such written notice, all authority and power of the Servicer under this
Agreement, whether with respect to the Notes, the Certificates or the
Receivables or otherwise, shall, without further action, pass to and be vested
in the Indenture Trustee or such Successor Servicer as may be appointed under
Section 7.02; and, without limitation, the Indenture Trustee and the Owner
Trustee are hereby authorized and empowered to execute and deliver, for the
benefit of the predecessor Servicer, as attorney-in-fact or otherwise, any and
all documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to
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complete the transfer and endorsement of the Receivables and related documents,
or otherwise. The predecessor Servicer shall cooperate with the Successor
Servicer and the Trustees in effecting the termination of the responsibilities
and rights of the predecessor Servicer under this Agreement, including the
transfer to the Successor Servicer for administration by it of all cash amounts
that shall at the time be held by the predecessor Servicer for deposit, or have
been deposited by the predecessor Servicer, in the Accounts or the Certificate
Distribution Account or thereafter received with respect to the Receivables and
all Payments Ahead that shall at that time by held by the predecessor Servicer.
All reasonable costs and expenses (including servicer conversion costs and
attorneys' fees) incurred in connection with transferring the Receivable Files
to the Successor Servicer and amending this Agreement to reflect such succession
as Servicer pursuant to this Section shall be paid by the predecessor Servicer
upon presentation of reasonable documentation of such costs and expenses. Upon
receipt of notice of the occurrence of a Servicer Default, the Indenture Trustee
shall give notice thereof to each Rating Agency.
Section 7.02. APPOINTMENT OF SUCCESSOR SERVICER.
(a) Upon the Servicer's receipt of notice of termination pursuant to
Section 7.01 or the Servicer's resignation pursuant to Section 6.05, the
predecessor Servicer shall continue to perform its functions as Servicer
under this Agreement, in the case of termination, only until the date
specified in such termination notice or, if no such date is specified in a
notice of termination, until receipt of such notice and, in the case of
resignation, until the later of (i) the date 45 days from the delivery to
the Trustees of written notice of such resignation (or written confirmation
of such notice) in accordance with the terms of this Agreement and (ii) the
date upon which the predecessor Servicer shall become unable to act as
Servicer, as specified in the notice of resignation and accompanying Opinion
of Counsel. In the event of the Servicer's termination hereunder, the
Indenture Trustee shall appoint a Successor Servicer, and the Successor
Servicer shall accept its appointment (including its appointment as
Administrator under the Administration Agreement as set forth in Section
7.02(b)) by a written assumption in form acceptable to the Trustees. In the
event that a Successor Servicer has not been appointed at the time when the
predecessor Servicer has ceased to act as Servicer in accordance with this
Section, the Indenture Trustee without further action shall automatically be
appointed the Successor Servicer and the Indenture Trustee shall be entitled
to receive the Total Servicing Fee. Notwithstanding the above, the Indenture
Trustee shall, if it shall be legally unable so to act, appoint or petition
a court of competent jurisdiction to appoint any established institution,
having a net worth of not less than $50,000,000 and whose regular business
shall include the servicing of motor vehicle receivables, as the successor
to the Servicer under this Agreement.
(b) Upon appointment, the Successor Servicer (including the Indenture
Trustee acting as Successor Servicer) shall (i) be the successor in all
respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties and liabilities arising thereafter relating thereto
placed on the predecessor Servicer and shall be entitled to the Total
Servicing Fee and all the rights granted to the predecessor Servicer by the
terms and provisions of this Agreement and (ii) become the Administrator
pursuant to Section 1.09 of the Administration Agreement.
Section 7.03. NOTIFICATION OF SERVICER TERMINATION. Upon any termination
of, or appointment of a successor to, the Servicer pursuant to this Article, the
Owner Trustee shall give
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prompt written notice thereof to Certificateholders, and the Indenture Trustee
shall give prompt written notice thereof to Noteholders and each Rating Agency.
Section 7.04. WAIVER OF PAST DEFAULTS. The Holders of Notes evidencing not
less than a majority of the Outstanding Amount of the Notes or the Holders (as
defined in the Trust Agreement) of Certificates evidencing not less than a
majority of the Percentage Interests (in the case of a default by the Servicer
that does not adversely affect the Indenture Trustee or the Noteholders or if
all Notes have been paid in full and the Indenture Trustee has been discharged
in accordance with its terms) may, on behalf of all Securityholders waive in
writing any default by the Servicer in the performance of its obligations
hereunder and its consequences, except a default in making any required deposits
to or payments from any of the Accounts or the Certificate Distribution Account
in accordance with this Agreement or in respect of a covenant or provision
hereof that cannot be modified with the consent of each Securityholder. Upon any
such waiver of a past default, such default shall cease to exist, and any
Servicer Default arising therefrom shall be deemed to have been remedied for
every purpose of this Agreement. No such waiver shall extend to any subsequent
or other default or impair any right consequent thereto except to the extent
expressly so waived.
Section 7.05. REPAYMENT OF ADVANCES. If a Successor Servicer replaces the
Servicer, the predecessor Servicer shall be entitled to receive reimbursement
for all outstanding Advances made by the predecessor Servicer.
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ARTICLE EIGHT
TERMINATION
Section 8.01. OPTIONAL PURCHASE OF ALL RECEIVABLES.
(a) On the Distribution Date following the last day of any Collection
Period as of which the Pool Balance is 10% or less of the Original Pool
Balance, the Transferor, the Servicer or any successor to the Servicer shall
have the option to purchase the Owner Trust Estate, other than the Accounts
and the Certificate Distribution Account. Notwithstanding the foregoing, the
Transferor, the Servicer or any successor to the Servicer, as the case may
be, may not effect any such purchase if the long-term unsecured debt
obligations of the related entity are rated less than Baa3 by Moody's or
BBB- by Standard & Poor's unless the Owner Trustee and the Indenture Trustee
shall have received an Opinion of Counsel to the effect that such purchase
would not constitute a fraudulent conveyance or the Rating Agency is
otherwise satisfied as evidenced by written notice from the Rating Agency to
the Indenture Trustee. To exercise such option, on the related Deposit Date
the Servicer shall deposit pursuant to Section 4.05(a) in the Collection
Account an amount equal to the aggregate Administrative Purchase Payments
for the Receivables (including Defaulted Receivables), plus the appraised
value of any such other property held by the Issuer other than the Accounts
and the Certificate Distribution Account, such value to be determined by an
appraiser mutually agreed upon by the Servicer and the Trustees, and shall
succeed to all interests in and to the Issuer. Notwithstanding the
foregoing, the Transferor, the Servicer or any successor to the Servicer
shall not be permitted to exercise such option if the amount to be
distributed to Securityholders on the related Distribution Date would be
less than the Note Distributable Amount and Certificate Distributable
Amount. In the event that both the Transferor and the Servicer, or any
successor to the Servicer, elect to purchase the Receivables pursuant to
this Section, the party first notifying the Indenture Trustee (based on the
Indenture Trustee's receipt of such notice) shall be permitted to purchase
the Receivables.
(b) As described in Article Nine of the Trust Agreement, notice of any
termination of the Trust shall be given by the Servicer to the Owner Trustee
and the Indenture Trustee as soon as practicable after the Servicer has
received notice thereof.
(c) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder
and the Owner Trustee will succeed to the rights of, and assume the
obligations of, the Indenture Trustee pursuant to this Agreement.
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ARTICLE NINE
MISCELLANEOUS
Section 9.01. AMENDMENT.
(a) This Agreement may be amended by the Transferor, the Servicer and
the Issuer, with the consent of the Indenture Trustee, but without the
consent of any Securityholders, (i) to cure any ambiguity, to correct or
supplement any provision in this Agreement which may be inconsistent with
any other provision of this Agreement, to add, change or eliminate any other
provision of this Agreement with respect to matters or questions arising
under this Agreement that shall not be inconsistent with the provisions of
this Agreement, (ii) to change the formula for determining the Specified
Reserve Fund Balance or the manner in which the Reserve Fund is funded or to
amend or modify any provisions of this Agreement relating to the remittance
schedule with respect to collections deposited into the Collection Account
or the Payahead Account pursuant to Section 4.02 or (iii) to amend or modify
any provisions in this Agreement relating to the Servicer Letter of Credit,
if any, or the acquisition thereof and including replacing the Servicer
Letter of Credit with a surety bond, insurance policy or deposit of cash or
securities satisfactory to the Indenture Trustee and each Rating Agency;
provided, however, that any such action shall not, as evidenced by an
Opinion of Counsel, adversely affect in any material respect the interests
of any Securityholder and provided, further, that in connection with any
amendment pursuant to clause (ii) or (iii) above, the Servicer shall deliver
to the Trustees a letter from each Rating Agency to the effect that such
amendment will not cause its then-current rating on the Rated Securities to
be qualified, reduced or withdrawn.
(b) This Agreement may also be amended from time to time by the
Transferor, the Servicer and the Issuer, with the consent of the Indenture
Trustee, the consent of the Holders of Notes evidencing not less than a
majority of the Outstanding Amount of the Notes and the Owner Trustee,
consent of the Holders (as defined in the Trust Agreement) of outstanding
Certificates evidencing not less than a majority of the Percentage
Interests, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Securityholders; provided,
however, that no such amendment shall (i) except as otherwise provided in
Section 9.01(a) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments on Receivables or
distributions that shall be required to be made for the benefit of the
Securityholders or (ii) reduce the aforesaid percentage of the Outstanding
Amount of the Notes and the Percentage Interests, the Holders of which are
required to consent to any such amendment, without the consent of all of the
Securityholders.
(c) Promptly after the execution of any such amendment or consent, the
Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder, the Indenture Trustee and
each Rating Agency. It shall not be necessary for the consent of
Securityholders pursuant to this Section to approve the particular form of
any proposed amendment or consent, but it shall be sufficient if such
consent shall approve the substance thereof. The manner of obtaining such
consents and of evidencing the authorization of Certificateholders of the
execution thereof shall be subject to such reasonable requirements as the
Owner Trustee may require.
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(d) Prior to the execution of any amendment to this Agreement, the
Trustees shall be entitled to receive and rely upon an Opinion of Counsel
stating that the execution of such amendment is authorized or permitted by
this Agreement and the Opinion of Counsel referred to in Section 9.02(i)(1).
The Trustees may, but shall not be obligated to, enter into any such
amendment which affects the Owner Trustee's or the Indenture Trustee's, as
applicable, own rights, duties or immunities under this Agreement or
otherwise.
Section 9.02. PROTECTION OF TITLE TO TRUST.
(a) The Transferor shall execute and file such financing statements and
cause to be executed and filed such continuation statements, all in such
manner and in such places as may be required by law fully to preserve,
maintain and protect the interest of the Issuer and of the Indenture Trustee
in the Receivables and in the proceeds thereof. The Transferor shall deliver
(or cause to be delivered) to the Trustees file-stamped copies of, or filing
receipts for, any document filed as provided above, as soon as available
following such filing.
(b) Neither the Transferor nor the Servicer shall change its name,
identity or corporate structure in any manner that would, could or might
make any financing statement or continuation statement filed in accordance
with Section 9.02(a) seriously misleading within the meaning of Section
9-402(7) of the UCC, unless it shall have given the Trustees at least 30
days' prior written notice thereof and shall have promptly filed appropriate
amendments to all previously filed financing statements or continuation
statements.
(c) Each of the Transferor and the Servicer shall give the Trustees at
least 60 days' prior written notice of any relocation of its principal
executive office if, as a result of such relocation, the applicable
provisions of the UCC would require the filing of any amendment of any
previously filed financing or continuation statement or of any new financing
statement and shall promptly file any such amendment or new financing
statement. The Servicer shall at all times maintain each office from which
it shall service Receivables, and its principal executive office, within the
United States.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader
thereof to know at any time the status of such Receivable, including
payments and recoveries made and payments owing (and the nature of each) and
(ii) reconciliation between payments or recoveries on (or with respect to)
each Receivable and the amounts from time to time deposited in the Accounts
and any Payments Ahead held by the Servicer in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables, the
Servicer's master computer records (including any backup archives) that
refer to a Receivable shall indicate clearly the interest of the Issuer and
the Indenture Trustee in such Receivable and that such Receivable is owned
by the Issuer and has been pledged to the Indenture Trustee. Indication of
the Issuer's and the Indenture Trustee's interest in a Receivable shall be
deleted from or modified on the Servicer's computer systems when, and only
when, the related Receivable shall have been paid in full or repurchased.
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(f) If at any time the Transferor or the Servicer shall propose to
sell, grant a security interest in, or otherwise transfer any interest in
motor vehicle receivables to any prospective purchaser, lender or other
transferee, the Servicer shall give to such prospective purchaser, lender or
other transferee computer tapes, records or printouts (including any
restored from backup archives) that, if they shall refer in any manner
whatsoever to any Receivable, shall indicate clearly that such Receivable
has been sold and is owned by the Issuer and has been pledged to the
Indenture Trustee.
(g) The Servicer shall permit the Indenture Trustee and its agents at
any time during normal business hours to inspect, audit and make copies of
and abstracts from the Servicer's records regarding any Receivable.
(h) Upon request, the Servicer shall furnish to the Owner Trustee or to
the Indenture Trustee, within five Business Days, a list of all Receivables
(by contract number and name of Obligor) then held as part of the Issuer,
together with a reconciliation of such list to the Schedule of Receivables
and to each of the Servicer's Certificates furnished before such request
indicating removal of Receivables from the Issuer.
(i) The Servicer shall deliver to the Trustees:
(1) promptly after the execution and delivery of this Agreement
and of each amendment hereto, an Opinion of Counsel stating that, in
the opinion of such counsel, either (A) all financing statements and
continuation statements have been executed and filed that are necessary
fully to preserve and protect the interest of the Trustees in the
Receivables, and reciting the details of such filings or referring to
prior Opinions of Counsel in which such details are given, or (B) no
such action shall be necessary to preserve and protect such interest;
and
(2) within 90 days after the beginning of each fiscal year
beginning with the first fiscal year beginning more than three months
after the Cutoff Date, an Opinion of Counsel, dated as of a date during
such 90-day period, stating that, in the opinion of such counsel,
either (A) all financing statements and continuation statements have
been executed and filed that are necessary fully to preserve and
protect the interest of the Trustees in the Receivables, and reciting
the details of such filings or referring to prior Opinions of Counsel
in which such details are given, or (B) no such action shall be
necessary to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (1) or (2) above shall specify
any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
(j) The Transferor shall, to the extent required by applicable law,
cause the Notes to be registered with the Commission pursuant to Section
12(b) or Section 12(g) of the Exchange Act within the time periods specified
in such sections.
Section 9.03. NOTICES. All demands, notices, communications under this
Agreement shall be in writing, personally delivered or mailed by certified mail,
return receipt requested, and shall be deemed to have been duly given upon
receipt (i) in the case of the Transferor, to CT
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Corp., 818 West 7th Street, Second Floor, Los Angeles, California 90017, (ii) in
the case of the Servicer, to American Honda Finance Corporation, 700 Van Ness
Avenue, Building 300, Torrance, CA 90501, Attention: President, (iii) in the
case of the Issuer or the Owner Trustee, at the Corporate Trust Office (as such
term is defined in the Trust Agreement), (iv) in the case of the Indenture
Trustee, at the Corporate Trust Office (as such term is herein defined), (v) in
the case of Moody's, to Moody's Investors Service, Inc., ABS Monitoring
Department, 99 Church Street, New York, New York 10007 and (vi) in the case of
Standard & Poor's, to Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., 25 Broadway (15th Floor), New York, New York 10004,
Attention: Asset Backed Surveillance Department or (vii) as to each of the
foregoing, at such other address as shall be designated by written notice to the
other parties.
Section 9.04. ASSIGNMENT.
(a) Notwithstanding anything to the contrary contained herein, except
as provided in the remainder of this Section, as provided in Sections 5.03,
6.03 and 6.05, this Agreement may not be assigned by the Transferor or the
Servicer without the prior written consent of Holders of Notes evidencing
not less than a majority of the Outstanding Amount of the Notes and Holders
(as such term is defined in the Trust Agreement) of Certificates evidencing
not less than a majority of the Percentage Interests. And as provided in the
provisions of this Agreement concerning the resignation of the Servicer,
this Agreement may not be assigned by the Transferor or the Servicer.
(b) The Transferor hereby acknowledges and consents to the mortgage,
pledge, assignment and grant of a security interest by the Issuer to the
Indenture Trustee pursuant to the Indenture for the benefit of the
Noteholders of all right, title and interest of the Issuer in, to and under
the Receivables and/or the assignment of any or all of the Issuer's rights
and obligations hereunder to the Indenture Trustee.
Section 9.05. LIMITATIONS ON RIGHTS OF OTHERS. The provisions of this
Agreement are solely for the benefit of the Transferor, the Servicer, the
Issuer, the Owner Trustee, the Certificateholders, the Indenture Trustee and the
Noteholders, and nothing in this Agreement, whether express or implied, shall be
construed to give to any other Person any legal or equitable right, remedy or
claim in the Owner Trust Estate or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein.
Section 9.06. SEVERABILITY. If any one or more of the covenants,
agreements, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements, provisions
or terms of this Agreement and shall in no way affect the validity or
enforceability of the other covenants, agreements, provisions or terms of this
Agreement.
Section 9.07. SEPARATE COUNTERPARTS. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
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Section 9.08. HEADINGS. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
Section 9.09. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of California, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
Section 9.10. NONPETITION COVENANTS.
(a) Notwithstanding any prior termination of this Agreement, the
Servicer and the Transferor shall not, prior to the date which is one year
and one day after the termination of this Agreement with respect to the
Issuer, acquiesce, petition or otherwise invoke or cause the Issuer to
invoke the process of any court or government authority for the purpose of
commencing or sustaining a case against the Issuer under any federal or
state bankruptcy, insolvency or similar law, or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar
official of the Issuer or any substantial part of its property, or ordering
the winding up or liquidation of the affairs of the Issuer.
(b) Notwithstanding any prior termination of this Agreement, the
Servicer shall not, prior to the date which is one year and one day after
the termination of this Agreement with respect to the Transferor, acquiesce,
petition or otherwise invoke or cause the Transferor to invoke the process
of any court or government authority for the purpose of commencing or
sustaining a case against the Transferor under any federal or state
bankruptcy, insolvency or similar law, or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Transferor or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Transferor.
Section 9.11. LIMITATION OF LIABILITY OF OWNER TRUSTEE AND INDENTURE
TRUSTEE.
(a) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by The Bank of New York (Delaware) not in
its individual capacity but solely in its capacity as Owner Trustee of the
Issuer and in no event shall The Bank of New York (Delaware) in its
individual capacity or, except as expressly provided in the Trust Agreement,
as beneficial owner of the Issuer have any liability for the
representations, warranties, covenants, agreements or other obligations of
the Issuer hereunder or in any of the certificates, notices or agreements
delivered pursuant hereto, as to all of which recourse shall be had solely
to the assets of the Issuer. For all purposes of this Agreement, in the
performance of its duties or obligations hereunder or in the performance of
any duties or obligations of the Issuer hereunder, the Owner Trustee shall
be subject to, and entitled to the benefits of, the terms and provisions of
Articles Six, Seven and Eight of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by Bankers Trust Company, not in its individual
capacity but solely as Indenture Trustee and in no event shall Bankers Trust
Company have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder or in any of the
58
<PAGE>
certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer.
59
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Sale and Servicing
Agreement to be duly executed by their respective officers as of the day and
year first above written.
HONDA AUTO RECEIVABLES 1999-1 OWNER
TRUST
By: THE BANK OF NEW YORK
(DELAWARE), not in its individual capacity
but solely as Owner Trustee on behalf of the
Trust
By:
---------------------------------------------
Name:
Title:
AMERICAN HONDA RECEIVABLES CORP.,
as Transferor
By:
---------------------------------------------
Name:
Title:
AMERICAN HONDA FINANCE
CORPORATION, as Servicer
By:
---------------------------------------------
Name:
Title:
Acknowledged and accepted as of the day
and year first above written:
BANKERS TRUST COMPANY, not in its
individual capacity but solely as Indenture
Trustee
By:
----------------------------------------
Name:
Title:
60
<PAGE>
SCHEDULE A
SCHEDULE OF RECEIVABLES
Delivered to the Owner Trustee and Indenture Trustee at Closing.
SA-1
<PAGE>
SCHEDULE B
LOCATION OF RECEIVABLE FILES
American Honda Finance Corporation
21041 South Western Avenue, Suite 200
Torrance, California 90501
American Honda Finance Corporation
1355 Northmeadow Parkway, Suite 100
Roswell, Georgia 30076
American Honda Finance Corporation
8505 Freeport Parkway, Suite 600
Irving, Texas 75063
American Honda Finance Corporation
470 Granby Road, Suite 2
S. Hadley, Massachusetts 01075
American Honda Finance Corporation
601 Campus Drive, Suite C-7
Arlington Heights, Illinois 60004
American Honda Finance Corporation
2680 Bishop Drive, Suite 100
San Ramon, California 94583
American Honda Finance Corporation
8514 McAlpine Park Drive, Suite 100
Charlotte, North Carolina 28211
American Honda Finance Corporation
200 Continental Drive, Suite 301
Newark, Delaware 19713
American Honda Finance Corporation
700 Van Ness Avenue, Building 300
Torrance, California 90501
SB-1
<PAGE>
EXHIBIT A
FORM OF DISTRIBUTION STATEMENT TO SECURITYHOLDERS
<TABLE>
<S> <C>
Honda Auto Receivables 1999-1 Owner Trust
NOTE PRINCIPAL DISTRIBUTABLE AMOUNT
Note Monthly Principal Distributable Amount $-------------------
Note Principal Carryover Shortfall $-------------------
change from immediately preceding Distribution Date $-------------------
Total $-------------------
NOTE INTEREST DISTRIBUTABLE AMOUNT
Note Monthly Interest Distributable Amount $-------------------
Class A-1 Notes: ($ per $1,000 original principal amount)
Class A-2 Notes: ($ per $1,000 original principal amount)
Class A-3 Notes: ($ per $1,000 original principal amount)
Class A-4 Notes: ($ per $1,000 original principal amount)
NOTE PRINCIPAL CARRYOVER SHORTFALL
change from immediately preceding Distribution Date $-------------------
Total $-------------------
NOTE INTEREST CARRYOVER SHORTFALL $-------------------
change from immediately preceding Distribution Date $-------------------
Total $-------------------
AVAILABLE AMOUNT
Available Interest $-------------------
Available Principal $-------------------
CERTIFICATE INTEREST DISTRIBUTABLE AMOUNT $-------------------
CERTIFICATE PRINCIPAL DISTRIBUTABLE AMOUNT $-------------------
POOL BALANCE $-------------------
NOTE POOL FACTOR $-------------------
Class A-1 Notes $-------------------
Class A-2 Notes $-------------------
Class A-3 Notes $-------------------
Class A-4 Notes $-------------------
CERTIFICATE POOL FACTOR $-------------------
RESERVE FUND BALANCE $-------------------
change from immediately preceding Distribution Date $-------------------
Total $-------------------
PAYMENTS AHEAD $-------------------
APPLIED PAYMENTS AHEAD $-------------------
</TABLE>
A-1
<PAGE>
<TABLE>
<S> <C>
TOTAL SERVICING FEE $-------------------
AMOUNT OF NOTEHOLDERS DISTRIBUTION ALLOCABLE TO PRINCIPAL $-------------------
Class A-1 Notes: ($ per $1,000 original principal amount)
Class A-2 Notes: ($ per $1,000 original principal amount)
Class A-3 Notes: ($ per $1,000 original principal amount)
Class A-4 Notes: ($ per $1,000 original principal amount)
AMOUNT OF NOTEHOLDERS DISTRIBUTION ALLOCABLE TO INTEREST $-------------------
Class A-1 Notes: ($ per $1,000 original principal amount)
Class A-2 Notes: ($ per $1,000 original principal amount)
Class A-3 Notes: ($ per $1,000 original principal amount)
Class A-4 Notes: ($ per $1,000 original principal amount)
AMOUNT OF CERTIFICATEHOLDERS DISTRIBUTION ALLOCABLE TO INTEREST $-------------------
AMOUNT OF CERTIFICATEHOLDERS DISTRIBUTION ALLOCABLE TO PRINCIPAL $-------------------
NONRECOVERABLE ADVANCES $-------------------
YIELD SUPPLEMENT WITHDRAWAL AMOUNT $-------------------
YIELD SUPPLEMENT AMOUNT $-------------------
AMOUNT ON DEPOSIT IN YIELD SUPPLEMENT ACCOUNT $-------------------
TRUST FEES AND EXPENSES $-------------------
PRINCIPAL PAYMENT AMOUNT $-------------------
</TABLE>
A-2
<PAGE>
EXHIBIT B
FORM OF SERVICER'S CERTIFICATE
[CURRENTLY UNDER REVIEW]
B-1
<PAGE>
(99-1)
Exhibit 10.2
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
HONDA AUTO RECEIVABLES 1999-1 OWNER TRUST,
as Issuer,
AMERICAN HONDA FINANCE CORPORATION,
as Administrator,
AMERICAN HONDA RECEIVABLES CORP.,
as Depositor,
and
BANKERS TRUST COMPANY,
as Indenture Trustee
--------------------------------
ADMINISTRATION AGREEMENT
Dated as of January 1, 1999
--------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
----
<S> <C>
Section 1.01. Capitalized Terms; Interpretive Provisions................................................. 1
Section 1.02. Duties of the Administrator................................................................ 2
Section 1.03. Records.................................................................................... 7
Section 1.04. Compensation............................................................................... 8
Section 1.05. Additional Information to be Furnished to the Issuer....................................... 8
Section 1.06. Independence of the Administrator.......................................................... 8
Section 1.07. No Joint Venture........................................................................... 8
Section 1.08. Other Activities of Administrator.......................................................... 8
Section 1.09. Term of Agreement; Resignation and Removal of Administrator................................ 8
Section 1.10. Action Upon Termination, Resignation or Removal............................................ 9
Section 1.11. Notices.................................................................................... 10
Section 1.12. Amendments................................................................................. 10
Section 1.13. Successors and Assigns..................................................................... 10
Section 1.14. Governing Law.............................................................................. 11
Section 1.15. Headings................................................................................... 11
Section 1.16. Counterparts............................................................................... 11
Section 1.17. Severability............................................................................... 11
Section 1.18. Limitation of Liability of Owner Trustee and Indenture Trustee............................. 11
Section 1.19. Third-Party Beneficiary.................................................................... 11
EXHIBITS
Exhibit A - Form of Power of Attorney...........................................................................A-1
</TABLE>
<PAGE>
This Administration Agreement, dated as of January 1, 1999 (the
"Agreement"), is among Honda Auto Receivables 1999 -1 Owner Trust, as issuer
(the "Issuer"), American Honda Finance Corporation ("AHFC"), as administrator
(in such capacity, the "Administrator"), American Honda Receivables Corp.
("AHRC"), as depositor (in such capacity, the "Depositor"), and Bankers Trust
Company, as indenture trustee (the "Indenture Trustee").
WHEREAS, the Issuer was created pursuant to the Amended and Restated Trust
Agreement, dated as of January 1, 1999 (the "Trust Agreement"), between the
Depositor and The Bank of New York (Delaware), as owner trustee (the "Owner
Trustee");
WHEREAS, the Issuer is issuing ____% Asset Backed Notes, Class A-1, ____%
Asset Backed Notes, Class A-2, ____% Asset Backed Notes, Class A-3 and ____%
Asset Backed Notes, Class A-4 (collectively, the "Notes") pursuant to an
Indenture, dated as of the date hereof (the "Indenture"), between the Issuer and
the Indenture Trustee;
WHEREAS, the Issuer has entered into certain agreements in connection with
the issuance of the Notes and of certain beneficial ownership interests of the
Issuer, including (i) the Indenture, (ii) a Sale and Servicing Agreement, dated
as of the date hereof (the "Sale and Servicing Agreement"), among the Issuer,
AHRC, as seller (in such capacity, the "Seller"), and AHFC, as servicer (in such
capacity, the "Servicer"), and (iii) a Letter of Representations, dated January
__, 1999 (the "Note Depository Agreement" and, together with this Agreement, the
Indenture, the Note Depository Agreement, the Sale and Servicing Agreement and
the Trust Agreement, the "Related Documents"), among the Issuer, the Indenture
Trustee and The Depository Trust Company;
WHEREAS, pursuant to the Related Documents, the Issuer and the Owner
Trustee are required to perform certain duties in connection with (i) the Notes
and the collateral therefor pledged pursuant to the Indenture (the "Collateral")
and (ii) the beneficial ownership interests in the Issuer (the registered
holders of such interests being referred to herein as the "Owners");
WHEREAS, the Issuer and the Owner Trustee desire to have the Administrator
perform certain of the duties of the Issuer and the Owner Trustee referred to in
the preceding clause and to provide such additional services consistent with the
terms of this Agreement and the other Related Documents as the Issuer and the
Owner Trustee may from time to time request; and
WHEREAS, the Administrator has the capacity to provide the services
required hereby and is willing to perform such services for the Issuer and the
Owner Trustee on the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual agreements herein contained,
and of other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto agree as follows:
SECTION 1.01. CAPITALIZED TERMS; INTERPRETIVE PROVISIONS.
(a) Capitalized terms used herein that are not otherwise defined shall
have the meanings ascribed thereto in the Trust Agreement or the Indenture, as
the case may be.
<PAGE>
Whenever used herein, unless the context otherwise requires, the following words
and phrases shall have the following meanings:
"ACCOUNTANTS" shall have the meaning set forth in Section 1.02(f).
"AGREEMENT" means this Administration Agreement, as amended, supplemented
or modified from time to time.
"RELATED DOCUMENTS" means the Note Depository Agreement and all of the
Basic Documents to which the Issuer or the Owner Trustee is a party.
(b) For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires, (i) terms used in this
Agreement include, as appropriate, all genders and the plural as well as the
singular, (ii) references to this Agreement include all Exhibits hereto (iii)
references to words such as "herein", "hereof" and the like shall refer to this
Agreement as a whole and not to any particular part, Article or Section within
this Agreement, (iv) the term "include" and all variations thereof shall mean
"include without limitation" and (v) the term "or" shall include "and/or", and
(vi) the term "proceeds" shall have the meaning ascribed to such term in the
UCC.
SECTION 1.02. DUTIES OF THE ADMINISTRATOR.
(a) The Administrator agrees to perform all its duties as
Administrator and, except as specifically excluded herein, agrees to perform all
the duties of the Issuer and the Owner Trustee under the Related Documents. In
addition, the Administrator shall consult with the Owner Trustee regarding the
duties of the Issuer or the Owner Trustee under the Related Documents. The
Administrator shall monitor the performance of the Issuer and shall advise the
Owner Trustee when action is necessary to comply with the respective duties of
the Issuer and the Owner Trustee under the Related Documents. The Administrator
shall prepare for execution by the Issuer, or shall cause the preparation by
other appropriate persons of, all such documents, reports, notices, filings,
instruments, certificates and opinions that it shall be the duty of the Issuer
or the Owner Trustee to prepare, file or deliver pursuant to the Related
Documents. In furtherance of the foregoing, the Administrator shall take (or, in
the case of the immediately preceding sentence, cause to be taken) all
appropriate action that the Issuer or the Owner Trustee is required to take
pursuant to the Indenture including, without limitation, such of the foregoing
as are required with respect to the following matters under the Indenture
(references are to Sections of the Indenture):
(i) the preparation of or obtaining of the documents and
instruments required for execution and authentication of the Notes and
delivery of the same to the Indenture Trustee (Section 2.02);
(ii) the duty to cause the Note Register to be kept and to give
the Indenture Trustee notice of any appointment of a new Note Registrar and
the location, or change in location, of the Note Register (Section 2.04);
(iii) the notification of Noteholders and the Rating Agencies of
the final principal payment on the Notes (Section 2.07(b));
2
<PAGE>
(iv) the fixing or causing to be fixed of any special record
date and the notification of the Indenture Trustee and Noteholders with
respect to special payment dates, if any (Section 2.07(c));
(v) the preparation of Definitive Notes in accordance with the
instructions of the Clearing Agency (Section 2.11); and
(vi) the preparation, obtaining or filing of the instruments,
opinions and certificates and other documents required for the release of
collateral (Section 2.12);
(vii) the maintenance of an office in the Borough of Manhattan, The
City of New York, for registration of transfer or exchange of Notes
(Section 3.02);
(viii) the duty to cause newly appointed Paying Agents, if any, to
deliver to the Indenture Trustee the instrument specified in the Indenture
regarding funds held in trust (Section 3.03);
(ix) the direction to the Indenture Trustee to deposit monies with
Paying Agents, if any, other than the Indenture Trustee (Section 3.03);
(x) the obtaining and preservation of the Issuer's qualifications
to do business pursuant to Section 3.04 of the Indenture (Section 3.04);
(xi) the preparation of all supplements and amendments to the
Indenture and all financing statements, continuation statements,
instruments of further assurance and other instruments and the taking of
such other action as are necessary or advisable to protect the Owner Trust
Estate (Section 3.05);
(xii) the delivery of the Opinion of Counsel on the Closing Date
and the annual delivery of Opinions of Counsel as to the Owner Trust
Estate, and the annual delivery of the Officer's Certificate and certain
other statements as to compliance with the Indenture (Sections 3.06 and
3.09);
(xiii) the identification to the Indenture Trustee in an
Officer's Certificate of a Person with whom the Issuer has contracted to
perform its duties under the Indenture (Section 3.07(b));
(xiv) the notification of the Indenture Trustee and the Rating
Agencies of each Servicer Default and, if such Servicer Default arises from
the failure of the Servicer to perform any of its duties or obligations
under the Servicing Agreement with respect to the Receivables the taking of
all reasonable steps available to remedy such failure (Section 3.07(d));
(xv) the preparation and obtaining of documents and instruments
required for the release of the Issuer from its obligations upon the merger
or consolidation of the Issuer under the Indenture and the obtaining of the
Opinion of Counsel and the Officer's Certificate relating thereto (Section
3.10);
3
<PAGE>
(xvi) the duty to cause the Servicer to comply with Sections 3.10,
3.11, 3.12, 4.10 and Article Eight of the Sale and Servicing Agreement
(Section 3.14);
(xvii) the delivery of written notice to the Indenture Trustee and
each Rating Agency of each Indenture Default and each default by the
Servicer or the Seller under the Sale and Servicing Agreement (Section
3.19);
(xviii) the monitoring of the Issuer's obligations as to the
satisfaction and discharge of the Indenture and the preparation of an
Officer's Certificate and the obtaining of the Opinion of Counsel and the
Independent Certificate relating thereto (Section 4.01);
(xix) the compliance with Section 5.04 of the Indenture with
respect to the sale of the Owner Trust Estate in a commercially reasonable
manner if an Indenture Default shall have occurred and be continuing
(Section 5.04);
(xx) the preparation and delivery of notice to Noteholders of the
removal of the Indenture Trustee and the appointment of a successor
Indenture Trustee (Section 6.08);
(xxi) the preparation of any written instruments required to
confirm more fully the authority of any co-trustee or separate trustee and
any written instruments necessary in connection with the resignation or
removal of the Indenture Trustee or any co-trustee or separate trustee
(Sections 6.08 and 6.10);
(xxii) maintaining the effectiveness of the licenses required
under the Pennsylvania Motor Vehicle Sales Finance Act (Section 6.14)
(xxiii) the furnishing of the Indenture Trustee with the names and
addresses of Noteholders during any period when the Indenture Trustee is
not the Note Registrar (Section 7.01);
(xxiv) the preparation and, after execution by the Issuer, the
filing with the Commission, any applicable state agencies and the Indenture
Trustee of documents required to be filed on a periodic basis with, and
summaries thereof as may be required by rules and regulations prescribed
by, the Commission and any applicable state agencies and the transmission
of such summaries, as necessary, to the Noteholders (Section 7.03);
(xxv) the opening of one or more accounts in the Issuer's name,
the preparation and delivery of Issuer Orders, Officer's Certificates and
Opinions of Counsel and all other actions necessary with respect to
investment and reinvestment of funds in the Accounts (Sections 8.02 and
8.03);
(xxvi) the preparation of an Issuer Request and Officer's
Certificate and the obtaining of an Opinion of Counsel and Independent
Certificates, if necessary, for the release of the Owner Trust Estate
(Sections 8.04 and 8.05);
(xxvii) the preparation of Issuer Requests and the obtaining of
Opinions of Counsel with respect to the execution of supplemental
indentures and the mailing to the
4
<PAGE>
Noteholders of notices with respect to such supplemental indentures
(Sections 9.01 and 9.02);
(xxviii) the execution, authentication and delivery of new Notes
conforming to any supplemental indenture (Section 9.06);
(xxix) the duty to notify Noteholders and the Rating Agencies of
redemption of the Notes or to cause the Indenture Trustee to provide such
notification (Section 10.02);
(xxx) the preparation and delivery of all Officer's Certificates,
Opinions of Counsel and Independent Certificates with respect to any
requests by the Issuer to the Indenture Trustee to take any action under
the Indenture (Section 11.01(a));
(xxxi) the preparation and delivery of Officer's Certificates and
the obtaining of Independent Certificates, if necessary, for the release of
property from the Lien of the Indenture (Section 11.01(b));
(xxxii) the notification of each Rating Agency, upon the failure
of the Issuer, the Owner Trustee or the Indenture Trustee to give such
notification, of the information required pursuant to Section 11.04 of the
Indenture (Section 11.04);
(xxxiii) the recording of the Indenture, if applicable (Section
11.15).
(b) The Administrator shall:
(i) pay from time to time reasonable compensation to (A) the
Indenture Trustee for all services rendered by the Indenture Trustee under
the Indenture and (B) the Owner Trustee for all services rendered under the
Trust Agreement (in each case which compensation shall not be limited by
any provision of law in regard to the compensation of a trustee of an
express trust);
(ii) except as otherwise expressly provided in the Indenture,
reimburse the Indenture Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Indenture
Trustee in accordance with any provision of the Indenture (including the
reasonable compensation, expenses and disbursements of its agents and
counsel), except any such expense, disbursement or advance as may be
attributable to its willful misconduct, negligence or bad faith;
(iii) except as otherwise expressly provided in the Trust
Agreement, reimburse the Owner Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Owner Trustee
in accordance with any provision of the Trust Agreement (including
reasonable compensation, expenses and disbursements of its agents and
counsel), except any such expense, disbursement or advance as may be
attributable to its willful misconduct, negligence or bad faith; and
(iv) indemnify the Indenture Trustee, the Owner Trustee and their
respective agents for, and hold them harmless against, any loss, liability
or expense incurred without negligence, willful misconduct or bad faith on
their part, arising out of or in connection
5
<PAGE>
with the acceptance or administration of the transactions contemplated by
the Indenture or the Trust Agreement, as the case may be, including the
reasonable costs and expenses of defending themselves against any claim or
liability in connection with the exercise or performance of any of their
powers or duties thereunder.
(c) In addition to the duties set forth in Sections 1.02(a) and (b), the
Administrator shall perform such calculations and shall prepare or shall cause
the preparation by other appropriate Persons of, and shall execute on behalf of
the Issuer or the Owner Trustee, all such documents, notices, reports, filings,
instruments, certificates and opinions that the Issuer or the Owner Trustee are
required to prepare, file or deliver pursuant to the Related Documents, and at
the request of the Owner Trustee shall take all appropriate action that the
Issuer or the Owner Trustee are required to take pursuant to the Related
Documents. In furtherance thereof, the Owner Trustee shall, on behalf of itself
and of the Issuer, execute and deliver to the Administrator and to each
successor Administrator appointed pursuant to the terms hereof, one or more
powers of attorney substantially in the form of Exhibit A hereto, appointing the
Administrator the attorney-in-fact of the Owner Trustee and the Issuer for the
purpose of executing on behalf of the Owner Trustee and the Issuer all such
documents, reports, filings, instruments, certificates and opinions. Subject to
Section 1.06, and in accordance with the directions of the Owner Trustee, the
Administrator shall administer, perform or supervise the performance of such
other activities in connection with the Collateral (including the Related
Documents) as are not covered by any of the foregoing provisions and as are
expressly requested by the Owner Trustee and are reasonably within the
capability of the Administrator.
(d) Notwithstanding anything in this Agreement or the Related Documents to
the contrary, the Administrator shall be responsible for promptly notifying the
Owner Trustee in the event that any withholding tax is imposed on the Issuer's
payments (or allocations of income) to a Trust Certificateholder as contemplated
in Section 5.02(c) of the Trust Agreement. Any such notice shall specify the
amount of any withholding tax required to be withheld by the Owner Trustee
pursuant to such provision.
(e) Notwithstanding anything in this Agreement or the Related Documents to
the contrary, the Administrator shall be responsible for performance of the
duties of the Owner Trustee set forth in Section 5.05 of the Trust Agreement
with respect to, among other things, accounting and reports to Owners; provided,
however, that the Owner Trustee shall retain responsibility for the distribution
of the Schedule K-1's, necessary to enable each Owner to prepare its federal and
state income tax returns.
(f) The Administrator shall satisfy its obligations with respect to clause
(d) above by retaining, at the expense of the Issuer, payable by the
Administrator, a firm of independent public accountants (the "Accountants")
acceptable to the Owner Trustee, which shall perform the obligations of the
Administrator thereunder. In connection with paragraph (d) above, the
Accountants shall provide, prior to _____________, 1999, a letter in form and
substance satisfactory to the Owner Trustee as to whether any tax withholding is
then required and, if required, the procedures to be followed with respect
thereto to comply with the requirements of the Code. The Accountants shall be
required to update the letter in each instance that any additional tax
withholding is subsequently required or any previously required tax withholding
shall no longer be required.
6
<PAGE>
(g) The Administrator shall perform any duties expressly required to be
performed by the Administrator under the Trust Agreement.
(h) In carrying out the foregoing duties or any of its other obligations
under this Agreement, the Administrator may enter into transactions or otherwise
deal with any of its Affiliates; provided, however, that the terms of any such
transactions or dealings shall be in accordance with any directions received
from the Issuer and shall be, in the Administrator's opinion, no less favorable
to the Issuer than would be available from unaffiliated parties.
(i) With respect to matters that in the reasonable judgment of the
Administrator are non-ministerial, the Administrator shall not take any action
unless within a reasonable time before the taking of such action, the
Administrator shall have notified the Owner Trustee of the proposed action and
the Owner Trustee shall not have withheld consent or provided an alternative
direction. For the purpose of the preceding sentence, "non-ministerial matters"
shall include:
(i) the amendment of or any supplement to the Indenture;
(ii) the initiation of any claim or lawsuit by the Issuer and the
compromise of any action, claim or lawsuit brought by or against the Issuer
(other than in connection with the collection of the Receivables);
(iii) the amendment, change or modification of the Basic Documents;
(iv) the appointment of successor Note Registrars, successor
Paying Agents and successor Indenture Trustees pursuant to the Indenture or
the appointment of successor Administrators or successor Servicers, or the
consent to the assignment by the Note Registrar, any Paying Agent or
Indenture Trustee of its obligations under the Indenture; and
(v) the removal of the Indenture Trustee.
(j) Notwithstanding anything to the contrary in this Agreement, the
Administrator shall not be obligated to, and shall not, (i) make any payments to
the Noteholders under the Related Documents, (ii) sell the Owner Trust Estate
pursuant to Section 5.02 of the Indenture, (iii) take any other action that the
Issuer directs the Administrator not to take on its behalf or (iv) take any
other action which may be construed as having the effect of varying the
investment of the Trust Certificateholders.
SECTION 1.03. RECORDS. The Administrator shall maintain appropriate books
of account and records relating to services performed hereunder, which books of
account and records shall be accessible for inspection by the Issuer and the
Depositor at any time during normal business hours.
SECTION 1.04. COMPENSATION. As compensation for the performance of the
Administrator's obligations under this Agreement and as reimbursement for its
expenses related thereto, the Administrator shall be entitled to an annual
payment of compensation which shall be solely an obligation of the Depositor.
7
<PAGE>
SECTION 1.05. ADDITIONAL INFORMATION TO BE FURNISHED TO THE ISSUER. The
Administrator shall furnish to the Issuer from time to time such additional
information regarding the Collateral as the Issuer shall reasonably request.
SECTION 1.06. INDEPENDENCE OF THE ADMINISTRATOR. For all purposes of this
Agreement, the Administrator shall be an independent contractor and shall not be
subject to the supervision of the Issuer or the Owner Trustee with respect to
the manner in which it accomplishes the performance of its obligations
hereunder. Unless expressly authorized by the Issuer, the Administrator shall
have no authority to act for or represent the Issuer or the Owner Trustee in any
way and shall not otherwise be deemed an agent of the Issuer or the Owner
Trustee.
SECTION 1.07. NO JOINT VENTURE. Nothing contained in this Agreement (i)
shall constitute the Administrator and either the Issuer or the Owner Trustee as
members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on any of them or (iii) shall be deemed to confer
on any of them any express, implied or apparent authority to incur any
obligation or liability on behalf of the others.
SECTION 1.08. OTHER ACTIVITIES OF ADMINISTRATOR. Nothing herein shall
prevent the Administrator or its Affiliates from engaging in other businesses
or, in its sole discretion, from acting in a similar capacity as an
administrator for any other Person or entity, even though such person or entity
may engage in business activities similar to those of the Issuer, the Owner
Trustee or the Indenture Trustee.
SECTION 1.09. TERM OF AGREEMENT; RESIGNATION AND REMOVAL OF ADMINISTRATOR.
This Agreement shall continue in force until the dissolution of the Issuer, upon
which event this Agreement shall automatically terminate.
(a) Subject to Section 1.09(e), the Administrator may resign its duties
hereunder by providing the Issuer with at least 60 days' prior written notice.
(b) Subject to Section 1.09(e), the Issuer may remove the Administrator
without cause by providing the Administrator with at least 60 days' prior
written notice.
(c) Subject to Section 1.09(e), at the sole option of the Issuer, the
Administrator may be removed immediately upon written notice of termination from
the Issuer to the Administrator if any of the following events shall occur:
(i) the Administrator shall default in the performance of any of
its duties under this Agreement and, after notice of such default, shall
not cure such default within ten days (or, if such default cannot be cured
in such time, shall not give within ten days such assurance of cure as
shall be reasonably satisfactory to the Issuer);
(ii) the existence of any proceeding or action, or the entry of a
decree or order for relief by a court or regulatory authority having
jurisdiction over the Administrator in an involuntary case under the
federal bankruptcy laws, as now or hereafter in effect, or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Administrator or of any substantial part of its
property, or ordering the
8
<PAGE>
winding up or liquidation of the affairs of the Administrator and the
continuance of any such action, proceeding, decree or order unstayed and,
in the case of any such order or decree, in effect for a period of 90
consecutive days; or
(iii) the commencement by the Administrator of a voluntary case
under the federal bankruptcy laws, as now or hereafter in effect, or the
consent by the Administrator to the appointment of or taking of possession
by a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Administrator or of any substantial part of
its property or the making by the Administrator of an assignment for the
benefit of creditors or the failure by the Administrator generally to pay
its debts as such debts become due or the taking of corporate action by the
Administrator in furtherance of any of the foregoing.
The Administrator agrees that if any of the events specified in clauses
(ii) or (iii) above shall occur, it shall give written notice thereof to the
Issuer and the Indenture Trustee within seven days after the occurrence of such
event.
(d) No resignation or removal of the Administrator pursuant to this
Section shall be effective until (i) a successor Administrator shall have been
appointed by the Issuer and (ii) such successor Administrator shall have agreed
in writing to be bound by the terms of this Agreement in the same manner as the
Administrator is bound hereunder.
(e) The appointment of any successor Administrator shall be effective only
after satisfaction of the Rating Agency Condition with respect to the proposed
appointment.
(f) Subject to Section 1.09(d) and 1.09(e), the Administrator acknowledges
that upon the appointment of a successor Servicer pursuant to the Sale and
Servicing Agreement, the Administrator shall immediately resign and such
successor Servicer shall automatically become the Administrator under this
Agreement; provided, however, that this paragraph shall not apply at such times
as the Indenture Trustee shall be the successor Servicer.
SECTION 1.10. ACTION UPON TERMINATION, RESIGNATION OR REMOVAL. Promptly
upon the effective date of termination of this Agreement pursuant to the first
sentence of Section 1.09 or the resignation or removal of the Administrator
pursuant to Section 1.09(a), (b) or (c), respectively, the Administrator shall
be entitled to be paid all fees and reimbursable expenses accruing to it to the
date of such termination, resignation or removal. The Administrator shall
forthwith upon such termination pursuant to the first sentence of Section 1.09
deliver to the Issuer all property and documents of or relating to the
Collateral then in the custody of the Administrator. In the event of the
resignation or removal of the Administrator pursuant to Section 1.09(a), (b) or
(c), respectively, the Administrator shall cooperate with the Issuer and take
all reasonable steps requested to assist the Issuer in making an orderly
transfer of the duties of the Administrator.
SECTION 1.11. NOTICES. All demands, notices and communications hereunder
shall be in writing and shall be delivered or mailed by registered or certified
first-class United States mail, postage prepaid, hand delivery, prepaid courier
service, or by telecopier (followed by hard copy by overnight delivery), and
addressed in each case as follows: (a) if to the Issuer or the Owner Trustee,
to: Honda Auto Receivables 1999-1 Owner Trust, The Bank of New York (Delaware),
9
<PAGE>
White Clay Center, Route 273, Newark, Delaware 19711, Attention: Corporate Trust
Administration Department, with a copy to The Bank of New York, 101 Barclay
Street, 12E, New York, New York 10286, Attention:_____________________; (b) if
to the Administrator, to: American Honda Finance Corporation, 700 Van Ness
Avenue, Building 300, Torrance, California 90501, Attention: President; (c) if
to the Depositor, to: American Honda Receivables Corp., 700 Van Ness Avenue,
Building 300, Torrance, California 90501, Attention: President; and (d) if to
the Indenture Trustee, to: Bankers Trust Company, Four Albany Street, 10th
Floor, New York, New York 10006. Attention: _____________________; or to such
other address as any party shall have provided to the other parties in writing.
Any notice required to be in writing hereunder shall be deemed given if such
notice is mailed by certified mail, postage prepaid, or hand-delivered to the
address of such party as provided above.
SECTION 1.12. AMENDMENTS. This Agreement may be amended from time to time
by a written amendment duly executed and delivered by the parties hereto, with
the written consent of the Owner Trustee but without the consent of the
Securityholders, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of the Securityholders; provided, that such amendment will
not, in the Opinion of Counsel satisfactory to the Indenture Trustee, materially
and adversely affect the interest of any Noteholders or Trust Certificateholder.
This Agreement may also be amended by the parties hereto with the written
consent of the Owner Trustee and the Holders of Notes evidencing at least a
majority of the Outstanding Amount and the Holders of Trust Certificates
evidencing at least a majority of the Percentage Interests evidenced by the
Trust Certificates for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of Securityholders; provided, however, that
no such amendment may (i) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments on the Receivables or
distributions that are required to be made for the benefit of the
Securityholders or (ii) reduce the aforesaid percentage of the Holders of Notes
and Trust Certificates which are required to consent to any such amendment,
without the consent of the Holders of all outstanding Notes and Trust
Certificates. Notwithstanding the foregoing, the Administrator may not amend
this Agreement without the permission of the Depositor, which permission shall
not be unreasonably withheld.
SECTION 1.13. SUCCESSORS AND ASSIGNS. This Agreement may not be assigned by
the Administrator unless such assignment is previously consented to in writing
by the Issuer and the Owner Trustee and subject to the satisfaction of the
Rating Agency Condition in respect thereof. An assignment with such consent and
satisfaction, if accepted by the assignee, shall bind the assignee hereunder in
the same manner as the Administrator is bound hereunder. Notwithstanding the
foregoing, this Agreement may be assigned by the Administrator without the
consent of the Issuer or the Owner Trustee to a corporation or other
organization that is a successor (by merger, consolidation or purchase of
assets) to the Administrator; provided, that such successor organization
executes and delivers to the Issuer, the Owner Trustee and the Indenture Trustee
an agreement, in form and substance reasonably satisfactory to the Owner Trustee
and the Indenture Trustee, in which such corporation or other organization
agrees to be bound hereunder by the terms of said assignment in the same manner
as the Administrator is bound hereunder. Subject to the foregoing, this
Agreement shall bind any successors or assigns of the parties hereto.
10
<PAGE>
SECTION 1.14. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS, EXCEPT THAT
THE DUTIES OF THE INDENTURE TRUSTEE SHALL BE GOVERNED BY THE LAWS OF THE STATE
OF NEW YORK.
SECTION 1.15. HEADINGS. The headings of the various Sections herein are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.
SECTION 1.16. COUNTERPARTS. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.
SECTION 1.17. SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 1.18. LIMITATION OF LIABILITY OF OWNER TRUSTEE AND INDENTURE
TRUSTEE.
(a) Notwithstanding anything contained herein to the contrary, this
instrument has been countersigned by The Bank of New York (Delaware) in its
capacity as Owner Trustee of the Issuer and in no event shall The Bank of New
York (Delaware) in its individual capacity or any beneficial owner of the Issuer
have any liability for the representations, warranties, covenants, agreements or
other obligations of the Issuer hereunder, as to all of which recourse shall be
had solely to the assets of the Issuer. For all purposes of this Agreement, in
the performance of any duties or obligations of the Issuer hereunder, the Owner
Trustee shall be subject to, and entitled to the benefits of, the terms and
provisions of Articles Six, Seven and Eight of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been executed by Bankers Trust Company as Indenture Trustee and in
no event shall Bankers Trust Company have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer hereunder
or in any of the certificates, notices or agreements delivered pursuant hereto,
as to all of which recourse shall be had solely to the assets of the Issuer.
SECTION 1.19. THIRD-PARTY BENEFICIARY. The Owner Trustee is a third-party
beneficiary to this Agreement and is entitled to the rights and benefits
hereunder and may enforce the provisions hereof as if it were a party hereto.
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
HONDA AUTO RECEIVABLES 1999-1 OWNER TRUST,
as Issuer
By: The Bank of New York (Delaware),
as Owner Trustee
By:
-----------------------------------------
Name:
Title:
AMERICAN HONDA RECEIVABLES CORP.,
as Depositor
By:
-----------------------------------------
Name:
Title:
BANKERS TRUST COMPANY,
as Indenture Trustee
By:
-----------------------------------------
Name:
Title:
AMERICAN HONDA FINANCE CORPORATION,
as Administrator
By:
----------------------------------------
Name:
Title:
12
<PAGE>
EXHIBIT A
POWER OF ATTORNEY PURSUANT TO
SECTION 1.02(c) OF ADMINISTRATION AGREEMENT
KNOW ALL MEN BY THESE PRESENTS, that The Bank of New York (Delaware), a
Delaware corporation (the "Grantor"), located at White Clay Center, Route 273,
Newark, Delaware 19711, as owner trustee of Honda Auto Receivables 1999-1 Owner
Trust, a Delaware business trust (the "Issuer"), does hereby appoint American
Honda Finance Corporation, a California corporation (the "Grantee"), located at
700 Van Ness Avenue, Building 300, Torrance, California 90501, as its
attorney-in-fact with full power of substitution and hereby authorizes and
empowers the Grantee, in the name of and on behalf of the Grantor or the Issuer,
to take the following actions from time to time with respect to the duties of
the Administrator under the Administration Agreement, dated as of __________
____, 1999 (the "Administration Agreement"), among the Issuer, the
Administrator, American Honda Receivables Corp., as depositor and Bankers Trust
Company as indenture trustee, for the purpose of executing on behalf of the
Grantor or the Issuer all such documents, reports, filings, instruments,
certificates and opinions required pursuant to the Related Documents:
The Grantee is hereby empowered to do any and all lawful acts necessary or
desirable to effect the performance of the duties under the Administration
Agreement and the Grantor hereby ratifies and confirms any and all lawful acts
the Grantee shall undertake pursuant to and in conformity with this Power of
Attorney.
This Power of Attorney is revocable in whole or in part as to the powers
herein granted upon notice by the Grantor. If not earlier revoked, this Power of
Attorney shall expire completely or, if so indicated, in part, upon the earlier
of (i) the termination of the of the amended and restated trust agreement, dated
as of __________ ____, 1999 (the "Trust Agreement"), among American Honda
Receivables Corp., as depositor and the Grantor, as owner trustee, and (ii) the
termination of the Administration Agreement, as each may be amended, restated or
supplemented from time to time. Capitalized terms used herein that are not
otherwise defined shall have the meanings ascribed thereto in the Trust
Agreement.
This Power of Attorney shall be created under and governed and construed
under the internal laws of the State of New York.
The Grantor executes this Power of Attorney with the intent to be legally
bound hereby, and with the intent that such execution shall have the full
dignity afforded by the accompanying witnessing and notarization and all lesser
dignity resulting from the absence of such witnessing and notarization or any
combination thereof.
A-1
<PAGE>
Dated this __________ ____, 1999.
[Seal] THE BANK OF NEW YORK (DELAWARE),
as Owner Trustee
By:
-----------------------------
Signed and delivered in the presence of:
- - -----------------------------------------------
Address:
---------------------------------------
---------------------------------------
[Unofficial Witness]
A-2
<PAGE>
- - ------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) _______________
----------------------
BANKERS TRUST COMPANY
(Exact name of trustee as specified in its charter)
NEW YORK 13-4941247
(Jurisdiction of Incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification no.)
FOUR ALBANY STREET
NEW YORK, NEW YORK 10006
(Address of principal (Zip Code)
executive offices)
BANKERS TRUST COMPANY
LEGAL DEPARTMENT
130 LIBERTY STREET, 31ST FLOOR
NEW YORK, NEW YORK 10006
(212) 250-2201
(Name, address and telephone number of agent for service)
----------------------
AMERICAN HONDA RECEIVABLES CORP.
(Exact name of Registrant as specified in its charter)
CALIFORNIA 33-0526079
(State or other jurisdiction of (I.R.S. employer
Incorporation or organization) Identification no.)
700 VAN NESS AVENUE
TORRANCE, CA 90501
(310) 781-4100
(Address, including zip code, and telephone number, including area code, of
Originator's principal executive offices)
Y. KOHAMA
700 VAN NESS AVENUE
TORRANCE, CALIFORNIA 90501
(310) 781-4100
(Name, address, including zip code, and telephone number, including area
code, of agent for service with respect to the originator)
<PAGE>
HONDA AUTO RECEIVABLES 1999-1 OWNER TRUST
(Issuer with respect to the securities)
____% ASSET BACKED NOTES, CLASS [A-1]
____% ASSET BACKED NOTES, CLASS [A-2]
____% ASSET BACKED NOTES, CLASS [A-3]
____% ASSET BACKED NOTES, CLASS [A-4]
(Title of the indenture securities)
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee.
(a) Name and address of each examining or supervising
authority to which it is subject.
Name Address
---- -------
Federal Reserve Bank (2nd District) New York, NY
Federal Deposit Insurance Corporation Washington, D.C.
New York State Banking Department Albany, NY
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
If the obligor is an affiliate of the Trustee, describe each
such affiliation.
None.
ITEM 3.-15. NOT APPLICABLE
ITEM 16. LIST OF EXHIBITS.
EXHIBIT 1- Restated Organization Certificate of Bankers Trust
Company dated August 7, 1990, Certificate of
Amendment of the Organization Certificate of Bankers
Trust Company dated June 21, 1995 - Incorporated
herein by reference to Exhibit 1 filed with Form T-1
Statement, Registration No. 33-65171, Certificate of
Amendment of the Organization Certificate of Bankers
Trust Company dated March 20, 1996, incorporate by
referenced to Exhibit 1 filed with Form T-1
Statement, Registration No. 333-25843 and
Certificate of Amendment of the Organization
Certificate of Bankers Trust Company dated June 19,
1997, copy attached.
EXHIBIT 2 - Certificate of Authority to commence business -
Incorporated herein by reference to Exhibit 2 filed
with Form T-1 Statement, Registration No. 333-12199.
EXHIBIT 3 - Authorization of the Trustee to exercise corporate
trust powers - Incorporated herein by reference to
Exhibit 2 filed with Form T-1 Statement,
Registration No. 333-12199.
EXHIBIT 4 - Existing By-Laws of Bankers Trust Company, as
amended on November 18, 1997. Copy attached.
-2-
<PAGE>
EXHIBIT 5 - Not applicable.
EXHIBIT 6 - Consent of Bankers Trust Company required by Section
321(b) of the Act. - Incorporated herein by
reference to Exhibit 4 filed with Form T-1
Statement, Registration No. 22-18864.
EXHIBIT 7 - The latest report of condition of Bankers Trust
Company dated as of September 30, 1998. Copy
attached.
EXHIBIT 8 - Not Applicable.
EXHIBIT 9 - Not Applicable.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Bankers Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this
statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in The City of New York, and State of New
York, on the 8th day of January, 1999.
BANKERS TRUST COMPANY
By:
-----------------------------
-4-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Bankers Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this
statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in The City of New York, and State of New
York, on the 8th day of January, 1999.
BANKERS TRUST COMPANY
By: Lillian K. Peros
-------------------------------------
Lillian K. Peros
Vice President
-5-
<PAGE>
STATE OF NEW YORK,
BANKING DEPARTMENT
I, MANUEL KURSKY, Deputy Superintendent of Banks of the State of New
York, DO HEREBY APPROVE the annexed Certificate entitled "CERTIFICATE OF
AMENDMENT OF THE ORGANIZATION CERTIFICATE OF BANKERS TRUST COMPANY UNDER
SECTION 8005 OF THE BANKING LAW," dated June 19, 1997, providing for an
increase in authorized capital stock from $1,601,666,670 consisting of
100,166,667 shares with a par value of $10 each designated as Common Stock
and 600 shares with a par value of $1,000,000 each designated as Series
Preferred Stock to $2,001,666,670 consisting of 100,166,667 shares with a par
value of $10 each designated as Common Stock and 1,000 shares with a par
value of $1,000,000 each designated as Series Preferred Stock.
WITNESS, MY HAND AND OFFICIAL SEAL OF THE BANKING DEPARTMENT AT THE CITY
OF NEW YORK,
THIS 27TH DAY OF JUNE IN THE YEAR OF OUR LORD ONE
---- ----
THOUSAND NINE HUNDRED AND NINETY-SEVEN.
Manuel Kursky
------------------------------
DEPUTY SUPERINTENDENT OF BANKS
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
ORGANIZATION CERTIFICATE
OF BANKERS TRUST
Under Section 8005 of the Banking Law
---------------------
We, James T. Byrne, Jr. and Lea Lahtinen, being respectively a Managing
Director and an Assistant Secretary of Bankers Trust Company, do hereby
certify:
1. The name of the corporation is Bankers Trust Company.
2. The organization certificate of said corporation was filed by the
Superintendent of Banks on the 5th of March, 1903.
3. The organization certificate as heretofore amended is hereby
amended to increase the aggregate number of shares which the corporation
shall have authority to issue and to increase the amount of its authorized
capital stock in conformity therewith.
4. Article III of the organization certificate with reference to the
authorized capital stock, the number of shares into which the capital stock
shall be divided, the par value of the shares and the capital stock
outstanding, which reads as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is One Billion, Six Hundred and One Million, Six Hundred Sixty-Six
Thousand, Six Hundred Seventy Dollars ($1,601,666,670), divided into One
Hundred Million, One Hundred Sixty-Six Thousand, Six Hundred Sixty-Seven
(100,166,667) shares with a par value of $10 each designated as Common Stock
and 600 shares with a par value of One Million Dollars ($1,000,000) each
designated as Series Preferred Stock."
is hereby amended to read as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is Two Billion One Million, Six Hundred Sixty-Six Thousand, Six Hundred
Seventy Dollars ($2,001,666,670), divided into One Hundred Million, One
Hundred Sixty-Six Thousand, Six Hundred Sixty-Seven (100,166,667) shares with
a par value of $10 each designated as Common Stock and 1000 shares with a par
value of One Million Dollars ($1,000,000) each designated as Series Preferred
Stock."
<PAGE>
5. The foregoing amendment of the organization certificate was
authorized by unanimous written consent signed by the holder of all
outstanding shares entitled to vote thereon.
IN WITNESS WHEREOF, we have made and subscribed this certificate this
19th day of June, 1997.
James T. Byrne, Jr.
---------------------------
James T. Byrne, Jr.
Managing Director
Lea Lahtinen
---------------------------
Lea Lahtinen
Assistant Secretary
State of New York )
) ss:
County of New York )
Lea Lahtinen, being fully sworn, deposes and says that she is an
Assistant Secretary of Bankers Trust Company, the corporation described in
the foregoing certificate; that she has read the foregoing certificate and
knows the contents thereof, and that the statements herein contained are true.
Lea Lahtinen
------------------
Lea Lahtinen
Sworn to before me this 19th day
of June, 1997.
Sandra L. West
- - --------------------
Notary Public
SANDRA L. WEST
Notary Public State of New York
No. 31-4942101
Qualified in New York County
Commission Expires September 19, 2003
<PAGE>
BY-LAWS
NOVEMBER 18, 1997
Bankers Trust Company
New York
<PAGE>
BY-LAWS
of
BANKERS TRUST COMPANY
ARTICLE I
MEETINGS OF STOCKHOLDERS
SECTION 1. The annual meeting of the stockholders of this Company shall be
held at the office of the Company in the Borough of Manhattan, City of New
York, on the third Tuesday in January of each year, for the election of
directors and such other business as may properly come before said meeting.
SECTION 2. Special meetings of stockholders other than those regulated by
statute may be called at any time by a majority of the directors. It shall
be the duty of the Chairman of the Board, the Chief Executive Officer or the
President to call such meetings whenever requested in writing to do so by
stockholders owning a majority of the capital stock.
SECTION 3. At all meetings of stockholders, there shall be present, either in
person or by proxy, stockholders owning a majority of the capital stock of
the Company, in order to constitute a quorum, except at special elections of
directors, as provided by law, but less than a quorum shall have power to
adjourn any meeting.
SECTION 4. The Chairman of the Board or, in his absence, the Chief Executive
Officer or, in his absence, the President or, in their absence, the senior
officer present, shall preside at meetings of the stockholders and shall
direct the proceedings and the order of business. The Secretary shall act as
secretary of such meetings and record the proceedings.
ARTICLE II
DIRECTORS
SECTION 1. The affairs of the Company shall be managed and its corporate
powers exercised by a Board of Directors consisting of such number of
directors, but not less than ten nor more than twenty-five, as may from time
to time be fixed by resolution adopted by a majority of the directors then in
office, or by the stockholders. In the event of any increase in the number
of directors, additional directors may be elected within the limitations so
fixed, either by the stockholders or within the limitations imposed by law,
by a majority of directors then in office. One-third of the number of
directors, as fixed from time to time, shall constitute a quorum. Any one or
more members of the Board of Directors or any Committee thereof may
participate in a meeting of the Board of Directors or Committee thereof by
means of a conference telephone or similar communications equipment which
allows all persons participating in the meeting to hear each other at the
same time. Participation by such means shall constitute presence in person
at such a meeting.
All directors hereafter elected shall hold office until the next annual
meeting of the stockholders and until their successors are elected and have
qualified. No person who
<PAGE>
shall have attained age 72 shall be eligible to be elected or re-elected a
director. Such director may, however, remain a director of the Company until
the next annual meeting of the stockholders of Bankers Trust New York
Corporation (the Company's parent) so that such director's retirement will
coincide with the retirement date from Bankers Trust New York Corporation.
No Officer-Director who shall have attained age 65, or earlier relinquishes
his responsibilities and title, shall be eligible to serve as a director.
SECTION 2. Vacancies not exceeding one-third of the whole number of the Board
of Directors may be filled by the affirmative vote of a majority of the
directors then in office, and the directors so elected shall hold office for
the balance of the unexpired term.
SECTION 3. The Chairman of the Board shall preside at meetings of the Board
of Directors. In his absence, the Chief Executive Officer or, in his
absence, such other director as the Board of Directors from time to time may
designate shall preside at such meetings.
SECTION 4. The Board of Directors may adopt such Rules and Regulations for
the conduct of its meetings and the management of the affairs of the Company
as it may deem proper, not inconsistent with the laws of the State of New
York, or these By-Laws, and all officers and employees shall strictly adhere
to, and be bound by, such Rules and Regulations.
SECTION 5. Regular meetings of the Board of Directors shall be held from time
to time on the third Tuesday of the month. If the day appointed for holding
such regular meetings shall be a legal holiday, the regular meeting to be
held on such day shall be held on the next business day thereafter. Special
meetings of the Board of Directors may be called upon at least two day's
notice whenever it may be deemed proper by the Chairman of the Board or, the
Chief Executive Officer or, in their absence, by such other director as the
Board of Directors may have designated pursuant to Section 3 of this Article,
and shall be called upon like notice whenever any three of the directors so
request in writing.
SECTION 6. The compensation of directors as such or as members of committees
shall be fixed from time to time by resolution of the Board of Directors.
<PAGE>
ARTICLE III
COMMITTEES
SECTION 1. There shall be an Executive Committee of the Board consisting of
not less than five directors who shall be appointed annually by the Board of
Directors. The Chairman of the Board shall preside at meetings of the
Executive Committee. In his absence, the Chief Executive Officer or, in his
absence, such other member of the Committee as the Committee from time to
time may designate shall preside at such meetings.
The Executive Committee shall possess and exercise to the extent permitted by
law all of the powers of the Board of Directors, except when the latter is in
session, and shall keep minutes of its proceedings, which shall be presented
to the Board of Directors at its next subsequent meeting. All acts done and
powers and authority conferred by the Executive Committee from time to time
shall be and be deemed to be, and may be certified as being, the act and
under the authority of the Board of Directors.
A majority of the Committee shall constitute a quorum, but the Committee may
act only by the concurrent vote of not less than one-third of its members, at
least one of whom must be a director other than an officer. Any one or more
directors, even though not members of the Executive Committee, may attend any
meeting of the Committee, and the member or members of the Committee present,
even though less than a quorum, may designate any one or more of such
directors as a substitute or substitutes for any absent member or members of
the Committee, and each such substitute or substitutes shall be counted for
quorum, voting, and all other purposes as a member or members of the
Committee.
SECTION 2. There shall be an Audit Committee appointed annually by resolution
adopted by a majority of the entire Board of Directors which shall consist of
such number of directors, who are not also officers of the Company, as may
from time to time be fixed by resolution adopted by the Board of Directors.
The Chairman shall be designated by the Board of Directors, who shall also
from time to time fix a quorum for meetings of the Committee. Such Committee
shall conduct the annual directors' examinations of the Company as required
by the New York State Banking Law; shall review the reports of all
examinations made of the Company by public authorities and report thereon to
the Board of Directors; and shall report to the Board of Directors such other
matters as it deems advisable with respect to the Company, its various
departments and the conduct of its operations.
In the performance of its duties, the Audit Committee may employ or retain,
from time to time, expert assistants, independent of the officers or
personnel of the Company, to make studies of the Company's assets and
liabilities as the Committee may request and to make an examination of the
accounting and auditing methods of the Company and its system of internal
protective controls to the extent considered necessary or advisable in order
to determine that the operations of the Company, including its fiduciary
departments, are being audited by the General Auditor in such a manner as to
provide prudent and adequate protection. The Committee also may direct the
General Auditor to make such investigation as it deems necessary or advisable
with respect to the Company, its various departments and the conduct of its
operations. The Committee shall hold regular quarterly meetings and during
the intervals thereof shall meet at other times on call of the Chairman.
<PAGE>
SECTION 3. The Board of Directors shall have the power to appoint any other
Committees as may seem necessary, and from time to time to suspend or
continue the powers and duties of such Committees. Each Committee appointed
pursuant to this Article shall serve at the pleasure of the Board of
Directors.
ARTICLE IV
OFFICERS
SECTION 1. The Board of Directors shall elect from among their number a
Chairman of the Board and a Chief Executive Officer; and shall also elect a
President, and may also elect a Senior Vice Chairman, one or more Vice
Chairmen, one or more Executive Vice Presidents, one or more Senior Managing
Directors, one or more Managing Directors, one or more Senior Vice
Presidents, one or more Principals, one or more Vice Presidents, one or more
General Managers, a Secretary, a Controller, a Treasurer, a General Counsel,
one or more Associate General Counsels, a General Auditor, a General Credit
Auditor, and one or more Deputy Auditors, who need not be directors. The
officers of the corporation may also include such other officers or assistant
officers as shall from time to time be elected or appointed by the Board.
The Chairman of the Board or the Chief Executive Officer or, in their
absence, the President, the Senior Vice Chairman or any Vice Chairman, may
from time to time appoint assistant officers. All officers elected or
appointed by the Board of Directors shall hold their respective offices
during the pleasure of the Board of Directors, and all assistant officers
shall hold office at the pleasure of the Board or the Chairman of the Board
or the Chief Executive Officer or, in their absence, the President, the
Senior Vice Chairman or any Vice Chairman. The Board of Directors may
require any and all officers and employees to give security for the faithful
performance of their duties.
SECTION 2. The Board of Directors shall designate the Chief Executive Officer
of the Company who may also hold the additional title of Chairman of the
Board, President, Senior Vice Chairman or Vice Chairman and such person
shall have, subject to the supervision and direction of the Board of
Directors or the Executive Committee, all of the powers vested in such Chief
Executive Officer by law or by these By-Laws, or which usually attach or
pertain to such office. The other officers shall have, subject to the
supervision and direction of the Board of Directors or the Executive
Committee or the Chairman of the Board or, the Chief Executive Officer, the
powers vested by law or by these By-Laws in them as holders of their
respective offices and, in addition, shall perform such other duties as shall
be assigned to them by the Board of Directors or the Executive Committee or
the Chairman of the Board or the Chief Executive Officer.
The General Auditor shall be responsible, through the Audit Committee, to the
Board of Directors for the determination of the program of the internal audit
function and the evaluation of the adequacy of the system of internal
controls. Subject to the Board of Directors, the General Auditor shall have
and may exercise all the powers and shall perform all the duties usual to
such office and shall have such other powers as may be prescribed or assigned
to him from time to time by the Board of Directors or vested in him by law or
by these By-Laws. He shall perform such other duties and shall make such
investigations, examinations and reports as may be prescribed or required by
the Audit Committee. The General Auditor shall have unrestricted access to
all records and premises of the Company and shall delegate such authority to
his subordinates. He shall have the duty to report to the Audit Committee on
all matters concerning the internal audit program and the adequacy of the
system of internal controls of the Company which he deems advisable or which
the Audit Committee may request. Additionally, the General
<PAGE>
Auditor shall have the duty of reporting independently of all officers of the
Company to the Audit Committee at least quarterly on any matters concerning
the internal audit program and the adequacy of the system of internal
controls of the Company that should be brought to the attention of the
directors except those matters responsibility for which has been vested in
the General Credit Auditor. Should the General Auditor deem any matter to be
of special immediate importance, he shall report thereon forthwith to the
Audit Committee. The General Auditor shall report to the Chief Financial
Officer only for administrative purposes.
The General Credit Auditor shall be responsible to the Chief Executive
Officer and, through the Audit Committee, to the Board of Directors for the
systems of internal credit audit, shall perform such other duties as the
Chief Executive Officer may prescribe, and shall make such examinations and
reports as may be required by the Audit Committee. The General Credit
Auditor shall have unrestricted access to all records and may delegate such
authority to subordinates.
SECTION 3. The compensation of all officers shall be fixed under such plan or
plans of position evaluation and salary administration as shall be approved
from time to time by resolution of the Board of Directors.
SECTION 4. The Board of Directors, the Executive Committee, the Chairman of
the Board, the Chief Executive Officer or any person authorized for this
purpose by the Chief Executive Officer, shall appoint or engage all other
employees and agents and fix their compensation. The employment of all such
employees and agents shall continue during the pleasure of the Board of
Directors or the Executive Committee or the Chairman of the Board or the
Chief Executive Officer or any such authorized person; and the Board of
Directors, the Executive Committee, the Chairman of the Board, the Chief
Executive Officer or any such authorized person may discharge any such
employees and agents at will.
<PAGE>
ARTICLE V
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS
SECTION 1. The Company shall, to the fullest extent permitted by Section 7018
of the New York Banking Law, indemnify any person who is or was made, or
threatened to be made, a party to an action or proceeding, whether civil or
criminal, whether involving any actual or alleged breach of duty, neglect or
error, any accountability, or any actual or alleged misstatement, misleading
statement or other act or omission and whether brought or threatened in any
court or administrative or legislative body or agency, including an action by
or in the right of the Company to procure a judgment in its favor and an
action by or in the right of any other corporation of any type or kind,
domestic or foreign, or any partnership, joint venture, trust, employee
benefit plan or other enterprise, which any director or officer of the
Company is servicing or served in any capacity at the request of the Company
by reason of the fact that he, his testator or intestate, is or was a
director or officer of the Company, or is serving or served such other
corporation, partner-ship, joint venture, trust, employee benefit plan or
other enterprise in any capacity, against judgments, fines, amounts paid in
settlement, and costs, charges and expenses, including attorneys' fees, or
any appeal therein; provided, however, that no indemnification shall be
provided to any such person if a judgment or other final adjudication
adverse to the director or officer establishes that (i) his acts were
committed in bad faith or were the result of active and deliberate dishonesty
and, in either case, were material to the cause of action so adjudicated, or
(ii) he personally gained in fact a financial profit or other advantage to
which he was not legally entitled.
SECTION 2. The Company may indemnify any other person to whom the Company is
permitted to provide indemnification or the advancement of expenses by
applicable law, whether pursuant to rights granted pursuant to, or provided
by, the New York Banking Law or other rights created by (i) a resolution of
stockholders, (ii) a resolution of directors, or (iii) an agreement providing
for such indemnification, it being expressly intended that these By-Laws
authorize the creation of other rights in any such manner.
SECTION 3. The Company shall, from time to time, reimburse or advance to any
person referred to in Section 1 the funds necessary for payment of expenses,
including attorneys' fees, incurred in connection with any action or
proceeding referred to in Section 1, upon receipt of a written undertaking by
or on behalf of such person to repay such amount(s) if a judgment or other
final adjudication adverse to the director or officer establishes that (i)
his acts were committed in bad faith or were the result of active and
deliberate dishonesty and, in either case, were material to the cause of
action so adjudicated, or (ii) he personally gained in fact a financial
profit or other advantage to which he was not legally entitled.
SECTION 4. Any director or officer of the Company serving (i) another
corporation, of which a majority of the shares entitled to vote in the
election of its directors is held by the Company, or (ii) any employee
benefit plan of the Company or any corporation referred to in clause (i) in
any capacity shall be deemed to be doing so at the request of the Company.
In all other cases, the provisions of this Article V will apply (i) only if
the person serving another corporation or any partnership, joint venture,
trust, employee benefit plan or other enterprise so served at the specific
request of the Company, evidenced by a written communication signed by the
Chairman of the Board, the Chief Executive Officer or the President, and (ii)
only if and to the extent that, after making such efforts as the Chairman of
the Board, the Chief Executive Officer or the President shall deem adequate
<PAGE>
in the circumstances, such person shall be unable to obtain indemnification
from such other enterprise or its insurer.
SECTION 5. Any person entitled to be indemnified or to the reimbursement or
advancement of expenses as a matter of right pursuant to this Article V may
elect to have the right to indemnification (or advancement of expenses)
interpreted on the basis of the applicable law in effect at the time of
occurrence of the event or events giving rise to the action or proceeding, to
the extent permitted by law, or on the basis of the applicable law in effect
at the time indemnification is sought.
SECTION 6. The right to be indemnified or to the reimbursement or
advancement of expense pursuant to this Article V (i) is a contract right
pursuant to which the person entitled thereto may bring suit as if the
provisions hereof were set forth in a separate written contract between the
Company and the director or officer, (ii) is intended to be retroactive and
shall be available with respect to events occurring prior to the adoption
hereof, and (iii) shall continue to exist after the rescission or restrictive
modification hereof with respect to events occurring prior thereto.
SECTION 7. If a request to be indemnified or for the reimbursement or
advancement of expenses pursuant hereto is not paid in full by the Company
within thirty days after a written claim has been received by the Company,
the claimant may at any time thereafter bring suit against the Company to
recover the unpaid amount of the claim and, if successful in whole or in
part, the claimant shall be entitled also to be paid the expenses of
prosecuting such claim. Neither the failure of the Company (including its
Board of Directors, independent legal counsel, or its stockholders) to have
made a determination prior to the commencement of such action that
indemnification of or reimbursement or advancement of expenses to the
claimant is proper in the circumstance, nor an actual determination by the
Company (including its Board of Directors, independent legal counsel, or its
stockholders) that the claimant is not entitled to indemnification or to the
reimbursement or advancement of expenses, shall be a defense to the action or
create a presumption that the claimant is not so entitled.
SECTION 8. A person who has been successful, on the merits or otherwise, in
the defense of a civil or criminal action or proceeding of the character
described in Section 1 shall be entitled to indemnification only as provided
in Sections 1 and 3, notwithstanding any provision of the New York Banking
Law to the contrary.
ARTICLE VI
SEAL
SECTION 1. The Board of Directors shall provide a seal for the Company, the
counterpart dies of which shall be in the charge of the Secretary of the
Company and such officers as the Chairman of the Board, the Chief Executive
Officer or the Secretary may from time to time direct in writing, to be
affixed to certificates of stock and other documents in accordance with the
directions of the Board of Directors or the Executive Committee.
SECTION 2. The Board of Directors may provide, in proper cases on a specified
occasion and for a specified transaction or transactions, for the use of a
printed or engraved facsimile seal of the Company.
<PAGE>
ARTICLE VII
CAPITAL STOCK
SECTION 1. Registration of transfer of shares shall only be made upon the
books of the Company by the registered holder in person, or by power of
attorney, duly executed, witnessed and filed with the Secretary or other
proper officer of the Company, on the surrender of the certificate or
certificates of such shares properly assigned for transfer.
ARTICLE VIII
CONSTRUCTION
SECTION 1. The masculine gender, when appearing in these By-Laws, shall be
deemed to include the feminine gender.
ARTICLE IX
AMENDMENTS
SECTION 1. These By-Laws may be altered, amended or added to by the Board of
Directors at any meeting, or by the stockholders at any annual or special
meeting, provided notice thereof has been given.
<PAGE>
I, Lillian K. Peros, Vice President of Bankers Trust Company, New York, New
York, hereby certify that the foregoing is a complete, true and correct copy
of the By-Laws of Bankers Trust Company, and that the same are in full force
and effect at this date.
------------------------------
VICE PRESIDENT
DATED: January 8, 1999
<PAGE>
<TABLE>
Legal Title of Bank: Bankers Trust Company Call Date: 09/30/98 ST-BK: 36-4840 FFIEC 031
Address: 130 Liberty Street Vendor ID: D CERT: 00623 Page RC-1
City, State ZIP: New York, NY 10006 11
FDIC Certificate No.: /0/0/6/2/3
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR SEPTEMBER 30, 1998
All schedules are to be reported in thousands of dollars. Unless otherwise indicated,
reported the amount outstanding as of the last business day of the quarter.
SCHEDULE RC--BALANCE SHEET
<CAPTION>
C400
-----------------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
- - ----------------------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C> <C>
1. Cash and balances due from depository institutions (from Schedule RC-A):
a. Noninterest-bearing balances and currency and coin (1) ............................. 0081 2,291,000 1.a.
b. Interest-bearing balances (2) ...................................................... 0071 2,636,000 1.b.
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A) ......................... 1754 0 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D)........................ 1773 6,617,000 2.b.
3. Federal funds sold and securities purchased under agreements to resell...................... 1350 32,734,000 3.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule RC-C)........................ 2122 20,227,000 4.a.
b. LESS: Allowance for loan and lease losses.......................................... 3123 619,000 4.b.
c. LESS: Allocated transfer risk reserve ............................................. 3128 0 4.c.
d. Loans and leases, net of unearned income,
allowance, and reserve (item 4.a minus 4.b and 4.c) ................................. 2125 19,608,000 4.d.
5. Trading Assets (from schedule RC-D) ....................................................... 3545 49,545,000 5.
6. Premises and fixed assets (including capitalized leases) ................................... 2145 885,000 6.
7. Other real estate owned (from Schedule RC-M) ............................................... 2150 115,000 7.
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) 2130 391,000 8.
9. Customers' liability to this bank on acceptances outstanding ............................... 2155 392,000 9.
10. Intangible assets (from Schedule RC-M) ..................................................... 2143 266,000 10.
11. Other assets (from Schedule RC-F) .......................................................... 2160 5,884,000 11.
12. Total assets (sum of items 1 through 11) ................................................... 2170 121,364,000 12.
</TABLE>
- - ---------------
(1)Includes cash items in process of collection and unposted debits.
(2)Includes time certificates of deposit not held for trading.
<PAGE>
<TABLE>
Legal Title of Bank: Bankers Trust Company Call Date: 09/30/98 ST-BK: 36-4840 FFIEC 031
Address: 130 Liberty Street Vendor ID: D CERT: 00623 Page RC-2
City, State ZIP: New York, NY 10006 12
FDIC Certificate No.: /0/0/6/2/3
SCHEDULE RC--CONTINUED
<CAPTION>
Dollar Amounts in Thousands Bil Mil Thou
- - ----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
<S> <C> <C> <C> <C>
13. Deposits:
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, part I).... RCON 2200 22,231,000 13.a.
(1) Noninterest-bearing(1) ......................................................... RCON 6631 3,040,000 13.a.(1)
(2) Interest-bearing ............................................................... RCON 6636 19,191,000 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E
part II) RCFN 2200 21,932,000 13.b.
(1) Noninterest-bearing ............................................................. RCFN 6631 2,423,000 13.b.(1)
(2) Interest-bearing ................................................................ RCFN 6636 19,509,000 13.b.(2)
14. Federal funds purchased and securities sold under agreements to repurchase RCFD 2800 14,360,000 14.
15. a. Demand notes issued to the U.S. Treasury .............................................. RCON 2840 0 15.a.
b. Trading liabilities (from Schedule RC-D)............................................... RCFD 3548 32,890,000 15.b.
16. Other borrowed money (includes mortgage indebtedness and obligations under
capitalized leases):
a. With a remaining maturity of one year or less ......................................... RCFD 2332 7,653,000 16.a.
b. With a remaining maturity of more than one year through three years................... A547 3,707,000 16.b.
c. With a remaining maturity of more than three years..................................... A548 3,034,000 16.c
17. Not Applicable. 17.
18. Bank's liability on acceptances executed and outstanding ................................. RCFD 2920 392,000 18.
19. Subordinated notes and debentures (2)..................................................... RCFD 3200 1,533,000 19.
20. Other liabilities (from Schedule RC-G) ................................................... RCFD 2930 6,595,000 20.
21. Total liabilities (sum of items 13 through 20) ........................................... RCFD 2948 114,327,000 21.
22. Not Applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus ............................................ RCFD 3838 1,500,000 23.
24. Common stock ............................................................................. RCFD 3230 2,002,000 24.
25. Surplus (exclude all surplus related to preferred stock) ................................. RCFD 3839 540,000 25.
26. a. Undivided profits and capital reserves .............................................. RCFD 3632 3,421,000 26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities .............. RCFD 8434 (46,000) 26.b.
27. Cumulative foreign currency translation adjustments ...................................... RCFD 3284 (380,000) 27.
28. Total equity capital (sum of items 23 through 27) ........................................ RCFD 3210 7,037,000 28.
29. Total liabilities and equity capital (sum of items 21 and 28)............................. RCFD 3300 121,364,000 29
</TABLE>
Memorandum
To be reported only with the March Report of Condition.
<TABLE>
<CAPTION>
Number
----------------------------
<S> <C> <C> <C> <C>
1. Indicate in the box at the right the number of the statement below that best describes the
most comprehensive level of auditing work performed for the bank by independent external
auditors as of any date during 1997 .................................................... RCFD 6724 N/A M.1
-----------------------------
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by external
submits a report on the consolidated holding company auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in 8 = No external audit work
accordance with generally accepted auditing standards
by a certified public accounting firm (may be required by
state chartering authority)
</TABLE>
- - -----------------
(1)Including total demand deposits and noninterest-bearing time and savings
deposits.
(2)Includes limited-life preferred stock and related surplus.
